7BUS2041 Using Financial Data Assignment – UK

Module Code: 7BUS2041
Module Title: Using Financial Data
Weighting: 60%
Assignment Format & Maximum Word count :- INDIVIDUAL Report, 3000 words
Assessment Criteria :
Learning Outcomes: Knowledge and Understanding tested in this assignment:

1.analyse accounting information (including both financial statements and management accounts) and
formulate appropriate recommendations or conclusions
2.interpret key financial performance indicators and be able to use this information to formulate future plans
3.design organisational strategies to enable the creation and maintenance of value
4.evaluate the financial requirements of a business or project and advise on the financing choices available to organisations (including the relevance of capital structure and the rewards expected by providers of finance).
5.evaluate financial and operating risks (both domestic and international) faced by organisations and the
strategies for mitigating those risks 6. appraise corporate governance and ethical issues which might arise in relation to accounting and financial management.
7BUS2041 Using Financial Data Assignment – UK

7BUS2041 Using Financial Data Assignment

Learning Outcomes: Skills and Attributes tested in this assignment:
7.advise financial and non-financial managers on financial issues
8.recommend and present ideas confidently and effectively on financial issues determine and apply a 9.range of alternative techniques to monitor and manage business performance

Description of the assignment:
This report will be testing the ability of students to evaluate business performance using financial risk and
corporate governance data.

Gentry Electronics has enjoyed tremendous sales growth during the last 10 years however even though sales have steadily increased, the company’s CEO Erica Harding, is concerned about certain aspects of its performance. She has called a meeting with the corporate controller and the vice presidents of finance operations sales and marketing to discuss the company’s performance. Erica begins the meeting by making the following observations:

7BUS2041 Using Financial Data Assignment – UK

We have been forced to take significant write down on inventory during each of the last three years because of obsolescence. In addition inventory storage costs have soared. We rent four additional ware houses to store our increasingly diverse inventory. Five years ago inventory represented only 20% of the value of our total assets. It now exceeds 35%. Yet even with all this inventory “stock outs”(measured by complaints by customers that the desired product is not available) have increased by 40% during the last three years. And worse yet it seems that we constantly must discount merchandise that we have too much of. “We have to employ one of these fresh finance graduates to enable us manage this problem. All I want is determine a way to make our problems less obvious and ensure the bank does not call back its loans. As it stands now, we seem to be heading towards losses and I am not willing to report a loss in any circumstance. We must manage our situation and avoid attention of the board and financiers. We have to be proactive and ensure finance will never be a problem in expanding our business.

Jeff who is a manager shares Erica’s concerns and how it will affect their strategic positioning The business planned to extend their operations to three countries in the next two years and make public offering of their shares. He is worried that this current problem will affect their ability to attract investors and build an international business. To alleviate his fears, Jeff has advised the board of directors to invite investors and fund provider to boost their financial position before the IPO He has also recommended that the company proactively start trading in foreign currency to build a currency base for the planned international expansion even though they are not sure when that will materialise and not authorised to trade foreign currency. “It does not matter when we expand or if we ever do. All we need to do is to make our shareholder believe we are expanding, and the foreign exchange trade and inflow will convince them. The key thing is for us to attract investors and raise our capital base, even though I don’t know how we will do that”.

Erica’s suggestion has been accepted and you have been employed as chief finance officer in Gentry Electronics You have now been tasked to use the following financial data in evaluating the current situation with the company and make suggestions on the organisational strategies which will enable the creation and maintenance of value for Gentry. Your response should be presented in the form of a report covering the five questions below as sections of the report.

(a) Compute the current ratio, gross profit ratio, net profit margin ratio, inventory turnover ratio and days in inventory for the four years.

(b) From the ratios calculated in (a) above is there justification for Erica’s concerns? Discuss the problems implications and potential causes of the changes in the ratios over the four years.

(c) As the newly employed chief finance officer in Gentry Electronics discuss potential remedies to problems discussed in (b) above and how each suggestion will alleviate Erica’s fears or improve the performance of the company.

(d) Discuss two possible concerns Erica Harding and the management of Gentry Electronics will possibly raise regarding your suggestions in (c) above and offer two alternative sources of finance for Gentry?

(e) Discuss two financial and operating risks Gentry may face if all suggestions provided by Erica and Jeff are adopted. Are there possible corporate governance and ethical issues which might arise in relation to ideas presented by Erica and Jeff.

Note: Please keep your ratio calculations as an appendix to the report. Use only the information in the
main report

7BUS2041 Using Financial Data Assignment – UK

7BUS2041 Using Financial Data Assignment

Submission requirements:
You should use Arial font size 12 and 1.5 line spacing. Please do not exceed the word count.
The hand-in deadline for submission is 23.30 on 25th April 2022.
Reports submitted more than 5 days late will attract a mark of zero.
Please submit your work as an electronic copy via Studynet Canvas with your ratio calculations as appendix. Remember the ratio calculations are assessed and carry 20 marks, so non- submission will mean loss of marks.
This is an individual assignment and the report submitted should be entirely your own work.

This assessment is subject to anonymous marking, please do not put your name on any document you submit. You must put your student registration number (SRN) on your submission.

Please see the assignment section of the module Canvas website for further information on the requirements of the assignment and advice on how to put your report together.

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