LCMB7002-Financial Management

LCMB7002-Financial Management

TASK DESCRIPTION

Students are required to select a public listed company whose shares are traded on The New York stock exchange. Download its most recent annual report(s) covering financial statements for the past five years.

Part a) [10 points, 500 words approximately]
A brief history of your selected company including its industry, business model, market place and major competitor(s). Review major events over the past five years e.g. change of directors, profit warning, legal issues, M&A, or any strategic changes you consider material to this companies results. MENTION AT LEAST ONE EVENT FOR EVERY YEAR.

Part b) [50 points, 3000 words approximately]

A critical review of the company’s financial performances covering the following four points:

• Calculation of financial ratios for the most recent financial year, one from each of the following types: profitability, liquidity, gearing and efficiency; briefly discuss your results (10 points)
• Critically evaluate the ratios you calculated using academic references (20 points)
• Comparison of your selected company to a major competitor on the basis of the financial ratios you have calculated (10 points)
• Recommendations on improving the financial management of the company. Be sure to reference details noted in Part A that will support your recommendations (10 points)

Part c) [40 points, 1500 words approximately]

Assume that the company you selected has been researching the prospects for a range of new investment opportunities. The cash flow details of two promising projects (which are mutually exclusive) are given below:

Assume that the company’s cost of capital is currently at 0.75 per cent.
Assume that all cash flows arise at year ends and ignore taxation and inflation.

1. Calculate the Payback Period (PBP), Accounting Rate of Return (ARR) and the Net Present Value (NPV) of the project. Evaluate the results of these calculations and recommend with reasons, reflecting all three calculations, which project should be adopted. (10 points)
2. Assume the initial investments for each project increase by 10%, and all cash flows fall by 10%; recalculate NPV and comment appropriately. (20 points)
3. Critically discuss the advantages and shortcomings of the PBP, ARR and NPV techniques as ways of evaluating capital projects, please use relevant literature (with proper referencing) to support your discussion (5 points)
4. Discuss non-financial factors management needs to consider. (5 points)

Please note the following when completing your written assignment:

1. Writing: Written in English in an appropriate business/academic style
2. Focus: Write about only the tasks set in the assignment.
3. Document format: In business report format or any other suitable format appropriate to the context. The total word count should NOT EXCEED 5000 words. Ensure a clear title, course, and name or ID number is on a cover sheet and a reference list using Harvard referencing throughout is also provided.
4. Research: Research should use reliable and relevant sources of information e.g. academic books and journals that have been peer reviewed. The research should be extensive.
5. References: clearly cite all sources in the body of your work, and in your reference list.

Additionally, you should refer to text books, current news items and ensure your assignment is current and up-to-date. High-level referencing skills using the Harvard Method must be demonstrated throughout your work and all sources listed alphabetically. Good referencing is a powerful way to reinforce the arguments you make in your writing. The point of referencing is that you can justify the points you write about and make it easy for the reader to find the things that you cite.

You must submit your work electronically via the Turnitin link on the university virtual learning platform (Moodle) on or before the deadline set by the assessment team.

Turnitin is a software program that compares a submitted text to other texts in its database. The database includes published books, journal articles, webpages and other submitted assignments. It checks the originality of the submitted text against these texts and produces a report that shows the percentage of writing that is original, and the source of non-original text.

Although Turnitin has been described as a plagiarism detector, it is actually an originality checker. So a piece of work submitted to Turnitin may have a high percentage of writing that is not original, but this may include a lot of common phrases or acknowledged quotes. It is therefore important to follow referencing guidance throughout the coursework.