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Teesside Business School ACC4024-N ECA Assessment 1 of 10 XXXXXXXXXX Teesside University International Business School Finance Management (ACC4024-N) End-Course Assessment (ECA)...

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Teesside Business School
ACC4024-N ECA Assessment 1 of 10
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Teesside University International Business School
Finance Management (ACC4024-N)
End-Course Assessment (ECA)
Weight 100% 4,000 Words
Assessment Brief
Part A (40%)
You are cu
ently working in a business consulting firm and you have to choose a company to
produce a professional report based on the financial performance and performance management
system of that company.
NNR Company has decided to outsource to take financial decisions. Your consulting firm has
een shortlisted for this job assignment. However, NNR Company needs to assess your ability
and capacity for analysing the financial information of a company and the ability to judge
operational management.
NNR company has sent you the following assessment criteria and you will produce a
professional report based on financial performance focusing on and interpreting varieties of
financial ratio analysis and Balanced Scorecard discussion.
You may choose any Public Limited Company PLC from the FAME database (available in the
Teesside University Li
ary database). FAME database is a UK Company house website linked
with li
ary resources. Or you may also choose any company which is listed on any stock
market (must show evidence of the company’s listing on the stock market).
The report
Produce a report not exceeding 1500 words (1500 (+/- 10%) (excluding reference and
appendices) which:
(a) Explains the background of the company.
(b) Calculates at least the recent three years’ key financial performance figures from its annual
eport and performance, and evaluate its performance against key competitors using a
database or other information sources for comparative data
(c) Discusses the importance of reviewing existing performance management systems of the
company
(d) Explains the Balanced Scorecard of the chosen company
(e) Writes a professional report by accurately referencing the sources of information
Note: Financial Institutions, such as Banks, Insurance Companies, Building Societies,
Financial Cooperatives, Mutual Funds, etc, CANNOT be chosen.
IMPORTANT
Ratios for the selected company used in the above should be calculated from the Annual
Reports and the source of the figures used must be clearly and explicitly shown.
ACC4024-N ECA Assessment 2 of 10
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Sources of information
The latest available Annual Report and Accounts MUST be used as the basis of the evaluation.
Extracts from the Annual Report used MUST be submitted with the report within the
Appendices.
Your report will be assessed based on the following marks distribution.
Report Topics Weight
1 The explanation of the background of
the company
10%
2 Analysis of the financial performance of
the company (Ratio analysis)
50%
3 Discussion on the importance of
eviewing existing performance
management systems of the company
10%
4 Explanation of the Balanced Scorecard
of the chosen company
20%
5 Presentation and referencing 10%
Total weight 100% (Converted to 40%)
Part B (60%)
The report
Produce a 2,500-word (+/-10%) report that examines the R-Tech UK Ltd case study given
elow. Critically analyze the issues given in the case study and answer the questions listed down
under each issue.
Report Contents Weight
1 Issue one 25%
2 Issue two 15%
3 Issue three 25%
4 Issue four 25%
5 Presentation and referencing 10%
Total Marks 100% (Converted to 60%)
R-Tech UK Ltd Case study
R-Tech UK Ltd is a company, based in Edinburgh UK, and established in 2010, that produces
smartphone components. It is a relatively small company with a highly skilled workforce.
Despite the Brexit impasse that impacted its supply/distribution chain, its excellent products
and reputation for customer service are still profitable.
ACC4024-N ECA Assessment 3 of 10
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R-Tech UK Ltd has six key departments – Marketing, Customer Support, Finance,
Manufacturing, Research and Development, and HR. The Company's Mission statement is to
e "Recognised by customers and employees as a progressive, high-quality, supplier of
innovative mobile products at affordable prices."
The board meeting of R-Tech UK Ltd on 5th April 2021. You are the Company's CFO, and you
have to prepare a report for the board meeting answering the five critical issues. The board
consists of highly qualified and educated members. Therefore, your report should use academic
and professional references to support the arguments. Moreover, your report should consist of
a clear structure and be well written. The word count of the report should be a maximum of
3500. Please see the given formatting instruction end of this document.
Issue 1
You have read a few journal articles to support your report and arguments. According to Hand,
Holthausen, and Leftwich XXXXXXXXXXresearchers investigating the impact of various economic or
egulatory changes on debt securities have generally employed two types of bond pricing
models: the absolute yield or the relative yield model. The literature relevant to financial bonds
explores these two models' behavioural implications and provides a theoretical and empirical
examination of the contrasting specifications. Evidence is presented that suggests the relative
yield model be the more appropriate specification.
Moreover, bonds are the most important investment class that hardly any retail investor owns
directly. Yet bonds are easy to buy and should be the bedrock for anyone trying to build up a
nest egg, as they will provide steady returns upon which the rest of your portfolio can be built.
When investors buy bonds, they instantly lower their risk, reduce the chance of losses and ease
those sleepless nights by creating a more balanced portfolio.
You have to explain the R-Tech UK Ltd board of directors:
• How the interest rate and inflation impact bond prices?
(5 marks)
• What are the differences between secured bonds and unsecured bonds?
XXXXXXXXXXmarks)
• Tesco plc has bonds on the market making annual payments, with 10 years to maturity, and
selling for £1,050. At this price, the bonds yield 10 percent. The par value of the bond is
£1000. What must be the coupon rate on the bonds?
( 5 marks)
• R-Tech UK Ltd is considering buying debentures of Tesco plc which were issued some years
ago in units of £100 each. This debt is due for redemption in seven years. The interest rate
on this debt is 15% per year, and the cu
ent market value per £100 of debt is £115. Calculate
YTM.
( 10 marks)
(Total Marks 25)
ACC4024-N ECA Assessment 4 of 10
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Issue 2
R-Tech UK Ltd is planning to invest in Jumbo PLC. The assistant accountant provides the following
information regarding Jumbo PLC's investment.
Jumbo PLC started trading seven years ago and has gone from strength to strength. Dividends are
cu
ently 5p per ordinary share, having grown at a 12% compound annual rate over the past ten years.
This growth rate is expected to be maintained for the next four years, after which growth is expected
to slow, and it is anticipated that dividends will only grow at 10% for the following three years.
Thereafter Jumbo Plc's dividends are expected to grow at 5% per year indefinitely.
You have to provide the cu
ent value of 3,000 ordinary shares of Jumbo PLC, assuming the required
ate of return is 18%.
(15 marks )
Issue 3
Investors' demand for information, regulatory requirements, and continually developing high-
quality reporting standards have led to a globally growing trend toward formal sustainability
eporting. Integrated reporting, which combines financial and sustainability-related information
into one report is also emerging. Accounting professionals’ increasing involvement complements
and enhances this trend. Accounting majors are future accounting professionals; thus, their
perceptions are important.
R-Tech UK Ltd looking for the cu
ent status of sustainability and integrated reporting discusses
elated regulatory requirements and sustainability reporting standards and investigates company
perceptions of sustainability and integrated reporting's potential advantages and disadvantages.
(Marks 25)
Issue 4
R-Tech UK Ltd identified an opportunity to manufacture and sell Perfume products. The financial
manager provides the following details for the financial analysis of the proposal.
● Market research is any organised effort to gather information about target markets or customers.
Based on market surveys, it is forecasted that sales will be as follows over the three-year life of the
project: £140,000 in the first year, £290,000 in the second year, and £220,000 in the third year of the
project.
● A variable cost is a corporate expense that changes in proportion to production output. Variable
costs increase or decrease depending on a company's production volume; they rise as production
increases and fall as production decreases. Variable costs are expected to amount to 25% of sales
evenue, leaving a contribution of 75% to cover fixed costs and to provide an element of profit.
● A fixed cost is a cost that does not change with an increase or decrease in the number of goods or
services produced or sold. Fixed costs are expenses that have to be paid by a company, independent
ACC4024-N ECA Assessment 5 of 10
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of any business activity. Fixed costs directly associated with the product line are expected to amount
to £4,000 per year.
● This new Perfume product require different packaging and the existing machines are unable to
meet the needs. A new machine which costs £150,000 is purchased. With its useful life of 3 years, it
is expected to have a residual cash value of £30,000 in the third year. Capital allowances are the sums
of money a UK business can deduct from the overall corporate or income tax on its profits. These
sums derive from certain purchases or investments, outlined in the Capital Allowances Act 2001. A
capital allowance is given instead of depreciation for certain types of assets. Capital allowance can
e claimed on this investment on an 18% reducing balance basis.
● The Company hired a Perfume production expert team to propose some unique ideas for its new
product and will pay £75,000 for it in twelve months. If the production of the Perfumes goes ahead,
they will pay a further £25,000 to consultants in year 1 for costs to be incu
ed in the design of the
final packaging for the product.
● Advertising and marketing costs of £6,000 per year are expected to be incu
ed if the product range
started being produced.
Derek, a new Chief Financial Officer, spoke to you last week and told you that the new products line
should require an additional expenditure on general administrative costs. However, Steve explained
to you the company policy that dictates that a charge equal to 10% of sales is levied on all product
lines each year, representing an allocation of the overall company's general administrative costs.
Working capital requirements are for the new Perfumes:
Years
Year 0 Year 1 Year 2 Year 3
Required Working Capital £20,000 £32,000 £32,000 £0
Derek also informed you that a marketing firm was hired to do pilot testing and they have charged
£150,000 for their services. Of this, a total of £50,000 were paid three months ago and the remaining
£100,000 will be paid next month.
● Taxes are levied on taxable profits at a rate of 20%.
You have to produce a statement of after-tax cash flows attributable to the proposed project for
the new Perfumes
and for each year of the project's life.
(Total Marks 25)
ACC4024-N ECA Assessment 6 of 10
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Guidelines for Presentation of Assessed Work
The report is an individual piece of work, requiring the appraisal of a concept and its manifestation
in finance management practice. The focus of marking will be the ability of the student to identify
the key features of a concept and to trace these through into policies and practices that tackle
challenges to companies’ finance management practices. The context of the examination is an
individual challenge to practically apply relevant techniques against the backdrop of a finance
management scenario which will illustrate the professional capabilities of the student in a way that is
transferable to their career development.
Assignment Format
The detailed format can be found in the support outline in your learning material section. It includes
sections such as:
•Title Page.
• Body of Assessment
• Reference List
• Appendices (if applicable).
Title Page
This should contain the following information:
• Name of programme (and pathway if
Answered Same Day Jan 30, 2023

Solution

Rochak answered on Jan 31 2023
33 Votes
Title Page
· Name of programme (and pathway if applicable).
· Your name, preferably in a larger font and highlighted.
· Module title (exactly as identified in your module guide or specification).
· Module code (exactly as identified in your module guide or specification).
· Module leader or group tuto
· The assessment title
· The date of submission.
· The word count of your report
Part A
Company: British Petroleum (BP)
Background
British Petroleum is one of the largest United Kingdom companies in the world and it is the second largest company in the United Kingdom in terms of revenue. The company is also part of the list called ‘Big Oil’ list which has all the prominent oil companies (Bamberg 1994).
British Petroleum is headquartered in London, England and operates all around the world. The company took vertical integration and now has its hands in all the areas related to oil which are exploration, extraction, refining, distribution, marketing, power generation and trading. BP has a long history where it was founded in the year 1909 and since then has been expanding through multiple mergers and acquisitions, and this expansion has helped the company to get ranked 35th in the Fortune 500 in the year 2022. British Petroleum is one of the largest United Kingdom companies in the world and it is the second largest company in the United Kingdom in terms of revenue.
In the year 2022 when most companies were struggling the company made a whooping revenue of $164.2 billion which is among the highest in the world. It is the partnership with various organizations along with the government that has given this steep rise to the company which now is the country’s second-largest company in terms of revenue.
Financial Performance
    Particulars
    2021
    2020
    2019
    Revenue
    $164.2 billion
    $106.4 billion
    $278.4 billion
    Operating Profit
    $13.5 billion
    -$22 billion
    $7.7 billion
    Net Profit
    $8.5 billion
    -$20.7 billion
    $4.2 billion
    Cu
ent Ratio
    1.14
    1.20
    1.03
    Asset Turnove
    0.58
    0.41
    0.56
    Return on Equity (ROE)
    9.90%
    -27.40%
    4.00%
    Debt/Equity
    0.92
    1.15
    0.79
    Revenue
Revenue (2021) = $164.2 billion
Revenue (2020) = $106.4 billion
Revenue (2019) = $278.4 billion
The company see an increasing revenue as can be seen in the above table where the company’s revenue declined in the year 2020 due to COVID-19 otherwise the company has been doing, and this decline in revenue was covered in the year 2021, and the company is hopeful that they will increase the revenues to back to before COVID-19 levels which were about $278 billion.
    Operating Profit
Operating Profit (2021) = $13.5 billion
Operating Profit (2020) = -$22 billion
Operating Profit (2019) = $7.7 billion
The operating profit of the company has been going well, in fact, this number increased from the pre-COVID levels because the oil prices have increased significantly after 2020.
The company used to have an operating profit of $7.7 billion in the year 2019 which increased to $13.5 billion in 2021 after dropping to the negative te
itory in the year 2020.
    Net Profit
Net Profit (2021) = $8.5 billion
Net Profit (2020) = -$20.7 billion
Net Profit (2019) = $4.2 billion
With the dip every company saw in the year 2020, the country back for the company has been very good in the year 2021 as the company’s profit became more than what it was during the pre-COVID period. The net profit for the company doubled from the pre-COVID levels which were about $4.2 billion in the year 2019, and it increased to $8.5 billion in the year 2021.
    Cu
ent Ratio
The cu
ent Ratio is the proportion of Cu
ent Assets and Cu
ent Liabilities.
Formula:
    Cu
ent Ratio = Cu
ent Assets/Cu
ent Liabilities
Cu
ent Ratio (2021) = 92,590 million/80,287 million
= 1.14
Cu
ent Ratio (2020) = 72,982 million/59,799 million
= 1.20
Cu
ent Ratio (2019) = 82,059 million/73,595 million
= 1.03
The higher the cu
ent ratio the better it is because if the cu
ent ratio is higher, it means that the company has an ample amount of cu
ent assets to pay off its cu
ent liabilities.
The company’s cu
ent ratio is greater than one which is great as that is what the standards say that you must have a cu
ent ratio over 1.00.
    Asset Turnove
Asset Turnover means how quickly the company is generating revenue from its assets, this is important because a company with high assets and low asset turnover is not doing good, therefore, this financial performance indicator becomes very important.
The asset turnover for the firm in the year 2019 was 0.56 which is decent enough, and because of COVID-19 it dropped to 0.41 in the year 2020, but when the company was back and running at full force in the year 2021 the asset turnover increased to 0.58 again.
Asset Turnover = Revenue/Total Assets
Asset Turnover (2021) = $164.2 billion/$283.1 billion
= 0.58
Asset Turnover (2020) = $106.4 billion/$259.5
= 0.41
Asset Turnover (2019) = $278.4 billion/$497.1 billion
= 0.56
    Return on Equity (ROE)
Return on equity is the metric which tells us how much return the company is making for every dollar invested in the company by the equity holders. British Petroleum has been doing great when it comes to return on equity as the company has generated
Return on Equity = Net Profit/Equity
Return on Equity (2021) = $8.5 billion/$85.9 billion
= 9.90%
Return on Equity (2020) = -$20.7 billion/$75.6 billion
= -27.40%
Return on Equity (2019) = $4.2 billion/$105.0 billion
= 4.00%
    Debt/Equity
The company’s debt to equity is on the rise as the company has been increasing debt financing to leverage more and make sure that the company keeps growing.
The debt-to-equity ratio for the company was 0.79 pre-COVID, i.e., as of 2019, this increased to 1.15 in the year 2020 because the company had to finance the losses through debt, now the same has decreased to 0.92 but it is still higher than what the company had it pre-covid.
Debt to Equity is one of the most important financial performance metrics because it tells you whether the company is over-leveraged or not. As if the company is over-leveraged then it is risking its future performance because anytime the leverage is not available the company might go to bust.
Debt to Equity = Total Debt/Total Equity
Debt to Equity (2021) = $79.0 billion/$85.9 billion
= 0.92
Debt to Equity (2020) = $86.9 billion/$75.6 billion
= 1.15
Debt to Equity (2019) = $83.0 billion/$105.0 billion
= 0.79
Performance Management System
The existing performance management system of the company is good as the company has been performing very well in the past years, and this has given the company rises where they have been ranked second in the United Kingdom when it comes to revenue.
Also, the cu
ent performance management system of the company cannot be judged because the firm does not report the internal management in its annual report which they produce.
Therefore, overall, when it comes to financial performance the company has been doing good because all the financial metrics are great as compared to pre-COVID levels. The comparison of the management system will also be good when we see the 2022 figures as that will ensure whether the company has been giving good returns consistently after the COVID period or not.
Balance Scorecard
The balanced scorecard is the scorecard that puts all the things...
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