Module: Strategic Financial Management
Tutor:
Assignment Title: Financial Ratios and International Accounting Standards
Assignment Length: 2,500 Words Maximum
Issue Date: As Per Schedule
Submission Deadline: As Per Schedule
Learning Outcomes
This assessment satisfies the following learning outcomes as specified in your Module Guide.
Learning Outcomes
Assessment Criteria
Demonstrate a knowledge and understanding of financial analysis and international accounting standards and their contribution to financial management.
Critically evaluate relevant accounting statements for management and investment decisions.
Demonstrate a knowledge and understanding of the theories and technical applications relating to accounting theories.
Identify and analyse problems relating to accounting decisions.
It is the candidate’s responsibility to familiarise themselves with LSC’s policies on plagiarism and use of unfair means contained within the Student Handbook.
This also requires familiarising yourself with the Harvard Author Date system of citing and acknowledging secondary sources.
The Assignment contains two Parts A and B.
Ensure you answer BOTH Parts thoroughly.
ASSIGNMENT QUESTIONS
Upholland Plc is thinking of investing in a limited liability company called Orrell. The management team are embarking on an analysis of Orrell to decide whether or not to invest.
The summarised financial statements of Orrell are shown below
Orrell Income statement for the year ended 31st October 2007
0
Sales revenue 23,420
Cost of sales (8,245)
––––––––
Gross profit 15,175
Expenses (2,460)
––––––––
Profit from operations 12,715
Finance cost (50)
––––––––
Profit before tax 12,665
Income tax expense (1,515)
––––––––
Net profit for the period 11,150
––––––––
Orrell Balance sheet as at 31st October 2007
0 0
Assets
Non-current assets 31,000
Current assets
Inventory 1,450
Trade receivables 2,500
Cash 50 4,000
–––––– –––––––
Total assets 35,000
––––––––
Equity and liabilities
Capital and Reserves
·50 Ordinary Shares 25,000
Reserves 7,520
–––––––
32,520
Current liabilities
Trade payables 860
Tax 620 1,480
––––––
Loan notes 1,000
–––––––
Total equity and liabilities 35,000
––––––––
Additional information
(i) During the year Orrell paid dividends of million.
(ii) The market share price for Orrell is .50.
(iii) Orrell’s main competitor is a company called Pemberton which has the following ratios:
Dividend per share 10 cents
Dividend cover 5 times
Earnings per share (EPS) 20 cents
Price earnings ratio 13·4
Debt/equity ratio 15%
Interest cover 100 times
Part A (60%)
(a) Calculate the following ratios for Orrell.
(i) Dividend per share
(ii) Dividend cover
(iii) Earnings per share (EPS)
(iv) Price earnings ratio (PE ratio)
(v) Debt/equity ratio
(vi) Interest cover
(b) Prepare notes for Upholland Plc that comment on the ratios you have calculated. Use the
ratios for Pemberton as a comparator.
PART B (40%)
(a) Explain the main purposes of the International Accounting Standards Board’s ‘Framework for the Preparation and Presentation of Financial Statements’.
(b) Identify any four user groups of financial statements and explain what information
they are likely to want from them.
Penalties for late Submission
Please consult your Student Handbook for the rules concerning late submission of your Coursework.
Coursework not submitted will be recorded as Fail. Extensions without penalties may be granted, but only in exceptional circumstances e.g. illness, and should be accompanied by written evidence.
Grade Description Mark Classification
Work of Exceptional Quality High 80+ I
Middle 75-79 I
Low 70-74 I
Work of Very Good Quality High 67-69 II.i
Middle 64-66 II.i
Low 60-63 II.i
Work of Good Quality High 57-59 II.ii
Middle 54-56 II.ii
Low 50-53 II.ii
Work of Satisfactory Quality High 47-49 III
Middle 44-46 III
Low 40-43 III
Unsatisfactory Performance Borderline 35-39 BF
Clear Fail below 35 F
The definitions of the above criteria are:
Work of Exceptional Quality
First Class
Virtually all of the relevant information/skills accurately deployed. Excellent grasp and effective integration of theoretical knowledge and technical application in relation to the Learning Outcomes. Calculations performed to a high level of accuracy. Evidence of originality and creativity as appropriate to the subject.
Evidence of thorough research through inclusion of a Bibliography and Harvard Referencing correctly applied.
Work of Very Good Quality
Upper Second Class
Most of the relevant information/skills accurately deployed. Good grasp and effective integration of theoretical knowledge and technical application in relation to the Learning Outcomes. Calculations performed accurately. Some evidence of originality and creativity as appropriate to the subject.
Evidence of research through inclusion of a Bibliography and Harvard Referencing correctly applied.
Work of Good Quality
Lower Second Class
Some of the relevant information/skills accurately deployed. Adequate grasp and limited effective integration of theoretical knowledge and technical application in relation to the Learning Outcomes. Limited evidence of originality and creativity as appropriate to the subject.
Evidence of research through inclusion of a Bibliography and Harvard Referencing correctly applied in the majority occurrences.
Work of Satisfactory Quality
Third Class
Some omissions in the deployment of information/skills. Limited grasp and very little integration of theoretical knowledge and technical application in relation to the Learning Outcomes. Virtually no evidence of originality and creativity as appropriate to the subject.
Evidence of limited research through inclusion of a Bibliography and Harvard Referencing correctly applied in some occurrences.
Unsatisfactory Performance
Borderline Fail
Deficiencies or omissions in information/skills. Limited knowledge and understanding of the Learning Outcomes. Marginal evidence of skills, knowledge or creativity which could, in the light of overall performance, constitute the basis for a pass grade.
Evidence of very limited research through inclusion of a Bibliography and Harvard Referencing correctly applied.
Clear Fail
Little evidence of the information/skills, theoretical and technical elements relevant to the assignment. Mainly irrelevant and/or incorrect information provided. Poor presentation and incorrect calculations.
Evidence of very limited research through inclusion or non inclusion of a Bibliography and Harvard Referencing incorrectly applied in the majority of occurrences.
Credit:ivythesis.typepad.com
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