Financial decision making

An individual written assignment of 3,000 words maximum is expected. Use the formal report format and include a Bibliography/ reference list of all books, journals and websites consulted in your research. Assume that the financial analysis is aimed at potential investors who are currently considering investing in Camden Limited. The financial performance evaluation will enable the potential investors decide whether to invest in this company. This assignment tests the following Learning Outcomes for the module: 1. Explain the structure of and terms used within the financial statements 2. Apply management accounting techniques for planning, control and decision making within the organisation 3. Calculate the main accounting ratios and explain their significance to users of financial statement 4. Demonstrate knowledge of the role of finance and accounting within the organisation with respect to both reporting and decision making aspects
Please note; SKANSA PLC is a Construction Company based in UK. SKANSKA PLC started back in 1886

. The company is planning to expand its operations to other countries in Europe in the next ten (10) years. The financial statements of SKANKA PLC. are attached for your consideration and attention. You are advised to incorporate the suggested amendments/feedback you received from the module leader during assignment briefing. Required TASK 1 (1500 WORDS) You are part of the Accounting and Finance team at SKANSKA PLC. Write a report to the Management of SKANSA PLC, critically evaluating the importance of Accounting and Finance functions, duties and roles within SKANSA PLC. Your evaluation must include some examples within the Company where appropriate. (40 marks) TASK 2 (1000 WORDS) Using the financial statements of SKANSKA PLC calculate the ratios required and comment on the company’s performance from an Investor with £1 million perspective. (50 marks) Marks will be awarded for Structure and Presentation skills. Structure includes the orderly presentation of relevant material. In addition, the extent of research evidenced by the appropriateness and adequacy of in-text referencing. There must be a Cover Page and Contents Page, paragraphs of Introduction, Conclusion and pages must be numbered. (10 marks) Assessment Criteria You will obtain marks for the following: Presentation of your work (report format, clarity of expression, referencing etc.) ……………….……………………….10% The functions/roles/duties of accounting and finance team within SKANSA PLC with appropriate examples. 40% Ratio calculation……………………………………………………………………………………..………………………… 10% Interpretation and analysis of the Ratios in relation to SKANSKA PLC performance……………… 40% TOTAL MARKS 100% Page 3 of 5 The summarised financial statements of SKANSKA PLC, a Public company engaged in Construction, are shown below: Statement of profit and loss: For the year ended 31 Dec. 2018 For the year ended 31 Dec. 2019 £000 £000 £000 £000 Sales revenue 4,800 6,000 Cost of sales Opening inventory 1,200 450 Purchases 2,700 4,800 3,900 5,250 Less: Closing inventory (450) (3,450) (900) (4,350) Gross profit 1,350 1,650 Operating expenses (600) (675) Finance cost (150) (300) Net profit 600 675 Statement of financial position As at year to 31 Dec. 2018 As at year to 31 Dec. 2019 £000 £000 £000 £000 Non-current assets 2,955 6,000 Current assets Inventory 450 750 Receivables – trade 900 1200 Prepayments 90 105 Cash 75 1,515 15 2,070 4,470 8,070 Issued share capital 900 900 Share premium account 300 300 Retained earnings 1,125 1,650 2,325 2,850 Non-current liabilities 10% loan notes 1,500 3,000 Current liabilities Payables – trade 570 2,100 Accruals 75 645 120 2,220 4,470 8,070 Page 4 of 5 Task 2 – Required a. Calculate the following five ratios for each of the two years: (i) Return on capital employed (ii) Net profit margin (iii) Current ratio (iv) Average Receivable days/ Debtors collection period (v) Average Payable days/ Creditors collection period (10 marks) b. Comment on the performance of SKANSKA PLC. results from and position between the two (2) years from (a), mentioning possible causes, reasons and effects for the changes in the ratios. (40 marks) Page 5 of 5 Criteria 70% 60-69% 50-59% 40-49% Fail Presentation Including report format, clarity of expression, referencing, conclusion 10% Brief fully met within word count. Professional presentation and language used in a report format. Excellent range and source of referencing. Harvard referencing used. Excellent conclusions Written in a Report format within word count. Meets brief fully. Clearly written and presented. Good referencing used from a range of sources with sensible and detailed conclusions Structured well in a Report format. Writing style is sometimes unclear. Adequate references however only partial use of Harvard referencing. A reasonable attempt at a conclusion made Brief partially met and an attempt made at a Report format. Too long or too short. Poor presentation. Problems with writing style. Few references and little conclusion given Brief not fully met. Far too long or too short. Not in a Report format. Unclear structure and poor presentation. No references or conclusion given Role of management accounting techniques in planning, control and decision making process 40% Demonstrates excellent research and understanding of the role of management accounting techniques and of its uses in planning, control and decision making The role of management accounting techniques has been well researched demonstrating a good understanding of its uses in planning, control and decision making Some research into the role of management accounting techniques is demonstrated together with some understanding of its practical uses in planning, control and decision making Limited analysis of the role of management accounting techniques in an organization and its uses in planning, control and decision making Little or no understanding demonstrated of the role of management accounting techniques in an organization or its role in planning, control and decision making Ratio Calculation 10% Excellent ratio calculations with the correct units of measurements for all the ratios required over the two-year period. A good ratio calculations with the correct units of measurements for at least 4 of the ratios required over the two-year period Fair ratio calculations with the correct units of measurements for at least 3 of the ratios required over the two-year period Weak ratio calculations with the correct units of measurements for at least 2 of the ratios required over the two-year period Poor ratio calculations with the correct units of measurements for at least 1 of the ratios required over the two-year period Interpretation and analysis of financial ratios 40% Excellent interpretation and analysis of the performance are provided to demonstrate the financial situation and possible causes for the change from an investors perspective. Good interpretation and analysis of the performance are provided to demonstrate the financial situation and possible causes for the change from an investors perspective. Fair interpretation and analysis of the performance are provided to demonstrate the financial situation and possible causes for the change from an investors perspective. Weak interpretation and analysis of the performance are provided to demonstrate the financial situation and possible causes for the change from an investors perspective. Poor interpretation and analysis of the performance are provided to demonstrate the financial situation and possible causes for the change from an investors perspective