Module Title |
Performance Measurement in Organisation |
Assignment Number |
Assessment 1 |
Module Code |
ACFI2208 |
Assignment Title |
Essay |
Module Leader |
Dr Rawinder Kaur |
Assignment Weighting |
30% |
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Assignment Release
Date: |
On
20th October 2022 |
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Submission
Date/Time: |
On 20th January 2023 by 12:00 (noon-GMT) |
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Assessment Information – What you need to do
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This assignment is an individual assignment. This assignment requires you to attempt all questions
from Section A and any two questions of your choice
from Section B.
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Criteria
for Assessment – How you will be marked
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Further
information on University mark descriptors can be found here. This assignment is designed to
assess the following learning outcomes: Subject
specific skills and knowledge 1. Calculations and analysis of ratios
Non-subject
specific skills
6.
Carry
out self-managed study and research to extend the boundaries of knowledge.
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Assessment
Details
The word count is 1500 words.
There will be a penalty of a deduction
of 10% of the mark for work exceeding the word limit by 10% or more. The word limit excludes figures, tables,
references list and appendices. Please note that
the reference list should be line in with Harvard referencing and should be
displayed at the bottom of your essay.
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How to Submit your Assessment
The assessment must be submitted by 12:00 noon (GMT/BST) on 20/01/2023. No paper copies are required. You can
access the submission link through the module web.
·
Your
coursework will be given a zero mark if you do not submit a copy through
Turnitin. Please take care to ensure that you have fully submitted your work.
·
Please
ensure that you have submitted your work using the correct file
format, unreadable files will receive a mark of zero. The Faculty accepts
Microsoft Office and PDF documents, unless otherwise advised by the module
leader. ·
All work submitted after the submission
deadline without a valid and approved reason will be subject to the University
regulations on late submissions. o If an assessment is submitted up to 14 days late the
mark for the work will be capped at the pass mark of 40 per cent for
undergraduate modules or 50 per cent for postgraduate modules o If an assessment is submitted beyond 14 calendar days
late the work will receive a mark of zero per cent o
The above
applies to a student’s first attempt at the assessment. If work submitted as
a reassessment of a previously failed assessment task is submitted later than
the deadline the work will immediately be given a mark of zero per
cent o
If an assessment which is marked as pass/fail
rather than given a percentage mark is submitted later than the deadline, the
work will immediately be marked as a fail ·
The
University wants you to do your best. However, we know that sometimes events
happen which mean that you can’t submit your coursework by the deadline –
these events should be beyond your control and not easy to predict. If
this happens, you can apply for an extension to your deadline for up to two
weeks, or if you need longer, you can apply for a deferral, which takes you
to the next assessment period
(for example, to the re-sit period following the main Assessment Boards). You
must apply before the deadline. You will find information about applying for extensions
and deferrals here. ·
Students
MUST keep a copy and/or an electronic file of their assignment. ·
Checks
will be made on your work using anti-plagiarism software and approved
plagiarism checking websites.
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Return of Marked Work
You can expect to have
feedback returned to you
on 17th February 2023.
If for any reason there is a delay you will be kept informed. Marks and feedback will be provided online. It is important that you access the feedback
you receive as this will help to make improvements to your later work, you
can request a meeting with your Module Leader or Personal Tutor to discuss
your feedback in more detail.
Marks will have been
internally moderated only, and will therefore be provisional; your mark will
be formally agreed later in the year once the external examiner has completed
their review. More information on assessment and feedback can be found here.
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Academic Integrity
In submitting a piece of work for assessment it is essential
that you understand the University’s requirements for maintaining academic
integrity and ensure that the work does not contravene University regulations.
Some examples of behaviour that would not be considered acceptable include
plagiarism, re-use of previously assessed work, collusion with others and
purchasing your assignment from a third party. For more information on academic offences, bad academic practice, and academic
penalties, please read chapter
four of our academic regulations.
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Academic Support and Your Well-being
Referencing is the process of acknowledging
other people’s work when you have used it in your assignment or research. It
allows the reader to locate your source material as quickly and easily as
possible so that they can read these sources themselves and verify the
validity of your arguments. Referencing provides the link between what you
write and the evidence on which it is based. You identify the sources that you have used
by citing them in the text of your assignment (called citations or in-text
citations) and referencing them at the end of your assignment (called
the reference list or end-text citations). The
reference list only includes the sources cited in your text. The main referencing guide
can be found
here
and includes information on the basics of referencing and achieving good academic practice. It also has tabs for the
specific referencing styles depending on whether you require Harvard style used in business or OSCOLA style used by the Law school. The University has a wealth of support services
available to students; further information can be obtained from Student Gateway,
the Student Advice Centre,
Library and Learning
Services and, most importantly, your Personal Tutor. If
you are struggling with your assessments and/or deadlines please do seek help
as soon as possible so that appropriate support and guidance can be identified
and put in place for you. More information can be found on the Healthy
DMU pages.
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Section A
Question 1 Richard
Plc
Richard
Plc is based in Bangladesh and engages in the production of leisure and sports clothes for retailers in the UK. It
makes up its accounts to 30th September each year.
Income
Statement for the year ended 30 September 2022 is as below:
Richard Plc
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2022 £000 |
Revenue |
98,000 |
Cost of Sales |
(56,600) |
Gross Profit |
41,400 |
Administration Expenses |
(20,100) |
Trading Profit |
21,300 |
Finance Costs |
(6,600) |
Profit on Ordinary Activities Before Taxation |
14,700 |
Taxation on Profit on Ordinary Activities |
(7,938) |
Profit for the Year |
6,762 |
Richard Plc
Balance Sheet as at 30
September 2022
|
2020 |
Non-Current Assets |
£000 |
Intangible Assets |
22,450 |
Property, Plant and Equipment |
87,200 |
Other Investments |
17,800 |
|
127,450 |
Current Assets |
|
Inventories |
18,700 |
Trade and Other Receivables |
27,530 |
Cash and Short-Term Deposits |
13,400 |
|
59,630 |
Total Assets |
187,080 |
Current Liabilities |
|
Bank Overdrafts |
12,600 |
Unsecured Bank Loans |
8,400 |
Trade and Other Payables |
13,200 |
Current Tax Liability |
9,320 |
|
43,520 |
Non-Current Liabilities |
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Medium Term Bank Loans |
22,000 |
Finance Leases |
9,600 |
Provisions |
10,200 |
|
41,800 |
Total Liabilities |
85,320 |
Net Assets |
101,760 |
Equity |
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Called Up Share Capital |
37,200 |
Share Premium |
24,000 |
Other Reserves |
12,400 |
Retained Earnings |
28,160 |
|
101,760 |
a)
The Directors of Richard Plc are
considering to sell £50 million worth of Property, Plant and Equipment to pay
off their Medium-term bank loans; any excess cash left over will then be used
to increase current assets and working capital. No profit or loss arises on the transaction and there
is no effect on market capitalisation. Show
the effects on profitability, liquidity and performance of the company, through
the ratio calculations both before and after the sale of Property
Plant and Equipment.
(i)
Gross
Profit % (2 marks)
(ii)
Gearing ratio
(6
marks)
(iii) Current
ratio
(4
marks)
(iv) After
tax profit as % of fixed assets (4 marks)
(v)
Z
scores, if market capitalization is £60,000,000. (12 marks)
c)
Bangladesh, adopted International Financial
Reporting Standards (IFRS) in 2006. Critically
evaluate the impact of adopting IFRS in the developing countries.
Note: Please use in-text citations and
referencing in this section.
(12 marks)
Total 750 words
Total 50 marks
Section
B
Answer
only 2 of the 3 questions in this section
2.
Investment Appraisal Technique:
Jacobson Limited is considering two mutually
exclusive projects with the following details, with a cost of capital of 12%
|
Cashflow |
|
Year |
Project A (£) |
Project B (£) |
0 |
(550,000) |
(550,000) |
1 |
270,000 |
170,000 |
2 |
170,000 |
210,000 |
3 |
130,000 |
150,000 |
4 |
150,000 |
180,500 |
a. Calculate the Payback
Period and NPV for each project.
(15 Marks)
b. Using the above
techniques briefly discuss why you chose project A or B.
(5 Marks)
c. Jacobson limited is
considering evaluating the projects using MIRR instead of IRR and has asked you
for advice. Discuss some of the limitations of IRR and how MIRR overcomes them.
(5 Marks) (200 words max)
2. Risk and Uncertainty:
Peter&Co is considering investing in three
mutually exclusive investment opportunities. The cashflows from each project is
dependent upon the market conditions that prevail over the life of the project.
If the market conditions are POOR during
the life of the projects, there is a 15% probability that Project A would
return £600,000; Project B would return £150,000; and Project C would make a
loss of £1,600,000
If the market conditions are AVEARGE
during the life of the projects, there is a 60% probability that Project A
would return £850,000; Project B would return £970,000; and Project C would
return £700,000
If the market conditions are GOOD during
the life of the projects, there is a 25% probability that Project A would
return £2,500,000; Project B would return £3,630,000 and Project C would make a
loss of £5,200,000
YOU
ARE REQUIRED TO:
a) Prepare the payoff
table showing clearly cashflow for each project with all possible combination
of market conditions.
(4 marks)
b) Using the payoff table
you prepared, recommend which investments are most suitable to undertake using
the following decision criteria:
·
Maximax
·
Maximin
·
Minimax regret
·
Expected Values
(16 marks)
c) The directors of Peter&Co are considering
evaluating the risk of each project using other method of dealing with risk.
Explain to the directors usefulness of decision trees in dealing with risk.
(5
marks)
3.
Divisionalisation
and Transfer Pricing:
WetWell
is a producer of canned carbonated drinks. It has several divisions which
supply materials to each other. Division C has offered to supply the Division
T with aluminium cans at the transfer price of £0.15 per can. Division C
calculates the transfer price based on full cost. Division C can also
sell the cans to external customers for £0.16 per can. Division C has
estimated that 80% of their full cost is variable, and the other 20% is fixed
Division
T uses the cans to produce the carbonated drinks, which it can then sell to
external customers.
YOU
ARE REQUIRED TO:
a.
Evaluate
the transfer prices at which Division C should charge Division T if the group’s
objective is to maximise profit across the whole group for the following three
scenarios:
i.Division
C has an external market for all the cans it produces at £0.16 per can
(2 Marks)
ii.Division
C has the capacity to produce 25 million cans and has an external market for 13
million cans and the transfer price is set at the full cost.
(5
marks)
iii.Division
T has found an external supplier that will supply as many cans as they require
for £0.13 per can. Division C is still charging Division T £0.15 per
can. Discuss whether Division T should buy externally and show the range
of transfer prices that Division C could sell to Division T
at.
(6 marks)
b.
Discuss
briefly the benefits and drawbacks of negotiated transfer prices.
(6 marks)
c.
The
company is considering adopting a policy that involves evaluating the
performance of each department using Return on Investment. Discuss the measure
and how it contrasts from Residual Value.
(6 marks)