Finance for Strategic Managers I need answers to the two attached questions, mentioning the source

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Finance for Strategic Managers

I need answers to the two attached questions, mentioning the source

Finance for Strategic Managers I need answers to the two attached questions, mentioning the source
Finance for Strategic Managers Task 3 – Information Leaflet Extension activities: To gain a merit grade you must produce an information leaflet for the Chamber of Commerce to distribute to the members. The leaflet should assess the following: The impact of ‘creative accounting’ techniques when making strategic decisions. The limitations of ratio analysis as a tool for strategic decision making. The importance of cash flow management when evaluating proposals for capital expenditure. To gain a distinction grade you must prepare an additional section for the leaflet that: Recommends, with justifications, methods and tools that allow businesses to analyse financial data for strategic decision making purposes. LO1 1M1 LO2 2M2 LO3 3M1 LO2 2D1 Task 4 – Capital Expenditure Appraisal Pietro Yon has been supplied with information from a component manufacturer who has asked for advice on the best project to accept for the purchase / replacement of a piece of machinery. The company are considering selling their old machine that has a capital cost of £260 000 and replacing it with an up to date model costing £220 000. For immediate purchase the company will receive £120 000-part exchange allowance. Both the current and new machines are able to meet the expected company demand, estimated at: Year Units 90 000 50 000 30 000 After three years, it is predicted that demand will be zero due to the technological developments in the industry. The following data has been provided for the existing and new machine: Current Machine £ per unit New Machine £ per unit Direct Materials 1.80 1.80 Direct Labour 0.75 0.60 Variable Overheads 0.45 0.30 Depreciation 0.35 0.55 Additional information The selling price for each component is £5.00 and this will remain constant for the next three years. The company expect the cost of direct materials and direct labour to increase by 5% each year. The company predicts that repair and maintenance costs for the current machine will be £7000 per annum. The current machine is expected to have a zero-residual value at the end of year 3. The company predicts that repair and maintenance costs for the new machine will be £1000 per annum. The new machine is expected to have a £75 000 residual value at the end of year 3. The company’s cost of capital is 15% Extract from the present value table for £1 at 15% Year Units 0.870 0.756 0.658 0.572 Pietro would like you to produce a business report that can be given to the company offering advice on the best course of action for the purchase / replacement machine. REQUIRED Prepare a report that evaluates the capital expenditure proposals using appropriate financial techniques. Extension activities: To gain a distinction grade you must include an assessment of the impact of the business proposal on the strategic direction of the organisation. LO3 AC 3.2 LO3 3D1 Guidelines for assessors The assignments submitted by learners must achieve the learning outcomes and meet the standards specified by the assessment criteria for the unit. To achieve a merit or distinction grade, the learners must demonstrate that they have achieved all the criteria set for these grades. Where work for the pass standard is marginal, assessors can take account of any extension work completed by the learners. The suggested evidence listed below is how learners can demonstrate that they have met the required standards. Task number LOs and AC Suggested evidence PASS Suggested additional evidence MERIT Suggested additional evidence DISTINCTION 1. LO1: AC 1.1, 1.2, 1.3 LO3: AC 3.1 The learner will provide an evaluation of the sources of financial data which can be used to inform business strategy and an assessment of the need for financial data and information in relation to business strategy. The assessment and evaluation should be balanced leading to conclusions. The learner should use appropriate examples to illustrate the points which are made and this will help to demonstrate their understanding. The learner will continue with an analysis of the risks related to financial business decisions. The analysis should be detailed and comprehensive. 2. LO2: AC 2.1, 2.2 2M1 The learner is required to download 2 / 3 consecutive years’ accounts for Samsung PLC using the link provided in the assignment. The learner will carefully interpret the financial statements. The learner must make an assessment and judgements on current viability of the business and prepare a comparative analysis of financial data using ratio analysis. The learner will make appropriate financial recommendations. The recommendations must be directly linked to the detailed analysis and must be relevant to the organisation. 3. LO1: 1M1 LO2: 2M2 2D1 LO3: 3M1 The learner will provide a detailed assessment of the impact of ‘creative accounting’ techniques when making strategic decisions. The learner should use appropriate examples to demonstrate their understanding of the importance of accurate financial data in formulating and delivering business strategy The learner will assess the limitations of ratio analysis as a tool for strategic decision making leading to balanced judgements. There must be full and clear assessment of the importance of cash flow management when evaluating proposals for capital expenditure. Appropriate examples will aid the learner in demonstrating the points which are made. The learner will refer to a range of methods and tools that allow organisations to analyse financial data for strategic decision making purposes. The learner must justify each of the methods and tools described. Appropriate examples of the methods and tools used by public and private sector organisations should illustrate the answer. 4. LO3 AC 3.2 3D1 Using the data provided in the case study, the learner is required to evaluate the business proposals for capital expenditure identifying benefits and issues and reaching conclusions. The learner must use appropriate financial techniques including payback, accounting rate of return, net present value and internal rate of return. Based on the data in the case study the learner is required to evaluate the business proposals for capital expenditure using appropriate financial techniques. The learner could consider non-financial factors, cost benefit analysis and value for money. The learner is required to provide an assessment, with appropriate justifications of the impact of a business proposal on the strategic direction of a business organisation. The learner should use the information in the case study and any other appropriate theory and research. © ATHE LTD 2016 326092016 Version 1.0

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