CASE STUDY - HARVEY HOMES PLC
You have just completed your MSc Management and joined Clarks Consultancy as a
trainee management consultant. You have been assigned to Harvey Homes plc and
have been asked by your manager to produce a 3,500 word business report that will
ultimately go forward to the board of directors.
Prepare a 3,500 word business report for your manager providing analysis and
business advice on the following:
Format: business report with headings, sub-headings and paragraphs 1 mark
Executive summary – key highlights/findings drawn from each task within the report
Note no introduction is required. No marks will be awarded for an introduction.
Part 1: Business Performance Analysis
You will need to calculate and use appropriate ratios in your analysis for the sections
Heading: Statement of Profit or Loss
Analyse and comment on the financial performance of Harvey Homes plc (exhibit 1).
Your analysis should critically evaluate the lines of the Statement of Profit or Loss.
You do not need to include a review of the segmental analysis in this section. 20
Heading: Statement of Financial Position
Analyse and comment on the financial position of Harvey Homes plc (exhibit 1). Your
analysis should critically evaluate the lines of the Statement of Financial Position.
Heading: Statement of Cash Flows
Use the Statement of Cash Flows (exhibit 1) to identify why Harvey Homes plc has
experienced an increase of cash during 2016, despite the completion of the
investment in the Midlands. Calculate and explain Harvey Homes plc’s Operating
Cash Cycle (OCC) for 2016 and 2015. Harvey Homes plc is keen to maximise
returns to their shareholders by paying out dividends: evaluate the 2016 dividend
and explain whether you think Harvey Homes was right to make this dividend
payment in 2016 or not. 10 marks
Use exhibit 2 to compare and contrast the financial performance of the Midlands
segment of Harvey Homes business in 2016 with the rest of the company. Your
answer should identify two reasons why the Midlands’ performance might be inferior
to that of the other segments in the company. 10 marks
Part 2: Investment Appraisal
Critically evaluate the investment appraisal information (exhibit 3) supplied by the
Financial Director, Cindy Shah. Challenge the management forecast in the first part
of your answer. Then in the context of Harvey Homes plc critically evaluate the
investment appraisal techniques considering the benefits and limitations of each
technique used. Use the following sub-headings to structure your answer:
Investment Appraisal Techniques
- Payback period
- Accounting Rate Of Return
- Net Present Value 20 marks
Heading: Sources Of Finance
Harvey Homes plc is considering a further investment, this time in France of £400m
from 2017. Advise the Board of Directors on the benefits and drawbacks of two
alternative sources of finance for this further investment, including an assessment of
their appropriateness in this case. 10 marks
Heading: Non-Financial Factors
Advise the board of directors on other non-financial factors that they should consider
regarding an expansion in France, specific to Harvey Homes plc. 5 marks
Total 100 marks
The word limit is 3,500 words excluding numerical tables, bibliography and appendices.
The executive summary is included in the word count and should be approximately 175
To assist you with this task you have been supplied with the following information:
Exhibit 1: Extracts from Harvey Homes plc’s Financial Statements for 2016, including
the Statement of Profit or Loss, Statement of Financial Position, Statement of Cash flows
and Statement of Changes in Equity.
Exhibit 2: Segmental analysis of Harvey Homes plc’s performance by geographical
Exhibit 3: Investment Appraisal – Midlands acquisition 2015 onwards.