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Learning outcomes assessed:

  •  Explain the principles of business and financial economics in an international  context.
  •  Identify and explain the impact of governmental, monetary and economic  policy on decision making in a business context.
  •  Describe and apply macro and micro concepts and models to business  decision making.
  •  Interpret financial information (external and internal) and apply to decision  making within a business context.
  •  Discuss the rationale and impact of decisions for business strategies to users  and stakeholders.
  •  Examine and discuss the relationship between theory, application in business  and financial economics in an international context.

This coursework is worth 100% of the total marks for this module.

Module Code Module Title Summer 2017 Coursework Brief

Coursework Instructions Please read carefully

  • Carefully read the module handbook, the marking criteria, and the grade descriptors.

Academic Misconduct

You are responsible for ensuring you understand the policy and regulations about academic misconduct. You must:

  • Complete this work alone except where required or allowed by this  assignment briefing paper and ensure it has not been written or composed  by or with the assistance of any other person.
  • Make sure all sentences or passages quoted from other people’s work in  this assignment (with or without trivial changes) are in quotation marks and are specifically acknowledged by reference to the author, work, and page.

Question -1 (a)

In this business report, business economic concept has been studied and has been analyzed that how these concepts could be utilized to make the significant changes into the organization by executing many new policies and strategies. In this report, Apple plc has been studied. Apple plc has executed many plans and strategies which are linked with the economy of the state and delivering condition. Apple Plc offers the best admirable and qualitative products to its customers in marketplace to trade with an outlook to amplify its sales turnover. Further, this business report depicts about the plans, strategies and political plans etc which have been unavailable into forethought for domineering the political flow and accounting flow in a particular economic position.

A company is always connected with numerous complicated activities to perform the business function of a company to meet its goals. It has been found that every activity of the firm is done to meet the objective and earn the profit (Brigham, and Ehrhardt, 2013).  

Apple Plc is an international company which is mainly based in America and situated at California. It sells many electrical items to its customers through its stores and online. The main completive advantages of this company are its best quality product and the techniques used by the company in its products. Through analyzing the industry, it has been found that a huge investment is required for a company to enter into this industry as high technique and high professionals are required (Fernandes, Lynch and Netemeyer, 2014). So it is easy for Apple to manage the competitive advantage. Apple upgrades its product timely and has launched many high tech products in the market. Further, it only focuses over the premium clients and it impacts over the economic scale of the company. Such as the product of the company like I phone and Mac Book has performed clueless awesome in the market and company has managed a great image in the industry.

This case depicts the user regarding the demand and supply concept. Fuel products and diesel products have taken into consideration to understand the concept in a better manner. Law of demand & supply has been analyzed and found that the demand of meticulous products may be superior with the growth of an optional product’s price. The product’s price of fuel has been reduced by 2.4P at the same time, in last year the price was 118.7/p and at the same time, diesel price has been also noted as 3.1 p at the same time, in last year the price was 120.5/p. Thus, it could be found that when the unleaded prices of a product or a service is based on abundant gulp factors and as a result, the diesel price has been hold up on the economic, financial and political policies which had been managed by the managers (Odell, 2014). Like, monetary policy depict that if government needs to make a control over the flow of currency in worldwide market then it might enhance the trades of the products in the industry and enhance the base of customers (Airaudo, Nisticò, and Zanna, 2015). Further, it has been analyzed that the fuel and diesel prices are directly based upon many alternative services and products which have been dealt in worldwide market like petrol, and diesel. The diesel price has also been mottled on international level to state level with the supply of diesel.

Question-1 (b)

A country’s development of economy and its society’s welfare largely depends on the policies of the country and the evaluating techniques used by the country with the help of central bank. It has been analyzed through a study that fiscal and monetary policy of a country make a large impact over the GDP, GDI, economic growth, FDI, international expansion etc. such as if the state make a policy to enhance the employment in the state than surely it would open up many opportunities for the foreign investors to come into the market and invest their amount (Lütkepohl, and Netšunajev, 2014). Further, government will also offer many opportunities, loans and subsidiaries to the business man to enhance the employment and welfare of the community.

Through the above study, it could be said that strategic plans, political situation, government interrelation etc impacted directly or indirectly over the performance of the company and helps the company to grow its market. Still, the policies made by the companies must be made according to the many factors (Ruddik, 2015).

The report depict the user about the various investment appraisal techniques and their execution, capital budgeting techniques and their significances, financial techniques which are managed and financial conception which helps the manager to make decisions. Through analyzing a study over this case, it has been found that if govern and financial forecaster act upon a concert in very effective manner then it might help the firm to enhance its business operations and with the help of this the profit of firm might also increase (Reifschneider, Wascher, and Wilcox, 2013).

This is also known as the main important aspects for an association as it aids the firm to meet its objectives. It has been examined that improvement of finance of a firm and economic assets of a state in the preliminary stage of an association coddles together basically to assist the company to accomplish its objectives. If a manger of finance department of an organization does not create decision about company’s financial factors like planning for raise the funds, investment appraisal techniques, capital budgeting etc with a inspection to shrivel its difficulty then it might eventually increase the general cost of firm’s production. Even if, one of the main tool which is capital budgeting might be used by administers to opt the best choice out of entire reachable choices in front of the firm (Borio, 2014). Additionally, administrators are not very powerful with the art and techniques of capital budgeting, financial planning, investment appraisal techniques and raising the funds. It may not only spin the firm into incompetent firm in its functions but also develop the production cost of firm. More, it has been analyzed that accounting and financial concept does not only present the midpoint factors of association which is performing with many conditions but also aids the executors to consider its affectivity of executing the statement and tools of finance for betterment of firm.  Like, if administers have good information about the tools of financial planning and capital budgeting, with the help of such tools so that manager could normally differentiate that which option may make extra rewards to relations? Another example may be affianced for the utilization of financial tools and conceptual framework of finance. If managers might understand the outcome of twice enters concentration in business after that they may surely handle the authority of the accountant of the firm to manage their financial statements according to the given system. This might aid the executors to discriminate the distinction in the financial statement (Bandy, 2013).

Answer to question- 1(c)

Thus it can be said that financial tools, techniques, conceptual framework and planning aids administer to identify all the factors that might make some changes into the finance development and availability in the business functions of an association. More, it has been analyzed that if managers can obtain their own opinion then which option of project would create cash inflow and revenue for the firm after that it may also definitely develop the capability and value to carry the company’s activities and functions.  

It is required for a company to evaluate every financial factor to make a better decision about the financial performance and growth of the company. In this report, Tesco plc has been considered to analyze the financial performance. It is required for every company to manage its financial and non financial factor both to enhance the market and performance of the company.  Ratio analysis and capital budgeting are some of the techniques which helps the company to analyze the performance of the organization.

Tesco plc is one of the biggest retailing companies in Australian market. It is an international company which have its operations in many other countries. It deals in grocery conglomerate and commodities. It is situated at England in United Kingdom. (Ahrendsen, & Katchova, 2012). 

Tesco Plc

A financial position of Tesco has been analyzed in this report. 5 years data of company has taken into consideration to evaluate the financial position of the company. A negative slope has been found from last 4 years in the operayions of the company (Grinblatt, and Titman, 2016). Still, company has performed well (Wood, Wrigley, and Coe, 2016.).

Tesco Plc’s liquidity ratio

This ratio explains the capability of Tesco to return the long and short term debt of the company with the help of current assets.

Liquidity ratio analysis

Particular

2013

2014

2015

2016

Current

0.66647062

0.647579927

0.603634528

0.752155828

Quick

0.466288831

0.470602791

0.454366482

0.628893172

Through analyzing the liquidity position of Tesco, it has been examined that company is not liquid like before. The 0.66 current ratio has been held by the company in 2013 which has been enhanced to 0.75 in 2015. At the other end, the other firm which is Morrison plc is enjoying the constant current ratio from 2013 to 2016. The current ratio of the company was 0.56 which has been deducted to .48 in 2016 because of its current liabilities (Kiran, & Singh, 2014).

Through analyzing the profitability position of Tesco, it has been examined that company is not profitable like before. The 3.75% operating profit has been held by the company in 2013 which has been decreased to 1.95% in 2015. Further, the .0030 net profit has been held by the company in 2013 which has been decreased to 0.0020 in 2015. The ROCE of the company has become 0. At the other end, the other firm which is Morrison plc is enjoying the good profitability state from 2013 to 2016. The net profit ratio of the company was 5.24% which has been deducted to 1.95% in 2016 because of many external factors (Gambacorta, and Signoretti, 2014).

Profitability Ratios

2013

2014

2015

2016

Operating Profit Margin

0.037567423

0.041395912

-0.0929934

0.0192163

Net Profit Margin

0.000378513

0.015261891

-0.0921746

0.0025352

Return on Capital Employed

0.1

0.1

-0.2

0.0

Return on Equity

0.00144049

0.065887787

-0.8119078

0.0159981

Return on Total assets

0.000484868

0.02034524

-0.12984575

0.003143222

Profitability details of Tesco

Financial Development

Solvency

Solvency ratio of the company depicts about the debt equity ratio, capital structure ratio and interest coverage ratio. The below table depict the solvency figures of the company (Morrisons PLC, 2016).

Debt equity ratio

Capital structure ratio

2012

2013

2015

2016

Debt- equity

2.50205179

2.739665856

5.25286381

4.089728727

Interest coverage ratio

4.607350097

4.664893617

-11.60721443

2.100401606

Debt equity ratio

Through analyzing the liquidity position of Tesco, it has been examined that company is not solvent like before. The 4.08 interest coverage ratio has been held by the company in 2013 which has been enhanced to 2.10 in 2015. At the other end, the other firm which is Morrison plc has preserved the interest coverage ratio of 1.48 in 2016. Debt equity ratio of the company also depicts a bas solvency position of the company (Lee and Epstein, 2012).

Through analyzing the liquidity position of Tesco, it has been examined that company is not capitalized like before. The 26.78 debtors turnover ratio has been held by the company in 2013 which has been enhanced to 10.06 in 2016 (Kurov and Stan, 2016).

Efficiency ratio analysis

Particular

2013

2014

2015

2016

Receivable turnover

26

26

9.17

10.06

Creditor turnover

6.02

5.4

12.4

11.9

Inventory turnover

17.02

16.02

20.52

19..81

Assets turnover

1.31

1.3

1.31

1.22

Working capital analysis over Morrison Plc

Efficiency ratio of Tesco

Garry will be able to get $ 2154.83, if he will make this investment.

Annual interest rate

8%

Years

3

Yearly investment

(700)

future value after 3rd payment

$ 2,154.83

Year

Project A

Project B

0

-£ 50,000

-£       50,000

1

 £ 17,000

 £               -   

2

 £ 17,000

 £               -   

3

 £ 17,000

 £               -   

4

 £ 17,000

 £               -   

5

 £ 17,000

 £       99,500

Calculation of NPV (Project A)

Year

Project A

Pv Factor

Present value

0

-£ 50,000

1

-£ 50,000.00

1

 £ 17,000

0.907029478

 £ 15,419.50

2

 £ 17,000

0.822702475

 £ 13,985.94

3

 £ 17,000

0.746215397

 £ 12,685.66

4

 £ 17,000

0.676839362

 £ 11,506.27

5

 £ 17,000

0.613913254

 £ 10,436.53

NPV= (cash outflow- cash inflow)

 £ 14,033.90

Calculation of Net present value (Project B)

Year

Project B

Pv Factor

Present value

0

-£ 50,000

1

-£ 50,000.00

1

 £         -   

0.907029478

 £              -   

2

 £         -   

0.822702475

 £              -   

3

 £         -   

0.746215397

 £              -   

4

 £         -   

0.676839362

 £              -   

5

 £ 99,500

0.613913254

 £ 61,084.37

NPV= (cash outflow- cash inflow)

 £ 11,084.37

After evaluating this, it is suggested to the company to invest into Project A as the offered NPV of this project is quite higher than Project B.

Conclusion 

After doing this study, it has been investigated that the Tesco’s performance in the monetary terms is not effectual and it is managing its functions very slowly and hence the company’s performance in terms of monetary and non monetary terms are also not impressive. Nonetheless, due to many marketing factors, company had to face such issues.  

References

Ahrendsen, B.L. & Katchova, A.L. 2012, "Financial ratio analysis using ARMS data", Agricultural Finance Review, vol. 72, no. 2, pp. 262-272.

Airaudo, M., Nisticò, S. and Zanna, L.F., 2015. Learning, monetary policy, and asset prices. Journal of Money, Credit and Banking, 47(7), pp.1273-1307.

Bandy, G. 2013. Financial management and accounting in the public sector. Oxon: Routledge.

Borio, C., 2014. The financial cycle and macroeconomics: What have we learnt?. Journal of Banking & Finance, 45, pp.182-198.

Brigham, E.F. and Ehrhardt, M.C., 2013. Financial management: Theory & practice. Cengage Learning.

Fernandes, D., Lynch Jr, J.G. and Netemeyer, R.G., 2014. Financial literacy, financial education, and downstream financial behaviors. Management Science, 60(8), pp.1861-1883.

Galí, J., 2015. Monetary policy, inflation, and the business cycle: an introduction to the new Keynesian framework and its applications. Princeton University Press.

Gambacorta, L. and Signoretti, F.M., 2014. Should monetary policy lean against the wind?: An analysis based on a DSGE model with banking. Journal of Economic Dynamics and Control, 43, pp.146-174.

Grinblatt, M. and Titman, S., 2016. Financial markets & corporate strategy.

Jaumotte, F., Lall, S. and Papageorgiou, C., 2013. Rising income inequality: technology, or trade and financial globalization?. IMF Economic Review, 61(2), pp.271-309.

Kiran, R. S., & Singh, V. K. 2014. How to make the financial analysis an easy task – A comparative analysis between the traditional and the modern approach? International Journal of Engineering Research and Applications, 4(8), 61-66.

Kurov, A. and Stan, R., 2016. Monetary Policy Uncertainty and the Market Reaction to Macroeconomic News: Evidence from the Taper Tantrum.

Lee, J.Y. and Epstein, M.J. 2012.Advances in management accounting. Bingley: Emerald Group Publishing.Edwards, J.R. 2013. A history of financial accounting. New York: Routledge.

Lütkepohl, H. and Netšunajev, A., 2014. Disentangling demand and supply shocks in the crude oil market: How to check sign restrictions in structural VARs. Journal of Applied Econometrics, 29(3), pp.479-496.

Morrisons PLC. 2016. Company History. [Online]. Available at: https://www.morrisons-corporate.com/about-us/company-history/ [Accessed on: 21st March 2017].

Odell, J.S., 2014. US international monetary policy: Markets, power, and ideas as sources of change. Princeton University Press.

Reifschneider, D., Wascher, W. and Wilcox, D.W., 2013. Aggregate supply in the United States: recent developments and implications for the conduct of monetary policy.

Ruddik, G, 2015, Morrisons grows market share for first time since 2011, The telegraph Retrieved from,https://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/11708744/Morrisons-grows-market-share-for-first-time-since-2011.html

Wood, S., Wrigley, N. and Coe, N.M., 2016. Capital discipline and financial market relations in retail globalization: insights from the case of Tesco plc. Journal of Economic Geography, 17(1), pp.31-57.

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