Fin Analysis & Invest Appraisal

ACCT407 Corporate Financial Management

Question:

Learning outcomes assessed:

On successful completion of this module, the student will be able to:

1. Critically evaluate the purpose and use of the annual report and financial statements

2. Demonstrate a critical understanding of the relationship between ethics, culture and finance

3. Understand the Regulatory Environment and offer an analysis how this influences corporate governance, business conduct, leadership and decision-making

4. Critically appraise linkages between the financing, investment and distribution decisions.

Assignment Brief Part 1: (weighting 50%, word count 2,000 words)

Compare and contrast the financial performance of a company of your chosen industry, listed on the Stock Exchange, in China or UK over the last 3 years using appropriate ratios, commenting on trends observed. Include a section explaining the context in which ratio analysis can provide useful information for decision making including inherent limitations in the technique.

Assignment Brief Part 2 (weighting 50%, word count 2,000 words)

Jardin Plc is a house-building company that plans to build 100 houses for the next four years.

Year	1	2	3	4
Number of small houses sold	10	5	20	15
Number of large houses sold	15	10	20	5

The company purchase the development site for $ 5,000,000 before building the small and large houses.

The financial information for the current selling price and variable cost is as follows.

	Small House	Large House
Selling Price	$ 300,000	$ 400,000
Variable cost of Construction	$ 200,000	$ 300,000

The selling price inflation is 5% per annum and the variable cost of construction inflation is 4% per annum. The company has a 12 per cent required return on this project.

Required:
As a report to management,

a)Evaluate the acceptability of the Jardin project using both the Payback and NPV methods. Clearly show your workings and separate conclusions for each method (500 words equivalent).

b)Evaluate the merits and de-merits of each method, referring to your answers above and suggest the context where each method might be appropriate (750 words).

c) Briefly discuss techniques to assess and manage risk and uncertainty in the investment appraisal process and relate the discussion to an industry of your choosing (750 words).

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