Finance Assignment Analysis: Corporate Governance, Investment Appraisal, and CVP Technique Essay

Assignment Brief

As part of the formal assessment for the programme you are required to submit an Introduction to Finance assignment. Please refer to your Student Handbook for full details of the programme assessment scheme and general information on preparing and submitting assignments.

Learning Outcomes:

After completing the module, you should be able to:

1. Contrast the appropriateness of the different sources of finance to a business.
2. Explain the implications of finance as a resource within a business.
3. Produce simple financial statements in accordance with accepted principles.
4. Use financial information for decision making purposes.
5. Demonstrate a confident use of the financial terminology and conventions in communicating results.

Your assignment should include: a title page containing your student number, the module name, the submission deadline and a word count; the appendices if relevant; and a reference list in Arden University (AU) Harvard format. You should address all the elements of the assignment task listed below. Please note that tutors will use the assessment criteria set out below in assessing your work. You must not include your name in your submission because Arden University operates anonymous marking, which means that markers should not be aware of the identity of the student. However, please do not forget to include your STU number.

Assignment Task

Question 1

(a) Critically discuss the ‘comply or explain’ model of corporate governance. (10 marks)
(b) Listed companies must send their financial statements to the authorities that oversee the stock exchange on which their shares are listed. Companies incorporated in the UK file their accounts with both Companies House and the London Stock Exchange. Identify and explain the characteristics of the approach that is used to the filing of financial statements by plc’s that are incorporated in the UK. 

Question 2

Required:

(a) Calculate the payback period for both the Edinburgh and Newcastle upon Tyne contracts.(4 marks)
(b) Calculate the accounting rate of return (ARR) for both contracts. Assume that the only difference between cash flow and profit is the depreciation charge.(6 marks)
(c) Critically evaluate the payback technique. (8 marks)
(d) Advise Flyers plc’s senior executive team on the comments made by Chang Ying Simmonds and Travis van Riemsdyk. Your advice should include an explanation of the characteristics of investment appraisal decisions and the advantages and disadvantages of the IRR.

Question 3 

Marginal costing is a technique that distinguishes between variable costs and fixed costs. In this approach to costing, only the variable costs of production are charged to cost units. Marginal costing and the concept of contribution are fundamental to the breakeven analysis or ‘cost-volume-profit’ (CVP) technique.

Required:

(a) Explain the concept of contribution and its importance to the CVP technique.(6 marks)
(b) Describe the nature of each of the ‘dropping a product or service’ and‘special contract’ decisions for which the CVP technique can be useful.
(9 marks)
(c) Critically evaluate the CVP technique and explain the limitations of its use inthe context of both the different interpretations offered by the economist’smodel of CVP and other limitations.

Question 4

Required:

(a) Prepare an opening statement of financial position at the start of July 20X5.(5 marks)
(b) Prepare a monthly cash flow forecast, showing the bank balance at the end of each of the 6 months and indicating what level of overdraft facilities the friends need to negotiate with their bank manager. (18 marks)
(c) Explain what additional expense they should take into account as a result of needing the financial assistance (overdraft) referred to in (b).