LSBM203 Managerial Finance

Learning Outcomes for the item of assessment

This item of assessment covers the following learning outcomes. For the full list of learning outcomes for the module, please refer to the Module Study Guide

(i) Understand and evaluate relevant accounting and finance regulatory frameworks.

(ii) Comprehend and critique the key accounting and finance techniques, principles and functions.

(iii) Interpret and analyse financial statements.

(iv) Through a process of analysis and evaluation, identify and recommend sources of finance to an organisation.

(v) Develop financial numeracy. (C6 & C7)

(vi) Develop problem solving skills. (C5)

Your work will be marked in grades rather than percentages. This is considered to deliver the most accurate and fair outcomes for students. Each assignment that you undertake will be assessed using the common grading system. Information about the grading system can be found in your Student Handbook.

The Grade Criteria can be found in Appendix C of your Student Handbook.

5. Assessment 2 Details

5.1 Task

The assignment consists of two tasks – Portfolio 1 consists of 70 marks and Portfolio 2 consists of 30 marks. Students are expected to read both Portfolios thoroughly and to answer all the required questions in a structured and organised manner with reference to published work.

Portfolio 1

You have been working as a finance manager in a company. The chief financial officer of the company has decided to invest in shares in either of these two companies and he has asked for your help in deciding.

(i) B&M European Retail Value S.A. was formed in 1978 and is now one of the leading variety retailers in the United Kingdom, employing over 28,000 staff. The business was founded by Malcolm Billington as Billington & Mayman and the first store opened in Lancashire. From its first store in Blackpool, Lancashire, B&M has grown to over 600 stores and employs over 26,000 colleagues. B&M believes in selling top branded products at great prices. The retailer has experienced encouraging revenue growth  and a store increase of more than 2400% (25x) over an eight-year period up to 2016. Over three million customers each week shop at their high street and home store outlets.

Prepare a report for potential investors which analyses the financial information for both companies and recommends which company would be a more viable option to invest in. The report must include:

a) Calculation of 10 financial ratios as given below for two years (2017 - 2018):

• Current ratios

• Quick ratios

• Net Profit Margin

• Gross Profit margin

• Gearing ratios

• P/E ratio

• Earnings per share

• Return on capital employed

• Average inventories turnover period

• Dividend payout ratio

b) Analyse the performance, financial position and investment potential of both companies. You should use charts to compare the performance of the two companies. You will need to look at the audited financial statements and carry out further research to explain the performance of each company for two years.

c) Provide recommendations of how the financial performance of the poorly performing business can be improved.

d) Discuss the limitations of relying on financial ratios to interpret a company’s performance.

Required:

a) Using appropriate investment appraisal techniques, advise senior management on whether they should opt for the Gold project or Silver project.

b) Discuss the limitations of using investment appraisal techniques to help in long term decision making.

1. Have you checked Canvas messages/announcements for any additional/final details of the assessment?

2. Are you submitting in the correct submission area e.g. if it is a resubmission of your second assignment it should be ‘AS2R’?

3. Make sure you are submitting the correct final version of your work.

4. Have you kept to the word limit? Remember, anything greater than 10% above the word count will not be marked.

5. Have you addressed the assessment requirements as outlined in the Assessment Brief?

6. Have you spell checked and proofread your work?

7. Is your work formatted correctly and consistently?

8. Are you submitting a document in the correct format?

9. Is your work written in an appropriate academic style?

10. Have you checked your citations and Reference List/Bibliography?

11. Have you submitted your work to get a similarity report to check you have paraphrased where required?

12. Have you read the Declaration of Authorship in Appendix 2 of the Assessment Brief?