BM414 Financial Decision Making
An individual written assignment of maximum is expected. Use the formal report format and include a Bibliography/ reference list of all books, journals and websites consulted in your research. Assume that the financial analysis is aimed at potential investors who are currently considering investing in Camden Limited. The financial performance evaluation will enable the potential investors decide whether to invest in this company.
This assignment tests the following Learning Outcomes for the module:
1. Explain the structure of and terms used within the financial statements
2. Apply management accounting techniques for planning, control and decision making within the organisation
3. Calculate the main accounting ratios and explain their significance to users of financial statement
4. Demonstrate knowledge of the role of finance and accounting within the organisation with respect to both reporting and decision making aspects
SKANSA PLC is a Construction Company based in UK. SKANSA PLC started back in 1984. The company is planning to expand its operations to other countries in Europe in the next ten (10) years. The financial statements of SKANKA PLC. are attached for your consideration and attention.
You are advised to incorporate the suggested amendments/feedback you received from the module leader during assignment briefing.
You are part of the Accounting and Finance team at SKANSA PLC. Write a report to the Management of SKANSA PLC, critically evaluating the importance of Accounting and Finance functions, duties and roles within SKANSA PLC. Your evaluation must include some examples within the Company where appropriate.
Using the financial statements of SKANSA PLC calculate the ratios required and comment on the company’s performance from an Investor with £1 million perspective.
Marks will be awarded for Structure and Presentation skills. Structure includes the orderly presentation of relevant material. In addition, the extent of research evidenced by the appropriateness and adequacy of in-text referencing. There must be a Cover Page and Contents Page, paragraphs of Introduction, Conclusion and pages must be numbered.
Calculate the following five ratios for each of the two years:
(i) Return on capital employed
(ii) Net profit margin
(iii) Current ratio
(iv) Average Receivable days/ Debtors collection period
(v) Average Payable days/ Creditors collection period
Comment on the performance of SKANSA PLC. results from and position between the two (2) years from (a), mentioning possible causes, reasons and effects for the changes in the ratios.