Evaluate Bonita Foods SL Investment Project for Wholesome Organic Foods

Overview of Wholesome Organic Foods

Learning Outcomes: Knowledge and Understanding tested in this assignment:

1. evaluate strategies available to an organisation to enable the creation and maintenance of value;
2. assess the financing choices available to organisations and the relevance of capital structure;
3. analyse the financial and operating risks faced by organizations and the strategies for mitigating these risks;
4. research the specific issues relating investing and raising finance on an international basis

Learning Outcomes: Skills and Attributes tested in this assignment:

5. analyse financial statements and interpret the results in the context of value creation;
6. critically evaluate capital investment proposals both domestic and international including estimation of component and overall capital costs;
7. devise strategies for identifying and managing foreign exchange risk and the risks of international investment;
8. devise financial strategies f or enhancing enterprise value.

Wholesome Organic Foods was founded in 1980 when the founding family acquired an organic farm in Kent. Demand for their wholesome organic food mushroomed and the business expanded rapidly in the 1980's but remained a family business. It was restructured as a limited company in 1990 and subsequently experienced rapid growth until 2001.

In that year the then directors decided that the business had reached the limit of development in its present form. Future development required large-scale expansion in order to compete with the cost base of non-organic food producers, which in turn needed an injection of capital that the Founding family were unable to generate themselves The conviction that there was much money to be made from “quality organic foods" had been vindicated but the directors felt that it would be safer to look for other avenues for future development.

They investigated several possibilities deciding eventually to expand production facilities and establish their own packing/distribution system so that their newly 'branded' produce could be sold by independent quality food retailers. Upon raising the necessary capital in the name of Wholesome Organic Foods plc, they embarked upon a to date, successful venture.

As the market grew and to keep abreast of new production technology, the directors agreed to further update the plant and machinery. They financed updating of equipment and premises by means of issuing debentures.

It is now April 2021 and the present directors of Wholesome Organic Foods plc believe that the long-term success of the company lies in future diversification and expansion. The newly appointed finance director, agrees with this opinion but insists that the company must first appraise its own current position and if necessary, make changes to strengthen its existing financial situation before embarking on new plans. He is particularly concerned that the company should preserve adequate liquidity and finance its assets in a beneficial manner. Members of the founding family still retain 30% of Wholesome Organic Foods equity and other long-standing directors own a further 25%; a change of control is unlikely to be welcome. During the last

Evaluate the Bonita Foods SL investment project on behalf of Wholesome Organic Foods plc. Advise the firm on whether it should undertake the project and identify the maximum price Wholesome foods Plc should pay to acquire the Bonita Foods SL. Also, advise the firm on the potential impact of foreign exchange on the project and evaluate the alternatives for financing the purchase.

Submission requirements:

Your answer should be presented in the form of a report of 2,000 words total (excluding the reference list). You must also submit a working Excel spreadsheet containing your calculations.

You should use Arial font size 12 and 1.5 line spacing. Exceeding the word count by 10% or

more or deviations from the formatting instructions will attract a penalty of up to 5%. Not submitting a working Excel spreadsheet will attract a penalty of 10%

The hand-in deadline for submission is 23.30 on 30th April 2021. Submissions up to 24 hours late will attract a 10% penalty for each day up to 5 days late will be capped at 50%. Reports submitted more than one week late will attract a mark of zero.

Referred work submitted late will attract a mark of zero.

Submit one electronic copy via Study net as a Word/PDF file.

This is an individual assignment and the report submitted should be entirely your own work.

This assessment is subject to anonymous marking so do not put your name on any document you submit. However, you must put your SRN on each document you submit. The report will be checked for plagiarism using Turnitin and you should check using the checker on the module site prior to submitting.

The purpose of this assignment is simply to give you the opportunity to demonstrate that you have acquired the knowledge and skills identified in the Module Guide and that you can apply them in a typical business situation.

You should approach the task as a business manager dealing with a ‘real’ business and should:

1. a) Adopt a coherent approach to dealing with the set task with a clearly stated business purpose.
2. b) Identify an appropriate theoretical dimension and consider the implications for practice.
3. c) Adopt appropriate analytical methods and a critical perspective.
4. d) Refer to empirical work where appropriate.