Premium Essay

Financial Management Report

In: Business and Management

Submitted By xuanqi1990
Words 583
Pages 3
Financial Management

APC308

Individual assignment

Weighting – 100% of the marks for this module

This is an individual assignment of about 3,000 words.

Requirements:

You are the senior financial manager in a large listed company, Carr plc. The directors of the company have identified a potential project, which they hope will be successful in increasing the wealth of the shareholders. The project will involve the purchase of new machinery costing £120 million with a life of 6 years, estimated scrap value of £15 million and net cash inflows over the life of the machinery of £35 million for the first three year and £30 million for the last three years. The companies cost of capital is currently 12%.

Little surplus exists within the company to invest in all the potential ventures and, due to limited funds and the board understands that to carry out any of the proposed projects will require them to raise all of the money through increased debt and this will increase the gearing of Carr plc to quite a high level.

As such you are required to produce a report critically addressing the above issues. In doing so the report should cover the following key elements:

1. Calculate the NPV, IRR and payback of the proposed project assuming the money can be raised at the current cost of capital and discuss the usefulness of these models of investment appraisal. (50%)

2. Critically evaluate the nature of gearing and the potential effects of high gearing on perceived risk and cost of capital. (50%)

The University policy on cheating collusion and plagiarism will be applied to this piece of work.
Guidance:

Students are encouraged to be inquisitive and innovative in their approach as to what should be included in this report the following may be of some use in providing guidance as to what could possibly be included, although...

Similar Documents

Premium Essay

Example of Financial Management Report

...Pharmaniaga Annual Financial Report consists of both for The Group and The Company. The Group is the sub-department for the company that is Pharmaniaga Berhad. This report consists of three...

Words: 1996 - Pages: 8

Premium Essay

Financial Management: Pepsico and Coca-Cola 2009 Annual Reports

...Financial Management: PepsiCo and Coca-Cola 2009 Annual Reports BUS 500 Instructor: Gary Shelton December 7, 2010 Abstract In this paper I will use the information obtained from the PepsiCo and Coca-Cola 2009 annual reports to determine financial information about these companies. I will answer questions about the companies assets and liabilities, profits, and if they can satisfy stockholders. What conclusions can you make about each company’s ability to pay current liabilities? A company’s liabilities are their legal debts and obligations. Liabilities can come up during the company’s business operations and are settled over time. They are settled through by transferring money, goods or services. A list of a company’s liabilities can be found on the balance sheet for the company. Included in the liabilities are loans, accounts payable, mortgages, deferred revenues, and accrued expenses. A company’s ability to pay its liabilities can be determined by analyzing the amount of assets as opposed to the amount of liabilities. To do this you will need to find the current ratio for the company. The current ratio is used to determine if a company’s short-term or current assets are available to pay off its short-term or current liabilities. The liabilities of PepsiCo can be found on the company’s Consolidated Balance Sheet. PepsiCo’s total current liabilities equal 8.765 million dollars. Its total liabilities equal 22.406 million dollars....

Words: 1802 - Pages: 8

Premium Essay

Audit

...Events Occurring between the Date of the Financial Statements and the Date of the Auditor’s Report ................................................. Facts Which Become Known to the Auditor after the Date of the Auditor’s Report but before the Date the Financial Statements are Issued...

Words: 4089 - Pages: 17

Premium Essay

Reporting Practices and Ethics Paper

...Reporting Practices and Ethics Christine Crumity HCS 405 Module R4 October 10, 2011 Barbara Archer Reporting Practices and Ethics Reporting practices and ethics are the seams of health care accounting and management. It is important that the principles and practices are adhered to in order for the organization to continue operating. Health care is an organization which thrives on care and safety along with stability. It is management’s responsibility to ensure that not only care criteria are met, but financial obligations also. It is important to remember that the health organization not only serves the client, but family also when care, finance, and ethics are at hand. The function of management is to report fairly and accurately on all financial statements and obligations. Management is the key competency when it comes to ensuring that the strength of the organization is strong and all reporting practices are legal. Management will be the obligator to report to not only other management members, but the CEO or Chief Financial officer also. Management has the ability to keep staff stable, knowing that jobs are secure to financial statements or operational costs are not an issue in the health care organization they are currently employed in. If management respect their practices and obligations to report all finances fairly and accurately the organization can continue operating successfully....

Words: 829 - Pages: 4

Premium Essay

Compilation of Financial Statements

...In some cases, the accountant may establish such understanding with those charged with governance. .03 An understanding with management and, if applicable, those charged with governance, regarding a compilation of financial statements should include the following matters: • The objective of a compilation is to assist management in presenting financial information in the form of financial statements. • The accountant utilizes information that is the representation of management (owners) without undertaking to obtain or...

Words: 10549 - Pages: 43

Free Essay

The Ethics of Earnings Management

...The Ethics of Earnings Management:  The Case of Income Smoothing  James Gaa  University of Alberta  May 2007  Information Asymmetry  In Most Situations, People Do Not Have the Same  Information  Management Inevitably Has Information that Would be  Useful to Investors – and other Stakeholders  In Financial Reporting:  Information Asymmetry Follows Immediately from the  Separation of Ownership and Management May 2007  The Ethics of Earnings  Management  2  1  Corporate Transparency (OECD)  “The Corporate Governance Framework Should Ensure  that  Timely and Accurate Disclosure is made  on All Material Matters regarding the Corporation,  Including the Financial Situation, Performance, Ownership,  and Governance of the Company.”  OECD, ”Corporate Governance Principles: 2004”  May 2007  The Ethics of Earnings  Management  3  Corporate Secrecy (OECD)  “Disclosure Requirements are Not Expected to Place  Unreasonable Administrative or Cost Burdens on  Enterprises. ...

Words: 4111 - Pages: 17

Premium Essay

A-123

...C . 2 0 5 0 3 THE CONTROLLER December 21, 2004 MEMORANDUM TO THE CHIEF FINANCIAL OFFICERS, CHIEF OPERATION OFFICERS, CHIEF INFORMATION OFFICERS, AND PROGRAM MANAGERS FROM: Linda M. Springer Controller SUBJECT: Revisions to OMB Circular A-123, Management’s Responsibility for Internal Control OMB Circular No. A-123 defines management's responsibility for internal control in Federal agencies. A re-examination of the existing internal control requirements for Federal agencies was initiated in light of the new internal control requirements for publicly-traded companies contained in the Sarbanes-Oxley Act of 2002. Circular A-123 and the statute it implements, the Federal Managers’ Financial Integrity Act of 1982, are at the center of the existing Federal requirements to improve internal control. This circular reflects policy recommendations developed by a joint committee of representatives from the Chief Financial Officer Council (CFOC) and the President’s Council on Integrity and Efficiency (PCIE). The policy changes in this circular are intended to strengthen the requirements for conducting management’s assessment of internal control over financial reporting. The circular also emphasizes the need for agencies to integrate and coordinate internal control assessments with other internal control-related activities. The revised circular is effective for FY 2006. Agencies should take steps in FY 2005 to prepare for its implementation....

Words: 12138 - Pages: 49

Premium Essay

Game

...To execute their duties efficiently, directors may need to call for the management accounting reports from the senior management level up to the board level and regularly use these reports to facilitate decision making. Key words: Management accounting, corporate governance. INTRODUCTION Management accounting, which was traditionally intended for internal use in companies has through its ability to measure value and present both current and forwardlooking information, developed into a key instrument to companies...

Words: 7902 - Pages: 32

Premium Essay

Ae Report

...AMERICAN EXPRESS COMPANY AUDIT AND RISK COMMITTEE CHARTER (as amended and restated as of January 23, 2011) Purpose The Committee is responsible for assisting the Board of Directors in its oversight responsibilities relating to (i) the integrity of the Company’s financial statements and financial reporting process; (ii) internal and external auditing, including the qualifications and independence of the independent registered public accounting firm and the performance of the Company’s internal audit services function; (iii) the integrity of the Company’s systems of internal accounting and financial controls; (iv) legal and regulatory compliance; (v) the assessment and management of the Company’s risk and capital; and (vi) the performance of the other Committee functions set forth in this charter. In discharging its responsibilities, the Committee is not itself responsible for planning or conducting audits or for any determination that the Company’s financial statements and disclosures are complete and accurate or are in accordance with generally accepted accounting principles and applicable rules and regulations. This is the responsibility of the Company’s management and the independent registered public accounting firm. In addition, the Company’s management is responsible for managing its risk function and for reporting on its processes and assessments with respect to the Company’s management of risk....

Words: 2324 - Pages: 10

Premium Essay

Isa 700

...INTERNATIONAL STANDARD ON AUDITING 700 FORMING AN OPINION AND REPORTING ON FINANCIAL STATEMENTS (Effective for audits of financial statements for periods beginning on or after December 15, 2009) Introduction Scope of this ISA 1. This International Standard on Auditing (ISA) deals with the auditor’s responsibility to form an opinion on the financial statements. It also deals with the form and content of the auditor’s report issued as a result of an audit of financial statements. 2. ISA 7051 and ISA 7062 deal with how the form and content of the auditor’s report are affected when the auditor expresses a modified opinion or includes an Emphasis of Matter paragraph or an Other Matter paragraph in the auditor’s report. 3. This ISA is written in the context of a complete set of general purpose financial statements. ISA 8003 deals with special considerations when financial statements are prepared in accordance with a special purpose framework. ISA 8054 deals with special considerations relevant to an audit of a single financial statement or of a specific element, account or item of a financial statement. 4. This ISA promotes consistency in the auditor’s report. Consistency in the auditor’s report, when the audit has been conducted in accordance with ISAs, promotes credibility in the global marketplace by making more readily identifiable those audits that have been conducted in accordance with globally recognized standards....

Words: 10038 - Pages: 41

Premium Essay

Hello Tomato

...Examples: * Salaries Expense | (Amount earned by employees for work already done) | * Advertising Expense | (Cost incurred for advertising, promotions, and other marketing activites) | Annual Report: An annual report, a document issued by management to the shareholders of a company, presents financial information and results of operations for the past fiscal year. The annual report includes financial...

Words: 1296 - Pages: 6

Premium Essay

Effect of Technological Change on Employee Performance in Organizations

...a) Private accounting These are accountants employed by a business firm or a NGO- frequently called management accountants. b) Public accounting This provides services on a fee basis. An accountant may practice as an individual or as a member of a public accounting firm. Public accountants who meet the required education, experience and pass required examinations may become CPA’s. 2. Specialized accounting fields/ branches There are several specialized fields in accounting. The two most common are financial accounting and managerial accounting ( this is based on user’s point of view). Other fields include:- Cost accounting, Environmental accounting, Tax accounting, Social accounting, etc. 3. Management Accounting – Management accounting is concerned with the provision of appropriate financial information to people within the organization (management and employees) to help them make better decisions. – It involves professional knowledge and skills in the preparation, presentation and interpretation of information required by management at all levels of the organizational structure. ← In other words, Management Accounting is concerned with data gathering (from both internal and external sources), analyzing, processing, interpreting and communicating the resulting information for use within the organization so that management can more effectively plan, make decisions and control operations....

Words: 772 - Pages: 4

Premium Essay

Reporting Practices and Ethics Paper Hcs 405 Week 2

...Reporting Practices and Ethics Kara Moore HCS/405 August 1, 2011 Barbara Archer Reporting Practices and Ethics Financial reporting practices and ethics have manifested an ocean of literature. This has mainly come from organization theorists that address accounting practices. These theorists and professionals have given fresh accountability measures. Their ideals give this industry the tools needed to survive, grow and prosper. The way an organization prepares and reports its financial information and handles its daily operations is in essence financial practices, and in the way it accomplishes this reveals their ethical standards to which they adhere to. This paper will discuss the financial practices, ethical standards, and financial management in health care. Financial management in simple terms is a management of finances for an organization. The goal of financial management is to achieve financial objectives, and can be broken down into four phases. The four elements of financial management are: planning, controlling, organizing and directing, and decision making (Baker & Baker, 2009). In the planning phase financials managers need to pinpoint the organizations objectives and the necessary steps to achieve those (Baker & Baker, 2009). In the controlling phase it is all about ensuring that each department is following the guidelines set forth in the planning stage....

Words: 1112 - Pages: 5

Premium Essay

Charter of the Finance and Audit Committee of the Oracle Corporation Board of Directors

...Provide an open avenue of communication among the independent accountants, financial and senior management, counsel, the internal audit department, and the Board of Directors. Review and, in its discretion, approve merger and acquisition and investment transactions proposed by the Corporation’s management. Section IV of this Charter sets...

Words: 2675 - Pages: 11

Premium Essay

Auditing Ch2

...Chapter 2 Financial Statement Audits and Auditors' Responsibilities |Learning Check | 2.1 The ultimate objective of accounting is the communication of relevant and reliable financial data that will be useful for decision making. Accounting methods involve identifying the events and transactions that affect the entity. Once identified, these items are measured, recorded, classified, and summarized in the accounting records and reported in accordance with generally accepted accounting principles (GAAP). The accounting process is carried out by an entity's employees, and ultimate responsibility for the financial statements lies with the entity's management. The primary objective of an audit is to add credibility to management's financial statements. The typical audit performed in accordance with generally accepted auditing standards (GAAS) involves obtaining and evaluating evidence concerning management's financial statements. Auditing culminates in the issuance of an audit report that contains the auditor's opinion on whether the financial statements do in fact present fairly the entity's financial position, results of operations, and cash flows in conformity with GAAP. The auditor is responsible for forming and expressing an opinion on the entity’s financial statements. 2.2 Verifiability is primarily concerned with the availability of evidence....

Words: 3005 - Pages: 13