ASSIGNMENT - CASE STUDY BASED RESEARCH
Learning Outcome's
- Discuss and apply the principles and practices of financial analysis for the strategic management of an organisation.
- Research and communicate financial analysis and make recommendations for various business situations to internal and external stakeholders for the efficient and effective performance of the organisation.
- Analyse organisational requirements and prepare financial forecasts and budgets for planning and control within an organisation.
- Apply cost accounting technique and method for the effective and efficient performance of an organisation.
- Interpret financial reports to evaluate organisational performance and decision-making for the efficient and effective performance of an organisation.
- Interpret and present financial data according to the legal and professional financial reporting and tax requirements in New Zealand.
Subject Aim:
To provide learners with the necessary knowledge, skills and tools for the application of financial information to support management planning and decision making within an organization. Learners will also gain an understanding of the compliance and regulatory requirements in accounting and finance for a business in New Zealand.
Assignment Aims:
- Learners will be able to apply necessary knowledge, skills and tools for the application of financial information to support management planning and decision making within the organization.
- Learners will be able to demonstrate their ability by applying their knowledge to a realistic case of New Zealand organization.
- Learners will be able to apply cost concepts and cost accounting techniques in the decision-making process.
- Learners will be able to apply financial forecasting techniques to provide information for decision making.
- Learners will be able to prepare and analyse financial forecasts and budgets for planning and control within the organisation.
Assignment Type: Research Based Case study
RESEARCH BASED CASE STUDY - Read the following case carefully and carry out additional research to address the tasks in the requirements section.
Case Study: Lincoln Vet Clinic (LVC)
INSTRUCTIONS/REQUIREMENTS:
Task 1: Write a report on the business which provides:
- An overview of the business
- An analysis of the financial statements for the past two years
- And a recommendation as to whether the veterinary clinic would be a worthwhile investment
Your report must include:
An executive summary (300 words maximum).
An introduction to the report including terms of reference, background information about the business and procedures used within the report.
A discussion of:
- The importance of Financial statements and their analysis for strategic management of an organisation
- Limitations of Financial Analysis (in general)
- Limitations of Financial Analysis (specific to the analysis)
Calculations of ratios for the year ended December 2016 and 2017, to be used for measuring and analysing the financial performance and position of the company under the following headings (At least two for each):
- Profitability ratios (see note 2)
- Financial Stability
- Working Capital Management
- Asset Utilisation
- Financial Market Ratios
Calculate the industry averages for Net profit and Return on Assets ratio to be used in the analysis below.
Discussion and Application of the principles and practices of financial analysis:
Your research must present the analysis of the financial ratios given above as follows:
- What each ratio measures
- Any increase/decrease for each ratio
- The possible reasons of the changes from Year 2016 to 2017
- Whether the increase/decrease in each ratio is favourable or unfavourable
- How the business has performed compared to industry averages
- Which stakeholders will be interested in a particular ratio
- Any non-financial aspects that might impact on business operations.
Assess solvency (both arms of the solvency test) for 2017 and explain the director's responsibilities under the Company Act 1993 for authorizing any dividends.
A conclusion which must be based on a consolidation of the information from all parts of your analysis and should state whether the business is a viable option for purchase.
Recommendations, which focus on the areas the business needs to further improve if Jack invests in the Lincoln Vet clinic.
References: This section gives the full details of any source of information quoted or referred to in the report. All references should be cited in the correct APA style. (6th Edition)
Appendices (if used) contain information relevant to your discussion, but which is too detailed to include in the body of the report. Each appendix must be numbered and referred to in the body of the report.
Task 2: Continuing from the case study in Part one, the following additional information is provided to you:
1. Based on past performance and future market growth, the sales forecasts and cost of sales for the year 2018 for each quarter is as follows:
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|
1st Quarter
|
2nd Quarter
|
3rd Quarter
|
4th Quarter
|
|
Revenue
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$201,200
|
$285,000$
|
$301,800
|
$370,000
|
|
Cost of sales
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$28,200
|
$29,700
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$31,750
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$41,350
|
2. Selling expenses are expected to be 10% of sales for each quarter for the year 2018.
3. Administrative expenses for the 1st quarter are estimated to be $145,000 and expected to increase by 8% in subsequent quarters.
4. The total expected financial expenses for 2018 are $84,800 which will be divided equally for each quarter.
5. Tax expense is estimated to be 15% more than the previous year.
6. Assume, all the expected selling, administration and financial expenses are paid within each quarter. The expected cash received, and cash paid to creditors for each quarter is:
|
|
1st Quarter
|
2nd Quarter
|
3rd Quarter
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4th Quarter
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|
Cash Received
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$225,000
|
$225,000
|
$242,500
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$250,000
|
|
Cash Paid
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$12,500
|
$10,800
|
$11,000
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$12,500
|
7. At the end of 2018, the following line items are expected to have these values:
Prepaid Expenses - $148,600
Inventory - $62,601
Non-Current Assets - $335,236
Loan - $40,000
Mortgage - $235,000
Equity - $282,530
Accounts Payable is expected to increase by 10% in 2018 while other liabilities are expected to increase by 20% in 2018. The amount of accrued expenses will double.
Requirements -
1. You are required to prepare and present a projected/forecasted income statement for the 2018 using best practice which meet the legal and professional financial reporting and tax requirements of New Zealand. (Download and use template 603_1 from Moodle).
2. Prepare the cash budget for each quarter for 2018 by using the information given (Download and use template 603_2 from Moodle).
3. Prepare forecasted balance sheet at the end of year 2018 using best practice which meets the legal and professional financial reporting and tax requirements of New Zealand. (Download and use template 603_3 from Moodle).
Note: Please round your calculations to 2 decimal places.
Task 3: Cost control systems are an important part of an organisation. They have a number of effects on an organisation. The management of LVC do not know the differences between the types of costing systems and need some guidance on which would be appropriate for LVC.
Required:
Prepare a written brief for the management of LVC which can be used by non-accountants to understand cost control systems. In your written brief, you should:
1. Explain and differentiate the following types of cost control systems:
a. Marginal Costing vs. Absorption Costing
b. Job Costing vs. Process Costing
c. Traditional Costing vs. Activity Based costing
2. Recommend which cost control system would be most appropriate for LVC Ltd. Justify your answer.
Attachment:- Assignment Files.rar