Accounting for Managers-
Shareholders and lenders, whilst not being the only stakeholders, provide capital to companies because they seek a return commensurate with the level of risk that they are willing to take.
You are required to do as follows:
Task One-
Using the Annual Report and Accounts of BMW AG for the year ended 31st December 2014, available at:
https://www.bmwgroup.com/bmwgroup_prod/e/0_0_www_bmwgroup_com/investor_relations/finanzberichte/bmw-group-geschaeftsbericht-2014.shtml
You should:
(a) Evaluate the performance of BMW in the following areas, using ratio analysis:
- Profitability
- Liquidity/Solvency
- Working capital efficiency
- Long term financial structure
- Investors' perspective
You may also use earlier years' financial accounts to supplement your analysis if you wish to be specific with certain trends that you have identified.
In addition you could also consider the performance of BMW in comparison with its peer group of competitors.
You should summarise your findings and make particular reference to the interests of the different stakeholders of the company.
Note: Any accounting ratios for BMW must be calculated (and workings shown) and not extracted from external databases, although, further analysis may be supported by downloading ratios from external databases for competitor companies.
When completing Part (a) take the following into account:
1. 5 years of analysis would be worthwhile.
2. Benchmarking to at least one competitor
3. Make sure that you explain why the ratios are changing and what the implications or conclusions of this are.
4. Don't forget to comment on the views of specific stakeholders.
5. Contemplate your presentation. This work lends itself to the use of graphs, charts, tables and so on.
Task Two-
Extract from https://www.automotivesupplychain.org - 5th April 2013
"Due to the fact that we are a build-to-order manufacturer and that we have an increasing number of configuration varieties in cars we have to use just-in-sequence supply. We use just-in-time and just-in-sequence supply chains to reduce stock in transit and to stock our facilities. Approximately 75% of the sourcing volume is sourced by JIT and JIS and this is divided into 90% JIS and 10% JIT."
Some industry observers have suggested that just-in-time is no longer practical, given the volatility and variability of global supply chains. Rudorfer explains that, "certainly, with an increase of overseas supply chains JIT and JIS do not work from the point of view of suppliers' production. However the structures within the plant are today not sufficient to meet these overseas demands on replenishment time. Therefore, BMW takes different measures to compensate for this by tasking logistics service providers around the BMW facilities, negotiating central distribution facilities in Germany with the suppliers and extending the BMW facility structures. By taking these measures JIT and JIS can be processed with suppliers far away (up to 1000 km), as these processes are necessary to get the high amount of variants to the assembly line without increasing assembly space and wasting assembly time."
As one of the leading European automotive manufacturers, critically discuss the philosophies and approaches of JIT practice and whether these remain as critical success factors to achieving competitive advantage in the automotive industry?
Appropriate credible academic and practitioner literature sources must be used to support your critical analysis, and the Harvard style of referencing must be adopted.
Task Three-
Considering your responses to Tasks One and Two you are required to provide advice, accompanied by rationale, as to whether you would recommend a buy, sell or hold (if they are already owned) policy for investors/potential investors in BMW shares.
Further Information:
You are required to present well structured answers of no more than 3,000 words (excluding calculations) in total. The words should be allotted according to the percentage marks awarded for each task.
Learning Outcomes specifically assessed:
Subject Specific Knowledge and Skills
1. Identify and critically appraise the different components of a financial report, and assess the adequacy of current international financial reporting requirements for a greater understanding of company performance
2. Analyse and interpret financial data and information, evaluate their relevance and validity, and synthesise a range of information in the context of business situations
3. Demonstrate the ability to use conventional management accounting and financial management techniques to produce appropriate information for management to aid planning, control and decision making
4. Evaluate the usefulness of contemporary management accounting techniques in measuring business performance
5. Critically appraise management accounting techniques with respect to their effectiveness and identify any weaknesses inherent in their use.
Attachment:- Accounting Assignment.rar