Homework: Finance and Accounting for Managers
Length: 2,500 words.
This homework is designed to assess the following Learning Outcomes:
a. Analyse and interpret core financial statements for sole traders and limited companies, in line with prescribed international accounting standards. Focus will be put on the use of annual reports of international real-world public companies.
b. Evaluate appropriate management accounting techniques and use management accounting information to support business decision-making.
c. Understand apply and evaluate management accounting concepts and techniques in decision making.
As set out on page 2 and generally, this homework requires you towrite a draft business report to address the following issues within the case study.
You are the Personal Assistant to Chris Smith . 3 months ago, Chris was appointed by ABCD Plc, the parent company of BB Ltd, as General Manager of BB Ltd to turn it around.
In his/her late 30's, after a business degree, Chris qualified as an accountant before joining ABCD as part of a trouble-shooting team. BB Ltd is his/her first independent command, so to speak. You are part of the turnaround team. It's ABCD that pays both your salaries.
The last few years have been very difficult for BB Ltd, a UK-based company whose principal activity is the manufacture of digital video equipment, which it distributes to retailers. It has only survived through the support of its parent company, ABCD plc, to whom it currently owes a significant debt. ABCD has reached the point where it is prepared to take drastic action, including closing down BB Ltd. So BB Ltd needs rapidly to improve its financial performance, advancing on all fronts; as appropriate increasing revenue and reducing costs and capital employed. Cashis available from ABCD if the case is strong.
Below is the brief you have received from Chris Smith:
Draft a report to go out in my name as follows:
• Highest level of confidentiality
• Readership - ABCD's BB Steering Committee + BB's top tier managers
But never cut corners or mislead - if something is complex or you just don't know (or cannot say) then make that clear, why,and ideally, how and when you can get back to clarity. Repetition kills credibility because it tells the reader that you don't know what you've already said. Spell-checks are there to make everyone look literate. And as my time is more valuable than yours, you must do the proofreading.
You have a few leads with which to start but I need from you elaboration, exploration and in some cases a recommendation. Specifically, in the draft report I'm looking for the following:
a. As per normal for ABCD, an Executive Summary of the report to follow (250 to 300 words)
b. The Cash budget - the finance department have passed me some alarming figures. What's going on - we all need to know. Recommendations would be welcomeincluding recommendations as to where we need to investigate (300 to 400 words).
c. New product line - a recommendation - and don't forget to draw attention to the limitations of this sort of Cost-Volume-Profit analysis (200 to 250 words).
d. Capital investment -an intelligent discussion of the options. Give recommendation but beaware that the final decision rests with ABCD who may choose differently. I know that the BB managers are used to the Accounting Rate of Return (ARR) as one of the investment appraisal methods. ABCD rejected ARR some years ago but can you include a few soothing words to justify its non-use.(350 to 450 words).
e. Selecting the builder-It's all very well to decide to build an extension to modernise the works but you need a builder. Can you cast your eye over the summarised accounts of the final shortlisted two? Does that information suggest choosing one over the others? Ratios will be part but not all of your justification, so you'll need to choose and explain your selection of ratios - but not too many please (650 to 800 words).
f. Budgeting. I feel I'd like to know how BB Ltd got into the state they are in. I believe that their current way of budgeting is both traditional and not especially rigorous. I know that ABCD have been looking at the Beyond Budgeting approach, but they have not come to any conclusions so far. Can you report on how and why traditional budgeting tends to go wrong and the modern ways in which smallmanufacturing firms like ours can budget effectively? Be gentle if you start to criticise thecurrent BB managers - we don't want to alienate them. On the other hand, they may need to be educated in best modern practice. Changes here will only show medium term gains, which is why it's the last item in the report. I've a few leads but you'll need to do your own research here.(450 to 600 words).
Format your homework according to the give formatting requirements:
a. The answer must be double spaced, typed, using Times New Roman font (size 12), with one-inch margins on all sides.
b. The response also includes a cover page containing the title of the homework, the course title, the student's name, and the date. The cover page is not included in the required page length.
c. Also include a reference page. The references and Citations should follow APA format. The reference page is not included in the required page length.
Attachment:- Brief-Template.rar