Shubham Mishra

MFRD
Assignment Help
You are required to follow the instructions
as specified towards each task and support
with a research by using supportive
materials like books, websites, etc., and give
a feedback on the findings by relating your
arguments to relevant case studies and
examples from a business organisation as
specified in MRFD Assignment task:
Shubham Mishra

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Shubham Mishra

MFRD Assignment Help

TASK 1 to TASK 4: You are required to follow the instructions as specified
towards each task and support with a research by using supportive materials
like books, websites, etc., and give a feedback on the findings by relating your
arguments to relevant
case
studies
and
examples
from
a
business organisation as
specified
in MRFD
Assignment task:

Task 1 and 2
The recession has left many people without jobs. Assuming that you have
been laid off by your company and you have personal savings of 50,000. You
have been contemplating what to do next and your friend has advised you to
start your own business and be your own boss. You decide to carry out
research on which business to engage in and how to raise the required
finance. You are required to start a new business as a sole trader, or
partnership or company with start-up capital of at least 100,000 - 1
million. Using supportive materials like books, websites, etc., and give a
feedback of the findings on P1.1, P1.2, P1.3, P2.1, P2.2, P2.3 and
P2.4. Answers without application to a specific business or appropriate
examples will be referred.

Task 1
LO1 Understand the sources of finance available to a
business
P1.1 Identify the sources of finance available to the new business you have
chosen
P1.2 Assess the implications of the different sources of finance to your chosen
business
P1.3 Select appropriate sources of finance for a business project you have
chosen e.g. opening new store, developing IT system, buy new machines etc.
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Shubham Mishra

Task 2
LO2 Understand the implications of finance as a resource
within a business
Using
the
same
business
you
have
chosen
above
P2.1
Analyse
the
costs
of
different
sources
of
finance
P2.2 Explain the importance of financial planning to the business
organisation
you
have
chosen
P2.3
Assess
the
information needs of
different decision makers
in your chosen business
P2.4 Explain the impact
of
finance
on
the
financial statements of
your chosen business

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Task 3
Use the case study given below and carry out a research by using supportive
materials like books, websites, etc., and give a feedback of the findings on
P3.1, P3.2, and P3.3. Answers without application to the case study or
appropriate examples will be referred.

LO3 Be able to make financial decisions based on financial

information
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Shubham Mishra

P3.1 Analyse budgets and make appropriate decisions from the case study
given
below:
Easy electronics ltd has been trading for many producing IBM compatible
motherboards or main boards which are sold to own equipment
manufacturers, Easy personal and computer hardware sellers. Budgeted
Profit and Loss Account and Cash Budget for the six months period ending
31/December 2013 is given below:

Easy Electronics
ltd Budgeted Profit and Loss Account for the six month period ending
31December 2013.
'000 '000
Sales

35,830

Less: Cost of sales

(18,878)

Gross profit

16,952

Profit from disposal of equipment

100
17,052

Less: Expenses
Administration cost (2400 + 675) 3075
Distribution cost

3,481 (6,556)

Profit before interest and tax

10,496

Loan interest

(500)

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Shubham Mishra

Profit before tax

9,996

Less: Corporation tax @ 23%

(2,299)

Profit after tax

7,697

Easy Electronics ltd

Cash flow forecast for July to December 2013
Months
Receipts (in flows)

Jul

Aug Sep

Oct

Nov Dec

'00 '00 '00 '00 '00 '00

0
0
0
0
0
0
Receipts from cash 1,50 1,57 1,65 1,81 2,00 2,20
sales
0
5
3
8
0
0
Receipts from
Debtors

3,33 350 3,67 3,85 4,24 4,66

3
0
5
9
5
9

Receipt from
disposal of fixed
asset

Total receipts (A)

400
483 507 5,32 6,07 6,24 6,86
3
5
8
7
5
9

Payments (out
flows)
Payments to trade
creditors

1,63 1,80 1,89 1,98 2,08 2,29

6
0
0
5
4
2

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Shubham Mishra

1,08 1,19 1,31 1,45

Salaries and wages 900 990 9
8
8
0
1,08 1,21 1,36
Variable overheads 800 880 968 4
4
0
Administrative cost
(excludes monthly
depreciation
100,000 for July Sept and 125,000
for Oct - Dec )
400 400 400 400

400 400

Distribution cost

640 960

400 440 484 557

Capital
expenditure

3,00
0
1,00
0

Dividends
Corporation tax

900

Interest and other

finance charges

500

413 4,51 483 912

Total payments (B) 6
0
1
4

615 746
6
2

Net cash flow

(surplus or
(deficit)) C = (A-B)

3,04
697 565 497 7
89

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-593

Shubham Mishra

Opening cash
balance (D)

100 169 226 2,75

0
7
2
9
-288 -199

Closing cash
balance (C+D)

169 226 2,75

7
2
9
-288 -199 -792

Additional information:
1.

30% of the sales are to be paid for by cash each month

2.

Settlement for credit purchase is 30 days

3.

The company offers a 30 days credit period

4.

State any other assumptions made.

P3.2 Explain the calculation of unit costs and make pricing

decisions using relevant information given below:
You are required to use the budgeted profit and loss account to explain how
unit costs are calculated. It is estimated that Easy Electronics ltd will
manufacture and sell 650,036 mother boards for the six months period
ending 31st December 2013. The finance director of Easy Electronics ltd has
asked you to evaluate a proposal to reduce the selling price by 10% from the
current price of 55.12 per unit and as results sales are expected to increase
by 20%. Cost of sales will also increase by 20%. All other costs will remain
constant. You are required to make pricing decision based on the above
information.

P3.3 Assess the viability of a project using at least two

investment appraisal techniques using the case study
provided below:
Easy Electronics ltd is considering diversifying into manufacturing
Aluminium computer cases or housing from October 2014. The companys
cost of capital is 10%. The net cash flows from the project are given below.

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Shubham Mishra

Project A: Aluminium Housing

Year

000

(8,000)

2,000

2,800

3,200

1,200

800

500

The project has a residual or scrap value of 400,000.

Year

Discount factor @10%

Discount factor @15%

0.909

0.870

0.826

0.756

0.751

0.658

0.683

0.572

0.621

0.497

0.564

0.432

LO4 be able to evaluate the financial performance of a

business
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Shubham Mishra

For task P4.1 and P4.2 you are required to carry out a research by using
supportive materials like books, websites, etc., to discuss the main financial
statements (profit and loss, balance sheet and cash flow statement and
compare appropriate formats of financial statements for different types of
business (such as formats of financial statements for sole trader, partnership
and limited company), and give a feedback of the findings on P4.1 and
P4.2. Answers without application to main financial statements or formats of
financial statements for different types of business and appropriate examples
will be referred.
P4.1 Discuss the main financial statements (the discussion should focus on
basic
form
and
purpose
of
main
financial
statements)
P4.2 Compare appropriate formats of financial statements for different types
of
business
P4.3 Interpret financial statements using appropriate ratios and comparisons,
both
internal
and
external
using
the
data
given
below.
For task P4.3 you are required to carry out a research by using supportive
materials like books, websites, annual reports, etc., to interpret financial
statements of WM Morrison Supermarkets PLC using appropriate ratios
given below and to compare its financial performance with that of J Sainsbury
PLC for year 2011 and 2010. Answers without application to the case study
given will be referred.

Particulars

WM Morrison
Supermarkets PLC

J Sainsbury
PLC

2011

2010

2011

2010

Turnover (mil)

17,663

16,479

22,29 21,10
4
2

Profit (Loss)
before Taxation

947

874

799

Return on
Shareholders
Funds %

17.55

16.13

14.19 15.25

Gross margin %

6.89

6.97

5.43

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827

5.50

Shubham Mishra

EBIT margin %

5.51

5.49

3.92

4.03

Profit Margin %

5.36

5.30

3.58

3.92

Berry ratio

3.95

3.79

3.09

3.04

Return on Capital
Employed %

12.53

12.44

8.68

9.78

Return on Total
Assets %

9.61

9.59

6.47

7.26

Net Assets
Turnover (x)

2.34

2.35

2.42

2.50

Current ratio (x)

0.57

0.55

0.65

0.58

Liquidity Ratio (x)

0.24

0.24

0.35

0.31

Stock Turnover (x) 23.27

25.83

23.77 25.99

Debtor Collection
Days

4.36

1.80

Creditors Payment
Days
29.12

31.01

31.16 31.76

Gearing %

42.02

29.61

66.18 57.28

Interest Cover (x)

6.09

21.33

6.79

8.13

Earnings per
share ()

0.27

0.24

0.32

0.34

3.95

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1.61

Shubham Mishra

Dividends per
share( )

0.12

0.08

0.15

Market
capitalisation
(mil)

7,236

7,083

5,846 6,257

9,111

12,34 11,39
0
9

Total Assets (mil) 9,859

0.14

Working Capital

-981

-948

1,104 1,221

Shareholders
Funds (mil)

5,397

5,420

5,629 5,424

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