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BFK450
COURSEWORK PORTFOLIO REQUIREMENTS (90%)
Task 1: Financial Analysis (50% of the coursework portfolio)
The Board of Directors has asked you to perform a review of the financial
performance and financial position of the business based on the company’s 2033
financial statements and key financial ratios compared with those for 2032 and
using any other available information which you consider to be relevant.
Required:
Prepare a report for the Board of Directors in which you analyse the company’s
financial performance and financial position, and which specifically addresses the
company’s profitability, efficiency, liquidity and stability.
You should provide an appendix to your report in which you provide full workings
for the calculation of the following 12 key financial ratios for your business for 2033:
1. Return on capital employed
2. Operating profit margin ratio
3. Gross profit margin ratio
4. Operating expenses to sales ratio
5. Sales revenue on capital employed
6. Inventory holding period
7. Receivables days
8. Payables days
9. Current ratio
10.Acid test ratio
11.Gearing ratio
12.Interest cover
You should incorporate 8 of the above key financial ratios within the body of your
report including the following 3:
1. Return on capital employed
2. Gross profit margin ratio
3. Gearing ratio
Note: Most members of the Board of Directors do not have a finance background
so your report will need to include clear and appropriate explanations of the
financial techniques and concepts which you have used in your analysis.
Word limit: 1,200 words excluding headings, sub-headings, tables, charts
and appendices. Font Size: 12. Line Spacing: 1 ½.
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Task 2: Evaluation of Product Recyclability Investment Opportunity
(30% of the coursework portfolio)
Your company’s Board of Directors is considering whether to launch a new
recyclable model of robot in 2035 (‘Model 2’) and your company’s CFO has asked
you to perform the following tasks:
• to evaluate the financial merits of this opportunity using the company’s current
investment appraisal methodology and decision criteria;
• to make a recommendation to management regarding whether this investment
decision should be implemented; and
• to identify and explain three ways in which the company’s current investment
appraisal approach could be improved.
If the investment proceeds, the new model will replace the existing non-recyclable
model which will be discontinued. To produce the new model, capital expenditure
of W$650,000 and 4 extra production employees will also be required and there will
be an increase in fixed overheads of $20,000 per annum.
There are two R&D projects available which will enable you to produce recyclable
robots:
1. R&D Project 18 which will require an investment in R&D of W$3m, all of which will
be treated as Development costs. Following R&D Project 18, the materials for this
new model will cost W$200 per unit less than those for non-recyclable robots.
2. R&D Project 19 which will require an investment in R&D of $3.5m, 60% of which
will be treated as development costs and 40% will be treated as research. Following
R&D Project 19, the materials for this new model will cost W$400 per unit less than
those for non-recyclable robots.
The marketing department strongly believes that if all domestic robot manufacturers
move to recyclable robots there will be a significant increase in total demand in all
markets in which your company operates. Industry experts have predicted that
assuming 2034 retail sales prices are maintained for the next 5 years, there will be
an increase in sales quantity (compared with the level achieved in 2034) for each
manufacturer over the next five years as shown below:

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A technical feasibility study for the new project has been carried out by a firm of
external consultants at a cost of W$15,000, though the consultants’ invoice for this
work has not yet been paid.
If the investment does go ahead then some existing equipment will no longer be
required, and it is estimated that the surplus equipment could be sold for proceeds
of W$100,000 (against a book value of $400,000). The production of the new model
will also require less factory space than is currently required which will mean the
surplus space can be sub-let for annual income of W$6,000.
Your company’s current investment appraisal approach requires the evaluation of
investment opportunities over a 5-year timescale using the Payback and Net Present
Value methods and the following decision criteria are applied:
1. Payback period below 2 years.
2. Net Present Value higher than +$250,000.
Your business has in the past applied the following assumptions when evaluating
capital investment projects:
1. A fixed overhead allocation of $100,000 is applied to all major projects (being
those with a total cost of $4m or above) and a fixed overhead allocation of
$50,000 for all other investment projects (except minor projects being those
which cost less than $200,000 for which there no fixed overhead allocation is
applied).
2. A cost of capital of 8% is applied which is based on the rate of interest payable
on the long term loan.
3. No adjustment is made for working capital requirements.
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Task Details/Description:
Prepare a brief report for the CFO which addresses the following detailed
requirements:
a) Perform a financial evaluation of this investment opportunity. (A table
highlighting the relevant cash flows together with detailed workings to support
your payback and net present value calculations should be presented in an
appendix. You should also provide a list of any assumptions you have made in
an appendix).
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b) Using the table below, explain your reasoning for the treatment of the items
specifically referred to in the narrative above as ‘relevant cash flows’ or
otherwise. (This table should be included in your main report and not in an
appendix).

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c) Provide a clear recommendation with supporting reasoning as to whether this
project should go ahead and if so, which of the two R&D projects is preferred.
d) Identify and explain what you consider to be the three most important changes
which could be made to improve the investment appraisal approach and
assumptions made.
Word limit: 600 words (excluding tables, charts and appendices). Font Size:
12. Line Spacing: 1 ½.
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Task 3: Critical Reflection
(20% of the coursework portfolio)
Critically reflect on two key learnings from the module, which could be drawn from
the uses and the limitations of accounting information and/or accounting techniques
for management purposes.
You should include specific examples and illustrations to support your reflection.
These examples could include those arising from the business simulation activity,
the module materials, your wider reading, and any relevant personal experiences.
It is expected that you will engage with relevant reflective practice literature to help
structure and analyse your reflections. The following article provides a succinct
summary of some key reflective practice models:
Rolfe, G. (2014) Big Ideas: Reach, touch and teach, Terry Borton. Nurse Education
Today, 34, pp 488-489.
Word limit: 700 words (excluding headings, sub-headings and references).
Font Size: 12. Line Spacing: 1 ½.
Please submit all of your work for all three tasks in one pdf document.