Case study on Associated British Foods
please follow the assignment brief closely. choose Associated British Foods as your topic.
Element 010 – Written Assignment (3000 Words)
Due 14 Dec by 14:00
Points 100
Available 17 Sep at 9:00 – 31 Jan 2019 at 23:59 5 months
Element 010 – End Term Assignment 3,000 Words (100%)
Assessment Brief 010: Case Study
After several rounds of interview, you are successfully appointed as the CFO of the Company. The Company has enjoyed considerable success in recent years and the board of directors have decided to adopt a growth strategy by making further investment in their current production line and acquiring an existing company in their industry. As the newly appointed CFO of the Company, you are tasked to evaluate the performance of the Company and prepare a report to the board of directors with evaluation of the potential investment opportunities.
The first investment under consideration is to make further investment in their current product, which needs initial investment between £30,000,000 and £40,000,000 and has a life of ten years. The finance department appraised some other similar investments before using different investment appraisal techniques. The discount rate is 12% for the Company (Ignore inflation and taxation).
At the same time, the Company plans to acquire another company in the same industry in the near future. However, the board of directors require more information for the potential target. You are tasked with the responsibility of identifying a potential target company and preparing a report to the board of directors justifying the choice of a target company and potential implications from mergers and acquisitions.
Required:
Suppose you are successfully appointed as the CFO for one of the companies listed below:
Associated British Foods;
AstraZeneca;
Barratt Developments;
Melrose Industries;
Diageo;
As the newly appointed CFO of your chosen company, you are required to write a report to the senior management team – fully referenced, and address the following:
Evaluate Financial Performance: Choose four categories from the list of five categories of financial ratios below, and use one financial ratio from each category to assess the financial health of your chosen company using past 5-year financial information:
Profitability;
Efficiency;
Liquidity;
Financial gearing;
Note: Analyse your chosen financial ratios using information from financial statements. Considering word limit, please choose one financial ratio from the four different categories listed above; therefore, you should focus on four ratios in total in your analysis. Critical analysis of the four ratios under four categories is required for a good work. Please critically evaluate past five-year firm performance using your chosen ratios and discuss the problems and limitations of financial ratios as a tool of financial analysis before make recommendation to the board of directors. Use small tables, diagrams and charts in your analysis and present professionally. Financial ratios can be collected using Osiris, Fame, annual report, or other professional resources. Compare with competitors and industry will be helpful. Suggested word: 700-800 words.
Investment appraisal: You plan to use NPV and IRR techniques to evaluate the project. Critically discuss NPV and IRR techniques and the implications of the investment on the Company. Risk and uncertainty in investment appraisal should be considered before you make recommendation.
Note: Please present NPV and IRR results using small tables. You need to make a decision on which investment appraisal format that you will choose. The project will be based on your chosen company, therefore, you have the flexibility to decide the project using your estimate. The investment should be around £30m to £40m, but how the money is invested would depend on the nature of the investment. Sensitivity analysis will be helpful to analyse different scenarios for the appraisal. Suggested word: 600-750 words.
Potential acquisition: After you identify a potential target company, you will address the following in your report to the senior management team:
Rationale for choosing the target company.
The synergistic gain of the acquisition for the Company.
Proposed deal value and finance of the acquisition.
The potential implications of such acquisition on firm performance.
Challenges and risk assessment of the acquisition.
Note: Based on analyses of your chosen company, please identify a target company in the real business world. Good work will provide critical analysis of the deal, rather than provide some general discussion without in-depth analysis. Good work will also link potential implications from the deal with your chosen financial ratios discussed in the financial performance section. Suggested word: 900-1000 words.
Appendix: Supporting information to help the senior management team make their final decision. Present your own tables and do not copy and paste an annual report in your appendix.
Assignment submission guidance
You should attach the Front Sheet before your own work, followed by title page and content page before the main body of your work.
You should adhere to the 3,000 word limitation. Any misuse of tables with aims to avoid word limit will be subject to penalty. There is ±10% tolerance on word limit, but in worse scenarios of deliberately using tables to avoid word limit could lead to more penalty. There will be a 10% penalty if the assignment is too short. Please indicate the word count on the Front Sheet.
Your Module Tutor is available to support you in preparing your report. Conference session times for you to live chat with your Module Tutor about the assessment will be posted on the announcement page. As well, you are encouraged to email your Module Tutor with any questions you have at any time. Please also note that you are welcome to submit rough drafts of your work for comments at any time up until the end of Week 10.
The word count excludes tables, charts, graphs, formulas, appendices and reference list. In sum, the word count refers only to the narratives. Table can be used to present numbers and some brief points.
We treat assessment offence seriously at ARU (more information is available at http://web.anglia.ac.uk/anet/academic/qad/module_guide/modguide_assessmentoffences.php). All the resources must properly cited in your assignment. The formatting must follow Harvard Referencing guideline (6th Edition) for both the construction of the reference list and the proper in-text citation formats – pay attention to §3.1 in particular. You can obtain the guide here: http://libweb.anglia.ac.uk/referencing/harvard.htm
You should provide an extensive list of references comprising a combination of: academic journal articles, textbooks, good quality periodicals such as FT or WSJ or The Economist. Good quality websites will be helpful, but please refrain from using Wikipedia or Investopedia heavily in your work.
You should use either Arial or Times New Roman 12 font sizes and use double spacing throughout. Use `justified’ margin whenever possible and centre all graphs, charts, figures, tables, etc.
Check your Turnitin access at least one week prior to submission. If you have any queries regarding Turnitin submission, please contact our faculty admin team directly. More submission guidance will be available on Turnitin submission point.
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Front Sheet
This sheet must be attached in the front of your assignment.
Name of Module:
MOD004051 Finance for Decision Making
SID Number:
Title of Your Course and Year/Stage:
Final Submission Date:
Actual word count:
Extension Granted to (if any):
Checklist before submission
Have you read, understood and acted in accordance with the referencing guidelines set out in the Harvard Reference Guide?
Where you have quoted directly from or where you have paraphrased the work of others, have you acknowledged and appropriately referenced the source of your quotation in the body of the text?
Have you placed all direct quotations in inverted commas?
Have you listed and correctly presented all your sources in the reference list?
Declaration by the candidate
I declare that this assignment is my own work (or, in the case of a group assignment, the work of my group), that it has not been copied from elsewhere and that any extracts from books, papers or other sources have been properly acknowledged as references or quotations.
The work contains no material drawn from unattributed sources.
þ Please tick the box to confirm acceptance of the above declaration.
Date ____________
Signature ____________
Marking Criteria for Element 010 – End Term Assignment 3000 Words
Section Content Mark Learning Outcome- Introduction · Brief introduction of the company that you choose.
· A concise summary of issues addressed in the essay, your main findings and the structure of the report.
5%
- Evaluate financial performance
· Choose one financial ratio from four different categories (focus on four ratios in total) in your analysis of financial ratios and evaluate ratio analysis as a tool to assess firm performance.
· Discuss your chosen financial ratios for past five years.
· Critically evaluate various aspects of financial position and performance of the Company.
· Analyse the problems and limitations of financial ratios as a tool of financial analysis.
25%
- Investment appraisal · Critical evaluation of NPV and IRR techniques.
· Provide samples to illustrate investment appraisal results using NPV and IRR techniques at your chosen format.
· Discuss potential implications of the investment on the Company.
· Discuss risk and uncertainty in investment appraisal and make your recommendation.
25%
- Potential merger and acquisition · Rationale for choosing the target company.
· The synergistic gain of the acquisition for the Company.
· Explanation and evaluation of the financing of the proposed acquisition.
· Critically analyse issues and challenges in the acquisition process including risk and uncertainty of the acquisition.
· Critically discuss potential implications of the investment on firm performance.
30%
- Conclusion · Clearly presented conclusions based on the preceding analysis.
· Make suggestions and recommendations based on your judgement.
5%
- Reference and presentation · Follow Harvard Reference guide.
· Adequate references and properly referenced resources.
· Use of journal articles.
· Professional presentation.
10%
Total Marks: 100% 1,2,3,4
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