Analysis of Financial Position & Sell My Car Ltd Case Study Accounting Assignment Help

Assignment Task

Case Study

• Sell My Car Ltd is a large web service in Australia that allows individuals to sell their cars online to other potential buyers. The company has been operating for over 10 years and has been quite successful in generating revenues and profits. The company makes its revenue by selling advertising ads on its website. They are currently listed on the stock exchange with their shares trading at USD 0.37 each.
• The company has seen declining sales over the past 4 years and need help.
• You have been hired as a Management Consultant to analyse the current financial position of Sell My Car Ltd and help them develop a budget and recommendations in order to move back to increase their profits in 2021.
• As such you will be reporting directly to the board and will be asked to provide a report that meets their requirements.
• Brief from the Board
• The Board of Directors is made up of four members. The Chairman, the CEO and two other Non-Executive Directors. In your first meeting with the Board, they have asked you to complete the following tasks for them.
• Scope of engagement
• Analysis of Financial Position
• The first stage is to analyse the current financial position of the company. You will be provided with the Balance Sheet, Profit and Loss Report and other financial information for the 2020 financial year.
• The Board would like you to analyse the following:
• Assess the viability for 2020
• Determine the cash flow break-even point for the company in 2020 (3 marks)
• Create a Cost-Volume-Profit Graph to represents their viability for 2020 (6 marks)
• Assess the liquidity for 2020
• Calculate the Current Ratio for 2020 (3 marks)
• Calculate the Quick Ratio for 2020 (3 marks)
• Calculate the Operating Cash Cycle for 2020 (6 marks)
• Determine the Working Capital for 2020 (3 marks)
• Assess the solvency for 2020
• Calculate the Debt to Equity Ratio for 2020 (2 marks)
• Calculate the Debt to Total Assets Ratio for 2020 (2 marks)
• Calculate the Interest Coverage Ratio for 2020 (2 marks)
• Write a report of approximately 1—2 pages that provides the Board with a summary of the viability, liquidity and solvency position of the company at the end of 2020. (18 marks)
• Financial planning
•  
• With the analysis complete, the board would like you to help them plan their finances for the upcoming financial year.
• The Board would like you to complete the following:
• Create an Operating Budget for the 2021 financial year broken into quarters
• Create the Sales Forecast (5 marks)
• Create the Production Forecast (5 marks)
• Create the Operating Expenses Forecast (5 marks)
• Create the Cash Budget for the first three months of the 2021 financial year broken into months.
• Create the collections cash flow (7 marks)
• Create the expenses cash flow (7 marks)
• Based on the Operating Budget and Cash Budget, write recommendations to the Board on how they can ensure they will be able to meet their obligations in the coming year. The recommendations should be approximately 1 – 2 pages in length. (23 marks)
•  
• Final Report
  The final report that will be presented to the Board of Directors should include:
  An executive summary
  The financial analysis which should include the exact calculations for each ratio, not just the final results. The Board wants to see how you calculate each of the ratios
  The analysis report of approximately 1 – 2 pages. This is quite important and the Board is not just interested in what the numbers are, but are more interested in what the numbers mean and how they relate to each other
  The Operating Budget for 2021 broken down into quarters
  The Cash Budget for the first 3 months of 2021 broken down into months
  The recommendations on how the company can improve their financial position in 2021, which should be about 2 pages. This is the most important part of the report and should include information from the previous sections to justify your answers. This is the section that the Board of Directors is most interested in and they are keen to see creative solutions that will assist their business.
  Assessment Submission
  The reports about the financial analysis of various facets of the company should be submitted as a Word file. This Word file is the final report that will be presented to the Board of Directors and should include:
  An executive summary
  The financial analysis which should include the exact calculations for each ratio, not just the final results (Should include the calculations & graphs asked in Analysis of Financial Position section in the Brief from the board)
  The analysis report of approximately 1 – 2 pages (As instructed in the Analysis of Financial Position section in the Brief from the board)
  The Operating Budget for 2021 broken down into quarters (As instructed in Financial planning section in the Brief from the board)
  The Cash Budget for the first 3 months of 2021 broken down into months (As instructed in Financial planning section in the Brief from the board)
  The recommendations on how the company can financially meet the contract of approximately 1 – 2 pages (As instructed in Financial planning section in the Brief from the board)

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