FIN4001: Introduction to Finance - Financial Terminology and Conventions in  Communicating Results - Finance Assignment Help

Assignment Task :

Learning Outcomes: 

After completing the module, you should be able to: 

1. Contrast the appropriateness of the different sources of finance to a business.

2. Explain the implications of finance as a resource within a business.

3. Produce simple financial statements in accordance with accepted principles.

4. Use financial information for decision making purposes. 

5. Demonstrate a confident use of the financial terminology and conventions in  communicating results

Assignment Task Question 1 

You are the Chief Financial Officer at Touchdown Sports Inc., a leading manufacturer of  protective equipment for use in contact sports.  

The company manufactures a range of products, including shoulder pads for use by  players of American football. These pads comprise a hard plastic shell with foam padding  underneath, metal rivets and elastic straps. Touchdown Sports Inc. sells all of its products  to retailers on a credit basis. 

Estimated annual usage of hard plastic in Touchdown Sports Inc’s manufacturing process  is 27,000 kilograms. This is used evenly throughout the year other than during July and  August, when production increases to meet demand due to the start of the American  football season in September, and during November, when production increases to meet  demand prior to the Christmas holiday in December.  

Inventory holding costs for hard plastic are estimated to be $1.75 per kilogram per year.  The estimated cost of placing and processing each order of hard plastic is $14.  

Throughout the year, it is estimated that hard plastic will cost an average of $0.90 per  kilogram. However, forecast fluctuations in demand mean that the cost of hard plastic  could vary from a maximum of $1.90 per kilogram and a minimum of $0.75 during the  year. 

Touchdown Sports Inc. imports hard plastic from Guangzhou Productions plc, China.  Recent disputes with this supplier have led Touchdown Sports Inc. to maintain a ‘buffer’  inventory to manage the risk of disruption to this supply. Guangzhou Productions plc  offers a 7.5% bulk purchase discount on orders of hard plastic of 10,000 kilograms or  more. 

The company’s approach to inventory management was discussed at a recent meeting of  Touchdown Sports Inc’s senior executive team. Grace Rodriguez, Chief Executive at  Touchdown Sports Inc., is an advocate of just-in-time (JIT) inventories management.  Grace has questioned the company’s current approach to the management of its  inventory of hard plastic and has commented: 

Holding inventories results in costs for the company. We could avoid these costs if  we introduce a JIT approach to the management of our inventory of hard plastic.  Inventories management models and information technology are available to help  us. 

Maria Cousins, Chief Operating Officer at Touchdown Sports Inc., has pointed out that the  successful management of inventories involves a number of practical issues. Maria has  commented: 

Inventories management models and information technology are useful, but I am  sure that there are other issues that we need to consider. I would like to know  more about the practical implications of managing inventories.

Required: 

(a) Calculate the economic order quantity (EOQ) for hard plastic. 

(b) Calculate the total annual cost of hard plastic. 

(c) Critically evaluate Touchdown Sports Inc’s decision to use the EOQ model as  part of its approach to the management of inventories.  

(d) Advise Touchdown Sports Inc’s senior executive team on the comments  made by Grace Rodriquez and Maria Cousins. Your advice should include an  explanation of the costs of holding inventories, the costs of failing to manage  inventories properly and the practical implications of managing inventories.

Question 2

An international regulatory framework for accounting is required in order to ensure  that financial statements can be relied upon and that the information within financial  statements is useful and relevant.  

Corporate governance is the system by which organisations are directed and  controlled. Corporate governance is important because it affects how decision  makers act, how they can and should be monitored and how they can be held to  account for their decisions and actions. 

Required: 

(a) Explain the role of each of the following organisations in the international  regulatory framework for accounting: IFRS Foundation; IFRS Advisory Council;  International Accounting Standards Board: IFRS Interpretations Committee. 

(b) Critically discuss the role of audit committees in corporate governance

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