Financial and Management Accounting Assignment

Assignment Task

Part A 

The aim of Part A of this assignment is to enable you to be familiar with the information in annual reports and develop your skills in interpreting the information content of financial statements of companies by using financial ratios and other financial indicators.

Question

You have recently been invited to interview for a management position at a listed company. For your interview with the Board you have been asked you to prepare a three part report:

i. The first part will analyse the past financial performance of the company based solely on public information available. Financial statements to be examined will include statement of financial position (balance sheet), income statement (profit and loss), and cash flow statement.

The Chief Executive is expecting analysis of the last two years to be discussed. The analysis will consist of financial ratios, percentage change statements and any other relevant financial indicators. All calculations are to be presented in an appendix, and a summary table of ratios should be shown in main body of your report. It may help your answer if you identify the business model your chosen company is pursuing; for example, are they pursuing a premium pricing strategy, or a high volume and low-cost strategy.

ii. The second part requires that after reviewing the past financial information you are expected to provide suggestions on how to improve the future financial performance of the firm.

Part B

The aim of Part B of this assignment is to enable you to be familiar with the financial information that is used internally within the firm, specifically considering the use and importance of budgets.

After your appointment to the company, you discover that one of the finance related problems is the limited acceptance by management and employees of the budgeting process. This subsequently leads to budgets not being adhered to. The Chief Executive has asked you to try and address this problem by producing a report for management and employees that:

i. Discusses possible reasons why budgets can fail and are not accepted by managers/employees.

ii. Provides arguments of how you can overcome these problems and highlight the advantages of budgets.

Students should try and connect their answer to Part B to their chosen company in Part A. However, students may also want to consider creating a simple fictitious example budget that would show the management and employees how all of the individual budgets flow in to the master budget.

Part C 

The aim of the third part of the assignment is to consolidate your understanding of the difference between profit and cash, and the importance of different performance measures used in business.

Question

(i) The cash movement in the year will generally never equal the profit earned in the year. With reference to the cash flow statement, explain the difference between profit and cash and include a numeric example to illustrate your answer.

(ii) Cash is only one factor monitored by business; identify and discuss other financial and nonfinancial performance measures businesses should monitor.

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