Financial Management and Management Accounting - Essay Writing - Accounting and Finance Assignment Help

Assignment Task

QUESTION 1

One of the learning outcomes for this course requires you to “examine financial management and accounting terminology and concepts”. In the light of that, define and explain each of these five terms and concepts, and give a practical example of each one in relation to AB Inbev:

1.1 Financing role

1.2 Operations role

1.3 Capital budgeting

1.4 Primary market

1.5 Financial decentralisation

QUESTION 2

Like any multinational, AB Inbev is juggling several strategies at the same time, including:

• New product strategy: “In addition, our portfolio of seltzers grew at double the rate of the industry, driven by a successful launch of Bud Light Seltzer” (p 6);
• New focus strategy: “We grew beer volumes by 5.6% in 2020, outperforming the industry, through the successful execution of our customer- and consumer-centric strategy and by driving operational excellence” (p 7);
• Debt strategy: “AB InBev may restrict the amount of dividends it will pay as a result of AB InBev’s level of debt and its strategy to give priority to deleveraging toward its optimal net debt to normalized EBITDA ratio of around 2x” (p 15);
• Tax strategy: “the company has no tax planning strategy currently in place to utilize these tax losses and deductible temporary differences” (p 60); and
• Investment strategy: “the company’s ALM objective is to match assets to the pension obligations by investing in long-term fixed interest securities with maturities that match the benefit payments as they fall due and in the appropriate currency … a pension de-risking strategy to reduce the risk profile of certain plans by reducing gradually the current exposure to equities and shifting those assets to fixed income securities” (p 72)

One of the learning outcomes for this course requires you to “plan and align finances with departmental projects, programmes and policies”. Given that, demonstrate your ability to exercise the related knowledge and skills by performing the following tasks:

2.1 Choose one strategy of AB Inbev, identify it clearly, and describe briefly what this strategy involves and aims to achieve.

2.2 Peruse AB Inbev’s financial statements, including the notes, and critically discuss any specific allocations you can find that seem to be aligned to the AB Inbev strategy you chose in your answer to question 2.1. above.

 2.3 With regards to just the one AB Inbev strategy you chose in your answer to question 2.1 above, critically evaluate the degree of alignment between this strategy and AB Inbev’s finances. Make any recommendation(s) that you feel may be justified.

QUESTION 3

“Financial Performance: Consolidated volumes declined by 5.7%, with own beer volumes down 5.8% and non-beer volumes down 3.8%, driven by the impact of the Covid-19 pandemic. Consolidated revenue declined by 3.7% to 46 881m US dollar, with revenue per hectolitre growth 2.1%. Combined revenues of our global brands, Budweiser, Stella Artois and Corona declined by 5.0% globally and 5.3% outside of their respective home markets. Consolidated Cost of Sales (CoS) increased 3.1%, and increased 9.8% on a per hectolitre basis, driven primarily by operational deleveraging resulting from the impact of the Covid-19 pandemic on our volumes and by supply chain adjustments implemented to meet evolving demand” (p 5); and

“Working capital includes inventories, trade and other receivables and trade and other payables, both current and non-current” (p 109).

One of the learning outcomes for this course requires you to “manage working capital”. Demonstrate your ability to exercise the related knowledge and skills by performing the following tasks:

3.1 Define “working capital” in general, giving a specific example related to AB Inbev.

3.2 Critically discuss the role of working capital, and the theoretically ideal patterns of working capital management, during hard times.

3.3 Critically evaluate the degree to which AB Inbev was experiencing hard times in 2020, and the degree to which its working capital management during 2020 was appropriate to its circumstances.

QUESTION 4

One of the learning outcomes for this course requires you to “develop and interpret financial management reports such as income and expenditure statements, budget, cash flow projection, variance analysis and balance sheet”. Demonstrate your ability to exercise the related knowledge and skills by performing the following tasks:

4.1 Outline the five basic elements of a complete set of financial statements, and briefly mention the purpose of each.

4.2 Critically discuss AB Inbev’s “Consolidated statement of comprehensive income” (p 26) in the light of the general economic situation and trading conditions during 2020.

4.3 Critically discuss AB Inbev’s “Consolidated statement of financial position” (p 27), also in the light of the general economic situation and trading conditions during 2020.

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