To: Accountant From:
Paul Hurst Subject:
I have received substantial sums from investors in the last few months. We therefore want to expand our portfolio of investments by taking a significant minority investment in a company. The company can be located anywhere in the world but I would want it to be listed on a stock exchange so that I can monitor our investment. You can select any company other than football clubs and financial institutions such as banks or insurance companies.
I would like you to write a report containing three sections: 1. Firstly, I would like you to report on the company’s financial performance, position and cash flow based on the most recent financial statements. If the most recently available financial statements relate to a year-end prior to March 2020, please select another company as I fear results will be vastly different following the COVID-19 pandemic
This report should include a comparison to competitors, or to industry averages, and I would like you to provide a recommendation as to whether Mariner Capital should invest in the company or not.
2. Secondly, I would like you to select a current issue in respect of financial reporting and discuss its relevance to your company, using the financial statements to support your discussion.
3. Finally, I would likely to comment on which international financial reporting standards you believe to be the most relevant for the entity. You can select more than one standard but explain why you have selected this as a key accounting standard (or standards) in relation to the company.
Respond to Paul’s email by preparing a report of no more than 5,000 words.
Produce a short video presentation of no more than 5 minutes summarising the key findings of your report. This can use any form of presentation software you like, but you will need to be included in the video yourself.
Do NOT select football clubs or banking or insurance companies (Tesco is OK, even though they have a banking section it is not the main part of the company). Your answer should be based on the information available in the company`s annual report, and any other relevant financial information. You should make use of the wide range of research tools made available to the university. The breadth of research covered, in conjunction with the suitability of the source, will be considered as part of the grade.
Part one of the report should assess performance, position and cash flow as separate propositions, so you should separate the report into those specific headings. As a guide, the performance section is normally expected to be around the same length as the position and cash flow sections combined. Explaining what has occurred (e.g. gross profit margins increased by 10%) is not enough. You should try to attempt to explain why changes happened, and when during the year. Be imaginative. Do not just use textbook ratios. Think what is relevant to your company. (For example, for a retail business the revenue per square metre of floor space could be important. For an airline it might be seat utilisation). If your company refers to key specific metrics in its annual report, consider comparing these with competitors. Consider the presentation of the report. Graphs are a useful way of presenting information clearly to the user and can be used to provide excellent comparisons between different periods and different entities. Any tables of numbers should be included in an appendix to the report (which is not included within the word count).
Part two of the report will involve you selecting one of the ‘current issues in financial reporting’ covered within ACFI 302 and explaining how it is relevant to the company you have chosen. You can select up to two current issues. This discussion should briefly outline the issue but should be mainly focused on how it is relevant to your chosen company, using specific examples from your earlier research.
Part three of the report will require you to select one or more accounting standard covered during your studies. You should explain why it is a key item in the financial statements and how it compares to the rest of the industry. When deciding which accounting standard(s) to cover, consider items such as the size of the balance, the risk of the balance and any significant judgements that have been required