The directors of the business are keen to understand the reasons behind the company’s worsening performance and require a deeper understanding of this year’s and prior year’s performance before deciding on an improved strategy.
Required:
Perform a financial analysis of Ardie Ltd. This should be presented as a Business Report to the Management of Ardie Ltd and should include the following:
- A ratio analysis of Ardie Ltd using the financial statements provided in Appendix 1. Include the analysis and interpretation in your report.
- An interpretation of your ratio analysis, including explanations of the movements in ratios and highlighting any strengths and areas of concern for this company and their external stakeholders.
- Any recommendations for improvement
There is a selection of financial ratios for 2012-2014 also included in Appendix 2 to provide you with comparative information.
The main body of the report should identify the key findings of your analysis but be expressed using appropriate financial language. Please note any calculations should be attached as an appendix to your report and not included in the main body of the text. It would however be useful to include a table of results as a summary within your report.
Make appropriate assumptions about the business and your report should include recommendations in respect of suitable improvements for management to consider.
The grading structure is as follows:
Presentation 5 marks
Calculations 15 marks
Interpretation & Analysis 25 marks
Conclusions & Recommendations 5 marks
Total 50 marks
Section A is worth 50% of the overall coursework mark.
Section B – Management Accounting - Theory
The MD of Xenon Ltd feels that the annual budget process is currently too not adding value.
The current process involves the majority of decisions on targets and resource allocation being made by Head Office. The production budget is prepared using traditional top down budgeting. Once the final budget is agreed, it is fixed, and divisional managers are required to explain in detail the reasons for variances between actual results and the original budget plan.
Required:
Prepare an essay for the Managing Director that critically discusses the company’s current annual budgeting process.
Then critically discuss how the alternative approaches of ZBB and Kaizen could be utilised by the management of Xenon, ensuring that you include their advantages and disadvantages.
Please ensure you make reference to academic sources in your discussion.
The grading structure is as follows:
Presentation and Structure 3 marks
Research and referencing 6 marks
Knowledge, understanding and critical evaluation 21 marks
Total 30 marks
Section B is worth 30% of the coursework mark.
Section C – Management Accounting - Practice
You are the management accountant for Splashtime Ltd which manufactures bath products.
The Sales Director has decided to run a promotional advertising campaign to try and boost sales on the ‘Zingy’ product range for five weeks. Normal weekly sales for the Zingy product set are 3,100 units and it sells at a price of £350 per set. She tells you that the Zingy normal contribution margin is 40% of the selling price.
She has asked you to evaluate the effects of the campaign and has provided you with the results of her market research into the idea as follows:
- Weekly sales are expected to increase during the promotion to 8,060 units.
- The promotional discount is 21% on the normal selling price.
- Unit variable costs are expected to remain the same during the promotion.
- Additional fixed costs incurred to run the promotion are expected to be £580,000.
Required:
- Calculate the expected contribution with and without the advertising campaign and the incremental profit or loss. Recommend whether you believe the advertising campaign should go ahead.
(13 marks)
2.Calculate % increase or decrease in sales units required during the promotion to achieve the normal profit level without the advertising campaign.
(4 marks)
3. Describe other factors that should be considered before making a decision regarding the promotion.
(3 marks)
Section C is worth 20% of the coursework mark.
Your coursework should be approximately 4,500 words overall
