This assessment is in two parts, please answer both parts
(Each part carries equal marks)
The maximum word count is 2 000 words (+/- 10%) in total to complete both sections
Please write the word count clearly on the front of your assignment.
Please note that this is an individual assignment and the policy of the University on “Policy on Cheating, Collusion and Plagiarism” applies.
You should use Harvard referencing and cite all sources used in your work.
Submission of Your Work
Your completed work should be submitted online by uploading it to the module Canvas site.
You should submit your work as a WORD document
Part A – Clique Automotive Plc
You are a financial analyst at Clique Automotive Plc; a public limited company specialising in manufacturing and distributing automotive equipment. The Board of Directors have looked into the financial statements of the company for the last two years and have raised concerns regarding both the company’s profitability and liquidity. The financial statements of Clique Automotive Plc for the last two years are given below:
Statement of Comprehensive Income for the year ended 31 December
| 2021 | 2020 | ||||
| £000 | £000 | £000 | £000 | ||
| Revenue | 38,550 | 29,950 | |||
|
Less: Cost of sales: |
|||||
| Opening Inventory | 3,875 | 4,535 | |||
| Manufacturing costs | 22,140 | 13,250 | |||
| 26,015 | 17,785 | ||||
| Less: Closing Inventory | (6,225) | (3,875) | |||
| Cost of Sales | (19,790) | (13,910) | |||
| Gross profit | 18,760 | 16,040 | |||
|
Less: Expenses |
|||||
| Selling & distribution expenses | 8,135 | 4,380 | |||
| Administrative expenses | 2,100 | 990 | |||
| Bad debts written off | 1,040 | 565 | |||
| (11,275) | (5,935) | ||||
| Operating profit | 7,485 | 10,105 | |||
| Less: Interest payable | (1,690) | (380) | |||
| Profit before tax | 5,795 | 9,725 | |||
| Less: Income tax | (900) | (1,920) | |||
| Profit after tax | 4,895 | 7,805 | |||
| Less: Dividends paid | (2,100) | (2,100) | |||
| Retained profit for the year | 2,795 | 5,705 | |||
Statement of Financial Position as at 31 December
| 2021 | 2020 | |||
| £000 | £000 | |||
| ASSETS
Non-current assets (net) |
||||
| Land and buildings | 24,590 | 19,280 | ||
| Equipment | 4,380 | 3,200 | ||
| Motor vehicles | 1,900 | 1,650 | ||
| 30,870 | 24,130 | |||
|
Current assets |
||||
| Inventory | 6,225 | 3,875 | ||
| Trade Receivables | 5,900 | 4,500 | ||
| Cash | 0 | 560 | ||
| 12,125 | 8,935 | |||
| Total Assets | 42,995 | 33,065 | ||
|
EQUITY AND LIABILTIES Equity |
||||
| Ordinary shares of £1 each | 26,035 | 24,330 | ||
| Retained earnings (reserves) | 3,905 | 1,110 | ||
| 29,940 | 25,440 | |||
| Non-Current liabilities
Loan stock |
4,575 | 1,250 | ||
| Current liabilities | ||||
| Trade Payables | 5,100 | 4,885 | ||
| Taxation | 1,200 | 1,490 | ||
| Bank overdraft | 2,180 | 0 | ||
| 8,480 | 6,375 | |||
Total Equity and Liabilities 42,995 33,065
Required:
Prepare a report for the Board of Clique Automotive Plc. that evaluates the financial position and performance of the business in relation to profitability, liquidity, gearing, efficiency (asset utilisation), and investor potential. You must support your report with the calculation of relevant ratios in each of these five evaluation areas mentioned above. Your discussion should comment on changes from year to year, as well as their potential implications for the business.
All calculations should be clearly shown including all appropriate workings and should be made to the nearest £000 or two decimal places where required.
Marks for Part A: 50%
Part B
Successful businesses should identify and invest in attractive long-term business projects, in order to take advantage of potential business opportunities, perform effectively and satisfy shareholders.
An issue of critical importance to business managers is therefore the evaluation of potential investment opportunities.
Required
Critically evaluate alternative approaches that may be used to financially assess long-term business investment opportunities.
As well as demonstrating your critical understanding of the financial techniques you discuss, you should also ensure that discuss the potential value of the information for decision makers.
You may include illustrative calculations in as far as they support your discussion.
Marks for Part B: 50%
Notes:
- To enhance your mark, your work should:
- Be concise, precise, well presented and clearly structured
- Draw logical conclusions from accounting information you discuss
- Synthesise information in a coherent and useful way
- Research thoroughly – showing evidence of wider reading
- Demonstrate critical understanding of financial management.
- Harvard standard referencing is required in your work
Up to 2,000 words in total overall. (plus, or minus 10%)