Objective

This assignment for MAF605 ACCOUNTING AND FINANCE FOR MANAGERS covers essential finance and accounting concepts. PART A includes calculating and analyzing financial ratios, investment appraisal techniques, preparing a cash flow statement, and discussing financing options for asset acquisition. PART B focuses on explaining the benefits of cash budgeting, differences between rights and bonus share issues, the use of overdraft facilities for managing cash flow, analyzing liquidity through ratios, managing inventory, and determining the most cost-effective financing options. The goal is to enhance students’ skills in financial analysis and decision-making in a business context.

REQUIREMENT

PART A:

QUESTION 1

1. a) For EACH of the three years calculate the following ratios:

    i The gross profit percentage

   ii The net profit after tax percentage

   iii The expenses to sales percentage

  iv The Earning Per Share

  v The Price Earning ratio

1. b) Discuss briefly the trends revealed by the above ratios.

QUESTION 2

1. a) Calculate the payback period (in years and months).
2. b) Calculate the ARR (accounting rate of return).
3. c) Calculate the NPV (net present value).
4. d) Explain briefly if you think that the project is viable.
5. e) Discuss the potential sources of long-term finance available to a large company.

QUESTION 3

1. a) Prepare a cash flow statement

) Outline the reasons for the cash flow statement. 

1. c) A company wishes to replace its fleet of vehicles. It is considering two possible options – to use Hire Purchase OR to lease the vehicles. Discuss the strengths and weaknesses of EACH option.

QUESTION 4

1. a) A company makes a single product.

TASKS  a)       

        i Calculate the budgeted profit. 

       ii Calculate the break-even point in units.

      iii Calculate the profit if an extra £100,000 was spent on marketing and 60,000 units are made and sold. 

1. b) Explain the importance of accounting ratios.

PART B:

QUESTION 1 

Explain the benefits of a cash budget. 

QUESTION 2 

Explain the differences between a rights issue and a bonus issue of shares. 

QUESTION 3 

A company is expecting a temporary negative cash flow. Discuss the benefits of funding the deficit by arranging an overdraft facility with its bank.

QUESTION 4

TASKS 

1. a) Calculate the current ratio for EACH of the three years.
2. b) Calculate the acid test ratio for EACH of the three years.
3. c) Analyse the liquidity position of the company over the three years.

QUESTION 5

1. a) Calculate the Economic Order Quantity.
2. b) Calculate the number of orders to be placed.
3. c) Calculate the total annual inventory costs.
4. d) Determine the reorder point.

QUESTION 6

1. a) Calculate the after-tax cost of debt, preferred stock and common stock.
2. b) Which source of financing should the firm choose? Why?

Online Class Participation

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