You are part of the Accounting and Finance team at SKANSKA PLC. Write a report to the Management of SKANSKA PLC, critically evaluating the importance of Accounting and Finance functions, duties and roles within SKANSKA PLC

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Module Title:

FINANCIAL DECISION MAKING

Module Code:

BM414

Assignment No/Title:

ASSIGNMENT

Assessment Weighting:

100%

Submission Date:

 

Feedback Target Date:

3 weeks

Module Co-ordinator/ Tutor:

 

Course Area

FD

Submission Instructions:

This assignment is to be submitted electronically using LSST Connect

 

  1. This assignment must be submitted electronically by 2pm on the submission date
  2. To submit electronically you must upload your work to the e-submission area within the VLE module concerned. Click Submit> Browse (find the correct file to upload) Upload> Submit Explain the structure of and terms used within the financial statements
  3. You can resubmit your work as many times as you like until the deadline. If you choose to resubmit, your earlier submission will be replaced, and you will NOT receive an Originality Report until 24 hours from when the submission was made.
  4. You will receive a digital receipt as proof of submission. This will be sent to your school’s e-mail address; please keep this for reference.
  5. You are reminded of the University’s regulations on cheating and plagiarism. In submitting your assignment, you are acknowledging that you have read and understood these regulations.
  6. You are reminded that it is your responsibility to keep an electronic copy of your assignment for future reference.

Instructions to Students:

An individual written assignment of 3,000 words maximum is expected. Use the formal report format and include a Bibliography/ reference list of all books, journals and websites consulted in your research. Assume that the financial analysis is aimed at potential investors who are currently considering investing in Skanska PLC. The financial performance evaluation will enable the potential investors decide whether to invest in this company.

 

This assignment tests the following Learning Outcomes for the module:

  1. Explain the structure of and terms used within the financial statements
  2. Apply management accounting techniques for planning, control and decision making within the organisation
  3. Calculate the main accounting ratios and explain their significance to users of financial statement
  4. Demonstrate knowledge of the role of finance and accounting within the organisation with respect to both reporting and decision making aspects

 

The Assignment Task:

Please note;

SKANSKA PLC is a Construction Company based in UK. SKANSKA PLC started back in 1984. The company is planning to expand its operations to other countries in Europe in the next ten (10) years. The financial statements of SKANSKA PLC. are attached for your consideration and attention.

You are advised to incorporate the suggested amendments/feedback you received from the module tutor during assignment briefing.

Required

TASK 1 (1500 WORDS)

You are part of the Accounting and Finance team at SKANSKA PLC. Write a report to the Management of SKANSKA PLC, critically evaluating the importance of Accounting and Finance functions, duties and roles within SKANSKA PLC. Your evaluation must include some examples within the Company where appropriate. (40 marks)

TASK 2 (1000 WORDS)

Using the financial statements of SKANSKA PLC calculate the ratios required and comment on the company’s performance from an Investor with £1 million perspective. (50 marks)

Marks will be awarded for Structure and Presentation skills. Structure includes the orderly presentation of relevant material. In addition, the extent of research evidenced by the appropriateness and adequacy of in-text referencing. There must be a Cover Page and Contents Page, paragraphs of Introduction, Conclusion and pages must be numbered. (10 marks)

Assessment Criteria

You will obtain marks for the following:

Presentation of your work (report format, clarity of expression, referencing etc.).................................................. 10%

The functions/roles/duties of accounting and finance team within SKANSKA PLC with appropriate examples.   40% Ratio calculation........................................................................................................................................................................ 10%

Interpretation and analysis of the Ratios in relation to SKANSKA PLC performance………………                               40%

TOTAL MARKS                                                                                                                                                 100%

 

The summarised financial statements of SKANSKA PLC, a Public company engaged in Construction, are shown below:

Statement of profit and loss:

 

For the year ended 31 Dec. 2018

For the year ended 31 Dec. 2019

 

£000

£000

£000

£000

Sales revenue

 

4,800

 

6,000

Cost of sales

 

 

 

 

Opening inventory

1,200

 

450

 

Purchases

2,700

 

4,800

 

 

3,900

 

5,250

 

Less: Closing inventory

(450)

(3,450)

(900)

(4,350)

Gross profit

 

1,350

 

1,650

Operating expenses

 

(600)

 

(675)

Finance cost

 

(150)

 

(300)

Net profit

 

600

 

675

Statement of financial position

As at year to 31 Dec.

2018

As at year to 31 Dec.

2019

 

£000

£000

£000

£000

Non-current assets

 

2,955

 

6,000

Current assets

 

 

 

 

Inventory

450

 

750

 

Receivables – trade

900

 

1200

 

Prepayments

90

 

105

 

Cash

75

1,515

15

2,070

 

 

4,470

 

8,070

Issued share capital

 

900

 

900

Share premium account

 

300

 

300

Retained earnings

 

1,125

 

1,650

 

 

2,325

 

2,850

Non-current liabilities

 

 

 

 

10% loan notes

 

1,500

 

3,000

Current liabilities

 

 

 

 

Payables – trade

570

 

2,100

 

Accruals

75

645

120

2,220

 

 

4,470

 

8,070

Task 2 - Required

  1. Calculate the following five ratios for each of the two years:

(i) Return on capital employed

(ii)  Net profit margin

(iii) Current ratio

(iv) Average Receivable days/ Debtors collection period

(v)  Average Payable days/ Creditors collection period (10 marks)

2. Comment on the performance of SKANSKA PLC. results from and position between the two (2) years from (a), mentioning possible causes, reasons and effects for the changes in the ratios. (40 marks)


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