Financial Management Assignment Answer for ABS MBA Students
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- Word limit 3500
(TOTAL MARKS 90)
Question 1
See Appendix 1 Vodafone Financial Accounts
a. Calculate the following ratios for 2021 to 2023:
- Net Profit Margin
- Gross Profit Margin
- Creditor (Payable) Days
- Debt Equity Ratio
- Return on Capital Employed
- Net Asset Turnover
(10 marks)
b. Based on the ratios calculated above comment on the financial performance of Vodafone plc over three years.
(10 marks)
c. At a recent board meeting of Vodafone, the sales director said that the company is doing so well now given the £12billion pounds profit in 2023 that the primary focus of the company must be maximization of profits.
Critically discuss if this should be a long-term goal for Vodafone and what other objectives might be important.
(10 marks)
Also Checkout: LO 3: UNDERSTAND THE FINANCIAL STATEMENT AND DECISION ANALYSIS, INCLUDING RISK MANAGEMENT ASSIGNMENT ANSWERS
Question 2
Sloane plc is looking to take on a new investment. The company will evaluate two mutually exclusive projects, whose details are given below. The company’s cost of capital is 10%.
| Project A | Project B | |
| Initial costs | (AED m) | (AED m) |
| Year 0 | 150 | 152 |
| Cash inflows: | ||
| Year 1 | 40 | 80 |
| Year 2 | 50 | 60 |
| Year 3 | 60 | 50 |
| Year 4 | 60 | 40 |
| Year 5 Year 6 | 85 20 | 30 50 |
Required:
a. Calculate the:
Expected payback period (3 marks)
Accounting Rate of Return (5 marks)
Net Present Value (5 marks)
Internal Rate of Return (5 marks)
b. Explain and evaluate the benefits of calculating the above investment appraisal techniques for the firm?
What are the challenges of conducting investment appraisal analysis?
(10 marks)
Also Read: MANCOSA BCOM FINANCIAL PROJECT MANAGEMENT ASSIGNMENT ANSWERS
Question 3
Required:
a. Consider the theoretical cost of Debt, Preference Shares and Ordinary Shares rank them from most expensive to cheapest.
(6 marks)
b. Recently one of your company directors has attended a finance conference, on their return the director has decided the company should fund all
projects with internal sources of financing as they are essentially ‘free’. Critically discuss if you agree with this statement.
(10 marks)
c. Discuss whether the company should raise finance (via any means) if it has a project available with a net present value of BD 10million
(10 marks)
d. Give an example of a type of business which might utilize high leverage (gearing) fully explaining how this would benefit them from a financial management perspective.
(6 marks)