MY ORGANISATION NAME IS “CONTACT ENERGY LIMITED ORDINARY SHARES (CEN)’’Calculate the following ratios for 2015 and 2016 based on its published financial statements. (Note: you have to show your calculations) (35 marks) Profitability ratios: Liquidity ratios: Efficiency ratios: Gross Profit Margin, Net Profit Margin, Return on Assets, Return on Stockholder’s Equity Current ratio, Acid Test ratio, Cash ratio, Net Working Capital Accounts Receivable Turnover, Inventory Turnover, Accounts Payable Turnover, Total Asset Turnover d. Leverage ratios: Debt ratio, Equity ratio, Debt-Equity Ratio e. Valuation and Growth ratios: Earnings per share, Price/Earnings ratio Question 2: Analyse the organisation’s 2016 financial statements using ratio analysis and identify strengths, weaknesses, and recommendations for improvement. (35 marks) Part B – 30 marks Question 3: Your organisation is in need of $150,000 for 30 days for an investment. Having no source of additional unsecured borrowing, the firm must find secure short term lender. The firm’s accounts receivable is quite low but its inventory is considered liquid and a reasonably good collateral. The book value of the inventory is $350,000 of which $150,000 is finished goods. You have the following options: ANZ Bank will make $150,000 trust receipt loan against the finished good inventory. The annual interest rate on the loan is 13.5% on the outstanding loan balance plus a 0.25% administration fee levied against the $150,000 initial loan amount. As inventory is sold, the average amount owed is expected to be $80,000 per month. ASB Bank will grant a loan of $150,000 against a floating lien on the book value of inventory for 35 days period on an annual interest rate of 14%. Westpac Bank will loan $150,000 against a warehouse receipt on the finished goods inventory and charge 15% p.a. on the outstanding balance. A 0.5% warehousing fee will be charged against the average amount borrowed. Given the loan will be liquidated as inventory is sold, the average loan balance is expected to be $70,000. Required: Calculate the dollar cost of each of the proposed plans for obtaining an initial loan amount of $150,000. (6 marks) Which plan do you recommend and why? (4 marks) Critical discuss the advantages and disadvantages of debt financing and equity financing and evaluate the financial management models to provide improved returns on the investments of the business entity with the understanding of the money markets and investment process.(20 marks)
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Universal Education Group Limited
trading as New Zealand National College 2008
Level 3
238 Queen Street
Auckland Central
New Zealand
Tel.: +64 (9) 379 9330 email: info@nznc.ac.nz
BUS608
Finance
Level 7 Assessment 2: Open Book Assignment
Deadline: 2017 Term 1 Week 9
Learning Outcomes assessed:
2. Analyse and infer the financial statements of a business and assist in the budgetary
projections.
4. Establish the importance of financial management for a business unit and
differentiate between the types of money markets as an essential trait required for
any business to survive and thrive.
5. Critically evaluate the financial management models to provide improved returns
on the investments of the business entity with the understanding of the money
markets and investment process.
6. Develop plans for business investments applying working capital management
models.
Declaration on plagiarism:
I hereby declare that this piece of work is the result of my own independent
scholarly research, and that in all cases materials from the work of others (such as
books, articles, essays, dissertations and information on the internet) is
acknowledged and appropriately referenced, and quotations and paraphrases are
clearly indicated. No material other than that listed has been used. This written
work has not previously been used at this or any other institution.
Full name: __________________________
NZNC ID: __________________________
Learning Outcome
Part
Total Possible
2,4
A
70
5,6
B
30
Total Awarded
100
BUS608 Finance Level 7 Assessment 2: Assignment & Presentation
last updated 2017-03-20
page 1 of 4 MARKING SCHEDULE
© Universal Education Group Limited trading as New Zealand National College 2008 – all rights reserved 2017.
Universal Education Group Limited
trading as New Zealand National College 2008
Level 3
238 Queen Street
Auckland Central
New Zealand
Tel.: +64 (9) 379 9330 email: info@nznc.ac.nz
Assessor:
Date of decision:
Moderator:
Moderation date:
Data Officer:
Data entry date:
Assessment Conditions:
• This is an open book assignment to be completed outside your normal lecture hours;
you may refer to your notes and hand-outs to complete this presentation.
• Result from this assessment counts towards 50% for your final grade in the Finance
paper/course for your Diploma in Business (Level 7) programme.
(written report – 40%; presentation – 10%)
• Cheating or academic misconduct will result to the student(s) concerned being
•
•
•
•
awarded a “Fail” for the Finance paper/course and must re-enrol next term. Any
work taken from other source must be referenced using the APA method.
The work should be professionally presented with the help of Microsoft Word and
Microsoft PowerPoint presentation.
For Part A, in addition to your written assignment, you must also present your
findings in class. Your presentation must be between 10 to 15 minutes and must be
accompanied by a professional PowerPoint presentation. You must arrange with
your lecturer your presentation time well in advance of Week 9.
Part B is only required to be addressed in your written assignment – no presentation
is necessary.
Submit your assignment (report in Word and presentation slides in PowerPoint)
electronically by the due date and time to assignments@nznc.ac.nz – failure to meet
the deadline means you will go into the re-submission stage automatically AND you
will not be able to select 2 x full-days lecture arrangement next term.
Assessor’s feedback to student
BUS608 Finance Level 7 Assessment 2: Assignment & Presentation
last updated 2017-03-20
page 2 of 4 MARKING SCHEDULE
© Universal Education Group Limited trading as New Zealand National College 2008 – all rights reserved 2017.
Universal Education Group Limited
trading as New Zealand National College 2008
Level 3
238 Queen Street
Auckland Central
New Zealand
Tel.: +64 (9) 379 9330 email: info@nznc.ac.nz
Part A – 70 marks
As a manager, you are required to prepare a report and a presentation to the Board of
Directors on your selected New Zealand-based organisation, answering ALL of the
following questions: MY ORGANISATI0ON NAME IS “CONTACT ENERGY
LIMITED ORDINARY SHARES (CEN)’’
Question 1:
Calculate the following ratios for 2015 and 2016 based on its published financial
statements. (Note: you have to show your calculations) (35 marks)
a. Profitability ratios:
Gross Profit Margin, Net Profit Margin, Return on Assets, Return on Stockholder’s Equity
b. Liquidity ratios:
Current ratio, Acid Test ratio, Cash ratio, Net Working Capital
c. Efficiency ratios:
Accounts Receivable Turnover, Inventory Turnover, Accounts Payable Turnover, Total Asset Turnover
d. Leverage ratios:
Debt ratio, Equity ratio, Debt-Equity Ratio
e. Valuation and Growth ratios:
Earnings per share, Price/Earnings ratio
Question 2:
Analyse the organisation’s 2016 financial statements using ratio analysis and identify
strengths, weaknesses, and recommendations for improvement.
(35 marks)
BUS608 Finance Level 7 Assessment 2: Assignment & Presentation
last updated 2017-03-20
page 3 of 4 MARKING SCHEDULE
© Universal Education Group Limited trading as New Zealand National College 2008 – all rights reserved 2017.
Universal Education Group Limited
trading as New Zealand National College 2008
Level 3
238 Queen Street
Auckland Central
New Zealand
Tel.: +64 (9) 379 9330 email: info@nznc.ac.nz
Part B – 30 marks
Question 3:
Your organisation is in need of $150,000 for 30 days for an investment. Having no
source of additional unsecured borrowing, the firm must find secure short term lender.
The firm’s accounts receivable is quite low but its inventory is considered liquid and a
reasonably good collateral. The book value of the inventory is $350,000 of which
$150,000 is finished goods. You have the following options:
i.
ii.
iii.
ANZ Bank will make $150,000 trust receipt loan against the finished good
inventory. The annual interest rate on the loan is 13.5% on the outstanding loan
balance plus a 0.25% administration fee levied against the $150,000 initial loan
amount. As inventory is sold, the average amount owed is expected to be
$80,000 per month.
ASB Bank will grant a loan of $150,000 against a floating lien on the book value
of inventory for 35 days period on an annual interest rate of 14%.
Westpac Bank will loan $150,000 against a warehouse receipt on the finished
goods inventory and charge 15% p.a. on the outstanding balance. A 0.5%
warehousing fee will be charged against the average amount borrowed. Given
the loan will be liquidated as inventory is sold, the average loan balance is
expected to be $70,000.
Required:
a. Calculate the dollar cost of each of the proposed plans for obtaining an initial loan
amount of $150,000. (6 marks)
b. Which plan do you recommend and why? (4 marks)
c. Critical discuss the advantages and disadvantages of debt financing and equity
financing and evaluate the financial management models to provide improved
returns on the investments of the business entity with the understanding of the
money markets and investment process.(20 marks)
BUS608 Finance Level 7 Assessment 2: Assignment & Presentation
last updated 2017-03-20
page 4 of 4 MARKING SCHEDULE
© Universal Education Group Limited trading as New Zealand National College 2008 – all rights reserved 2017.
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