Social Science Department
Year 12 Business (T)
Unit 3: Planning for Current Context (46271)
Semester 2, 2021
Topic: Financial Management
Assessment Task 1: Financial Response
Worth: 25% of semester mark
Virgin Airlines Australia announced in April 2020 that it had entered voluntary administration due to the reduction in flights as a result of Covid-19 travel restrictions.
Reports estimate Virgin Australia were struggling to service a $5 Billion (AUS) dollar debt. Virgin Australia chief executive Paul Scurrah said “Our decision today is about securing the future of the Virgin Australia Group and emerging on the other side of the Covid-19 crisis.”
Over the past decade Virgin Australia has only reported two statutory profits in the past decade, and requested a substantial bail out from the Australian Government, which was denied.
Virgin Australia Group was owned by a number of entities and appointed Deloitte (a consulting group) to try and restructure the firm’s debt, pay off creditors and find a buyer. A number of private equity groups were interested, with Bain Capital winning the final bid.
Task:
You are required to write a response that critically analyses the situation that Virgin Airlines faced in 2020. Your response needs to address the financial management aspects of the statement above and include expanded research from other articles.
Your response should look to cover:
Various types of Finance – internal or external sources of finance that were available to Virgin and a critical analysis of why private equity was sort over debt finance.
The impact of the $5b debt on Virgin, its effect on the solvency for the business and whether or not Virgin Airlines was negligent running up this debt.
Other information relevant to the financial management of Virgin airlines you discover through your research.
Your response should be 700 – 800 words in length, incorporating an executive summary (not included in the word count), introduction and conclusion. You must also include Harvard in-text referencing.
General Assessment Criteria
Students will be assessed on the degree to which they demonstrate:
Knowledge and understanding
Skills
Marking guide attached on reverse.
Finance Response Rubric (T) 2021 Student: Grade___________ Mark _______
Criterion
A (85-100)
B (70–84)
C (50 – 69)
D (30 – 49)
E (1 -29)
Knowledge and understanding
-critically analyses the sources of finance available to business and analyses the impact(s) they have on business
-critically analyses the impact of debt on this case study including the solvency of the business and the implication of the financial decision making of going into debt.
-critically analyses financial management and evaluates the problems identified providing relevant solutions linked to established financial theories
– synthesises a variety of viewpoints, ideas and decisions to present a reasoned understanding of the importance of financial planning and management of Virgin Airlines
-analyses the sources of finance available to business and analyses the impact(s) they have on business
– analyses concepts relating to the impact of debt on this case study including the solvency of the business and the implication of the financial decision making of going into debt.
– analyses financial management and evaluates the problems identified providing relevant solutions l linked to established financial theories
– compares and analyses s a variety of viewpoints, ideas and decisions to present a reasoned understanding of the importance of financial planning and management of Virgin Airlines
-explains the sources of finance available to business and analyses the impact(s) they have on business
-explains the impact of debt on this case study including the solvency of the business and the implication of the financial decision making of going into debt.
– explains financial management and describes the problems identified providing some solutions linked to established financial theories
– compares and explains s a variety of viewpoints, ideas and decisions to present an understanding of the importance of financial planning and management of Virgin Airlines
– describes the sources of finance available to business and has a limited understanding of the impact(s) they have on business
– describes the impact of debt on this case study including the solvency of the business, May or may not describe the implication of the financial decision making of going into debt.
– describes financial management, may not link problems and relevant solutions to established financial theories
– describes viewpoints, ideas and decisions to present a basic understanding of the importance of financial planning within Virgin Airlines
-identifies the sources of finance available to business and is unable to identify the impact(s) they have on business
– identifies the impact of debt on this case study may not include the solvency of the business and/ or the implication of the financial decision making of going into debt.
– identifies financial management, unable to identify problems nor relevant solutions with respect to established financial theories
– identifies viewpoints, ideas and decisions with little understanding of the current situation facing Virgin Airlines
Skills
-evaluates information to draw evidence based conclusions to solve problems and produce innovative solutions
-constructs logical, reasoned and convincing arguments to thoroughly justify valid conclusions, decisions, judgments and recommendations
-Draws on a wide range of sources to inform argument
– communicates complex ideas with coherent and sustained arguments with analysis of evidence, detailed annotations, using appropriate terminology and accurate referencing
-analyses information to draw evidence based conclusions to solve problems and produce innovative solutions
-constructs convincing arguments to justify valid conclusions, decisions judgments and recommendations
-Draws on a range of sources to inform argument
– communicates complex ideas and coherent arguments using appropriate evidence, terminology and accurate referencing
-interprets information to draw evidence based conclusions to solve problems and produce solutions
-constructs arguments to justify valid conclusions, decisions judgments and recommendations
– Makes use of multiple sources to inform argument
-communicates ideas and arguments using appropriate evidence, terminology and accurate referencing
-describes information with some relationship to the problem being addressed
-constructs arguments with some reference to conclusions, decisions judgments and recommendations with some lapses in logic
-Limited research used to inform argument
-communicates ideas and arguments with referencing
-describes information with little or no relationship to the problem being addressed
-constructs arguments with little or no reference to conclusions, decisions judgments and recommendations
– Research not evident
-communicates limited ideas and information with minimal referencing
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