Assignment 2-(Case study) 2000 words +/-10%Total Weighting:50%Intended Learning Outcomes: 3 and 4 Assignment 2: A Case Study LO 3. Analyse capital investment decisions, including carrying out a risk assessment, using appropriate accounting ratios. LO 4. Analyse and compare internal and external performance indicators and the role of pricing on performance. Beta Ltd wantsto re-establish itself … Continue reading “capital investment decisions | My Assignment Tutor”
Assignment 2-(Case study) 2000 words +/-10%Total Weighting:50%Intended Learning Outcomes: 3 and 4 Assignment 2: A Case Study LO 3. Analyse capital investment decisions, including carrying out a risk assessment, using appropriate accounting ratios. LO 4. Analyse and compare internal and external performance indicators and the role of pricing on performance. Beta Ltd wantsto re-establish itself as a retail giant and decides to appraise investment opportunities. It has opportunities for investing in two different projects: Project 1 has an initial cost of £360,000 and Project 2 has an initial cost of £390,000.It is estimated that the net cash flows over the next five years will correspond to those given below. Year12345Net Cash Flow-Project 1£100,000£150,000£130,000£80,000£50,000Net Cash Flow-Project 2£70,000£90,000£100,000£150,000£50,000 You are required to calculate for project 1 and project 2,the following: i)The payback periods. ii)The net present value at a 12% cost of capital,and iii)The internal rate of return. Also, advise Beta ltd on the suitability of the projects, based on your above calculations. Financial Statements of Beta Ltd. Income Statement for the period ended June30, 2021 Details £ £ Sales 700,000 Less Cost of goods sold -400,000 Gross profit 300,000 Expenses Salary 120,000 Office expenses 65,000 Interest 20,000 Total (205,000) Profit before Tax 95,000 Tax -5,000 Net profit 90,000 Statement of Financial Position as on 30 June 2021 Assets Non-Current Assets Building 120,000 Machinery 57,000 Car 20,000 Total 197,000 Current Assets Inventory 25,000 Trade receivables 10,000 Bank 14,000 Total 49,000 Less Current Liabilities Trade payables 10,000 Accruals 11,000 Bills payables 6,000 27,000 -27,000 Net Current Assets 22,000 Total Assets 219,000 Non-Current Liabilities Bank Loans 80,000 5% Debentures 60,000 Total 140,000 Equity Share capital 50,000 Reserves and Surpluses 19,000 6% Preference Share Capital 10,000 Total Capital and Liabilities 219,000 You are required to: ·In line with the case scenario, write a Report analysing Capital Investment decisions and carry out a risk assessment using appropriate accounting ratios,Current ratio, Quick ratio, Debt Equity ratio, Interest Cover ratio, Stock Turnover ratio, Debtors’Turnover ratio, Creditors Turnover ratio and Net Profit ratio. Analyse and compare internal and external performance indicators and the role of pricing on performance. You must discuss different pricing strategies also. Referencing your work References to relevant academic theory and research findings should be provided and cited appropriately using the Harvard system of referencing, Presentation Present a document with a word count of 2000 words (+/-10%) (Case Study evaluation) and 2000 words (+/-10%) (Case Study evaluation) excluding references, bibliography, images, diagrams, table and appendices. The word count should be statedin the assignment cover sheet and please note you will be penalizedfor exceeding the word limit. Work must be submittedin a folder, word-processed in a suitable format of 12-point font, 1.5-line spacing and pages numbered.
