Solent University Coursework Assessment Brief

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Solent University

Coursework Assessment Brief


Assessment Details

Module Title: Understanding Finance


Module Code: QH0320
Module Leader: Tracy Mncube
Level: 3
Assessment Title: Budget report
Assessment Number: AE1
Assessment Type: Individual report
Restrictions on Time/Word Count: 1000 words (+/- 10%) plus spreadsheet
Consequence of not meeting There is no penalty for presenting below the word
time/word count limit: limit, but students should be aware that there is a risk
they may not maximise their potential grade.

Assignments should be presented appropriately in line


with the restrictions stated above; if an assignment
exceeds the word count, this will be taken in account
in the grades given using the assessment criteria
shown.
Individual/Group: Individual
Assessment Weighting: 100%
Issue Date: w/c 14 June 2021
Hand In Date: 4pm, Monday, 20th September, 2021
Mode of Submission: On-line
Number of copies to be submitted: One copy submitted to ‘Solent Online Learning’

Anonymous Marking This assessment is to be marked anonymously

Assessment Task

You are required to produce a budget report, complete with analysis and
commentary, on a given scenario. The report consists of THREE compulsory parts.

HAMBLE LTD

Assessment Scenario

Hamble Ltd is an established food packaging and distribution business operating


across London and the south east of England. The Directors of Hamble Ltd are
considering expanding the business over the next 12 months by purchasing an
existing established business which operates in the east of England and the
midlands.

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PART A (35% weighting)

The directors of Hamble Ltd have asked you, as a recently employed assistant
management accountant, to prepare and review their cash budget. The
bookkeeper started the cash budget but was unable to complete it due to ill
health.

In addition, Hamble Ltd requires you to evaluate the different funding options for
its expansion plans.

Estimated sales and purchases for each of the nine months to September are given
below:
Jan Feb Mar April May June July Aug Sept
£,000 £,000 £,000 £,000 £,000 £,000 £,000 £,000 £,000
Credit sales 9,500 8,000 6,000 11,000 12,350 14,000 13,250 4,500 12,500
Cash sales 250 350 800 600 620 900 500 350 800
Credit purchases 6,000 5,200 5,800 8,000 8,700 6,300 5,200 5,000 5,100

Trade Receivables: Credit sales are to be collected two months after the date
they have been sold.

Trade Payables: Credit purchases are to be paid one month after the date they
have been purchased.

Borrowings: The terms of a 5-year loan are coming to an end and Hamble Ltd are
due to repay the capital of £1,000,000 on 31st July.

Current Liabilities: Corporation tax of £100,000 is due to be paid to HMRC in the


month of May.

Delivery vehicles: Hamble Ltd has a policy of replacing delivery vehicles every 2
years. A number of delivery vehicles are due to be replaced under this policy in
June at a cost of £1,250,000, but existing delivery vehicles will be traded in for
£310,000 as part of the deal.

Other overheads: Other overheads will be £2,200,000 per month settled on a


monthly basis in the month incurred.

Cash: Hamble Ltd expects to have £90,000 in cash at the beginning of April.

You are required to:

1. Using Excel, prepare a cash budget for the business for the 6-month period
from April to September.

NOTE: To achieve full marks you MUST show your working out, i.e. by using Excel
cell referencing and formula.

2. Examine the cash budget you have prepared and advise the directors of
Hamble Ltd of any possible solutions to cash flow problems that might be
evident. Marks will be awarded depending on the depth of discussion.
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3. Identify five sources of finance available to Hamble Ltd and evaluate the
advantages and disadvantages of each. You should then make a
recommendation to the directors of Hamble Ltd of the most appropriate
source of finance for the proposed expansion plans. Marks will be awarded
depending on the depth of discussion.

4. Within the next 3-5 years Hamble Ltd intend to expand their business
throughout the UK following which their aim is to list the business on the
London Stock Exchange. The Directors of Hamble Ltd have asked you to
briefly explain the advantages and disadvantages of raising finance through
the issue of shares.

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Policy, Governance and Information
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PART B (40% weighting)

The Directors of Hamble Ltd have identified two existing established businesses
that may be suitable to purchase to fulfil their expansion plans and have asked you
to calculate and compare ratios for both companies before making a
recommendation on which company to purchase.

Income Statements for the Year Ended 31 st Dec 2020


Norwich Ltd Salford Ltd
£'000 £'000
Sales revenue 8,320 11,250
Cost of sales (6,020) (9,030)
Gross profit 2,300 2,220
Operating expenses (1,048) (1,535)
Operating profit 1,252 685
Finance charges (20) (70)
Profit before tax 1,232 615
Taxation (62) (30)
Profit for the year 1,170 585

SOFP (Balance Sheet) as at 31st Dec 2020


Norwich Ltd Salford Ltd
£'000 £'000 £'000 £'000
Non-current assets 502 198
Current assets
Inventory 1,290 2,437
Trade receivables 730 1,990
2,020 4,427
Total assets 2,522 4,625

Equity
Share capital 1,350 800
Reserves 580 1,145
1,930 1,945

Current liabilities
Trade payables 430 850
Taxation 62 30
Bank overdraft 35 350
527 1,230

Non-current liabilities
Loans 65 1,450
Total equity and liabilities 2,522 4,625

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You are required to:

1. Use your Excel skills to calculate the following ratios for both companies.
You should then present your calculated ratios within your report in a
simple table format for ease of comparison.

NOTE: To achieve full marks you MUST show your working out, i.e. by using Excel
cell referencing and formula.

a. Gross profit margin


b. Operating profit margin
c. Return on capital employed
d. Asset turnover
e. Current ratio
f. Acid test
g. Inventory days
h. Trade receivable days
i. Trade payable days
j. Working capital cycle/operating cycle
k. Gearing
l. Interest cover

2. Compare the performance of the two companies in the 4 key areas of


profitability, efficiency, liquidity and gearing using the ratios calculated in
part 1 and make a recommendation as to which of the two companies
Hamble Ltd should consider purchasing. Marks will be awarded depending on
the depth of discussion.

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Policy, Governance and Information
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PART C (25% weighting)

Hamble Ltd has a varied client base that includes schools, hospitals and the
hospitality sector and has experienced fluctuating consumer demands since the
beginning of the Covid-19 pandemic.

One of their products is a fresh produce box, consisting of local seasonal produce,
and which is ordered in units. The following information is available for the year
ending 30th September.

1. Due to these fluctuating demands, you have been asked to use Excel to
prepare a flexible sales budget for quantities of 200,000 units and 300,000
units. Sales revenue is fully variable.

NOTE: To achieve full marks you MUST show your working out, i.e. by using Excel
cell referencing and formula.

Budget

Sales (units) 250,000

£/unit £000s
Sales revenue 3,250
Variable produce costs (875)
Variable production
overheads (150)
Fixed production costs (700)
Fixed administration costs (1,160)
Profit 365

2. Consider specific factors that may contribute to an increase or decrease in


Hamble Ltd’s consumer demand. You should identify a minimum of 2 factors
that may contribute to an increased demand and a minimum of 2 factors
that may contribute to a decreased demand. Marks will be awarded
depending on the depth of discussion.

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Assessment criteria (Parts A, B and C will be marked against the following criteria in accordance with the indicated weighting)
A1 – A2 A3 – A4 B1 – B3 C1 - C3 D1 – D3 F1 F2 – F3
Recounting of factual information – depth
Accurately recounts a wide range of Accurately recounts a wide  Accurately recounts a range Satisfactory range of  Acceptable range of  Recounts a limited  Substantial
factual information, with many range of factual information of factual information, with factual information factual information range of factual inaccuracies/omis
indications of greater breadth and with several indications of occasional indications of accurately recounted; largely accurately information with sions in factual
depth of knowledge, beyond greater breadth and some greater breadth of knowledge; recounted; some information;
expectations for this level; depth of knowledge; inaccuracies/omissi
ons;
Relevance and range of sources
Information always relevant and Information consistently Relevant information drawn Relevant information Mostly relevant Information not Range of
drawn from a wide range of sources, relevant and drawn from a from a wide range of sources drawn from appropriate information drawn from always relevant and information
many of them independently wide range of sources, some of range of sources an adequate range of drawn from a inadequate, often
identified; which are independently sources; limited range of irrelevant
identified; sources;
aspects.
Organisation of work
Organisation of information is Organisation of information is Organisation of information is Organisation of Organisation of Some errors in Information is
exceptionally logical and convincing consistently logical and logical and clear; information is clear; information is generally organisation of disorganised
for work at this level; convincing; clear; information;
Understanding of principles, terms, concepts, theories and practices
Demonstrates an understanding of Demonstrates an Recognises and demonstrates Recognises and Recognises the basic Occasional Fails to recognise
the principles, terms, concepts, understanding of the principles, clear understanding of the key demonstrates basic principles, terms, errors/omissions/m the basic
theories and practices within the terms, concepts, theories and principles, terms, concepts, understanding of the key concepts, theories and isrecognitions of principles, terms,
subject/discipline that substantially practices within the theories and practices within principles, terms, practices within the the basic principles, concepts, theories
exceeds expectations for the level in subject/discipline that exceeds the discipline/field. concepts, theories and subject/field. terms, concepts, and practices
many aspects. expectations for the level in practices within the theories and within the
several discipline/field. practices within the subject/field.
subject/field.
Analysis of issues/problems
Analysis of issues/problems, Analysis of issues/problems, Analysis of issues/problems, Generates satisfactory Analysis is adequate Analysis partial Analysis of
including some that are several of which are not closely some of which are not closely analyses of defined when dealing with well- when dealing with defined
unpredictable or loosely defined is defined; defined; problems/issues; defined issues/problems; well- defined problems/issues
exceptional for this level; issues/problems, inadequate,
and marginally inaccurate or
inadequate for this absent, with
level; reliance on
description;

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Application of learning in less familiar contexts
Demonstrates outstanding ability to Ability to apply learning in less Evidences ability to apply Applies learning to Tendency to description Marginally fails to Fails to apply
apply learning in less familiar familiar contexts/situations learning in less familiar produce a satisfactory and reliance on familiar apply learning when learning in a less
contexts/situations. exceeds expectations for this contexts/situations response to a less familiar approaches; dealing with a less familiar
level in some aspects. context/ situation. Limited application of familiar context/situation.
learning to address a less context/situation.
familiar context/situation.

Performance of set work


Performance of set creative, Performance of set creative, Performance of set creative, Accurately performs set Performance of set Performance of set Performance of
practical, technical, work-related or practical, technical, work- practical, technical, work- creative, creative, creative, practical, creative, practical, set creative,
scholarly tasks is exemplary, in many related or scholarly tasks is related or scholarly tasks is practical, technical, work- technical, work-related or technical, work- practical,
instances excellent accurate related or scholarly tasks, scholarly tasks generally related or scholarly technical, work-
accurate; tasks shows some related or
inaccuracies and is scholarly tasks
marginally inaccurate and
inadequate for this inadequate for
level; this level;
Independence and initiative
shows independence, capacity and shows independence, capacity sometimes shows elements of Performs under Some tendency to rely on Tendency to rely on Reliant on
initiative beyond expectations for and initiative beyond independence and capacity appropriate levels of support, supervision and support, support,
this level. expectations for this level in beyond expectations for this supervision and guidance. guidelines with few supervision and supervision and
several instances. level. indications of guidelines with little guidance; lacks
independence. indication of independence.
independence.
Presentation and format
Presentation of information and data Clarity, style and format of Presentation of information Presentation of Presentation of Presentation of Presentation of
is outstanding in its clarity, accuracy, presentation of information and data is consistently clear information and data is information and data information and information and
stylistic appropriateness with and data is excellent, and appropriate in style and clear, in a satisfactory mostly clear and in an data sometimes data disorganised,
evidence of ability/creativity beyond format format and style acceptable format, with unclear and not in inappropriate in
expectations for this level; occasional an appropriate format and with
inconsistencies/ minor format, with some significant errors
errors in style, format inconsistencies/ in style, format
errors in style,
format
Referencing (Harvard Solent format)
Exemplary referencing/citation Consistently accurate Accurate referencing/citation. Mostly accurate Occasional Omissions/errors in Significant errors
referencing/citation. referencing/citation. inconsistencies / minor referencing/citation in referencing or
errors in none
referencing/citations.

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Learning Outcomes

This assessment will enable students to demonstrate in full or in part the learning
outcomes identified in the Module descriptors.

Late Submissions

Students are reminded that:

i. If this assessment is submitted late i.e. within 5 working days of the submission
deadline, the mark will be capped at 40% if a pass mark is achieved;
ii. If this assessment is submitted later than 5 working days after the submission
deadline, the work will be regarded as a non-submission and will be awarded a zero;
iii. If this assessment is being submitted as a referred piece of work then it must be
submitted by the deadline date; any Refer assessment submitted late will be
regarded as a non-submission and will be awarded a zero.

https://students.solent.ac.uk/official-documents/quality-management/academic-
handbook/2o-assessment-principles-regulations-temporary-amendments-for-covid-19-
contingency-plans.pdf

Extenuating Circumstances
The University’s Extenuating Circumstances procedure is in place if there are genuine
circumstances that may prevent a student submitting an assessment. If students are not
'fit to study’, they can either request an extension to the submission deadline of 5 working
days or they can request to submit the assessment at the next opportunity (Defer). In
both instances students must submit an EC application with relevant evidence. If
accepted by the EC Panel there will be no academic penalty for late submission or non-
submission dependent on what is requested. Students are reminded that EC covers only
short term issues (20 working days) and that if they experience longer term matters that
impact on learning then they must contact the Student Hub for advice.

Please find a link to the EC policy below:

https://students.solent.ac.uk/official-documents/quality-management/academic-
handbook/2p-extenuating-circumstances.pdf

Academic Misconduct
Any submission must be students’ own work and, where facts or ideas have been used
from other sources, these sources must be appropriately referenced. The University’s
Academic Handbook includes the definitions of all practices that will be deemed to
constitute academic misconduct. Students should check this link before submitting their
work.

Procedures relating to student academic misconduct are given below:

https://students.solent.ac.uk/official-documents/quality-management/academic-
handbook/4l-student-academic-misconduct-procedure.pdf

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Policy, Governance and Information
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Ethics Policy

The work being carried out by students must be in compliance with the Ethics Policy.
Where there is an ethical issue, as specified within the Ethics Policy, then students will
need an ethics release or an ethical approval prior to the start of the project.

The Ethics Policy is contained within Section 2S of the Academic Handbook:


https://staff.solent.ac.uk/official-documents/quality-management/academic-
handbook/2s-solent-university-ethics-policy.pdf

Grade marking
The University uses a letter grade scale for the marking of assessments. Unless students
have been specifically informed otherwise their marked assignment will be awarded a
letter grade. More detailed information on grade marking and the grade scale can be
found on the portal and in the Student Handbook.

https://students.solent.ac.uk/official-documents/quality-management/academic-
handbook/2o-annex-3-assessment-regulations-grade-marking-scale.docx

Guidance for online submission through Solent Online Learning (SOL)

http://learn.solent.ac.uk/onlinesubmission

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