Dr Rebecca De Coster
Main objectives of the assessment:
To enable students to exhibit their appreciation of the module material concerning enterprise and business planning relevant to the operation of engineering related businesses.
Brief Description of the assessment:
Quantitative and qualitative evaluation based largely around a high technology business proposal covering most aspects of the taught module and inviting discussion and speculation to show awareness. The report is in four parts worth 25% each part.
Learning outcomes for the assessment (refer to the appropriate module learning outcomes)
Students will be able to demonstrate the following:
Investment appraisal of engineering projects
Financial planning and control based on the principles of cost and revenue measurement
Evaluate business approaches on an ethical basis including information gathering
Identification of the important and critical issues facing businesses from the competitive point of view
Application of the tools and techniques for effective enterprise management
The students will be required to:
Prepare an individual assignment (no shared work).
State any assumptions.
Full references and sources of all materials must be stated.
Required content for formal report Parts 1-4 are given on the following pages.
Assessment method by which a student can demonstrate the learning outcomes:
Business appraisal of a Case Study firm plus investment analysis and budgeting in a single report.
100% of module marks
Format of the assessment/coursework: (Guidelines on the expected format and length of submission): *Note: full reports may not exceed 25 pages (including appendices)
Format is a formal written report including charts/diagrams; calculations (with data; formula; workings and assumptions) and discussion/ comments. Report to be written using Word in a 12 point font (any Excel based calculations should be copied into tables in the Word file using a minimum 9 point font). Typical length of report c15 pages* comprising Title Page; Abstract; Parts 1 – 4; References (essential: see library guide on Harvard Referencing) and Appendices (Case Study financials etc..).
Assessment date/submission deadline:
Please submit a printed copy (with a completed submission sheet) by 4pm Monday 22nd February 2016, to the CEDPS Central Office (MCST 055)
Indicative reading list:
The module Course Notes (available online), cover the essentials. They also contain a Reading list with Recommended Reading as wider reading (from academic sources) is expected including articles which are accessible online via Brunel library (e.g. “Summon” search engine or “Emerald database”).
Tutor e-mail: email@example.com
Use your student ids for anonymity (i.e. no student names on the assignment itself).
Case Study information is to be accessed via the Internet: obtain their Financial Information (possibly in the investors section) and then review their recent Annual Reports as well as wider reading.
ASSIGNMENT: Financial Management
Select a major manufacturing business as a Case Study firm that has all of the following:
i) Annual Report published (with 12 months of results) during 2015 in £s/ Euros/ $s
ii) Operates in a specific sector, for example, consumer electronics (such as Sharp or Logitech) or manufactures vehicles (such as Honda or Mitsubishi) etc…
iii) Has business and financial information available via the Internet in English.
Include their latest financial statements at the back of the assignment. Use their currency.
The assignment is to develop an appraisal of the firm’s current situation; to prepare a forecast and examine an investment opportunity. Assumptions are to be clearly stated.
Prepare a formal written report:
Prepare a Word document and write formally (i.e. avoid use of “I” or casual terms). For calculations show formula; data; workings and results (preferably tabulated). Greater discussion; interpretation and evaluation is expected for higher grades (e.g. giving insights into the firm’s situation; the management implications and making sector comparisons), as well as appropriate use of business/financial terms and evidence of wider reading.
Start each of the four parts on a new page (this is to aid the marking process).
Part 1) Business Review
Conduct a business and market review of the Case Study firm based on their published Annual Reports (to be accessed via the Internet).
a) Scope of Operations: introduce (briefly) the Case Study firm’s main operations (in their home country and overseas facilities) and revenue sources (for example, main product sales split by product type/region). Clearly state all sources and units (e.g. $ thousand).
b) Review their recent Performance: sales trends and key profit margins (for at least 3 years) and comment on the Case Study firm’s recent results of operations.
Note: show your workings. The use of diagrams is encouraged – each visual representation to be followed by a short commentary / discussion.
c) R&D expenditure: comment on the Case Study firm’s ability to finance a new product development which will need design costs (in the year before production) equivalent to one fifth of their most recent (full year) monetary value for Gross Profit.
Note: show your understanding (of the Case study firm’s situation) and your ability as a manager to make decisions / recommendations. Do you recommend they invest this amount? Yes/no and justify with some supporting text
Academic Year 2015/16
Part 2) Ratio Analysis
a) Management Ratios: assess the Case Study firm’s recent results for the last 2 years (using Annual Reports with full year statements) – specifically two or three ratios per “PERL” category to be calculated (preferably tabulated) and commented on.
b) Firm’s situation: prepare a short commentary giving your view of the firm’s recent financial results and identify any major items requiring management attention/action.
Part 3) Investment Appraisal
The firm is considering whether to invest £12 Million in Year 0 to develop a product for which they expect Sales during Years 1 – 5.
a) Investment appraisal: examine the Net Present Value (NPV) for a new product investment at a 10% rate given that the firm expects annual Sales Revenues (in £) equal to ten times your student id (adjust if necessary) and a Profit Margin of 25%.
b) Project sensitivity analysis: examine the sensitivity of the project to sales erosion (of 10%, 20% and 30%) including the project NPV (using the same 10% discount rate).
c) Project return: using the original sales revenue, increase the discount rate till you achieve a negative NPV and use this to establish the project IRR (Internal Rate of Return). Comment on this result in terms of the project likely cost of capital.
Part 4) Business Planning and Budgeting
The Case Study firm has a UK workshop of annual capacity of 20,000 units that produces a processor board that is priced at £4,NNN where NNN is the last three digits of your student id. The current workshop is mainly manual in its operation and you are asked to evaluate whether purchase of an automatic assembly machine is worthwhile leading to a Contribution Margin increase (for the same price) as variable costs reduce to 50% of selling price.
a) Break-Even Analysis: overheads are £5,000,000 for the current configuration and variable costs are relatively high at 60% of selling price. Conduct a break-even analysis (state any assumptions) firstly, for the existing workshop and assembly method and secondly, the upgraded workshop using a C-V-P chart to illustrate each scenario.
b) Economics of Production: examine the financial implications of this new upgrade in terms of the economics of production including target setting given that a ROS of 20% is required. Do you support this proposed business opportunity?
c) Budgeting: discuss the issues of ‘control’ for a major manufacturing firm for both ongoing operations as well as new projects/ investments – illustrate with a figure the likely budget components/process for a manufacturing firm.
Note: wider reading is expected including academic articles which are accessible online via Brunel library (e.g. using the “Summon” search engine or the “Emerald database”).