FIN7040 - Management - MSc Management with Streams - Financial Decision Making - Assessment Answer
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BBP University School of Business and Technology
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FIN7040 Financial Decision Making Assessment Answer
Case Study - EASYFLIGHT PLC
You have just completed your MSc Management and joined Expert Consultancy as a trainee management consultant. You have been assigned to Easyflight plc and have been asked by your manager to produce a 3,500 word business report that will ultimately go forward to the board of directors.
Task Prepare a 3,500 word business report for your manager providing analysis and business advice following the requirements below. Format: business report with headings, sub-headings and paragraphs Executive summary – key highlights/findings drawn from each task within the report
Part 1: Business Performance Analysis
You will need to calculate and use appropriate ratios in your analysis for the sections required below:
1.1. Statement of Profit or Loss
Analyse and comment on the financial performance of Easyflight plc using all relevant information from exhibit 1. Your analysis should critically evaluate the lines of the Statement of Profit or Loss. You do not need to include a review of the segmental analysis in this section
1.2. Statement of Financial Position
Analyse and comment on the financial position of Easyflight plc using all relevant information from exhibit 1. Your analysis should critically evaluate the lines of the Statement of Financial Positio
1.3. Statement of Cash Flows
Use the Statement of Cash Flows (exhibit 1) and identify what has happened to the cash position of Easyflight during 2018. Calculate and explain Easyflight plc’s Operating Cash Cycle (OCC) for 2018 and 2017. Critically evaluate the company’s 2018 dividend policy and explain whether you think Easyflight was right to make this dividend payment in 2018 or not
1.4. Market Segment Analysis
Use exhibit 2 to compare and contrast the financial performance of the different segments of Easyflight business in 2018 with the rest of the company. Then, to assist the board with their decision-making, recommend pricing and operating costs strategy for the different segments based on your findings.
Part 2: Investment Appraisal
Critically evaluate the investment appraisal information (exhibit 3) supplied by the Financial Director. Your evaluation should challenge the management forecast in the first part of your answer. Then, in the context of Easyflight plc, critically evaluate the following investment appraisal techniques considering the benefits and limitations of each technique. You need to give a clear assessment as to whether the company was right to proceed based on the results of each appraisal technique. Use the following sub-headings to structure your answer
2.1.a Management Forecast
2.1.b Investment Appraisal Techniques - Payback period - Accounting Rate Of Return - Net Present Value
2.2. Sources of Finance Easyflight plc is considering a further investment, this time in an airport retail business of £2,000m from 2019. Advise the Board of Directors on the benefits and drawbacks of two alternative sources of finance for this further investment, including an assessment of their appropriateness in this case
2.3. Non-Financial Factors
Advise the board of directors on other non-financial factors that they should consider regarding an expansion into airport retail. Your answer should be specific to Easyflight plc
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