| Section | Content | Mark |
| Question 1 | · Choose ONE financial ratio from FOUR different categories (focus on four ratios in total) in your analysis of financial ratios and evaluate ratio analysis as a tool to assess firm performance.
· Discuss your chosen financial ratios for past 3 years. · Critically evaluate various aspects of the financial position and performance of the Company. · Analyse the problems and limitations of financial ratios as a tool of financial analysis. |
30%
1000 words |
| Question 2 | · discuss the aims of budgeting
· discuss the advantages and limitations of incremental budgeting ·discuss the advantages and limitations of Zero Based Budgeting |
30%
1000 words |
| Question 3 | ·Critical evaluation of NPV and Payback techniques
· Provide samples to illustrate investment appraisal results using NPV and Payback techniques at your chosen format · Discuss potential implications of the investment on Nissan. |
30%
1000 words |
| Presentation and referencing | · Follow Harvard Reference guide.
· Adequate references and properly referenced resources. · Use of journal articles. · Professional presentation, including: introduction, conclusion, use of appropriate headings |
10% |
Task:
You have been appointed as the Management Accountant of NISSAN MOTOR MANUFACTURING (UK) LIMITED. Download the Annual Reports for 2017-2019 (data available through the Fame database).
Under current Brexit uncertainty, Nissan is considering its growth strategy, in particular by making a further investment into its current production line. As the newly appointed Management Accountant (MA) of the Company, you are tasked to evaluate the performance of Nissan and prepare a report to the board of directors with an evaluation of the potential investment opportunities.
The first investment under review is to make further investment in their current product – Nissan Qashqai, which needs initial investment between £10,000,000 and £20,000,000 and has a life of 5 years.
As the newly appointed MA of Nissan, you are required to write a report to the senior management team – fully referenced, and address the following:
Required:
- Evaluate financial performance:Choose FOUR categories from the list of five categories of financial ratios below and use ONE financial ratio from each category to assess the financial health of your chosen company using past 3-year financial information (2017-2019). Discuss the problems and limitations of financial ratios as a tool of financial analysis before making recommendations to the board of directors regarding the investment decision. The ratio categories are as follows:
- Profitability
- Efficiency
- Liquidity
- Financial gearing
- Investment
- The company is currently using incremental budgetinghowever, it is considering changing the system to Zero Based Budgeting. Please advise the board on the aims of budgeting, advantages and disadvantages of the two budgeting systems, before advising the board on whether the change is recommended or not.
- Investment appraisal:You plan to use NPV and Payback techniques to evaluate the project. Critically discuss NPV and Payback techniques and the implications of the investment in Nissan. The discount rate is 10% (ignore inflation and taxation). Please present NPV and Payback results using small tables. You need to make a decision on which investment appraisal format that you will choose. You have the flexibility to decide the project using your ESTIMATE. The investment should be between £10m to £20m, but how the money is invested would depend on the nature of the investment.
