Basic and Corporate Finance

Question Description

General Assessment Guidance
• Your summative assessment for Finance is a Coursework submission representing 60% of the
total marks for the Module. The other 40% is assessed in a closed-book exam. You must pass
both components (coursework and exam) to achieve an overall pass for the module.
• The deadline for submission is 23:59 hrs on Tuesday, 28th August 2018. Late submissions will
not be marked.
• You are required to submit your assessment via Turnitin online access. Only submissions made via
the specified mode will be accepted and hard copies or any other digital form of submissions (like
via email or pen drive etc.) will not be accepted.
• For coursework, the submission word limit is 2,000 words. You must comply with the word count
guidelines. You may submit LESS than 2,000 words but not more. Cover sheet, numerical Tables,
diagrams, bibliography, appendices, annex and headings are NOT included within word count
calculations. You must specify total word count on the front page of your report.
• Any calculations in excel should be pasted into an Appendix showing the Formulae AND the values.
• For coursework, please use font size 12 for body text and the typeface (font) should be Arial or
Times New Roman with minimum 1.5 spacing.
• For headers and titles, please use font size 14. Your submission must have standard margins and
page numbers.
• Please use English (UK) as your language in the submission.
• Do NOT put your name or contact details anywhere on your submission. You should ONLY put
your student identification number(s) (SRN) which will ensure your submission is recognised in
the marking process.
• A total of 100 marks are available for this assessment and you are required to achieve a minimum
of 50% overall to pass this module.
• You are required to use only Harvard Referencing System in your submission. Any content which
is already published by other author(s) and is not referenced will be considered as a case of
plagiarism.
You can find further information on Harvard Referencing in the online library on the VLE. You can
use the following link to access this information:
http://my.bpp.com/vle/mod/data/view.php?d=223&rid=596
• BPP University has a strict policy regarding plagiarism and in proven instances of plagiarism or
collusion, severe punishment will be imposed on offenders. You are advised to read the rules and
regulations regarding plagiarism and collusion in the GAR and MOPP which are available on VLE
in the Academic registry section.
• You should include a completed copy of the Assignment Cover sheet. Any submission without
this completed Assignment Cover sheet will be considered invalid and not marked.
BPP University Business School: August 2018
Sensitivity: Internal
2. Assessment Brief
2.1. Case Study / Brief
Introduction
The Finance Director at White Dreams Ltd. (a UK-based private wedding gowns, shoes and
accessories retailer with stores set up across England and Wales) has been taken ill suddenly and
since you are the one manager in the company with an MBA you have been asked to stand in for him
for a few days until an interim finance director arrives. You need to take responsibility for preparing a
report of approximately 2,000 words for the company’s up-coming senior management meeting. This is
an excellent opportunity to demonstrate your knowledge and skills to the senior management team,
which you hope to join in the near future.
The company is facing a number of issues and the senior management has been asking you to answer
their queries in a succinct but sufficiently detailed report.
Each of the next FOUR e-mails must be read, in order to fully understand the context of the
requirements. A copy of the draft FS for the year ended 30 June 2018 has been made available and
you should make reference to those accounts throughout the questions – when specified. All the
requirements must be addressed in your report.
E-mail no. 1 RE: Impact of financial transactions
From: Adam Bush (a.bush@whitedreams.co.uk) – White Dreams London Store Manager
To: Your Name (your.name@whitedreams.co.uk) – Finance Director
Date: 05/07/2018
Subject: Financial transactions not included on FS – URGENT
Hi
Apologies for the short notice but I just received an e-mail from one of your accountants regarding the
latest draft accounts. He told me that while he was going through his files the other day, he realised
that he left out some of the transactions related to our store and they are not reflected in the draft
financial statements.
I know that the senior management meeting is scheduled in a few days’ time, and it might be better to
make them aware sooner rather than later.
Here’s a list of transactions that have been missed out:
1) £465,740 Sales on credit were made (with corresponding cost of £380,200)
2) £33,670 Cash sales were made (with corresponding cost of £21,900)
3) £152,500 Rent was paid in advance at the start of the year (for period from 01/01/2018 to
31/12/2018)
4) £6,100 Professional Sewing Machine was bought on credit to make repairs and amendments
on gowns (it has an expected useful life of 3 years)
5) £3,500 Warehouse costs have not been accounted for (standing order paid in cash)
6) £102,555 Inventory (wedding gowns, shoes and accessories) were bought on credit and
£38,700 were bought for cash
7) £56,900 Wages paid to employees and £7,870 still remain to be paid as at 30/06/2018
8) £962 Electricity bill was received (but NOT paid) on 03/07/2018 in relation to the period
covering 01/04 to 30/06 2018
9) £71,200 paid to trade payables
10) £34,699 Dry cleaning costs incurred during the year to maintain gowns intact
I hope this is not going to cause too much of an inconvenience.
Kind Regards,
Adam
BPP University Business School: August 2018
Sensitivity: Internal
E-mail no. 2 RE: Financial Analysis
From: Riley Beest (r.beest@whitedreams.co.uk) – Managing Director
To: Your Name (your.name@whitedreams.co.uk) – Finance Director
Date: 01/07/2018
Subject: Financial Performance – URGENT
Hi – I have just finished reading the draft accounts for the year ended 30/06/2018, but I can’t find the
usual commentary on the financial and operating performance of the company. Do you mind sending
me a copy?
Also, looking at the last two years’ worth of comments, I realised that our profitability has been
decreasing steadily and I would like to understand why.
I have put together some statistics for the sector, to see whether it is an industry-wide issue or if it is
just White Dreams that is suffering. We don’t seem to have looked at industry averages in the past.
Find below the relevant ratios (sector averages and corresponding ratios for White Dreams based on
2017’s financial information):
Sector average 2017
Return on year-end capital employed (ROCE) 25.8% 27.2%
Net asset (total assets less current liabilities) turnover 1.4 times 1.71 times
Gross profit margin 35% 33%
Operating profit margin 16% 13.2%
Current ratio 1.77:1 1.8:1
Average inventory turnover 3.35 times 3.9 times
Trade payables’ payment period 64 days 40.11days
Debt to equity 23% 14%
Would you mind having a look and get back to me with some useful insights?
I would recommend including the commentary and insights in the report you are preparing for the next
senior management meeting. It would be a good source of discussion.
KR,
Riley
BPP University Business School: August 2018
Sensitivity: Internal
E-mail no. 3 RE: Company Valuation
From: Julien Lacy (j.lacy@whitedreams.co.uk) – Chief Operating Officer
To: Your Name (your.name@whitedreams.co.uk) – Finance Director
Date: 02/07/2018
Subject: Potential Acquisition Target
Hi
Thank you for meeting me this morning, I thought it was a very interesting conversation.
Following on from what we discussed, please find in Appendix 2 an extract of the financial information
you requested in relation to the potential acquisition of Bridal Party Ltd.
I was told that the company is specialised in making (and selling) customisable items for people who
are getting married and for wedding guests; and I also found out that they have recently won a major
customer (an on-line bridal shop that sells and ships low-cost wedding gowns worldwide).

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