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FIN331 ACCA - Assignment 1

This document provides instructions for an ACCA coursework assessment on financial management. It includes two parts: [1] Writing summaries on financial management, working capital management, and investment appraisal topics; and [2] Completing two Excel questions. Question 1 involves calculating the net present value and internal rate of return of investing in a new machine. Question 2 requires calculating the cash operating cycle for a company and advising if a just-in-time inventory system would be appropriate. The assessment aims to develop students' analytical skills and commercial acumen in analyzing business and financial factors impacting projects.

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Michidmaa Munkhbayr
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39 views

FIN331 ACCA - Assignment 1

This document provides instructions for an ACCA coursework assessment on financial management. It includes two parts: [1] Writing summaries on financial management, working capital management, and investment appraisal topics; and [2] Completing two Excel questions. Question 1 involves calculating the net present value and internal rate of return of investing in a new machine. Question 2 requires calculating the cash operating cycle for a company and advising if a just-in-time inventory system would be appropriate. The assessment aims to develop students' analytical skills and commercial acumen in analyzing business and financial factors impacting projects.

Uploaded by

Michidmaa Munkhbayr
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 5

Programme : ACCA route

Module: Financial
Management I/FIN331/

Coursework Assessment Brief


October 26th 2023

UFE PSIAF:October 26, 2023


FIN331 ACCA Coursework
Students’ instructions - PLEASE READ CAREFULLY
1. Assessment details
(a) This assignment was published on the 26th of October 2023.
(b) The submission deadline is the 1st of November 2023.
(c) Each student must submit.

1.1 Marking guide

Content Marks

Part 1 2
Write summary/brief/ notes for topics namely,
about financial management, working capital
management and investment appraisal, business
finance

Part 2 2
Do 2 questions in excel and show all the relevant
workings.

Presentation and professionalism (show your 1


workings clearly)

Total marks 5

1.2 Learning outcome and transferable skills

Course Learning outcome:

CLO1: Working capital analysis, practical use in decision making


CLO2: Investment appraisal, practical use in decision making

Transferable skills and competencies developed:

● Analytical skill
● Commercial acumen through analysing business and financial environmental factors
affecting the project result
PART 1:

Requirement: Write summary/brief/ notes for topics namely, about financial management, working capital
management and investment appraisal
PART 2:

Question 1:
Toy Co plans to buy a new machine. The cost of the machine, payable immediately, is $800,000 and
the machine has an expected life of five years. Additional investment in working capital of $90,000
will be required at the start of the first year of operation. At the end of five years, the machine will be
sold for scrap, with the scrap value expected to be 5% of the initial purchase cost of the machine.
Production and sales from the new machine are expected to be 100,000 units per year. Each unit can
be sold for $16 per unit and will incur variable costs of $11 per unit. Incremental fixed costs arising
from the operation of the machine will be $160,000 per year.
Toy Co has an after-tax cost of capital of 11% which it uses as a discount rate in investment appraisal.
The company pays profit tax one year in arrears at an annual rate of 30% per year.

Required:
(a) Calculate the net present value of investing in the new machine and advise
whether the investment is financially acceptable. (7 marks)
(b) Calculate the internal rate of return of investing in the new machine and advise
whether the investment is financially acceptable. (4 marks)

Question 2:

You are a management accountant working at Riverside Ltd, a company that manufactures and
distributes a range of travel clothes and bags for many years in the US. Riverside Ltd sells travel
clothes and bags in the USA domestically and exports the goods worldwide
In order to reduce holding and ordering cost, Riverside Lts uses economic order quantity. However,
the holding and ordering cost of raw material is relatively high for Riverside Ltd. All materials are
paid for in cash at the time of purchase. Production staff are paid their wages daily in cash. All other
overheads, production, and sales, are on credit. All sales are credit sales.

You have estimated the figures below for the coming year.
Sales $15,500,000
Average receivable $3,800,000
Materials purchases $10,500,000
Production staff wages $3,500,000
Other production overheads $2,050,000
Sales overheads $1,050,000

Average stocks:
Finished goods $2,750,000
Work in progress $2,650,000
Raw materials $1,950,000

Average payables $1,000,000

Required:

A. Calculate the cash operating cycle. (10 marks)


B. As a management accountant of Riverside Ltd, write what is Just-in-time (JIT)
inventory system and advise JIT system is appropriate for the company (5 marks)

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