Assignment Cover Sheet

May 9th
PIN or Student Date
ID Due

Table of contents & list of references

Not be included in the word count. A
Programme Word textboxes used will not be marked
and Centre Limit
2000

Module: Financial Management – Assignment (50%)

MSc All streams

This assignment is to be carried out by a small group (3-4) of students from

your MSc Stream. The groups must come from within the same MSc.

Your group is involved in the start up of a new business. The exact nature of
the business is left to the group to decide but must be a new venture that will
not require an unreasonable level of funding.

You are required to produce a comprehensive financial plan for this business
which and:

a) Clearly outline the aims and objectives of the business, indicate what
the unique selling point of the enterprise is and the legal form
(company or partnership).
b) Indicate the level of funding required and what form that funding will
take.
c) Detail the main costs of the products or services provided and establish
the break even point for those products or services including a
sensitivity analysis. You must indicate how you have arrived at the
price of your product or service.
d) Produce a detailed monthly cash flow for the first three years of the
business.
e) Provide an investment appraisal for a capital purchase (machinery,
transport, or buildings) that may need to be made for the business at
the end of year 3.
f) Produce annual budgeted income statements, balance sheets and
cash flow statements for the first three years of the business. Showing
a range of financial ratios from year to year so that an analysis of the
business may be made.

This data will be complied into a 2000 word report (tables and financial
statements are not included in the word count).
The report is expected to explain the decisions made, include appropriate
theory where applicable, and show an understanding of the markets you will
operate within and justification of your reasons why this business will be a
financial success.

Learning Outcomes
On successful completion of this assessment, the student will:

Identify the sources of finance of a business or other organisation and recognise

the key relationships between debt and equity.
Evaluate different capital structure options available to a business
Understand the working capital requirements in companies
Recognise the strategic implications of financial decision making
Understand the content and purpose of financial statements, their interpretation,
their limitations and show awareness of the legal and accounting constraints in
their production.
Understand and apply the principles of budgeting and planning and use cost
concepts required for decision making.
Comprehend the theoretical basis of investment appraisal techniques and
evaluation of the risks involved and use valuation skills and metrics in capital
budgeting.
Internet-based & electronic library research skills
Problem Solving Skills

Marking Scheme
Answers should follow the question structure; the basis of assessment gives a
clear indication of what is expected. There is not a model answer to this as each
group will produce a unique data set, but the marks will reflect the clarity of
thought by the students and those that link appropriate theory into their
responses will be rewarded. Certainly it is expected that those students whose
analysis includes a comprehensive commentary on the decisions taken will be
credited.
Similarly the marking should be on the basis of clarity and appropriateness, not
on volume or discursive presentation. Students who show a clear understanding
of the techniques they are using will be appropriately awarded.

Guide for Total Assignment Mark:

Note that the pass mark is 50%.

• Almost flawless & possibly publishable 80% and over

 • Excellent work with theoretical integration 70% - 79%
• Satisfactory: Competent but strong in part 60% - 69%
• Marginal pass: 50% - 59%
Limited linkage between theory, practice & case
• Retrievable fail: 40% - 49%
Thin, with little or no theoretical underpinning
• Clear fail Below 40%

Basis of Assessment Weighting Mark

Markers are required to put comments in all the sections %

Report Presentation and Style 10

Marker’s comment/s
Good professional report with appropriate referencing, clarity
and use of English 8-10 O
A good written report but with some aspects lacking clarity or
poor use of English 4-7 O
Weak presentation lacking professional approach 0-4 O

Aims and objectives of business. The Business Case. 10

Marker’s comment/s
The quality of the argument made for the business case is a
crucial part of a real business, and credit will be given for a
creative idea.
Use of competitive analysis and some simple models to
demonstrate case, innovative 8-10 O
Limited arguments made but either innovative or well proven
business model already used. 5-8 O
Weaker case presented with lack of research 0-5 O

Funding Requirements and Company structure. 10

Marker’s comment/s
Some thought needs to have been given to where the funding
is sourced and that should reflect current market conditions
with respect to interest levels and repayment terms etc. The
report should also give consideration to the debt equity
balance. The company structure should also reflect normal
practice for the form of business under consideration and offer
some reasoning for the choice.
Considered sources of funding reflecting market conditions
with some theoretical input and appropriate company
structure. 8-10 O
Appropriate structure but limited discussion on sources of
funding and equity debt balance. 4-8 O
Lack of rigour in determining funding sources and form of
structure 0-4 O
Costing and Pricing. Break Even Analysis 20
Marker’s comment/s
Full explanation of potential costs well sourced, proper
consideration given to pricing with detailed break even and
sensitivity analysis. 16-20 O
The majority of costs are explained with prices derived from
market data and an accurate break even which details
variable and fixed costs correctly. 10-15 O
Inappropriate costs, prices not related to market data with
limited explanation and inadequate break even because of
errors in calculating variable or fixed costs. 0-9 O

Monthly Cash Flows 10

Marker’s comment/s
Three years of monthly cash flows. The cash flows should be
detailed and accurate.
Comprehensive Cash flows, which are accurate and reflect
the likely cash flows of the business proposal. 11- 15 O
Minor errors in cash flows 6-11 O
Several errors in cash flow 0-6 O
Investment Appraisals 10
Marker’s comment/s
A detailed investment appraisal for an element of capital
expenditure, proposed or real is required. The investment
appraisal should be realistic and some sensitivity should be
demonstrated
Cash flows, which reflect the likely cash flows of the business
proposal, an accurate investment appraisal with some
discussion of the cost of capital used. 8- 10 O
Minor errors in appraisal, no discussion of cost of capital.
6-11 O
Appraisal flawed 0-6 O

Production of budgeted statements 20

Marker’s comment/s
Income statements, Balance sheets and Cash flow
statements for years 1 -3 for the business should be shown.
Credit should be given for correct statements and for their
complexity.
Comprehensive statements that are accurate complex and
reflect the cash flows of the business proposal. Current
information pertaining to taxation used 17-25 O
Minor errors in statements, use of cash only business.
10-17 O
Errors in statements, balance sheets manipulated 0-10 O

Ratios 10
Marker’s comment/s
The ratios used should clearly demonstrate the changes in the
business and accurately reflect the data created in the
 accounts.

A range of ratios showing the profitability, efficiency and

financial changes in the business accurately produced.7-10 O
Ratios used but inaccurate or limited in range. 4-7 O
Poor use of ratios 0-3 O

Mark Total

General Comments: (Markers are required to complete this section)

 Basis of Assessment
• Presentation and report 10%

The presentation should be clear informative and persuasive. The marker will be
looking for a well-structured, concise but detailed report, with relevant tables
and/or figures to aid the student’s explanation or argument. A good standard of
English is essential. Correct Harvard referencing is required.
Note that the word limit does not include references or contents page. Students
are expected to keep to the word limit +/- 10%

• Aims and objectives of business. The Business Case 10%

A clear explanation must be given as to why this business is likely tom be a

success. So evidence of some market research needs to be shown.

• Funding Requirements and company structure 10%

The students should consider not only the level and cost of debt but look at
the theoretical arguments that arise around the debt equity balance in the
company. Also a case needs to be made as to the legal structure of the
company and why that choice has been made.

• Costing and Pricing. Break Even Analysis 20%

The costs and prices of the products or services offered must be clearly
thought through and consist with the current market chosen.

Monthly Cash Flows 10%

With a new business the detail and accuracy of the cash flows is critical. The
group will need to demonstrate they have gone through a range of possible
outcomes and that the cash flows produced are the most likely outcome.

• Investment Appraisals 10%

The group will need to demonstrate they have given clear thought to the cost
of capital in any investment appraisal.

Production of budgeted statements 20%

There should be an income statement, a balance sheet and a cash statement

for each of the three years of business. Students should ensure that the
information is consistent across all the three statements.
• Ratios 10%
Ratios should reflect the progression of the business over the three year period.
A reasonable cross –section of ratios should be demonstrated and an appraisal
of the business made based on their results.