Financial Decision Making

LO 1: Understand the role of financial information and financial analysis in business risk assessment and decision- making

LO 2: Evaluate how financial statements support business decision making

LO 3: Analyse sources of finance and how businesses finance fixed assets and working capital

LO 4: Evaluate how different ownership structures impact on financial performance

Scenario
After graduating, you worked as an investment banker before resigning due to stress. Although you enjoyed it, it was a stressful job with long days and hours. You recently had a child and your partner asked you to take a new job that would allow more time with your family.
Thanks to your background you obtained a job as a business columnist in a newspaper and you've been asked to write several feature articles.

Task 1 Article

Instructions

Write an article in which you should
Examine the factors (both financial and non-financial) that drive decisions making in business,
Weigh up the business risks impacting on financial and business decisions
Explain the differences between the accrual and cash flow approaches in financial reporting, and how it might impact business decision making
Investigate techniques to manage cash flow

Task 2

Instructions

Write an illustrated example using Poundland (the data is attached). You should:
Using the data provided concerning Poundland as an example, describe the sections of the income statement and the balance sheet.
Interpret the financial statements of Poundland
Assess the value of EPS, ROCE and other overall indicators for the sustainability of Poundland
Describe methods for Poundland to decide whether to invest or make capital expenditures
Provide examples of the types of capital expenditure and revenue expenditures that could be incurred by Poundland
Based on the data for Poundland, estimate its source of long-term financing and working capital financing
Looking at the balance sheet, weigh the pros and cons of off-balance sheet financing.

Task 3

Instructions

Draw a mind map of the main stakeholders, annotate it to identify contrasting interests between owners, managers and shareholders

Differentiate the governance, accounting ethics, legal and regulatory environments between organisations listed on the FTSE and non-listed Private Limited company.