FIN 7040 Financial Decision Making - BPP University

Assessment Brief

Case Study - ROAST LTD Your role

You work in the finance deSectionment of Starbucks UK. Your Chief Financial Officer (CFO) has asked you to review the financial statements and other material sourced for you below, of Roast Ltd, an independent UK chain of coffee houses. The objective is to assist her in evaluating the attractiveness of the company as a target for acquisition by Starbucks.

Task
Prepare a 3,500 word business report for your CFO providing analysis and business advice to address the requirements below.

Format: business report with headings, sub-headings and paragraphs

Executive summary - key highlights/findings drawn from each task below to answer the central question: should Starbucks acquire Roast Ltd or not?

Section 1: Industry Review

Using your own independent research, provide a top-line review (in bullet point format) of the current UK coffee house industry. This should include a summary of who the key players are, how well it is performing, and any challenges or opportunities that you find.

Section 2: Business Performance Analysis

You will need to calculate and use appropriate ratios in your analysis for the sections required below:

Statement of Profit or Loss

Analyse and comment on the financial performance of Roast Ltd using all relevant information from exhibits 1 and 2. Your analysis should critically evaluate the lines of the Statement of Profit or Loss.

Statement of Financial Position
Analyse and comment on the financial position of Roast Ltd using all relevant information from exhibits 1 and 2. Your analysis should critically evaluate the lines of the Statement of Financial Position.

Statement of Cash Flows
Use the Statement of Cash Flows (exhibit 1) and identify what has happened to the cash position of Roast Ltd during 2018.

Calculate and explain Roast Ltd's Operating Cash Cycle (OCC) for 2018 and 2017. 3 marks Critically evaluate the company's 2018 dividend policy and explain whether you think Roast Ltd was right not to make a dividend payment in 2018.

Section 3: Investment Appraisal

Critically evaluate the investment appraisal information (exhibit 3).
Your evaluation should challenge the management forecast in the first Section of your answer. Then, in the context of Roast Ltd, critically evaluate the following investment appraisal techniques considering the benefits and limitations of each technique. You need to give a clear assessment as to whether the company was right to proceed based on the results of each appraisal technique and what we now know.
Use the following sub-headings to structure your answer:
Management Forecast
Investment Appraisal Techniques
- Payback period
- Accounting Rate Of Return
- Net Present Value

Attachment:- Financial Decision Making.rar