7025AFE Managerial Finance Coursework2 Assignment Brief 2025 | CU

7025AFE Assignment Task

CASE STUDY – Golden Electrics Plc (Assume the company’s current financial year starts from 1 September 2024 and ends on 30 August 2025).

Grange UK Ltd is a provider of consultancy services, with a portfolio of wide portfolio of clients operating in different sectors of industry and commerce. You have recently been recruited to the company and have been tasked to provide financial and operational advice to one of the clients, Golden Electrics plc.

Golden Electrics Plc is a London Stock Exchange-listed company established eight years ago, and it produces and sells a range of electric measuring and monitoring devices to its UK and international customers. Claire Mandel, the treasury manager of Golden Electrics, has informed you that she has realised the company will soon encounter financial challenges and as such the company’s stakeholders are worried that the creditors will call for the liquidation of the company’s assets if its finances are not improved in the short term and ultimately in the long term. Claire Mandel is planning to raise finance in the short term to avoid the company going into liquidation. She is also looking at how in the long term, the company’s finances can be improved for operational sustainability.

In addition to sourcing funds, Claire Mandel has been working with the company’s operational manager to find other ways to improve the operational revenue of Golden Electrics Plc, and they have come up with the following three possible options:

Option 1: Production and sale of a new specialised Control Kit

The new Control Kit is now ready to be manufactured following an R C D expenditure of £8 million over the last 18 months. Golden Electrics is considering the production of this product to gain access to a new market. The company has manufacturing space available that it currently rents to another business for £150,000 a year. This space will not continue to be leased if the decision is not to manufacture the new product.

The business would have to purchase machinery costing £6 million and invest £3 million in working capital immediately for production to begin. A market research report, for which the business paid £80,000, indicates that the new product has an expected life of five years. Sales of the product during this period are predicted as:

Predicted sales for the next five years.

The selling price per unit will be £50 in the first year but will fall to £45 in the following three years. In the final year of the product’s life, the selling price will fall to £25. Variable production costs are predicted to be £18 per unit. Fixed production costs (including depreciation) will be £2.2 million a year. Marketing costs will be £2.4 million a year. The business intends to depreciate the machinery using the straight-line method and based on an estimated residual value at the end of the five years of £1.5 million. The business has a cost of capital of 8 per cent a year.

Option 2: Production and sale of Automatic Switches.

Golden Electrics Plc produces Automatic Switches for small motors. Its sales have been 500 switches a month for the last few months, but it is about to launch an expansion strategy aimed at increasing sales over the next four months, May to August. Sales in May are expected to be 500 switches but to increase by 50 units a month until 650 units are sold in August and each subsequent month.

The selling price of the Switch is £50, and half the customers pay in the month following purchase. One-quarter takes two months to pay, and the other quarter pay cash on delivery, taking advantage of a 10% cash discount. Golden Electrics Plc has planned an advertising campaign for May, June and July, costing a total of £27,000, payable in three equal instalments in May, June and July.

To facilitate the increase in production, new plant and equipment costing £24,000 have been ordered for delivery in May, with payment in three equal monthly instalments, commencing in June. The cost of commissioning this machinery is estimated at £2,400 and will be paid in May.

To reduce the impact of acquiring these fixed assets, Golden Electrics Plc plans to arrange a three-month loan of £27,000 from its bank and expects to pay interest at the rate of 10% per annum. The interest will be paid in one amount on the same day as the capital sum is repaid. The money is to be transferred into its account on 20 May. Raw materials cost £16 a unit and are paid for one month after purchase. Monthly fixed costs, including depreciation of £600, total £4,800 and are paid for in the month incurred. The opening bank balance for May is expected to be
£16,800 positive. The company’s overdraft limit is £30,000.

Option 3: Production and sale of Circuit Breakers

Golden Electrics Plc makes 400 Circuit Breakers every month and sells them for £70 each. Fixed monthly overheads are £3,000 and the standard cost of one Circuit Breaker is as follows:

To boost sales to increase operational revenue, Golden Electrics Plc plans to reduce the selling price to £61, improve the quality by spending 25% more on materials and increase its advertising by £1,600 a month.

Requirement:

On behalf of Grange UK Ltd, write a management report to the directors of Golden Electrics Plc discussing the below areas:

(a) Provide an explanation on the benefits of the different sources of finance Golden Electrics Plc can have and discuss how the sources identified can help the company to avoid the impending liquidation.
 
(b) Identify the different types of stakeholders of Golden Electrics Plc and discuss how they will be impacted if Golden Electrics Plc fails to fund from the sources identified in part (a).

(c) Analyse the investment proposal in option 1 by using NPV and provide recommendations. You should also comment on other investment appraisal techniques that the company may use, and the limitations of using those techniques.

(d) Analyse Golden Electrics Plc’s monthly cash budget in option 2 for the four-month period May to August. Provide recommendations of the benefits of the cash budget to the company. Assuming, the three options outlined by Golden Electrics Plc generates excess cash, discuss how the company can manage the excess cash.

(e) Calculate and analyse the breakeven points in option 3 and provide recommendations to Golden Electrics Plc based on your calculations.

(f) Include a detailed literature review of the tools you have used such as the NPV, breakeven analysis and budgets and their importance to Golden Electrics Plc.

(g) Considering the current business environment, discuss any other issues that may impact the survival of Golden Electrics Plc.

Your report will be assessed based on the following structure in conjunction with the marking rubric:

7025AFE Submission Instructions:

(i) The maximum word count for the main text excluding tables is 2,500 words. Only the main text excluding any tables and diagrams counts, this also excludes the contents page, executive summary, list of references and appendices.

(ii) The assignment must have a front cover.

(iv) An executive summary is required (not included in the word count), but this should not exceed 1 page. A short introduction is required (and included in the word count), even if it is not explicit in the assessment criteria.

(v) A reasonable number of appendices may be used for relevant supporting information and to demonstrate your calculations and analysis.

(vi) Produce your report, as a Word document with the following layout: The report should not be in a pdf format.

Font style, Arial 12

Pages should be numbered with portrait orientation, and margins of 2.5 cm on both sides.

Students are required to retain draft copies of assessments and evidence of how assessment tasks are completed, and to provide such information upon request.”

Please let me know if you need further clarification or assistance.

7025AFE Development of Skills and Attributes

The Graduate Attributes to be achieved here are:

• communicate effectively;
• act with integrity;
• think creatively;
• get things done.

7025AFE Marking and Feedback

How will my assignment be marked?

Your assignment will be marked by the module team.

How will I receive my grades and feedback?

Provisional marks will be released once internally moderated.
Feedback will be provided by the module team alongside grade release. Feedback will be available through Aula, where the coursework will be submitted. Your provisional marks and feedback should be available within 2 weeks.

What will I be marked against?

Details of the rubric (marking criteria) for this task can be found at the bottom of this assignment brief.

7025AFE Assessed Module Learning Outcomes

The Learning Outcomes for this module align with the marking criteria, which can be found at the end of this brief. Ensure you understand the marking criteria to ensure achievement of the assessment task. The following module learning outcomes are assessed in this task:

1. Critically analyse financial and non-financial information and make informed business decisions through the identification and application of appropriate KPIs.

2. Evaluate management accounting decision-making techniques and apply them in relevant internal and external situations.

3. Synthesise diverse forms of economic information from both the environment and the organisation to evaluate and propose solutions to business problems.

4. Discuss critically the criteria used to evaluate investments or capital projects and how firms source funding for the same

7025AFE Assignment Support and Academic Integrity

If you have any questions about this assignment please see the Student Guidance on Coursework for more information.

Spelling, Punctuation, and Grammar:

You are expected to use effective, accurate, and appropriate language within this assessment task.

Academic Integrity:

The work you submit must be your own, or in the case of groupwork, that of your group. All sources of information need to be acknowledged and attributed; therefore, you must provide references for all sources of information and acknowledge any tools used in the production of your work, including Artificial Intelligence (AI). We use detection software and make routine checks for evidence of academic misconduct.

It is your responsibility to keep a record of how your thinking has developed as you progress through to submission. Appropriate evidence could include: version-controlled documents, developmental sketchbooks, or journals. This evidence can be called upon if we suspect academic misconduct.

If using Artificial Intelligence (AI) tools in the development of your assignment, you must reference which tools you have used and for what purposes you have used them. This information must be acknowledged in your final submission.

Definitions of academic misconduct, including plagiarism, self-plagiarism, and collusion, can be found on the Student Portal. All cases of suspected academic misconduct are referred for investigation, the outcomes of which can have profound consequences for your studies. For more information on academic integrity, please visit the Academic and Research
Integrity section of the Student Portal.

Support for Students with Disabilities or Additional Needs:

If you have a disability, long-term health condition, specific learning difference, mental health diagnosis or symptoms and have discussed your support needs with health and wellbeing, you may be able to access support that will help with your studies.

If you feel you may benefit from additional support, but have not disclosed a disability to the University, or have disclosed but are yet to discuss your support needs it is important to let us know so we can provide the right support for your circumstances. Visit the Student Portal to find out more.

Unable to Submit on Time?

The University wants you to do your best. However, we know that sometimes events happen which mean that you cannot submit your assessment by the deadline or sit a scheduled exam. If you think this might be the case, guidance on understanding what counts as an extenuating circumstance, and how to apply is available on the Student Portal.