MOD007192 Introduction to Financial Analysis and Management Assignment Questions 2026 | Anglia

MOD007192 Introduction to Financial Analysis and Management Assignment

Question 1 – Frequency Distribution

Weighting – 32% of total marksLab-grown

Lab-grown diamonds, also known as synthetic diamonds or cultured diamonds, are diamonds produced in controlled laboratory environments rather than mined from the earth's crust. These diamonds possess identical chemical and physical properties to natural diamonds, as they are created using high-pressure, high-temperature (HPHT) or chemical vapor deposition (CVD) processes, which mimic the natural conditions under which diamonds form in the Earth's mantle. Lab-grown diamonds offer several advantages over mined diamonds, including ethical and environmental benefits, as they do not involve destructive mining practices or contribute to environmental degradation. Additionally, they often come at a lower cost compared to natural diamonds, making them an attractive option for consumers seeking sustainable and affordable alternatives in the jewellery industry. In recent years, lab-grown diamonds have skyrocketed in popularity, revolutionising the jewellery industry. With advancements in technology and growing environmental consciousness, consumers are increasingly drawn to these ethically sourced, sustainable alternatives to traditional mined diamonds. The appeal lies not only in their eco-friendlyproduction process but also in their identical chemical composition and physical characteristics to natural diamonds. As a result, lab-grown diamonds have become the preferred choice for many consumers seeking beautiful, high-quality jewellery with a clear conscience.

GemCraft Ltd is currently facing challenges in fulfilling customer delivery deadlines and upholding the desired quality standards for lab-grown diamonds. This operational hurdle is starting to negatively impact both sales figures and overall profits. Concerned by these developments, the Director of Human Resources has initiated an investigation into the issue and is troubled by the ongoing struggles in recruiting and retaining staff members. Furthermore, staff surveys consistentlyhighlight concerns regarding salaries. Consequently, the HR Director aims to gain a comprehensive understanding of the company's overall salary structure to enable benchmarking against competitors and industry norms. To facilitate this analysis, all employee salaries have beenmeticulously documented in the ‘GemCraft’ worksheet, ensuring accuracy and thoroughness in theassessment process.

a) Frequency Table and Graph - You are tasked to utilise the data from the GemCraft worksheet to create frequency table. You must utilise the provided lower-class and upper-class boundaries to facilitate the calculation of subsequent class boundaries along with the frequencycount within each class.

(i) Construct a frequency table and of the salaries, using a maximum of 10 groups, and enter your values in the table below (5 marks; 1 for each class boundary and 3 for frequencies). 

(ii) After generating the frequency table, utilise the frequency distribution data to construct a graph. Describe the shape of the distribution using appropriate terms such as "approximately normal," "symmetric," "skewed" (specify the direction of skewness). Additionally, discuss the relationship between the mean and median and how they relate to each other. (3 marks)

(iii)

DataThe frequency distribution data displayed in the graph above shows that the shape issymmetrical with  a  rightward skewness.  The  relationship   between  the mean  and   themedian can be described as a positively skewed distribution because of the rightwardtail; therefore, meaning that the mean is larger than the median. 

b) Measures of Central Locations and Measures of Dispersion. Perform calculations and provide responses to the questions below:

(i) How many people were working in the company? And what is the average salary of this company? (1 mark)

No. of Employees = 1,032
Average Salary=  £29,064.17

(ii) What is percentage of employees that earn less than £40,000? And how many employees earn more than £50,000? (1 mark)

% of employee's earning < £40,000 = 94.77
%No. of employee's earning > £50,000 = 20

(iii) Calculate Measures of Dispersion (minimum, maximum, range, quartile 1, median (quartile 2), quartile 3, interquartile range, semi-interquartile range, variance, and standard deviation) of the data set. (6 marks)

c) The manager decided to increase all the salaries by 8%.

(i) Calculate measures of central location and dispersion of the new values including the highest and the lowest salaries (5 marks)

(ii) A rival company published a summary of their financial information indicating that the meansalary of their employees is £60,000 with a standard deviation of £18,000. Compare the co-efficient of variation between two companies. (3 marks)

Coefficient of variation of GemCraft Ltd. = 21.82%
Coefficient of variation of rival company= 30% 
Difference in coefficient of variation= 8.12% 

According to (Hayes, 2024) the risk and return trade-off is greater when the formula forthe coefficient   of variation   results  in  a  lower ratio  of  the   standard  deviation to  meanreturn. Therefore, in this comparison because GemCraft Ltd. has the lower coefficient ofvariation of  21.82%,   they   will be  faced   with   a  better  risk  and   return  trade-off by  thedifference of 8.12% lower, as compared to the rivals who faces 30%. Also, because therival company has the higher coefficient of variation, their level of dispersion around themean will be greater than that of GemCraft Ltd, as supported by (Insee, 2016).

d) Describe and discuss the descriptive statistics including the appropriate use between sample and population and summarise what you have learnt and achieve using appropriate references to support your discussion. (300 words, 8 marks) 

Descriptive statistics refers to the analyzation, summarization and presentation offindings in relation to a data set derived from a sample or an entire population. Descriptivestatistics   is   segmented   into   three   main   categories   which   are:   frequency   distribution,measures of central tendency also known as measures of central location and measures ofvariability/dispersion. It favours the simplification and aids in the ease of visualization of thedata set, (Corporate Finance Institute, 2021).

Statistical data gathered from a population refers to the collection of all items of interestto the study, whereas, the data gathered from a sample is only that derived from a subset ofthe population (365 Science, 2018). Therefore, to acquire the understanding of GemCraft’soverall   salary   structure   the   human   resource   manager   gathered   data   from   the   entireemployee population within the company. .

After analysing the given data set of employee salaries at GemCraft, the mean salarywas found to be £29,064.17; whereas, in the rival company it’s £60,000. Additionally, it wasdistinguished   that   GemCraft   has   1,032   employee’s;   of   whom   94.77%   earns   less   than£40,000,  with 20  persons   earning   more   than   £50,000.   The  maximum  salary  received  is£59,406.00,   which   is   less   than   the   rivals   mean  salary   and   the   minimum  is   £15,655.00.Therefore, a salary rise is recommended at GemCraft as an incentive to retain workers andrecruit new ones, in this way employees wouldn’t feel unpaid for their labour and wouldn’t want to quit or go to competitor companies for jobs. These now motivated employees willthen perform better on the jobsite, up-keeping with tasks, meeting delivery deadlines on timeand producing high quality diamonds.

Given that the coefficient of variation of GemCraft is 21.82%, which is 8.12% better than the rivals giving them the risk and return tradeoff advantage, after the increase of salaries, risk and return figures should remain better and maintained to a level where it’s better than the competitors, giving GemCraft the competitive advantage in the lab grown diamond market.

Question 2 – Regression Analysis

Weighting – 30% of total marksLab-grown

Avocado farming in the USA faces several notable issues, primarily concerning water usage and environmental impact. Avocado cultivation requires significant amounts of water, particularly in regions like California where water scarcity is a pressing concern. The high-waterdemand of avocado orchards has led to conflicts over water resources, especially during drought periods, exacerbating tensions between agricultural interests and local communities.

Guacamore, a prestigious American-owned company specialising in avocado farming, boasts arich history of success built upon its unwavering commitment to delivering exceptional service and top-notch product quality. Over the past five years, the company has thrived among the increasing popularity of avocados, driven by evolving consumer preferences favouring online purchases and home delivery services. Despite recent surges in profitability attributed to heightened demand from prominent clients, Guacamore now struggles with mounting operational costs, particularly in labour and water expenses, posing a threat to its profitability. To confront these challenges head-on, Guacamore endeavours to examine the correlation between avocado sales and production costs, aiming to reveal potential cost-saving opportunities. Concerns regarding potential profitability risks have prompted Allen O'Reilly, the dedicated Accountant, to delve into the correlation between weekly avocado sales and weekly production costs. Data collection has been conducted and compiled on the spreadsheet labelled “GUACAMORE”.a) Regression Analysis - Utilise the GUACAMORE spreadsheet to conduct a simple regression analysis as per question.

i) Draw a scatter plot illustrating the relationship between weekly avocado sales and weekly production costs using Microsoft Excel. (2 marks)

ii) Calculate the average of weekly avocado sales and weekly production costs, including the Correlation coefficient (R) and Coefficient of Determination (R2) for this data? (4 marks)

Average weekly sales of avocado= 35,523
Average weekly production costs= £10,515.00
Correlation coefficient (R) = 0.966508
Coefficient of Determination (R2) = 0.9341

iii)  Calculate the slope and intercept values (4 marks)

Value of Slope m= 2.1623
Value of Intercept C= 12787

b) Draw  conclusions from the results that you have achieved from the questions above usingappropriate reference to support your discussion. (15 marks)

Your answers (approximately 600 words) should include the following:

(i) State, giving a brief explanation, which variable would be the dependent variable and whichvariable would be independent variable using appropriate references to support your discussion (must include in-text references).
(ii) The purpose of regression analysis.
(iii) The interpretation of your overall results including any suggestions for enhancing business operations and improvements where appropriate, in the specific context of the scenario. Your interpretation should include the explanation of the correlation between the two variables including the strength, direction, and an explanation of the effect.
(iv) Conclusion – a summary of what you have learnt and achieved.

The independent variable (X) is used to estimate the other variables, which in thisscenario is Guacamore’s weekly production cost. The dependant variable (Y) which isGuacamore’s   weekly   avocado   sales   is   the   variable   being   estimated   and   it   changesdepending on adjustments to the independent variable (Helmenstine, 2022). Guacamorewould be able to utilize the data of the weekly production costs to approximate whetheror not, high or low weekly avocado sales will be made, because the higher the production costs the more sales will be made and vice-versa; hence the reason why, the weekly production cost is the independent variable.

Also, because there are concerns about potential profitability risk and threats posed, the correlation between these two variables requires  close attention   to   ensure  that   avocados  aren’t   over   produced  to   exceed   its deemed lab our expenses, water expenses and operational costs.

Regression Analysis captures the correlation between the independent and dependent data in a set, and this is depicted on a graph and is determined by seeinghow the data is dispersed around a line (Beer, 2024). It can be used to examine the strength of the relationship between the variables and then predict a future model of therelationship between the variables (Taylor, n.d.).

As can be seen in the data examined for Guacamore, as weekly production costsincreases, simultaneously, the weekly   avocado  sales also rises. The   company has aweekly average production cost of £10,515.00 with their weekly average avocado salesat   35,523.

Thus,   the   linear   relationship   between  these  two  variables   is   a   positivecorrelation   because   they   increase   together.   The   correlation   coefficient   of   0.966508proves that there is the existence of a very strong positive correlation, as displayed onthe scatterplot with the upward slope which values 2.1623.

It is suggested that Guacamore can reduce their heightened operational costsspecifically when it comes to labour by investing into a hydroponic system. According toUrban Grove 2022, “avocado plants can be grown hydroponically”. Also, Hydro Garden,n.d. states that hydroponic  gardens  utilized  85% less water. Therefore,   a hydroponicsystem   will   minimize   Guacamore’s   labour   costs,   because   the   plants   will   receive   itsnutrients and water from pumps, eliminating the need for human labour. Additionally, withthis system in place, Guacamore will be using less water than its previous growing times,thus,   removing   the   issue   of   water   usage   concerns.   In   terms   of   drought   periods,Guacamore   should   purchase   water   tanks   which   would   only   be   designated   for   useparticularly during the drought periods in California. Where man-labour is necessary, thecompany can outsource workers from third world countries who would work the job forlower salaries to further decrease Guacamore’s labour expenses. Since the company’sproduction costs and avocado sales has a positive relationship, a higher production costshould be invested, to in turn receive higher sales figures which will be utilized to putthese systems in place to subside current hindrances. Furthermore, the decreased needfor costly labour expenditure will lead to a future profit increase for Guacamore.

In conclusion, the dedicated accountant Allen O'Reilly reason for being promptedwhen it comes to the potential profitability risks was valid, because despite the positiverelationship seen in the regression analysis done above, between the production costsand   avocado   sales   there were   some   restraints.

However,   by   implementing   thehydroponic system, purchasing the asset of water tanks and outsourcing cheap labour,Guacamore   should   then   face   less   of   a   profitability   risk   than   it   currently is facing.Therefore, these investments now will serve as cost-saving opportunities to Guacamorein the near future and it will also aid in achieving a more smooth operational flow in theproduction of avocados.

Question 3 – Time Series and Forecasting (Additive Model)

Weighting – 30% of Total Marks 

Wesco, a leading supermarket chain is renowned for its extensive product selection and exceptional customer service. Part of its current strategy is a commitment to an ongoing enhancement of its operations. Despite its strategic location and a wide array of offerings, the Wesco chain faces recurrent issues such as overstocking of perishable goods, stockouts of high-demand items, and sub-optimal utilisation of resources. These challenges not only lead to revenue loss but also tarnish the customer experience, eroding brand loyalty over time. With thousands of products lining its shelves, Wesco struggles to strike the delicate balance between maintaining sufficient stock levels and avoiding excess inventory. The manager of Wesco is delving into the realm of time series analysis and forecasting, seeking assistance to optimise inventory management and better meet customer demand. This case study therefore centres on the implementation of an additive model for time series forecasting to accurately predict future sales trends. The Wesco Sales Director has provided sales data from the past 3 years in worksheet labelled “WESCO”. 

a) Complete Time Series and Forecasting analysis using the additive model. You are required to provide a completed table of the calculations that are needed to estimate the sales forecasts for the quarters 1, 2, 3 and 4 of year 2024. The table should include, the moving average, trendcentered moving average, seasonal variation, adjusted seasonal values, extended trend, and the sales forecast. (22 marks)

b) Discuss the purpose of forecasting in the context of the Wesco scenario, including benefits to the business and provide a summary of what you have learnt and achieved using appropriate references to support your discussion. (300 words, 8 marks)

Forecasting can be done by analysing trends, seasonal, cyclical or irregular components.Forecasts in businesses are undertaken to estimate the predicted future performance within aparticular time frame based on a previous data collection, (Dotis-Georgiou, 20021).

Wesco’s issues of overstocking of perishable goods, stock-outs of high-demand items,and sub-optimal utilisation of resources can be avoided through the utilization of the time seriesforecast, because past records will allow them to determine future amounts of products to stockduring certain time periods to avoid over or understocking by significant amounts; therefore,better  meeting   customer   demands.   The   company   will   face   improvements   in   being   able   tomanage their stock levels and circumvent the matter of overstocked perishable goods leadingto losses.

Thence, the finance department will produce better predictions of restocking expenditureand proposed profitable amounts. The   additional profits earned can be  used in the furtherperformance of Wesco’s  current strategy of commitment to the ongoing enhancement of itsoperations. For example: since Wesco   is renowned for its  extensive   product selection andbrand loyalty is being eroded, this additional profit can be used to invest into new high-qualitylarge   scale   demanded   product   lines,   followed   by   a   membership   club   in   which   only   paidcustomers   will   have   access   too.   Thus,   aiding   in   Wesco’s   product   selection   furtherance,   astrategy to retain loyal customers and additionally, a new stream of income i.e. the membershipclub fee.

As observed, Wesco’s time series has the trend component of a consistent rise duringthe four quarters from the years 2021-2023. The sales forecast results were: 3856, 4695, 5970and 8281 respectively.  Thus, the business owners and managers can now utilize these salesforecast to meet the estimated sales predictions, stocking near the approximated amount ofgoods to be sold during each quarter in the upcoming years.