Business Finance (L6) September 2021 End of Module Project

End of Module Project
Throughout this Business Finance module we have focused on investment and financing from a risk based perspective with an emphasis on the shareholders of the company.

This End of Module Project allows you to bring together several aspects of the module in a holistic manner.

Select a company of your choice and obtain their latest annual report (this can be one you work for, are familiar with or one you have an interest in). Ensure your chosen company will enable you to meet all of the criteria below.

There are lots of companies to choose from and normally their annual reports are available easily from the company’s web site. if you are struggling for a suitable company, just have a look at the Financial Times (either hard copy or on the web) where you will see a comprehensive list of company names that are listed on the FTSE, this would be a good starting point.

Using your chosen company, you are required to:

1 Explain the key sources of finance for your company. For example what is the mix of share capital and long term loans, does this company appear to be risky from a gearing point of view? (350-500 words)
2 Identify the key elements of working capital and discuss any particular strengths or weaknesses which you feel the company has in this area. (350-500 words)
3 Discuss the company’s exposure to risks generally and exchange rate risk in particular as a result of their involvement in international markets. How does the company manage these risks, and how successful do you think the company is in this? (400-500 words)
4 Evaluate the success of corporate restructuring activities undertaken by your chosen company in the last five years or so. For example, has it acquired new subsidiary companies, entered into joint ventures or undertaken divestment, and how successful has this been? (400-500 words)

Your completed End of Module Project should be in the form of a written report of 2,000 words.

The learning outcomes for this assignment are:
• Understand the conceptual framework of finance
• Evaluate alternative funding policies and instruments available to firms
• Appreciate methods of valuation and their application to corporate restructuring

Module Background

Unit 9: Corporate Restructuring and Issues Relating to Small Businesses
In this final unit we will look at two quite diverse topics. In the first we will consider why companies seek to expand by means of acquisitions or mergers, or to reduce their scale of operations by divestment. In the second we will focus on issues relating to small businesses, and compare and contrast the position of these businesses with that of larger organisations in respect of many of the topics we have covered in this module.

In this unit we shall:
• Examine reasons for the popularity of takeovers/mergers
• Consider the practicalities of financing mergers
• Examine the reasons for divestment
• Consider some of the specific issues facing small businesses, particularly in relation to available sources of finance, and appropriate methods for valuation

On completion of this unit you will be able to:
• Evaluate the advantages and disadvantages of achieving growth by means of mergers
• Explain the reasons for companies undertaking divestment, and alternative means of achieving this
• Appreciate the particular issues facing small businesses in all aspects of business finance

Unit 9 Reading
Required Reading
For this unit you should read the following from the core text:

McLaney, E. (2017) Business Finance: Theory and Practice (11th Ed). FT Prentice Hall.
• Chapter 14 – Corporate Restructuring (Including Takeovers and Divestments)
• Chapter 16 – Small Businesses

Additional Reading
Guo,S., Hotchkiss, E. S. And Song, W. (2011) ‘Do Buyouts (Still) Create Value?’ Journal of Finance 66 (2): 479-482. Online via Essex eLibrary.

Writing Output
Writing should be in the form of a Written Report in 2,000 words in Harvard Referencing with Charts/Figures & Appendices.

Report format:

• Executive Summary

• Contents Page

• Introduction
• References

• Appendices

2,000 words (Word counts starts at Introduction and stops at References)

Using your chosen company, you are required to:

1 Explain the key sources of finance for your company. For example what is the mix of share capital and long term loans, does this company appear to be risky from a gearing point of view? (350-500 words)
2 Identify the key elements of working capital and discuss any particular strengths or weaknesses which you feel the company has in this area. (350-500 words)
3 Discuss the company’s exposure to risks generally and exchange rate risk in particular as a result of their involvement in international markets. How does the company manage these risks, and how successful do you think the company is in this? (400-500 words)
4 Evaluate the success of corporate restructuring activities undertaken by your chosen company in the last five years or so. For example, has it acquired new subsidiary companies, entered into joint ventures or undertaken divestment, and how successful has this been? (400-500 words)

Your completed End of Module Project should be in the form of a written report of 2,000 words.