calculate (and tabulate) a full range of performance indicators/financial ratios, and be prepared to take a view on the recent performance of FBC Foods plc

calculate (and tabulate) a full range of performance indicators/financial ratios, and be prepared to take a view on the recent performance of FBC Foods plc

FINANCIAL DECISION MAKING – PRE-ISSUED CASE STUDY & GUIDELINES

Instructions to candidates (please read carefully):

a) The following case study provides some basic information that can be used in your analysis during the examination

b) A copy of this material will be available in the examination and, therefore, you should NOT take this case study into the examination room

c) You are allowed to prepare notes for this examination. Your notes should be a maximum of two pages (four sides) of A4. These notes can be taken into the examination and should be attached to your answer script on completion of the examination

d) As part of your prepared notes, you are advised to calculate (and tabulate) a full range of performance indicators/financial ratios, and be prepared to take a view on the recent performance of FBC Foods plc

e) The three hour examination will consist of FOUR compulsory questions

f) Non-programmable calculators are permitted in this exam

Scenario:

FBC Foods plc is a diversified international food, ingredients and retail group. It operates in many countries across Europe, southern Africa, the Americas, Asia and Australia. The company originated in the UK (where it is still headquartered), and has grown both organically and by strategic acquisitions. FBC Foods plc currently have three principal divisions – Grocery, Agriculture and Retail.

The grocery division has a number of international brands, and a variety of continental brands. The agriculture division supplies products and services to farmers, feed and food manufactures, processors and retailers. It also buys grain from farmers. Its breadth of experience enables it to add value all along the food, drink, and biofuel industry supply chains. The retail section is made up of just one major retail chain, currently operating in Great Britain, Ireland, France, Portugal and Spain. It solely focuses on short-term, inexpensive fashion items.

                                                                                                                                          Continued overleaf

The summarised final accounts are as follows:

Income statement for year to 28/29 February:

 

2015

2016

 

£m

£m

Turnover (all credit sales)

1,300

1,250

Cost of sales

(720)

(710)

Expenses

(470)

(440)

 

-------

-------

Operating profit

110

100

Interest paid

(40)

(45)

 

-------

-------

Profit before tax

70

55

Provision for tax

(15)

(12)

 

-------

-------

Profit after tax

55

43

Proposed dividend

(15)

(15)

 

-------

-------

Retained profit

40

28

 

====

====

Summarised balance sheet (position statement) as at 28/29 February:

 

2015

2016

Non-current assets

6,100

5,500

Cumulative depreciation

(2,500)

(2,300)

 

--------

--------

 

3,600

3,200

Current assets

--------

--------

 

 

Inventory

1,400

1,490

Accounts receivable

530

500

Bank

10

40

 

-------

--------

 

1,940

2,030

 

-------

--------

Total assets

5,540

5,230

Current liabilities

====

====

 

 

Accounts payable

630

233

Bank overdraft

-

20

Tax owing

15

12

Dividends

15

15

 

------

------

 

660

280

 

------

------

Long-term loans

780

890

Equity and reserves

------

------

 

 

Ordinary share capital (£1)

3,000

3,000

Retained profit

1,100

1,060

 

-------

--------

 

4,100

4,060

 

-------

--------

Total liabilities

5,540

5,230

 

====

====


Price: £ 40

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