Part -1:
Individual Assignment: Financial Analysis
The Final Project for this module is a consultancy report to Anthony's Orchard, an expanding apple orchard and distributor. The company has been entertaining the idea of expanding its product line to include apple juice. In order to do this, a major investment in an apple press is needed. The aim of your consultancy report is to analyse all relevant data and make a recommendation to the management of the company in regard to this idea. Each of the remaining Individual Assignments Submission in this module will focus on one component of this consultancy report; in Unit 6 you will compile these, complete your analysis and submit the Final Project.
Measuring and regularly monitoring the financial health of a company, using budgeting and control methods, is a vital concern for managers.
By acquiring and analysing timely and accurate financial data, decision-makers will have the tools to facilitate operational and strategic decisions. These decisions may concern reactions to business or environmental conditions, resource acquisition, expansion and more.
This Individual Assignment will provide the opportunity to analyse financial data for Anthony's Orchard. As you heard from company CEO Bob Frost in this unit's media piece, Anthony's Orchard would like to make aggressive plans for its future, including the expanded product offering described above. At the same time, unforeseen circumstances can impact the current health of the company as well as its future plans. What-if analyses are valuable aids in assessing a variety of planned and unplanned events. You will utilise the analysis you conduct here as part of the Final Project.
To prepare for this Individual Assignment:
Review the readings and media for this unit, including the Anthony's Orchard case study media.
Familiarise yourself with the Anthony's Orchard company and its current situation; this can be done by exploring each of the tabs across the top of the screen in the Anthony's Orchard case study media. Hint:You should focus on the financial information.
To complete this Individual Assignment:
Review the Financial Statements: Analyse the current financial state of Anthony's Orchard and evaluate the impact of a major customer cancelling their expected order. This analysis should include the following:
Your view of the current financial health of the company
Your assessment of the materials and labor costs
Your assessment of the income statement
Your assessment of the cash flow statement
Your assessment of each of the business units in Anthony's Orchard
C-V-P analysis of the current year's financials
Conduct a What-If Analysis: This what-if analysis concerns an unforeseen circumstance that could impact the company's current health as well as its future plans. A major customer is considering cancelling their order for prepared apple products. This customer accounts for 25% of the prepared apple product revenue. Evaluate the impact of this on the budgeted statements contained in the case study.
Notes:
You should fully state and justify any assumptions that you choose to make in relation to the financial data you use. For example, if you make assumptions about the state of the economy or the industry over the period you cover in your analysis, be sure to state these and identify why you believe they are worth consideration here.
Be sure to include references to any sources you use as well, including external sources of economic data or industry statistics.
This Individual Assignment forms the basis for Section 1 of your Final Project. You will receive feedback on this work from your Faculty Member, and will be expected to incorporate any suggestions into the Final Project.
Your submission (excluding appendices) should be 1,000 words (+/- 10%) in length.
Submit your Individual Assignment to your Faculty Member for feedback. Be sure to submit by the end of this unit in order to receive timely Faculty Member feedback. Contact your Faculty Member for permission to submit an assignment early, to submit an assignment after the end of the unit or to resubmit an assignment on which you have already received feedback.
To complete your Individual Assignment, do the following:
Please answer the Individual Assignment in a single Word document.
Part -2:
Assignment: Analysis of the Investment
In the Shared Activity for this unit, you analysed projected financial data and assessed its value to making a physical expansion decision. As you have heard in the media presentation from CFO Mary Scott, Anthony's Orchard is faced with another type of expansion decision. CEO Bob Frost is eager to expand the product line to include apple juice.
Of course, a decision to expand a product line has very many variables. In this assignment, you will focus on one of these: the additional cost resulting from the purchase of an apple press (a piece of equipment required to manufacture apple juice). You also will investigate the value of a number of financial measurements. Ultimately, you will develop a recommendation for the company, and this analysis will help you to support that recommendation.
To prepare for this Individual Assignment:
Review the Anthony's Orchard case study in the unit resources.
Consider the following:
- The company, according to Anthony's Orchard Strategic Plan, is hoping to purchase an apple press in order to start a new line of prepared apple products-apple juice.
- The company estimates this new product offering will generate an additional $95,000 net income per year and estimated cash flows of $90,000 per year. The cost of the apple press will be $950,000 and this expenditure, as shown in the budgeted cash flow statement, is expected to take place in the fourth quarter of 2012.
- The apple press is expected to have a seven-year life and no salvage value.
- The company requires a 10% return on investment for new capital investments and the company uses a cost of capital of 8%.
- The company's revenue goal for 2015 is $25 million.
- Assume a minimum 12% gross margin on revenue.
To complete this Individual Assignment, answer the following:
- Do you think the company's revenue goal of $25 million by 2015 is realistic?
- Explain how purchase of the apple press might affect the company's revenue goals. Based on this information, explain whether Anthony's Orchard should invest in the apple press. Support your response with relevant information provided in the case study, the previous year's financials for 2010, the current year's financials for 2011 and the budgeted year's financials for 2012.
- Draft budgeted financial statements from 2012 to 2015 under both options that provide a realistic assessment of expected revenues and costs, and explain how you have arrived at these budgeted figures.
Notes:
You should fully state and justify any assumptions that you make in relation to the financial data you use. Be sure to include all references as well.
This Individual Assignment forms the basis of Section 2 of your Final Project. You will receive feedback on this work from your Faculty Member, and will be expected to incorporate any suggestions into the Final Project.
Your submission (excluding appendices) should be 1,000 words (+/- 10%) in length.
Part -3:
Developing a Balanced Scorecard
In this unit, you are exploring the need for organisations to measure and manage performance against objectives, as well as the potential effectiveness of tools such as Balanced Scorecards and Strategy Maps as aids in this cause.
You will now develop a BSC for Anthony's Orchard. The company has a number of strategic goals; measuring performance towards those goals will be critical to its sustained success.
To prepare for this Individual Assignment:
Visit the Anthony's Orchard case study in the unit resources. Review again the current and historical financials. Consider that one of the company's key goals in its strategic plan is to exceed revenue of $25 million dollars by the year 2015.
To complete this Individual Assignment:
- Explain the potential value of a BSC to Anthony's Orchard. Describe specific ways that the introduction of a BSC can contribute to this organisation.
- Develop a BSC that is aligned to the key goal in the strategic plan, i.e. exceeding revenue of $25 million dollars by 2015. Develop, quantify and justify suitable key performance measurement criteria for Anthony's Orchard in each of these four key areas:
- Financial
- Customer
- Internal Business Processes
- Learning and Growth
Notes:
You should fully state and justify any assumptions that you make in relation to the financial measurements you use. You should also make suitable use of appendices to include relevant financial performance measurement information you include. Be sure to include all references as well.
This Individual Assignment forms the basis of Section 3 of your Final Project. You will receive feedback on this work from your Faculty Member, and will be expected to incorporate any suggestions into the Final Project.
Your submission (excluding appendices) should be 1,000 words (+/- 10%) in length.