Accounting and Finance

 

Learning outcomes and pass attainment level:

 

Demonstrate the use of accounting information for decision making purposes, including the interpretation and analysis of financial statements.

 

Determine and interpret ratios and percentages across periods of time and companies to make simple decisions.

 

Use publically available financial information with self-generated financial statement analysis to make a simple evaluation of a company.

 

Explain the role of financial markets and institutions in a modern financial system and their impact upon individuals and business organisations.

 

 

This assignment is an individual piece of course work designed to assess the accounting and finance elements of the module. It is marked out of 100, and accounts for 70% of the final grade for this module. It is broken down into three elements, much of which requires on going work during the year.

 

All sections and questions must be answered.

 

 

Guidance

 

Your assignment should be submitted as a printed word-processed document and supporting spreadsheet. Submit a clearly labelled CD-ROM containing your computer file(s) [in addition to you hard copy].

 

Please ensure that your student ID appears on each page of your assignment and staple the pages together.

 

Mark

 Content
 

 

70+

(1st)

 Excellent

Excellent work which demonstrates authoritative grasp of the concepts, methodology and content appropriate to the subject discipline. Indication of originality in the application of ideas, in synthesis of material or in performance; personal insights reflecting depth and confidence of understanding and real critical analysis. Work is well structured and presented with full referencing.
 

60-69 (2.1)

 Very Good

Very good work which demonstrates sound level of understanding based on a grasp of relevant concepts, methodology and content; displays skill in interpreting and analysing complex material. The material is well organised and referenced
 

50-59 (2.2)

 Good

Work that demonstrates a coherent response to the requirements of the coursework and has a clear expression of ideas. It uses relevant source material and demonstrates some understanding of the concepts. The student draws relevant conclusions, the work organised and some referencing.
 

40-49 (3rd)

 Acceptable

Recognisable if limited awareness of the requirements of the coursework. There is some evidence of some understanding. There is some attempt to draw relevant conclusions.
 

35-39

 Unacceptable

Marginal fail. Unsatisfactory but showing some understanding. May be condonable is stronger performance on one aspect of the work compensates for weaker work elsewhere.
 

0-34

 Unacceptable

A poor attempt little evidence of understanding or application.

 

Part One: Information for decision making (25 marks)

The lecturers’ conference costing scenario

                       

LECCON are an established company, who for many years have organised various members’ conferences for the professional institutions/establishments of accountants, lawyers, dentists, etc.

They had recently been approached to organise an upcoming three day academics conference, and have asked you to assist with the costing of the project and estimating profit.

The conference is expected to attract about 800 delegates.

The conference costs £450 for academics, £300 for retired academics, and £150 for PhD students. Approximately, 75% of the delegates will pay the full fees; 10% are expected to be retired academics with the remainder of the places being taken by PhD students.

There is a discount available for those full fee paying academics of £100 if bookings are received at least 2 months prior to the conference taking place, it is anticipated that 10% of the delegates (academics) will meet this requirement.

Any academics presenting papers for discussion at the conference will be able to attend the conference free of charge, however, the meals and accommodation costs will still have to be paid as part of the costs.  There are 50 places available for those presenting papers, and it is expected that these will all be taken.

The costs associated with such conferences are heavy. The basic costs are the booking of the main hall (maximum capacity of 1,500 delegates) which costs £4,500, the conference dinner at £52 per head, the accommodation at £156 per head, and all other meals at £62 per head.  These are costs if the venue is booked with over 650 fee paying delegates, if less than 650 fee paying delegates have booked then these per head costs increases by 10% (exclude non-fee paying delegates from these calculations).

The after dinner entertainment is estimated to cost £1,500.

The costs of publishing the conference materials are a set up cost of £2,000 plus £10 per copy up to 350 copies and then £7.50 per copy for any extra after that. Only the fee paying delegates will be entitled to a printed copy of the papers.

The other expenses of an ad hoc nature, photocopying, phone calls etc. come to £6,000.

 

 

Required:

  • Construct a spreadsheet, using appropriate formulae, to show the estimated profit for the details given above; what is the expected level of income and profit?

 

  • What is the breakeven point in terms of number of delegates and income?

 

  • How many delegates would need to attend the conference if a profit of £30,000 was required?

 

  • Construct appropriate charts to show the:
    1. Breakdown of the number of delegates for each category
    2. Breakdown of the income by delegate type
    3. Breakdown of the expenses by category type

 

As part of your portfolio you need to include:

  • Copy of the spreadsheet showing:
  1. values
  2. formulae used
  3. charts / graphs constructed

 

  • Electronic copy on CD-ROM or USB

 

 

 (25 marks)

                                                                                                            (Total 25 Marks)


 

Part Two: The Fantasy Stock Market Game (50 Marks)

  • The Fantasy Stock Market Game will be played individually.
  • Students are recommended to use http://www.bullbearings.co.uk/ and play the BCU13/14 Game, (password BCBS1) as transaction logs are available, which will need to be submitted with your coursework. Please take screenshot of opening portfolio (cash). Additional conditions apply to the usage of this site.
  • Use your student ID to join and trade the BCU13/14 game.
  • Each individual will start with a virtual £100,000 each for five different games (Fantasy Stocks, Spread Betting, CFD Trading, Fantasy FX, Fixed Odds Betting). You only have to play Fantasy Stocks Game. You may invest as much of this money as you wish in shares. Any amount not invested will be kept in your cash account which will not pay interest.
  • You must register for the live BCU13/14 Game, between 2nd December 2013 and 9th December 2013.
  • Each transaction will incur a virtual £10 brokerage fee, and purchases will also incur 0.5% stamp duty fee. This is applied automatically if you use the recommended online system.
  • Your trading must commence no earlier than 2nd December 2013, but no later than 9th December 2013. You must make at least 4 trades (buy or sell) in each calendar month up to February 2014 (3 periods). At the end of every day between 9th December 2013 and 28th February 2014 you must be holding shares in a minimum of two different companies. (However, there is no requirement to trade each day! No maximum applies to number of trades / shares held).
  • Eligible Securities – Students can trade in any share listed on FTSE All-Share and Alternative Investment Market (AIM) exchanges that are traded in GB£. Players cannot trade Mutual funds, Futures, Bonds, or Foreign Currency shares. NOTE: players should not play the other Bullbearings games i.e. Spread Betting, CFD Trading, Fantasy FX and Fixed Odds Betting.
  • You are recommended to trade during market hours. Prices for orders placed outside of these times may be adversely affected.
  • Ensure you print a snapshot of your Portfolio – at some point every month.
  • Game End You must sell all of your holdings, on a date of your choosing, between 3rd and 14th March 2014.
  • It is recommended that you keep a backup / copies / screenshots of your transaction log. Should there be a failure of the automated system these will be required for your coursework.
  • You are required to keep, at each trading opportunity, a reflective journal of your activities, thoughts, and reasons for each decision that you make. A decision will be to buy, hold or sell a share.

Selecting Companies to Invest In

  • It is expected that initially your investments will be based on your existing knowledge of the companies, financial analysis and investment techniques. As the module progresses and your understanding of finance increases, we will expect you to undertake more analysis before making your investment decisions.

 

Your work must include

 

  1. From Bullbearings:
    1. Proof of joining online game (screenshot of opening cash holding / email)
    2. Transaction log
    3. Portfolio snapshot – opening balance and final balance after liquidation

(12 marks)

 

  1. Completed summary sheet (attached).

NOTE: lecturers must not be asked to complete the calculations.

(8 marks)

 

  1. Reflective journal with reasons for each decision.

(22 marks)

 

  1. Summary comment and reflective statement (max 250 words)

(8 marks)

 

Assessment Rationale

 

  • Your transaction record, portfolio’s final balance and reflective journal entries will form the individual assessment of the finance element of this module. The mark awarded for this element of the assessment will be predominately based on the quality of the reflective journal entries, and ability to track and record your portfolio within the given guidelines, rather than the frequency of trading or actual final cash balance.

 

(Total 50 Marks)


 

The Fantasy Stock Market Game: summary page (attach to final submission)

Student ID: S13183648
Degree Programme:  
Bullbearings Username: SMike
Date joined BCU13/14 Game:  
Cash balance on liquidation: £
Portfolio percentage increase:  
Benchmark used:

(Provide some justification)

  
Benchmark start and finish prices (29/11/2013 to 1/3/2014):

(Show workings/ data source)

  
Market Adjusted Return (Alpha) achieved:  +/-  
   
Attached YES/NO  
Proof of Registration /email: wugumike@yahoo.com.tw    
Transaction Log attached:      
Journal with reflective entry:      
       
Number of portfolio snapshots attached:    

 


 

Part Three: Finance and Financial Markets (25 marks)

  1. Identify the Adverse Selection and Moral Hazard problems, due to information asymmetry, in the following financial products/services. Describe what remedies the contracting parties might use to mitigate these problems?
  2. Bank Loans
  3. Insurance

 (10 marks)

 

  1. Suggest and discuss the most probable sources of finance for the following three businesses: (If suggesting a bank loan, it would be advantageous to do some research and mention the suitable bank/product etc.)

 

  1. Davis Sandwiches: A new business selling sandwiches made at home, delivering to local offices, need finance for a small vehicle.

 

  1. Martin and Fiona Foods: Organically grown partnership business hoping to increase annual turnover from £300,000 to £1 million, needing new premises and refrigerated vans for an expanding food delivery service in Birmingham and surrounding areas.

 

  • Raphael Meals Ltd: Food suppliers to retail outlets, schools and hospitals in the Midlands, currently achieving a turnover £30 million, with plans to gain national presence through growth and acquisitions.

(15 marks)

 

(Total 25 Marks)

 

 

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