Learning Outcomes Assessed:
LO1: Demonstrate the skills and knowledge to interpret and maintain basic financial data.
LO2: Illustrate how financial data analysis can aid decision making in business.
LO3: Demonstrate ICT skills in data manipulation
Assessment Task:
You are the Assistant Financial Analyst at GreenLeaf Industries, a mid-sized company specialising in eco-friendly packaging solutions. The company is considering expanding into new markets and seeking additional investment from potential investors. Senior management requires a comprehensive financial analysis report to assess the company’s current financial health and the viability of the expansion.
Your task is to use financial data interpretation and problem-solving techniques to prepare a professional report for the senior management team and potential investors.
Your report should include the following sections: –
Introduction (Aim of the report) (5 Marks)
Section 1 (20 Marks)
(i) Define and discuss the theory behind financial management and its importance. (10 Marks)
(ii) Explain the usefulness of financial statements in decision making process. (10 Marks)
Section 2 (50 Marks)
You are required to use the templates provided in MS Excel document and provide 1 screenshot each in the appendix area for all questions in this section.
GreenLeaf Industries
Trial Balance as at 31 March 2025
|
Account |
Debit (£) |
Credit (£) |
|
Revenue |
|
93,500 |
|
Cost of Goods Sold |
42,570 |
|
|
Salaries and Wages |
16,900 |
|
|
Sales & Admin Expenses |
4,285 |
|
|
Marketing Expense |
2,875 |
|
|
Overheads |
3,800 |
|
|
General Expenses |
1,250 |
|
|
Interest Expense |
1,000 |
|
|
Tax Expense |
3500 |
|
|
Cash |
8,500 |
|
|
Accounts Receivable |
12,000 |
|
|
Inventory (Closing) |
10,000 |
|
|
Property, Plant & Equipment (PPE) |
65,000 |
|
|
Furniture & Fittings |
24,820 |
|
|
Motor Vehicles |
30,000 |
|
|
Accounts Payable |
|
9,000 |
|
Accrued Expenses |
|
3,000 |
|
Short-term Bank Overdraft |
|
2,500 |
|
Bank Loan (Long-term) |
|
30,000 |
|
Bonds Payable |
|
20,000 |
|
Share Capital |
|
50,000 |
|
Retained Earnings (Opening) |
|
18,500 |
|
Totals |
226,500 |
226,500 |
Using the financial data provide above, you are required to:
2(A) Prepare the Income Statement in the Excel Sheet (A). (see Excel Template) (10 Marks)
2(B) Conduct a vertical analysis of the income statement in the Excel Sheet (A). (see Excel Template) (10 Marks)
2(C) Prepare the statement of financial position (Balance sheet) in Excel Sheet (B) (see Excel Template). (15 Marks)
2(D) Use the data from the Excel sheet (A & B), GreenLeaf Industries’ financial statements to calculate the following ratios in Excel Sheet (C) (see Excel Template):
- Profitability: Net Profit Margin, Return on Capital Employed (ROCE)
- Liquidity: Current Ratio, Quick Ratio
- Efficiency: Asset Turnover Ratio (15 Marks)
(Show ratio formulas & workings)
Section 3 (20 Marks)
Industry averages
|
Ratio |
Industry Average |
|
Net Profit Margin |
15% |
|
ROCE |
18% |
|
Current Ratio |
2.0 |
|
Quick Ratio |
1.2 |
|
Asset Turnover Ratio |
1.8 |
Using the industry averages given above, you are required to:
Compare GreenLeaf Industries’ performance results from section 2(D) with the industry averages and discuss where the company is performing better or worse compared to industry.