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MOCK EXAMINATIONS SPRING SEMESTER 2023

Finance II FINU9F4

B. I: STUDY SESSION 1 [MAXIMUM 200 WORDS]

REQUIRED

Are there any Ethical, Environmental, Social, or Governance (EESG) issues that might concern, or impress, someone thinking of investing in, working for, or trading with Portmeirion Group (PMP)? Justify your answer, and clearly reference all information sources used. (15 Marks)

BII: STUDY SESSION 2 [MAXIMUM 400 WORDS]

Assume that an appropriate Capital Asset Pricing Model Beta for Portmerion Group is 1.8, that the relevant equity risk premium is 5.8%, and the relevant risk-free rate of interest is 2.57%. Also assume that the relevant corporation tax rate is 19%.

REQUIRED

Using the assumptions stated above, and information from the annual report provided, calculate showing all workings and page number references from the annual report:

a)

i) The cost of equity

ii) Return on equity over the financial year to 31^st December 2021

iii) Debt to asset ratio

iv) Debt to equity ratio

v) Equity to asset ratio

vi) Cost of debt

vii) Weighted average cost of capital (WACC)

viii) Present value of the tax shield on Portmeirion Group’s debt. (20 marks)

B. III: STUDY SESSION 6 [MAXIMUM 400 WORDS]

REQUIRED

a) Assume that all purchases are credit purchases and that all sales are credit sales. Then using the annual report provided for Portmeirion Group, and showing all your workings use the average balance sheet method to calculate each of the following where applicable:

i) Net working capital (NWC) over the most recent financial year

ii) Accounts payables period

iii) Raw materials inventory period

iv) Work in progress period

v) Finished goods inventory period

vi) Receivables period

vii) Cash conversion period.

b) Referring to your calculations in V (a) above, comment upon the operating cycle for Portmeirion Group. What differences in any of the operating cycle components might you expect to find in for example: (i) a restaurant chain, (ii) a supermarket, or (iii) a construction company.            (25 marks).