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ACCT5002 Accounting for Managers

Assessment details

Assessment 1 Quiz

Due: 5 pm 3 December, 2021

Weighting: 10%

Your quiz questions are based on the Annual report of Nick Scali Limited for the year ended 30 June 2021.

The quiz will cover Topics 2 and 3 (the balance sheet and income statement). You will be required to answer 10 questions about Nick Scali Limited’s 2021 annual report. A link to the report is provided in the unit’s Blackboard site. You must only use the link provided. This will ensure you use the right report. Do not source the report from anywhere else.

There is a total of 10 closed questions of varying types (e.g. multiple choice, fill in blanks, yes/no).

The quiz will be open from Monday 22 November 2021, 9:00 AM AEST. The quiz must be completed by Friday 3 December 2021, 5:00 PM AEST.

There is no time limit for taking the quiz but once started the attempt must be completed in one sitting.

Assessment 2 Financial analysis of Nick Scali Limited

Due: 5 pm 14 January 2022

Word guide: 1500 (maximum)

Weighting: 40%

Your task is to analyse and interpret the financial performance and financial position of Nick Scali Limited (NCK) for the financial year ended 30 Jun 2021 in a written report with a maximum of 1,500 words.

Your primary source of information is the company’s 2021 annual report together with the list of ratios provided in this document for 2019, 2020 and 2021. Whilst your focus is the 2021 financial year, also comment on comparative and trends in key financial indicators where relevant. For this purpose, we have also provided the 2020 Annual report.

Instructions:

· Use financial data from the sources identified above.

· Model your analysis on the guidance and examples provided in Topics 4 and 5.

· Before you start your analysis, contextualise your financial analysis by reading the Chairman and Managing Director’s Review and the Directors’ Report for the 2021 financial year. Include any relevant information from these reports in your financial analysis.

· You can present tables, graphs or diagrams to help summarise and communicate your analyses but you must provide explanations and conclusions from each.

Required:

A. Overview of economic and industry context (6 marks)

Overview the economic impact of the extraordinary events caused by covid-19 and identify what you think the key national and retail industry drivers of profitability during the pandemic for a company such as NCK might be. Approximately 200 words.

B. Analysis of cash flow performance (8 marks)

Analyse and interpret NCK’s Statements of Cash Flows for 2021 (comparing to the prior year where relevant) and provide conclusions on the company’s cash flow performance.

Approximately 300 words.

C. Analysis of profitability (8 marks)

Analyse and interpret NCK’s profitability for 2021 (comparing to the prior year where relevant) and provide conclusions on the company’s profit performance.

Approximately 300 words.

D. Analysis of financial position (8 marks)

Analyse and interpret NCK’s financial position as at 30 June 2021 including analysis of financial liquidity, gearing and efficiency. Approximately 300 words.

E. Overall evaluation of NSL (10 marks)

Utilising NCK’s investment ratios and your analysis in parts A to D above, provide an overall financial evaluation of NSL for the 2021 financial year. Include a brief discussion of how you perceive the covid-19 pandemic to have impacted NSL. Approximately 400 words.

Nick Scali Limited – Ratios

	2019	2020	2021
Return on equity	49.9%	52.4%	78.2%
Current ratio	1.27	1.06	1.17
Interest cover ratio	57.65	9.09	18.42
Operating profit margin	22.7%	25.8%	34.4%
Gearing ratio	23.5%	71.7%	62.1%
Inventories turnover period	135.47	137.82	111.15
Market price per share (financial year end)	$6.26	$6.48	$11.72
EPS	$0.52	$0.52	$1.04
Acid-test ratio (times)	0.62	0.67	.81
DPS (interim + final)	$0.450	$0.475	$0.65
Gross profit margin	62.9%	62.7%	63.5%
Sales revenue to capital employed (times)	2.50	1.39	1.31
Return on capital employed	56.7%	35.8%	45.2%
Net profit margin	15.7%	16.0%	22.6%
Fixed assets turnover (times)	2.90	1.48	1.39

Sources: Market price per share, DPS and EPS from Nick Scali Limited 2020 and 2018 Annual Reports; all other figures based on author calculations using data from Nick Scali Limited 2020 and 2018 Annual Reports (specifically Financial Statements and Notes).

MARKING CRITERIA	Excellent 40	Very Good 33	Good 27	Satisfactory 20	Developing 10	Inadequate 0
Quality of parts A to D 70%	Accurate and comprehensive. Analyses each required dimension with no inaccuracies. Interprets ratios and provides explanations of key findings that are supported by deeper analysis and broader company context that show surprising insight.	Accurate and comprehensive. Analyses each required dimension with very few inaccuracies. Interprets ratios and provides explanations of key findings, some of which are supported by deeper analysis or broader company context that shows some insight.	Mostly accurate and comprehensive. Analyses each required dimension with some inaccuracies. Interprets ratios and provides some explanations that are supported by deeper analysis or broader company context.	Mostly accurate but is missing some components or explanation. Analyses most required dimensions, mostly accurately. Interprets ratios but in a mostly definitional and descriptive way. Limited explanation or depth of analysis.	The attempt covers some relevant components but has major inaccuracies or lacks explanation The attempt does not analyse most required dimensions or has major inaccuracies or is hard to follow.	Largely inaccurate, incomprehensible or not attempted
Quality of the overall evaluation 20%	Succinctly, accurately and comprehensively draws conclusions from the analysis and highlights the company’s key financial strengths, weaknesses and related areas for further investigation. Surprising insight is demonstrated.	Accurately and comprehensively draws conclusions from the analysis and highlights the company’s key financial strengths, weaknesses and related areas for further investigation. Some insight is demonstrated.	Draws mostly accurate conclusions from the analysis that highlight most of the company’s financial strengths and weaknesses. At least one appropriate area for further investigation is noted.	Draws mostly accurate conclusions from the analysis that highlight some of the company’s key financial strengths and weaknesses. Areas for investigation may be absent or tenuous.	Draws mostly inaccurate conclusions or company financial strengths and weaknesses based on the analysis are not clear.	Largely inaccurate, incomprehensible or not attempted
Written communication 10%	Very well organised and presented. Use of language makes meaning consistently clear. Outstanding attention to spelling, punctuation, grammar and syntax (virtually error free).	Very well organised and presented. Use of language nearly always makes meaning clear. Only a few minor errors in spelling, punctuation, grammar and syntax.	Well organised and presented. Use of language mostly makes meaning clear. Several minor errors in spelling, punctuation, grammar and syntax.	Adequately organised and presented. Several errors in spelling, punctuation, grammar and syntax but meaning and readability is not hampered.	Disorganised and untidily presented or readability is hampered by lack of attention to spelling, punctuation, grammar and syntax.	Disorganised and untidily presented and readability is hampered by lack of attention to spelling, punctuation, grammar and syntax.

Assessment 3 Presentation Stone & Wood Case Study

Due: 5 pm 9 February 2022

Word guide: 1500 (maximum)

Weighting: 50%

Required

Note that Parts A and B must be submitted through Turnitin and Part C is submitted as both a video file and a written report through the submission link provided.

Read the full Stone & Wood case study available on this unit’s Blackboard site.

Budget data

Notes

1. The budget period is the 12-month period ending 30 June 2022, however you will base your assessment on the financial statements provided in the Stone & Wood case study for Fermentum Pty Ltd for the 2019 and 2020 financial years.

2. For the purpose of this assessment, assume Stone & Wood accounts for 100% of Fermentum’s financial operations.

3. Assume all costs below gross profit line are fixed costs.

4. Assume cost of sales are 80% variable costs and 20% fixed costs

5. You are advised the base case estimates of sales mix are 50% of sales revenue are trade sales in kegs to pubs and clubs, and 50% are retail sales in cans and bottles.

6. The worst-case scenario for the budget year is a 20% fall in total sales from the base case estimate due to the impact of covid-19 restrictions.

7. The best-case scenario for the following budget year is a 10% increase from the base case estimate in retail sales due to online sales growth during lockdown.

Required

PART A Budgeting (25 marks)

1. Prepare base, best and worst-case profit (NPBT) budgets in contribution margin format (3 x 5 marks each = 15 marks)

2. Calculate the break-even point and margin of safety (4 marks)

3. Interpret your results from parts 1 and 2 including a comparative analysis of best, worst and base case scenarios (6 marks).

PART B Financing (10 marks)

During 2020 there were major changes to Stone & Wood's balance sheet.

a. Discuss the major changes to assets, liabilities and equity (5 marks)

b. Using relevant accounting ratios discuss changes in Stone & Wood’s financial risk (3 marks)

c. Did these changes put the company in a better or worse position to withstand the financial shock of the covid-19 pandemic on the brewing industry? (2 marks)

PART C Video presentation (5 minute maximum) of response to sale of Stone & Wood (15 marks)

Read the following article that reports Stone & Wood was recently sold for $500m. https://manofmany.com/lifestyle/drinks/stone-wood-sold-to-lion

You are required to discuss the sale of Stone & Wood given the Balance Sheet valuations in their 2020 Financial Statements and the information provided in the Stone & Wood case study.

1. Discuss how assets are valued in accounting balance sheets and why or why not this may reflect market value.

2. Provide possible reasons for differences between Stone & Wood's market value and accounting book value according to their 2020 Statement of Financial Position assuming there is no material change in the Balance Sheet from the end of the 2020 financial year up to the time of sale of Stone & Wood. Draw on information from the case study wherever possible.

3. Include a discussion of intangible assets and your estimate of the value of goodwill at the time of sale for Stone & Wood.

4. Drawing on information from the case study and other information you consider relevant identify factors that were likely drivers of the market value of Stone & Wood.

Your response to PART C must be filmed and uploaded on a video file via the assessment submission link.

You must also include a written version of your presentation in your word document submission. This need not be exactly what you say in the video but should be a reasonably faithful representation of what you cover and in the order which you cover it.

You must also include a clear photo of your student ID card at the end of your written submission for this assignment.

For the first 10 seconds of the video:

· you must show your student ID card or other photo ID such as your drivers licence or passport. Your name and photo on your card must be clear in the video.

· At the same time, in the background, it must be obvious that you are holding this card.

You will then lower the card and start your presentation with no break in the video. Your face must be clear in the video at all times. The maximum time for the video is 5 minutes and no marks will be awarded for content after the first 5 minutes.

Failure to follow any of these instructions may result in zero marks for this part of the assignment.

Referencing

Note that Wikipedia (and equivalent websites) are not acceptable academic references. Please use the Harvard referencing system, or similar widely accepted system such as APA.

Note the textbook and unit materials need to be referenced where used in assignments.

Academic Integrity

As part of a University initiative to support the development of academic integrity, assessments may be checked for plagiarism, including through an electronic system, either internally or by a plagiarism checking service, and be held for future checking and matching purposes.

Where a Unit Assessor requires further information to confirm the authenticity of any assessments submitted they may contact the student to discuss the process followed to prepare the assignment and/or the content of the assignment.