BMS512 Business and Management Decisions

Task:

Analyse a range of financial strategies including budgets, financial management and accounting
Evaluate approaches to procurement and contracting within an organisation
Assess the commercial context that an organisation operates within
Write a report to address the following
1) Why is capital investment appraisal process so important to S plc?             
2) Prepare a cashflow analysis statement for the above new investment.             
3) What is the payback period for the new investment? If S plc imposes a three-year maximum payback should the project be accepted?
4) Determine the net present value for the new investment? Should the investment proposal be accepted? Explain why?
5) Describe the logic behind the net present value approach. What is the relationship between net present value and cost of capital.
7) Calculate the internal rate of return for the investment proposal. Should the proposal be accepted? Would a change in the cost of capital affect the internal rate of return?
8) Discuss why the net present value method is often regarded to be superior to internal rate of return. 
S plc finds that the cheapest source of long-term finance available to it is through a bank loan.
C) An existing computer game is to be introduced into a new market segment by S plc. 
The following details relate to this product:
Selling price per game: £100.
Variable costs per game: £60.
Fixed costs per annum specific to this game: £300,000.
Required: 
1) Calculate the breakeven sales revenue, the sales revenue to achieve a target profit of £120,000  and the margin of safety.
2) What are the consequences of a price increase or decrease of 10%
3) Cost-volume-profit analysis provides important information for management decisions. The analysis illustrates relationships that prevail under a particular set of assumptions. Critically comment on these assumptions.
1) Distinguish between three categories of suppliers: strategic suppliers, preferred suppliers and transactional suppliers.                                     
2) Compare the advantages of single sourcing and multiple sourcing in the context of procurement.
3) Explain what cross-sourcing is using an example and how it benefits the buyer.     

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