Limited is a supplier of office equipment in Newport. The company is also listed on the London stock exchange. The traditional company has a board of directors comprising two executive directors and two non-executive directors. It also has two sub-committees, which are the audit committee and nomination committee. The Audit committee is made up of two non-executive directors whilst the nomination committee is made up of two executive directors and one non-executive director.
Currently, Sir Williams, the CEO, is responsible for remuneration of the directors. The board of directors is planning to bid for a contract amounting to ? 5million for the provision of office equipment to government schools across Newport for the next five years. However the directors are worried about the company’s liquidity position as this might affect the chances of securing the contract. As the management trainee with a MBA, you have been tasked by the board to prepare a bid proposal based on the following financial information: Additional notes: . Administration expenses include ? 290,000 which is depreciation of non current assets during the year. The company sold an asset which had a net book value of ? 310,000 for ? 80,000. During the year the entity acquired non-current assets costing ? 1,900,000. A dividend of ? 700,000 was declared during the year. Required Preparation of report addressed to the board of directors which includes the following: Statement of Cashflows and its evaluation; (30%) An assessment of the company’s working capital management and; (10%) An evaluation of the company’s compliance with the corporate governance code. (10%) Total 50%
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Kapoor Limited is a company that manufactures plastic watches in Chennai. The start-up has been in operation for six months and does not have a decent budgetary system in place. The company owners have asked you to set up a modern budgetary system for the company based on the following information: Additional information: Ninety per cent of the monthly sales for cash. the remainder will be sold on credit, the receivables settling one month after sales.
Wages are paid sixty percent during the month in which they are earned, forty per cent in the month following. Variable overhead is paid in the month in which it is incurred. Material costs are paid two months after the material is used in production. The company will purchase a new pick up truck for ? 14,000 in August. The present truck will be sold in the same month for ? 4,500. The company intends to pay the insurance premium amounting to ? 5,000 in two equal instalments in the month of June and August.
The depreciation charge of ? 1,000 a month is included in the Fixed overhead. The cash balance on 1 June 2009 is expected to be ? 3,000 in hand. Required Prepare a report to the owners which should include the following: The process of setting up a budgetary system and its significance to the company; (16%) A cash budget for each of the two months commencing 1 June 2009. (24%) An assessment of how to evaluate which customers should receive credit and how of much should be offered. (10%) Total 50%
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