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Module Title: Introduction to Accounting
Programme: International Incorporated Master
Module code: LIPC 3430
Total marks: 100
Overall weighting: 40%
Coursework
This is the first component of your assessment and it is weighted at 40% of the overall mark.
Learning outcomes:
LO3: Analyse the performance of an organisation
LO5: Demonstrate the capacity for self-managed and team-based learning
LO6: Write an effective and appropriate report
LO7: Demonstrate the capacity for critical analysis
Assignment brief
You have been asked by a client to advice on the financial position of two companies in a similar trade sector. You have been supplied with the following financial statements.
Income Statement for the year ended 31 March 2016
Nixon Ltd Zip Ltd
Notes £000 £000
Revenue 638 493
Cost of sales (331) (297)
–––––– ––––––
Gross profit 307 196
Distribution costs (36) (29)
Administrative expenses 1 (99) (46)
–––––– ––––––
Profit before taxation 172 121
Taxation (21) (22)
–––––– ––––––
Profit for the year 151 99
====== ======
Statement of financial position as at 31 March 2016
Notes Nixon Ltd Zip Ltd
Non‐current assets (NBV): £000 £000 £000 £000 £000 £000
Property, plant and equipment 1 198 111
Current assets:
Inventory 60 58
Trade and other receivables 35 43
Cash and cash equivalents 2 –
–––– 97 –––– 101
–––– ––––
Total assets 295 212
Equity and liabilities: ==== ====
Share capital (£1 share each) 50 30
Retained earnings 161 66
–––– ––––
Non‐current liabilities: 211 96
Borrowings – 20
Current liabilities:
Trade and other payables 2 74 74
Current tax payable 10 12
Bank overdraft – 10
–––– 84 –––– 96
–––– 84 –––– 116
–––– ––––
Total equity and liabilities 295 212
==== ====
Notes to the financial statements:
1. The non‐current assets held by the companies are as follows:
Nixon Ltd Zip Ltd
£000 £000
Land and buildings 97 43
Fixtures and fittings 28 17
Motor vehicles 73 51
–––– ––––
198 111
–––– ––––
2. Trade and other payables for both companies include a proposed dividend. Nixon Ltd has proposed a dividend of £50,000 and Zip Ltd a dividend of £40,000.
Required:
a. Calculate all the appropriate ratios (at least 2 from each group) and critically appraise the current financial position of each of the two companies. (40 marks)
b. Define working capital cycle and calculate the working capital cycle of both companies and discuss how a company can improve the working capital cycle? (30 marks)
c. What are the limitations of ratio analysis technique, discuss in details? (30 marks)
Total Marks 100
Submission Guidelines
Submit your assignment – electronic copy only on Turnitin by the deadline date provided on your assignment.
Late Submission
If you are not able to complete your coursework on time the ONLY way to receive an extension is to apply at the Customer Service Desk on the ground floor. You will need to provide third party evidence to support your reasoning for requiring an extension.
Your tutor cannot approve an extension, if you have not completed the official forms your work will count as not submitted and receive zero.
Plagiarism
Please refer to plagiarism on Blackboard.
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