Intended learning outcomes:
1. Evaluate the performance of a company using various financial analytical tools.
2. Analyse different patterns of cost behaviour and apply cost-volume-profit analysis to business decisions.
3. Select and apply investment appraisal techniques appropriately.
4. Evaluate the performance of business units using both financial and non-financial measures.
Sultan Investments, a leading investment services company has employed you to evaluate the financial performance of two companies listed in Muscat Securities Market (MSM). You are supposed to consider the following instructions to complete this task and advise your client on which companies he has to invest.
General Instructions for answering this question:
a. Select any two companies from the same industry or sector. Remember that your client is not interested in Banking and Investment companies.
b. Collect the companies' annual financial reports for two consecutive years. Avoid using quarterly statements. You may refer to http://www.msm.gov.om/ or the company websites for this.
c. Use the financial statements and additional information collected to complete the below mentioned tasks.
d. Do not forget to provide references for the data collected (use Coventry Harvard style of referencing).
1. Compute two of related ratios to comment on the below of the chosen companies:
a. Operational Efficiency - 2 marks
b. Liquidity -2 marks
c. Profitability -2 marks
d. Capital Structure/ Gearing -2 marks
e. Market Ratios - 2 marks
2. Conduct a literature Review as required: 10 Marks
Use the computations done in task 1 and the literature review to analyse the following of the chosen companies. You are also required to comment on which company is in a better financial position and why? 20 Marks
c. Efficiency Position
(TOTAL 30 marks)
3. Imagine you are a financial advisor of a consultancy. Advise your client in which company he should invest.
You are required to use gearing and market ratios calculated, literature review and all other information collected from the financial statements for completing this task. You are also required to state your recommendations very clearly and well justified 7 Marks
4. Discuss the role of non-financial factors in investment appraisal decision making. 5 marks
(10 + 30 + 15= 55 MARKS)
Fawas and Maryam (F&M) is a famous and leading group of trading businesses in Oman. F& M is considering in three of their business zones to invest for further expansion, aiming to improve their revenues. The below are the details of the three of these investment projects given to you. The rate of investment is assumed at 10%.
Based on the above details, you are required to:
1. Evaluate the projects using Net present value method and Pay-back period method (7+3 marks). 10 marks
2. Based on the above and some literature reviews, recommend one project to invest with justification. 10 marks