Inancial Management Individual assignment

Requirements:

You are the senior financial manager in a large listed company, Crisp plc. The directors of the company believe there are great opportunities for success in some large projects they have identified so long as they can raise the necessary finance. The finance for the projects amounts to about ?250 million. While the company is successful, it has limited cash having reinvested profits in existing ventures and so must look to outside sources.

The directors are open to either debt or a share issue on the stock exchange to raise funds but require further information on the differing sources of finance available and the way it may effect the cost of capital. The directors also wish to better understand the nature of the capital markets where the shares may be issued and would like you to critically evaluate the theories surrounding the efficient market hypothesis (EMH).

In addition the directors wish to have a better understanding of the practical aspects of the dividend decision and would like you to evaluate the arguments for and against their relevance to share valuation.

As such you are required to produce a report critically addressing the above issues. In doing so the report should cover the following key elements:

1. The role and importance of capital markets and EMH.



2. The different sources of finance available to large companies and the impact on cost of capital.



3. The practical aspects of the dividend decision and a critical evaluation of the theories of relevance and irrelevance of dividends to share valuation.






Guidance:

Students are encouraged to be inquisitive and innovative in their approach as to what should be included in this report the following may be of some use in providing guidance as to what could possibly be included, although this is in no way meant to be prescriptive.

The aim of the assignment is to help you understand how a large company demonstrates key areas of financial management in practice. This will include investigating topics from throughout the course linked to the above issues. Some of the principles, concepts ad models will be more relevant to your chosen approach than others and so it is likely that different students will formulate different approaches to the problems. This is normal, it is not expected that all of the course content will be used in the analysis, concentrate on that which you feel is most important.

As part of your work you might find it helpful to briefly explore the underlying theory behind the key areas of investigation that you identify before applying them to report.


With a 2,500  3,000 word limit you do not have a lot of room for long introductions so assume you are writing to a sophisticated audience who has a working knowledge of financial management and is well versed in business theory. Numerical example for illustrative purposes may be of use but should not be the only element of the work; discussion and interpretation of models and concepts is also required.

Please avoid relying too heavily on descriptive sections reproducing information available from the set text. It is your own logical, evaluation of the situation, the interpretation of course material and presentation, with critical analysis, of a coherent strategic report that will attract high marks.

Please note that the company named is a fictitious one and does not exist.



Marking Guide

The learning outcomes for this module assessed by this piece of work are

Knowledge

1. Identify and evaluate the main sources of funds available to an organisation and understand the key determinants of an organisation s capital structure and the risks these pose to the organisation.

2. Describe and critically reflect upon the key issues involved in the effective management of an organisations finances.

3. Apply theoretical concepts and frameworks to a range of practical situations in order to propose solutions to business problems

Skills

4. Demonstrate the cognitive skills of critical thinking and analysis
5. Recognise the skills required to communicate effectively using and be able to put these skills into practice.