Instructions

▪ Make sure you read and understand each question before answering.
▪ When answering questions, address all question requirements in order to optimise marks scored.
▪ Pay attention to question command words.
▪ You may use resources such as books, dictionaries, notes or any other written materials while
sitting the exam.
▪ All used resources must be referenced.
▪ Select and organise notes you wish to reference while completing the exam.
▪ Begin each question response in the allocated section below each question
General overview
The word count for this examination is 3,500 words (-/+ 10% tolerance, i.e. your submission must not be
less than 3,150 words and must not exceed 3,850 words). There will be word count requirements indicated
next to each question. Markers are instructed to stop marking when the maximum word count is reached.
NOTE – Appendices and the References list (if used) are all excluded from the overall word count, i.e. the
full word count allowance is for the main body of your submission.
Use allocated space for the business profile of your chosen organisation. Write your answers to each
question in the specified location. It is important that the marker can easily identify which question is being
answered otherwise the submission will not be marked.

Context – Organisation Summary

You must choose an organisation on which to base your answers, i.e. your answers must be set in the
context of this specific organisation. Choose an organisation with which you are familiar. It must be a real
organisation and the type of organisation you choose must be relevant to the questions.
All your answers must be based on this organisation unless the question instructs you differently.
You must provide a summary of background information on your chosen organisation (200 words). This
must include:
▪ Name of the organisation
▪ Size of organisation
▪ Main markets where it operates (geographical locations)
▪ Examples of products and services
▪ Key competitors
▪ Main customer segments
In addition to the above, you can include any other information which might be useful for the marker to
understand the context of your answers. Your organisation summary is not included in the overall word
count.

Syllabus Content
Before you answer the questions it is strongly recommended that you familiarise yourself with the study
content relating to the unit. This content can be found in the Qualification Specification. Understanding
this will help you to construct your answers and will ensure the content is relevant to the questions set.

NOTE – The organisation summary must be completed and must accompany the submission otherwise
the assessment will not be marked.

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 Business profile (200 words)

Headquartered at London, United Kingdom, Marks & Spencer Group Plc is a major multinational retailer
that was established by Michael Marks and Thomas Spencer in 1884. As of 2019, the organisation operated
at a total of 1463 locations worldwide. As of 2019, the organisation had generated a revenue of over 10
thousand millions. The company operates with over eighty thousand employees that are employed in the
locations where the company operates. From the inception of the company to date, the company is a
specialist in the retail of home, as well as, food products along with clothing and apparel items. The company
operates in a total of 57 nations whereas, the UK is the main and primary market for the company. India is
the second most important market where M&S operates. Being a retail business, there are various
competitors of Marks & Spencer as the retail industry is a highly competitive sector. The key competitors of
M&S include the Macy’s, Aldu UK, Tesco, Debenhams, Asda, as well as, John Lewis Partnership. As a
retail business, the organisation primarily targets both men and women that are within 33 to 55 years of age
that fall into the middle to high income group of the populous (Burt et al. 2002).

Question 1 20 Marks

Assess the objectives of financial management and the role of different stakeholders in the financial
strategy of your organisation.

One explanation behind why an association uses a budgetary manager is to enlarge benefits while
managing the record of the association. The expansion can be in the short or long stretch. However, the
essential place is that the individual or division managing the cash related issues of the association must
ensure that the association being alluded to is making sufficient advantage. The arrangement of
advantages for keeping up the business is in like manner an essential bit of cash related organization that
the overseer needs to manage fittingly (Shapiro, A.C. and Hanouna, 2019). At the point when the central
wraps up the estimation of the entire required for a business methodology, the important aggregate would
then have the option to be referenced from any legal sources, for instance, debenture, shares, or even sales
for bank credit. Regardless, the truth is that there should be a suitable concordance between the money the
firm has and the total procured. The continuance of the association is major. That is one explanation the
organization considers utilizing money related boss regardless. The director needs to choose adequate
cash related decisions to ensure the association is productive. There must be a proper perception and
association among the various divisions. The store office must fathom and agree with various workplaces
inside the association for the business to work without any problem. Budgetary managers moreover
endeavor their closest to perfect to decrease the cost of capital, which is something that is basic to the
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 business. They ensure money acquired attracts small financing costs so the association can grow
advantage.

In business, a stakeholders typically is a financial investor in the organization whose activities decide the
result of the business choices (Miles, 2017). These partners do not need to be value investors. They can
likewise be the business's representatives, who have a stake in the organization's prosperity and
motivating force for the ventures and initiatives of the organization to succeed. They can be colleagues,
who depend on your prosperity to keep the graceful chain going. Each business adopts an alternate
strategy to partners. The role that stakeholders play varies between organizations, subject to the principles
and obligations spread out at the establishing of your organization or as your business developed
throughout the years. The most widely recognized meaning of a stakeholder, notwithstanding, is a
concerned party that puts an enormous financial investment and that has both the interest and influence to
hold a justifiable and logical "stake" in the organization.

From a financial perspective, stakeholders can influence the financial management of Marks & Spencer in
various ways including:

Influencing Corporate Management: The partners can be a piece of the governing body and
consequently help in taking activities. They can assume control over specific divisions like assistance,
HR, or innovative work and oversee them for guaranteeing achievement.

Investing or De-investing: Stakeholders are the huge speculators of the organization and they can
whenever get or take out cash from the organization. Their choice will rely on the organization's money
related execution. Along these lines they can pressurize the administration for money related reports and
change strategies if essential. A few partners can even increment or decline the speculation to change the
offer cost in the market and in this manner make the conditions good for them.

Influencing EDM: Major partners are a piece of the governing body. In this manner they additionally
take choices alongside other board individuals (Qureshi et al. 2017). They have the ability to disturb the
choices too. They bring in more thoughts and compromise the administration to obey them. The partners
likewise have all the forces to select senior-level administration. In this manner, they are there in all the
significant dynamic regions. They additionally take choices in regards to liquidations and furthermore
acquisitions.

Corporate Conscience: Large partners are the significant partners of the organization and have observed
over all the significant exercises of the organization. They can cause the organization to keep human
rights and ecological laws. They likewise screen the redistributing exercises and may cast a ballot against
any business choice on the off chance that it hurts the drawn out objectives of the organization.

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 Other Roles: Apart from the over four significant jobs they likewise have some different tasks to carry
out in the organization. They can distinguish new zones for showcase entrance and expanded deals. They
can get all the more advertising thoughts. They additionally draw in different speculators like bumble bees
in the organization. They can be a piece of a choice board or an agent for the organization. Besides, they
can make all the significant social and natural choices.
(700 words)

Question 2 20 Marks

Recommend how projected financial statements and other measures of business performance could
be used by your organisation to evaluate its activities and processes.

Data from fiscal reports impacts business choices by giving information that would permit the business to
move its arranging and foresee up and coming income crunches. To maximize the assessment of the fiscal
summaries, it is an absolute necessity for the business to set them up routinely, and base them on careful,
current data. Moreover, the business should likewise guarantee that it utilizes legitimate bookkeeping data
to make strong, educated choices.

Projecting the Cash Flow

An income projection impacts business choices by featuring periods when the business will be shy of
money, empowering the business as far as setting aside corporate income during progressively abundant
occasions or think ahead to make sure about required subsidizing (Ardi and Murwaningsari, 2018). By
demonstrating how much money will be streaming into and out of the business over the coming year, the
income projection would give the business a fundamental arranging device, empowering it regarding
budgetary choices to turn away income troubles before they form into out and out emergencies.

Balance Sheet

The accounting report of the association would give a general image of the money related strength of the
business procedures, exercises and the produced outcomes as a mix of these procedures and exercises by
contrasting resources and liabilities and computing your total assets. Monetary records impact business
choices by indicating whether the business can manage the cost of new speculations, putting these choices
with regards to a greater picture (Ramya and Kavitha, 2017). In the event that there is credit accessible to
the matter of Marks and Spencer, it very well may be anything but difficult to dismiss the way that these
capital implantations don't speak to real pay. An asset report impacts business choices by helping the
business to remember this reality.

Statements of Company Income

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 Pay proclamations impact business choices by giving data about the organization's productivity,
highlighting zones where the organization could be acquiring more or spending less. An explanation of
the income records of the entirety of the organization's wellsprings of pay, just as the entirety of its classes
of costs. This configuration would empower the organization as far as assessing whether the partnership is
lopsidedly centered around a specific kind of deals action, for example, discount or retail, and to choose
whether they association wishes to make an increasingly adjusted income stream (Franklin et al. 2018).
Likewise, the data on a salary articulation could help the business as far as choosing to cut costs in a
specific territory to improve the general edges benefited by the business toward the finish of each money
related year.

Justifying the Recommendations

The budget summaries help huge companies, for example, Marks and Spencer as far as settling on
successful business choices by empowering them to make a general evaluation of their business exercises
from a monetary point of view. On the off chance that the pay explanation of the organization shows that
the organization is gaining a benefit yet the accounting report of the organization shows that it has no
money spared, at that point this data can control the organization toward choices that will improve the
organization's pace of reserve funds. Then again, if the asset report shows that the association has capital
accessible, yet the pay articulation of the organization shows that the organization is losing cash, this data
can help essentially as far as permitting the organization to choose to utilize accessible assets all the more
cheaply.

(700 words)

Question 3 20 Marks

In the context of your organisation, evaluate its main sources of potential financial risk using
suitable techniques. For each risk area you are required to recommend and justify appropriate
action to reduce the exposure.

Liquidity and funding risks

Liquidity is a term that refers to how easily the assets of a business firm can be sold and liquidated in the
market for realization of money from the market. There are two types of liquidity risks. The first is the
funding or cash flow and the second is the liquidity risk. In Marks and Spencer funding or cash flow
liquidity is a major risk because it is always a great concern to the company pioneers whether in the
future, the company can fund its liabilities or not. Liquidity risk is important for the pioneers of Marks &
Spencer as the investors have interest in it and they will decide their further investment in Marks &

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 Spencer after judging the liquidity of the company. The current ratio is the liquidity ratio that has been
used as a tool for assessing the liquidity risk of Marks & Spencer. This ratio has measured the company’s
power to meet its obligation for one year. Current ratio has been calculated by dividing the current assets
by current liabilities.

Profitability risk

The long run achievement of any corporate body is relying upon its sustainable profitability. In many
corporate segments, like for “Mark and Spencer” it is not so easy to reach its profit volume at peak and
more tough to continue. Profitability is taking a vital part in sustaining an organization as regards that
concerned organization’s financial status. According to the last annual report of Mark and Spencer, it has
been found that the concerned organization has faced a sharp downturn in its yearly profit rate. It is
clearly shown that, profit rate before taxation of this retail group has collapsed up to 62% or 66.80 million
pounds (Wood,2020).

Overall revenue of this retail giant has also reduced almost 2% up to 10.18 billion pounds. Net income of
this company has also fallen 29% up to 23.70 million pounds. Dividend rate was also reached up to 0.04
pounds from 0.14 pounds. Total sales volume also decreased up to 2.3% in the financial year 2018-2019,
which is 0.30% less than previous year. This fluctuation has occurred after restructuring of a bill of
approx. 514.10 million pounds, which covers the first term payment of 321 million pounds regarding store
closure activity. According to the management, it has also stated that at least one store among its three
core clothing stores is planned to vanish from London’s highways within 4 years. This retail group also
indicates that almost 150-million-pound closure price might be followed in near future
(Integratedreporting, 2020).

Market risk

As per annual report, the sales of “Mark and Spencer” has fallen up to 2.3% as compared with the past
year. Total volume of cloth selling has declined approx. 1.4% up to 3.7bn pounds by 31st March. It has
also seen that this retail giant is already facing a risk of misplacing its leading market position to Primark
in the annual year 2018. The adjusted EPS of “Mark and Spencer” has also decreased up to 8.6% due to
lower modified profit on a yearly basis. The food selling halls of “Mark and Spencer’s” are also
backwards, which has reduced its sales down up to 0.6% in the last 3 months. These changing operational
structures, fall in sales, growth has turned this retail group outperformed in the opposing store market
(Corporate.marksandspencer, 2020).

Recommendation

Profitability risk: After analyzing the financial report of Mark and Spencer, it has been found that
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 worsening in selling clothes and immense store closure prices are liable for this fall in the company's
yearly profit. It has also found that crucial structural transformations like changing the selling process
from retailer to internet based also affects the profitability status of this retail giant. Hence, “Mark &
Spencer'' is required to adopt no-frills fetters like its rival group Lidl, Primark and ALDI. This retail giant
also requires to transform its corporate culture, as this organization carries many committees, many layers.

Market Risk

It has also found that the online capacity of “Mark and Spencer '' is underrated than its rival groups.
Therefore, when the consumers are searching for any product of “Mark and Spencer”, the product
information-oriented page is taking a long time to give response and also the search operation has some
problems. Hence, this organization needs to rectify those lack areas, make its systems updated to meet the
peak demand of its customers. The management requires them to deliver better proposals to give correct
money value and gain attention from more consumers. The organization has also evolved a completely
new sort of store which would help to appeal to this corporate giant in a better way.

Liquidity and funding risks: As per financial report, it has found that “Mark and Spencer” captures
almost 10183.90 volume of its total assets, whereas it covers 3702.5 of its total equity and 6481.4 of its
overall liability. The “quick ratio” and “current ratio” of this retail giant are 0.35 and 0.66 respectively
(Corporate.marksandspencer, 2020). This statistical data indicates that “Mark and Spencer '' have capacity
to meet it's long- or short-term liabilities. However, this result also shows that this liquidity capacity of the
retail group is decreasing year by year. Hence, the concerned organization needs to increase its sales
volume, because this increasing rate in sales would help “Mark and Spencer” to gain more profit and fix
its position in the current market probably.

(700 words)

Question 4 20 Marks

In the context of your organisation, evaluate options for the financing of business activities. You are
required to include in your evaluation the characteristics of the different sources of finance.

The sources for producing financial investment for M&S might end up with equity, obligation,
debentures, held benefit, word developments, functioning capital developments, letters of recognition,
adventure subsidizing, euro issue, and so forth. These wellsprings of property are employed in numerous
instances. They're classified with regards to the timeframe, influence and proprietorship, as well as the
wellspring of theirs of the age range. It's ideal to evaluate every wellspring of capital just before choosing

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 it. Wellsprings of capital are probably the most explorable area especially for the company individuals
that will start one more small business. It's possibly the toughest slice of a significant amount of
endeavours. You will find a variety of capital energy sources which could be recognized influenced by a
variety of details.

How in the direction of picking out the right wellspring of a within comes wit by account as well as out
searching of each and every wellspring of property. For decomposing as well as taking a look at the
energy sources, the understanding of a significant amount of characteristics of the funding solutions is
needed by it. There are many attributes depending on what wellsprings of the fund are set up. Determined
by a timespan, energy sources are called lengthy haul, medium-term, as well as the existing second.
Balance, as well as possession, characterize wellsprings of the bank account into advertised as well as
acquired capital. Outside sources and also inward sources will be the 2 wellsprings of capital or maybe
fund development. All of the energy sources have many characteristics to fit a variety of types of
essentials. The company ought to fully grasp them inside a bit of profundity.

● Long haul funding suggests capital essentials for some time of more than five to ten years. In addition,
depending upon various components, capital consumptions in repaired materials as device and creating
and acreage, and so forth of the company are backed making use of lengthy haul wellsprings of the fund.
A bit of component of dealing capital that for most moment continues to be together with the company is
the same funded with night haul wellsprings of property. The long haul energy sources of financing can
include, but aren't restricted to, inner accruals or even kept earnings, word loans from the federal
government, industrial banks and, any other monetary institutions, equity shares or even discuss capital,
venture funding, preference shares, global funding as well as Foreign Loans and so on.

● Financing more than a moderate take indicates funding for three to five years and it is utilized mostly
for 2 reasons. A particular, when lengthy stretch capital can't be availed for the second and present when
surrendered income utilizations as offers are manufactured that are to become restricted with several three
to five yrs. You will find numerous kinds of energy sources out of in which financial could be gotten
within a medium-term. Although aren't restricted to, lease financial, corporate bonds or debenture, capital
loans coming from fiscal institutions as well as hire buy financial, these energy sources include things
like.

● Fleeting or momentary funding infers financing for less than one year of time. The basic need for a
transitory report rise to fund the present property associated with an adept ton of unrefined materials plus
completed bank balance, least cash, obligated people, and items, and so on. Transient funding is
additionally known as functioning capital funding. Although not minimal to, creditors, developments
coming from customers, trade credit, payables, costs discounting and then fixed build up not extending
greater than one season of your time and so on, the momentary energy sources of financial happen to be

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 inclusive of.

Wellsprings of property are structured dependent on command and also ownership with the company.
These 2 variables are an enormous notion while selecting a wellspring of benefits for the company.
Within no matter what thing capital is obtained by us, at this time there are 2 types of fees - 1 will be the
curiosity and also an additional is revealing influence as well as belonging. Some reps abhorrence to
debilitate the ownership rights of theirs within the company among others usually takes self-esteem within
posting the chance. Self-esteem is suggested by assured capital furthermore. It's sourced from promoters
of the connection or perhaps through the normal population by providing innovative really worth
provides. The owners start up the company by receiving the cash that is very important for a startup.
Acquired or even dedicated capital may be previously set up by using extrinsic sources. With this kind of
capital, the borrower leverages as a result of the company-owned property in deep situation a monetary
mortgage isn't repaid through the company and that suggests the group will shell out the borrower by
offering the benefits when generally there need to develop an occurrence of liquidation. An additional
component on the acquired retailer is a regular instalment of fixed intrigue as well as compensation of
capital.
(700 words)

Question 5 20 Marks

Discuss how your organisation might evaluate potential investment opportunities to ensure that
decisions reflect the needs of the business and its financial management strategy.

Financial Measurements

To assess potential and useful open doors for putting corporate assets in an organization, it is significant
that the organization gauges a couple of the organization's key monetary measurements. To assess an
organization's funds, there are three budget reports that must be painstakingly inspected including the cash
flow statement, the income statement, as well as, the balance sheet of the company. The best spot to begin
while assessing an organization is searching for liquidity on the monetary record in real money structure
(Salimi and Rezaei, 2018). Basically, Marks and Spencer will be watching the fiscal summaries to check
whether the organization has enough cash to cover its costs. The organization ought to likewise be
verifying whether the organization's transient obligations will make them exhaust their money before the
ending of the current financial year.

To decide an organization's liquidity on the accounting report, the organization needs to search for the ebb
and flow proportion, which is an estimation of the working capital that the organization has at the ebb and
flow time. To compute the present proportion of an organization, looking at its present resources that can
be transformed into money and its present liabilities that must be paid in the up and coming year. A
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 company that is perfect for speculation is commonly an organization that will have a 2:1 proportion of
resources for liabilities (Basu et al. 2019). A few organizations can have a lower proportion on the off
chance that they are all around run, implying that they are adequately controlling your money.
Organizations in moderate development ventures additionally may not require as much liquidity as
organizations in quickly developing businesses. Most organizations, be that as it may, ought to have a 2:1
proportion.

Income Statement

In the wake of deciding an organization's liquidity, the investigation should proceed onward to the salary
articulation. This archive will incorporate a few budgetary measurements that can enable the organization
to conclude whether to put resources into an organization. Specifically, Marks and Spencer must
guarantee to check the development of profit and the development of total compensation. Checking these
measurements can help Marks and Spencer to decide whether the organization is really developing. Take
a gander at the base and top lines of the pay proclamation returning 10 years. Ideally, the top and base
development lines will be equal. At the point when these lines are equal, it implies that both the business
development rate and the net income development rate are increasing at a similar rate. In the event that the
lines are not equal, it might imply that the organization's income is developing while income is going
down (Ding et al. 2018).

With the assessment of the aforementioned financial, as well as, tangible areas of business, it would be
possible for Marks & Spencer to identify and determine potential opportunities for investment along with
deciding the manner in which to divide the investment. For instance, it could be stated that in some cases,
the company could be aiming to invest for long-term and thereby, instead of focusing on the short-term
returns of the shortlisted businesses, it could look for long-term returns over the period of 5 or more years.
On the other hand, for medium-term investment plans, that company could be looking for businesses that
have shown a strong growth over a three-year period and for short-term, businesses that have shown a
strong growth over a yearly period.

Yearly Returns

The following money related metric that M&S needs to inspect is the short-recorded organization's arrival
on resources. There are three unique estimations that one can check to figure out what an organization is
achieving with its profit contrasted with how much the organization is spending to acquire that income.
These estimations remember the arrival for capital contributed, the retrun on value, just as the return on
organisation-possessed assets (Ferracuti and Stubben, 2019). Organizations worth putting resources into
will have solid returns. Typically, a great investment opportunity can be availed in the form of investing
in an organization that has at least a 30% return on a yearly basis. Looking at an organization's return on
the invested resources such as the capital, as well as, the company-owned assets and the company equity
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 will uncover its benefit to reflect the extent to which the organization is viable in terms of utilizing its
advantages for acquiring revenues, as well as, profitability.

(700 words)

Reference list
Ardi, S. and Murwaningsari, E., 2018. Financial Performance Determination, Earnings Quality, Intellectual
Capital and Company Value. South East Asia Journal of Contemporary Business, Economics and
Law, 15(5), pp.1-16.

Basu, S., Ma, X. and Tran, H., 2019. Measuring investment opportunities using financial statement
text. Available at SSRN 3372691.

Burt, S.L., Mellahi, K., Jackson, T.P. and Sparks, L., 2002. Retail internationalization and retail failure:
issues from the case of Marks and Spencer. The International Review of Retail, Distribution and Consumer
Research, 12(2), pp.191-219.

Corporate.marksandspencer. 2020. [online] Available at:

<https://corporate.marksandspencer.com/documents/msar-2019/full-annual-report.pdf> [Accessed 25 May
2020].

Ding, S., Kim, M. and Zhang, X., 2018. Do firms care about investment opportunities? Evidence from
China. Journal of Corporate Finance, 52, pp.214-237.

Ferracuti, E. and Stubben, S.R., 2019. The role of financial reporting in resolving uncertainty about
corporate investment opportunities. Journal of Accounting and Economics, 68(2-3), p.101248.

Franklin, M., Graybeal, P. and Cooper, D., 2018. Determine the Efficiency of Receivables Management
Using Financial Ratios. Principles of Accounting, Volume 1: Financial Accounting.

Integratedreporting. 2020. Marks & Spencer - Annual Report - Risks And Opportunities. [online] Available
at: <http://examples.integratedreporting.org/fragment/265> [Accessed 25 May 2020].

Miles, S., 2017. Stakeholder theory classification, definitions and essential contestability. Stakeholder
Management; Emerald Publishing Limited: Bingley, UK, pp.21-47.

Qureshi, H.M., Malik, R.H. and Qureshi, W., 2017. Role of stakeholders in requirement change
management. International Journal of Computer Science and Information Security, 15(2), p.113.

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Ramya, A. and Kavitha, S., 2017. A Study on Financial Analysis of Maruthi Suzuki India Limited
Company. Journal of Business and Management, 19(7), pp.93-101.

Salimi, N. and Rezaei, J., 2018. Evaluating firms’ R&D performance using best worst method. Evaluation
and program planning, 66, pp.147-155.

Shapiro, A.C. and Hanouna, P., 2019. Multinational financial management. Wiley.

Wood, Z., 2020. Marks & Spencer Reports Sharp Drop In Annual Profits. [online] the Guardian. Available
at: <https://www.theguardian.com/business/2018/may/23/marks-and-spencer-reports-sharp-drop-in-annual-
profits> [Accessed 25 May 2020].

Appendix (optional)

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