Critically evaluate the International Financial Reporting Standards (IFRS) adoption from the perspective of prompting accounting practice harmonisation (15 marks). (Approximately, 800 words)
MGTM11 Financial Decision Making in a Multinational Corporation Assignment Brief 2026 | Sunderland
MGTM11 Financial Decision Making in a Multinational Corporation Assignment
Knowledge:
- K1. Critical evaluation of the international dimension for financial reporting and the current key issues within the international financial reporting environment.
- K2. Critical understanding of the role and value of financial statements by analysing and interpreting financial reports for strategic decision-making.
- K3. Critical understanding of a range of key strategic management accounting models and concepts, and their roles at the local and international level.
Skills:
- S1. The ability to demonstrate cognitive skills of critical thinking and analysis.
- S2. The ability to apply the key financial statement and management accounting concepts and methodologies to contribute to successful decision-making within the business environment.
Learning outcomes:
The assignment covers all module learning outcomes.
Assignment guideline:
- The weighting in this assignment is 100% of the marks for this module.
- This is an individual assignment of 4,000 words (+/–10%) excluding reference list and bibliography.
- This assignment does not require appendices, and any content present in appendices will not be marked.
- Answer all questions.
Students should approach this assignment as an academic, critical discussion, commenting on the literature and drawing logical conclusions. Academic referencing using the Harvard referencing style is a key requirement of the assignment, demonstrating wider reading and underpinning the discussions to ensure they have relevant depth. Students are encouraged to be inquisitive and innovative in their approach to what should be included in this report. The University policy on cheating, collusion, and plagiarism will be applied to this piece of work.
Assignment brief: Answer all questions
Question one: (a) Harmonisation of Accounting Standards
(b) International financial analysis (Honey Badger Plc)
Question two: (a) Product mix decision (Castromac Plc)
(b) Cash budget (Alpha Ltd)
(c) Budgeting process
Question One
(a) Critically evaluate the International Financial Reporting Standards (IFRS) adoption from the perspective of prompting accounting practice harmonisation (15 marks). (Approximately, 800 words)
(b) The Honey Badger Plc is predominantly a manufacturer, distributor and marketer of non- alcoholic beverage concentrates and syrups. Operating in more than 200 countries worldwide, the company primarily sells its concentrates and syrups, as well as some finished beverages, to bottling and canning operations, distributors, fountain wholesalers and retailers. It also markets and distributes juices, juice drinks and certain water products. Additionally, it has ownership interests in bottling and canning operations. The financial statements have been prepared in accordance with the U.S. Generally Accepted Accounting Principles (GAAP).
Below are provided:
i. The consolidated balance sheet for the financial years ended December 31, 2023, and 2022.
ii. The consolidated statements of income for the financial years ended December 31, 2024, 2023, 2022 and 2021.
Consolidated Balance Sheets
| December 31 (In millions of $) | 2023 | 2022 |
|---|---|---|
| Assets Current | ||
| Cash and cash equivalents Marketable securities | 2,126 219 | 1,866 68 |
| 2,345 | 1,934 | |
| Trade accounts receivable, less allowances | 2,097 | 1,882 |
| Inventories | 1,294 | 1,055 |
| Prepaid expenses and other assets | 1,616 | 2,300 |
| Total Current Assets | 7,352 | 7,171 |
| Investments and other Assets | ||
| Equity method investments: Honey Badger Plc Enterprises Inc. | 972 | 788 |
| Honey Badger Plc Hellenic Bottling Company S.A. | 872 | 791 |
| Honey Badger Plc Amatil Limited | 492 | 432 |
| Other, principally bottling companies | 2,401 | 3,117 |
| Cost method investments, principally bottling companies | 254 | 294 |
| Other assets | 2,694 | 2,792 |
| 7,685 | 8,214 | |
| Property, Plant and Equipment | ||
| Land | 385 | 217 |
| Buildings and improvements | 2,332 | 1,812 |
| Machinery and equipment | 5,888 | 4,881 |
| Containers | 396 | 195 |
| 9,001 | 7,105 | |
| Less allowances for depreciation | 3,090 | 2,652 |
| 5,911 | 4,453 | |
| Trademarks with indefinite lives | 1,724 | 1,697 |
| Goodwill and other intangible assets | 1,829 | 882 |
| Total Assets | 24,501 | 22,417 |
| Liabilities and Shareowners’ Equity | ||
| Current | ||
| Accounts payable and accrued expenses | 3,692 | 3,679 |
| Loans and notes payable | 2,475 | 3,743 |
| Current maturities of long-term debt | 180 | 156 |
| Accrued income taxes | 994 | 851 |
| Total Current Liabilities | 7,341 | 8,429 |
| Long-Term Debt | 2,701 | 1,219 |
| Other liabilities | 2,260 | 961 |
| Deferred income taxes | 399 | 442 |
| Shareowners’ equity | ||
| Common stock ($0.25 par value) | 873 | 873 |
| Capital surplus | 3,857 | 3,520 |
| Reinvested earnings | 24,506 | 23,443 |
| Accumulated other comprehensive income (loss) and unearned compensation on restricted stock | (3,047) | (2,788) |
| 26,189 | 25,048 | |
| Less treasury stock, at cost | 14,389 | 13,682 |
| 11,800 | 11,366 | |
| Total Liabilities and Shareowners’ Equity | 24,501 | 22,417 |
Consolidated Income Statements
| Year ended December 31 (in millions of $) | 2024 | 2023 | 2022 | 2021 |
|---|---|---|---|---|
| Net operating revenues | 21,044 | 19,564 | 17,545 | 17,354 |
| Cost of goods sold | 7,762 | 7,105 | 6,044 | 6,204 |
| Gross profit | 13,282 | 12,459 | 11,501 | 11,150 |
| Selling, general and administrative expenses | 7,488 | 7,001 | 6,149 | 6,016 |
| Other operating charges | 573 | 1,443 | ||
| Operating income | 5,221 | 5,458 | 5,352 | 3,691 |
| Interest income | 176 | 209 | 325 | 345 |
| Interest expense | 178 | 199 | 289 | 447 |
| Equity income (loss) | 406 | 384 | 152 | (289) |
| Other income (loss)—net | (138) | (353) | 39 | 99 |
| Gains on issuances of stock by equity investee | 8 | 91 | ||
| Income before income taxes and cumulative effect of accounting change | 5,495 | 5,499 | 5,670 | 3,399 |
| Income taxes | 1,148 | 1,523 | 1,691 | 1,222 |
| Net income before cumulative effect of accounting change | 4,347 | 3,976 | 3,979 | 2,177 |
| Cumulative effect of accounting change for SFAS No. 142*, net of income taxes: | ||||
| Company operations | ||||
| Equity investees | (367) | |||
| Cumulative effect of accounting change for SFAS No. 133**, net of income taxes | (559) | (10) | ||
| Net income | 4,347 | 3,050 | 3,969 | 2,177 |
| Employees (at year end) | 10,241 | 10,506 | 11,047 | 11,408 |
Required:
1. Prepare a simplified balance sheet with three subheadings in the assets section and three subheadings in the equity and liabilities section. Provide a brief analysis of the statement (4 marks).
2. Compute the financial structure of the company (i.e. working capital, working capital need, and net cash). Briefly evaluate the company’s financial structure (4 Marks).
3. Prepare the common-size income statements for the financial years 2021–2024. Briefly evaluate the company’s financial performance based on these statements (2 Marks).
4. Compute the profitability ratios and analyse them from the perspective of gaining insight into the efficiency with which the company’s resources are used (12 Marks).
Note: Profitability Ratios list:
- Return on shareholders’ equity (ROE)
- Return on capital employed (ROCE)
- Gross profit rate
- Return on sales
- Asset turnover
- Return on assets (ROA)
- Sales per employee
(Approximately, 1,200 words)
Question Two
(a) Castromac Plc is a multinational company manufacturing three products: Lam, Mam, and Nam. Ramble Plc, the supplier of the company’s two raw materials used in all three products, has informed the company that their employees have refused to work overtime. By implication, the supply of the two raw materials will be limited to the quantities below for the year 2026:
Material A 2,060 kg
Material B 2,440 kg
Castromac Plc has not found any other source of supply of materials A and B for the year 2026. The relevant information relating to the three products manufactured by Castromac Plc is as follows:
| Lam | Mam | Nam | |
|---|---|---|---|
| Quantity of materials used per unit manufactured (kg): | |||
| Material A | 2 | 1 | 4 |
| Material B | 5 | 3 | 7 |
| Maximum sales demand (units) | 204 | 320 | 220 |
| Selling price | ÂŁ35.00 | ÂŁ48.00 | ÂŁ42.50 |
| Variable costs per unit | ÂŁ20.00 | ÂŁ36.00 | ÂŁ25.00 |
Castromac Plc’s estimated fixed cost for 2026 amounts to £3,037.50.
Required:
1. Recommend the optimum product mix which will maximise the profits of Castromac Plc for the year 2026 (7 marks).
2. Determine the estimated profit of the company using the optimum product mix (3 marks).
3. Evaluate any three qualitative factors worth considering in deciding on the above scenario (3 marks). (Approximately, 500 words)
(b) Alpha Ltd makes a range of products, all of which follow a similar production process and have the same cost structure. The products are made in batches that are started at the beginning of the month and are completed and taken into finished goods inventories at the end. There is no work in progress at the end of any month. The business is considering a change in its sales prices, volumes and credit terms.
Current position
Sales revenues are £375,000 a month and produce a contribution of 40p per £1 of sales revenue. Variable raw material costs account for 20p per £1 of sales revenue. Fixed costs are £300,000 a month, of which £37,500 is depreciation. The business’s only variable costs are production costs.
Trade receivables take one month to pay, trade payables for raw materials are paid one month after purchase, and the other variable costs are paid during the month of production. At the end of each month, the business has sufficient raw material inventories to meet the following month’s production and enough finished inventories to meet the following month’s sales.
Possible future position
Production and sales volumes would be increased by 50%. To generate the increased demand, selling prices would be reduced by 10%, and trade receivables would be allowed to be paid two months after the sale. Neither the usage nor the cost per product of raw materials and other variable costs would be affected by the proposed expansion. Apart from the increased trade receivables payment period, all working capital policies would remain the same as at present. The changes to sales volume, price, and payment period, were they to occur, would commence with sales made from 1st December this year, but to meet the business’s working capital policies, there would be effects on cash flows before that time.
The business’s balance at the bank on 1st October is expected to be £87,500.
Required:
1. Prepare Alpha Ltd’s cash budgets for each of October, November, and December this year and January and February next year on the assumption that the proposed expansion of sales goes ahead (Note: Ignore interest) (15 marks).
2. List and comment on other factors that should be considered by the company’s management when considering this proposal (10 marks).
(Approximately, 800 words).
(c) Budgeting is a valuable tool for planning, controlling, coordinating, communicating, evaluating, and improving performance and decision making. On the other hand, some experts have mounted wide-ranging criticism of the manner in which budgetary systems are typically implemented. In this respect, examine how corporate reliance on budgets is affected by major changes in the economic environment (i.e., economic crisis that began in 2008) and investigate how companies brought more flexibility to their budgeting process in order to cope with environmental uncertainty (e.g., Beyond budgeting) (25 marks).
(Approximately, 700 words)
Word Limit
The word count must be stated on the front page of your assignment. Summarising and compressing the information in your assignment into the word limit is one of the skills that students are expected to acquire and demonstrate as part of the assignment process.
The word limit is set as a maximum of 5,000 words. If this is exceeded, then the following penalties will be applied:
| Word count | Penalty |
|---|---|
| Exceeds limit by up to 10% | No penalty – tolerance band |
| Exceeds limit by 10.1 - 20% | 5 percentage points |
| Exceeds limit by 20.1 - 30% | 10 percentage points |
| Exceeds limit by 30.1 - 40% | 15 percentage points |
| Exceeds limit by 40.1 - 50% | 20 percentage points |
| Exceeds limit by more than 50% | Mark of zero |
The word count does not include:
- Title page
- Reference list/Bibliography
- Appendices
- Appropriate tables, figures and illustrations
Please note, in-text citations [e.g. (Smith, 2011)] and direct secondary quotations [e.g. “dib- dab nonsense analysis” (Smith, 2011, p.123)] are included in the word count.
The Use of Tables
Tables should not include large amounts of text which represent the main discussion and arguments, as these should be included in the main body of your work.
If tables are used inappropriately in this way, the wording in question will be deemed to be part of the main body of the work and included in the word count (with the relevant penalty imposed where the maximum word count has been exceeded).
Marking Guide:
Marks will be awarded in accordance with the following assessment criteria.
Grading
Your mark and feedback will be made available to you electronically once the internal moderation has taken place, which is after 4 weeks from your submission deadline
Infringement
The University is committed to the universal academic standard, which prohibits students from submitting materials which contain someone else’s work without appropriate acknowledgement. By submitting your work, you confirm that the work you submit is your own and that you have read and understood the guide to academic integrity and academic misconduct.
Generic Assessment Criteria – Postgraduate
These should be interpreted according to the level at which you are working and related to the assessment criteria for the module
| Categories | Grade | Relevance | Knowledge | Analysis | Argument and Structure | Critical Evaluation | Presentation | Reference to Literature |
|---|---|---|---|---|---|---|---|---|
| Pass | 86 – 100% | The work examined is exemplary and provides clear evidence of a complete grasp of the knowledge, understanding and skills appropriate to the Level of the qualification. There is also ample excellent evidence showing that all the learning outcomes and responsibilities appropriate to that Level are fully satisfied. At this level it is expected that the work will be exemplary in all the categories cited above. It will demonstrate a particularly compelling evaluation, originality, and elegance of argument, interpretation or discourse. | ||||||
| 76 – 85% | The work examined is outstanding and demonstrates comprehensive knowledge, understanding and skills appropriate to the Level of the qualification. There is also excellent evidence showing that all the learning outcomes and responsibilities appropriate to that level are fully satisfied. At this level it is expected that the work will be outstanding in the majority of the categories cited above or by demonstrating particularly compelling evaluation and elegance of argument, interpretation or discourse. | |||||||
| 70 – 75% | The work examined is excellent and is evidence of comprehensive knowledge, understanding and skills appropriate to the Level of the qualification. There is also excellent evidence showing that all the learning outcomes and responsibilities appropriate to that level are satisfied At this level it is expected that the work will be excellent in the majority of the categories cited above or by demonstrating particularly compelling evaluation and elegance of argument, interpretation or discourse. | |||||||
| 60 – 69% | Directly relevant to the requirements of the assessment | A substantial knowledge of relevant material, showing a clear grasp of themes, questions and issues therein | Comprehensive analysis - clear and orderly presentation | Well supported, focused argument which is clear and logically structured. | Contains distinctive or independent thinking; and begins to formulate an independent position in relation to theory and/or practice. | Well written, with standard spelling and grammar, in a readable style with acceptable format | Critical appraisal of up-to-date and/or appropriate literature. Recognition of different perspectives. Very good use of a wide range of sophisticated source material. | |
| 50 – 59% | Some attempt to address the requirements of the assessment: may drift away from this in less focused passages | Adequate knowledge of a fair range of relevant material, with intermittent evidence of an appreciation of its significance | Significant analytical treatment which has a clear purpose | Generally coherent and logically structured, using an appropriate mode of argument and/or theoretical mode(s) | May contain some distinctive or independent thinking; may begin to formulate an independent position in relation to theory and/or practice. | Competently written, with only minor lapses from standard grammar, with acceptable format | Uses a good variety of literature which includes recent texts and/or appropriate literature, including a substantive amount beyond library texts. Competent use of source material. | |
| 40 – 49% | Some correlation with the requirements of the assessment but there is a significant degree of irrelevance | Basic understanding of the subject but addressing a limited range of material | Some analytical treatment, but may be prone to description, or to narrative, which lacks clear analytical purpose | Some attempt to construct a coherent argument, but may suffer loss of focus and consistency, with issues at stake stated only vaguely, or theoretical mode(s) couched in simplistic terms | Sound work which expresses a coherent position only in broad terms and in uncritical conformity to one or more standard views of the topic | A simple basic style but with significant deficiencies in expression or format that may pose obstacles for the reader | Evidence of use of appropriate literature which goes beyond that referred to by the tutor. Frequently only uses a single source to support a point. Weak use of quotation | |
| Fail | 35 – 39% | Relevance to the requirements of the assessment may be very intermittent, and may be reduced to its vaguest and least challenging terms | A limited understanding of a narrow range of material | Largely descriptive or narrative, with little evidence of analysis | A basic argument is evident, but mainly supported by assertion and there may be a lack of clarity and coherence | Some evidence of a view starting to be formed but mainly derivative. | Numerous deficiencies in expression and presentation; the writer may achieve clarity (if at all) only by using a simplistic or repetitious style | Barely adequate use of literature. Over reliance on Material provided by the tutor. |
| The evidence provided shows that the majority of the learning outcomes and responsibilities appropriate to that Level are satisfied. | ||||||||
| 30 – 34% | The work examined provides insufficient evidence of the knowledge, understanding and skills appropriate to the Level of the qualification. The evidence provided shows that some of the learning outcomes and responsibilities appropriate to that Level are satisfied. The work will be weak in some of the indicators. | |||||||
| 15 – 29% | The work examined is unacceptable and provides little evidence of the knowledge, understanding and skills appropriate to the Level of the qualification. The evidence shows that few of the learning outcomes and responsibilities appropriate to that Level are satisfied. The work will be weak in several of the indicators. | |||||||
| 0 – 14% | The work examined is unacceptable and provides almost no evidence of the knowledge, understanding and skills appropriate to the Level of the qualification. The evidence fails to show that any of the learning outcomes and responsibilities appropriate to that Level are satisfied. The work will be weak in the majority or all of the indicators. |
