Business Finance
Cardiff University Management of Williams Limited Directors Case Report

Cardiff University

Question Description

I’m stuck on a Business question and need an explanation.

1. 2500 words

2. 15 references and use the reference I uploaded ( it is in the pdf files from unit 1- unit 6)

3.Structure

  • Appropriate coversheet (as attached in this document)
  • Title Page, including the given title in full.
  • Executive Summary 

  • Contents Page 

    • Introduction

    • Literature review to support your accounting models used. 

    • Sources of Funding 

    • Investment appraisal 

    • Cash budgeting 

    • Breakeven analysis 

    • Evaluation

    • Any other issues to be considered. 

    • Conclusions and Recommendations 

    • Appendices which should be numbered.

4. Requirement:

You will be required to write a management report to the management of Williams limited directors in which the following points should be discussed.

  • Provide an explanation on the different sources of funding the company can have and their advantages and disadvantages. You should make recommendations as to how the company can manage the same to help in the planned expansion program.
  • Analyse the Investment proposals by using NPV and provide recommendations. You should also briefly comment on other investment proposal techniques that Williams Limited may use, and the limitations of using those techniques
  • The use of management tools such as Breakeven analysis and Budgets.
  • A computation of your breakeven analysis and the cash budget for the first 3 months.
  • An evaluation of the estimated company performance or position during the same period
  • A detailed Literature Review of the tools you have used such as breakeven analysis and
  • budgets and their importance to business.
  • Other issues for management to consider that you think are vital for them to survive and make a profit.

5.Layout

  • Font style, Arial, font size 12
  • 1.5 line spacing.
  • The page orientation should be ‘portrait’
  • Margins on both sides of the page should be no less than 2.5 cm
  • Pages should be numbered
  • Your name should not appear on the script.

Unformatted Attachment Preview

Report background CASE STUDY: Williams Limited WILLIAMS is a limited company, whose head office in based in South Africa. The company has been operation in the UK for the past 10 years. WILLIAMS provides financial services to a number of organisations which include SME’s, property developers and investment property funds in the UK and Africa. For the past 10 years, WILLIAMS has been a profit making firm as it has retained its previous clients, in addition to capturing an increasing share of the market. However, the finance director of WILLIAMS has recently got in touch with your professional consulting firm, and has engaged your firm with the mandate to provide them with an explanation of the cash flow problem that WILLIAMS Limited had been facing. The company is also dependent on the parent based in South Africa for and when required. In the past month there has been a number of meetings in London and South Africa where it has been agreed that WILLIAMS Limited should do their best to expand the business and raise the required capital in England, or perhaps in Europe, so as not to depend so much on cash coming from the parent company all the time. Consequently, the management of WILLIAMS is considering the followings: New Software The current product that Williams Limited has to offer mostly to specialist developers and investment funds companies is outdated. The company is looking to invest in a new product, and the details of this proposal is outlined below. Advanced Suite Advanced Suite Draft figures Year £'000 0 1 2 3 4 5 New Software cost (9,000) Cumulative Working Capital (850) Sales Revenue (610) (790) (310) (730) 3400 6300 7500 8900 (420.00) (600.00) (800.00) 9500 Less: Module A Module B Overheads (900.00) (1,110.00) (1,010.00) (1,400.00) (1,600.00) (2,100.00) (1,900.00) (230.00) (240.00) (330.00) (300.00) (300.00) All of the above estimates have been prepared in terms of present day cost and prices. Assume that cash flows arise at the end of each period. In addition • Revenues are expected to rise by 4% in price terms per year from year 1 (start of year 2) the budget estimated selling price at start was £120. • Overheads and working capital are expected to rise by 4% per year from year 1(start of year 1) • The cost of Module A and Module B are expected to rise in line with inflation of 4% per year from the beginning of year 1. • The working capital is cumulative and will be recouped at the end of year 5. • The cost of Technicians, who have come from the South Africa have not been taken into consideration in the forecast and are as follows: Technician (T1): Will be paid £120 per hour and expected number of hours for T1 are 1,300hrs. The rate paid is expected to rise in line with inflation at 4% per year from year 2 and the number of hours is expected to reduce by 3% per year, every year from year 2 onwards. Technician 2 (T2): Will be paid £110 per hour and expected number of hours for T2 are 1,400hrs. The rate paid is expected to go up in line with inflation at 4% per year from year 2 and the number of hours is expected to reduce by 3% per year, every year from year 2 onwards. If WILLIAMS Limited invests in Advanced Suite, then the discount rate that would be required to assess the NPV would be 6%. The table above shows the estimated outgoings and inflows for the project. New Drop-in Centre The manager in charge of sales has just informed your company that they plan to open a Drop-in Centre in London and it is hoped that this Centre will be opened for business on 1April 2020. You have also been informed that to start with, the company will only sell 2 types of service as packages: Entry Level package (ELP) and Advanced Level package (ALP). This will be done to test the market and see if the business will break-even in the same period. These two are the most popular asked for packages and will be offered at £300 for ELP and £400 for ALP. The company has provided you with the following information regarding the costs and estimated sales for the period mentioned above. WILLIAMS plan to put in £6,000 as start-up capital and plan to sell a total of 1320 (combined) of ELP and ALP for the same period. They are not sure which of the two services will produce the most profits for WILLIAMS. Total budgeted sales for each month are as follows: April 440, May 440 and June 440, of which 30% of each month will be for ALP. You will be required to assess the best product combination of sales for the Aril and May 2020. To help with the setup of the Centre, the company has just concluded a deal with one of the high street banks to get a loan of £21,000 on the 1st of April 2020. The interest on this loan will be 3.5% to be paid every month. The company will be required to make 12 equal payments to repay the loan starting end of May 2020. Financial information As mentioned above the company plans to sell a total of 1320 product packages between 1st April and June 2020. The fixed costs for the period are as below: Rent £ 15,500 Telephone £ 1,900 Loan Interest £ 2,205 Insurance £ 6,200 Electricity and Gas £ 3,000 Business Rates £ 4,500 Fixed cost specific to products ELP ALP Marketing £21,000 £ 25,000 Administration £ 7,500 £ 11,500 Staff Salary £ 19,500 £ 23,000 From their costs estimates, the variable cost of the services are £180 for the ELP and £210 for the ALP. The fixed costs are for the whole period, so they are not affected by the level of service. However, the variable costs will increase with services output (ie sales output multiplied with variable cost per product). Revenue from the sale of ELP and ALP will be on the basis of 30% cash in the same month, and the remaining 70% credit to be paid the following month. 1. 2500 words 2. 15 references and use the reference I uploaded ( it is in the pdf files from unit 1- unit 6) 3.Structure • Appropriate coversheet (as attached in this document) • Title Page, including the given title in full. • Executive Summary • Contents Page • Introduction • Literature review to support your accounting models used. • Sources of Funding • Investment appraisal • Cash budgeting • Breakeven analysis • Evaluation • Any other issues to be considered. • Conclusions and Recommendations • Appendices which should be numbered. 4. Requirement: You will be required to write a management report to the management of Williams limited directors in which the following points should be discussed. ⚫ Provide an explanation on the different sources of funding the company can have and their advantages and disadvantages. You should make recommendations as to how the company can manage the same to help in the planned expansion program. ⚫ Analyse the Investment proposals by using NPV and provide recommendations. You should also briefly comment on other investment proposal techniques that Williams Limited may use, and the limitations of using those techniques ⚫ The use of management tools such as Breakeven analysis and Budgets. ⚫ A computation of your breakeven analysis and the cash budget for the first 3 months. ⚫ An evaluation of the estimated company performance or position during the same period ⚫ A detailed Literature Review of the tools you have used such as breakeven analysis and ⚫ budgets and their importance to business. ⚫ Other issues for management to consider that you think are vital for them to survive and make a profit. 5.Layout • Font style, Arial, font size 12 • 1.5 line spacing. • The page orientation should be ‘portrait’ • Margins on both sides of the page should be no less than 2.5 cm • Pages should be numbered • Your name should not appear on the script. ...
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Final Answer

Attached.

Cash Budget Template

Strictly Confidential

Notes
This Excel model is for educational purposes only and should not be used for any other reason.
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Budget

Budget

Budget

Budget
Total
Jan - Dec

ACCOUNT NAME

Apr

May

Jun

Cash In from Sale of Goods/Services
Entry Level package (ELP)
Advanced Level package (ALP)

27.720
15.840

92.400
52.800

92.400
52.800

43.560

145.200

145.200

60
70
130

60
70
130

60
70
130

5.167
634
735
2.067
1.000
1.500
7.000
8.333
2.500
3.833
6.500
7.667
46.936
47.066
(3.506)

5.167
633
735
2.066
1.000
1.500
7.000
8.333
2.500
3.833
6.500
7.667
46.934
47.064
98.136

5.167
633
735
2.067
1.000
1.500
7.000
8.333
2.500
3.833
6.500
7.667
46.935
47.065
98.135

180
210
390
0
15.501
1.900
2.205
18.602
3.000
4.500
21.000
24.999
7.500
11.499
19.500
23.001
140.805
153.987
179.973

0

0

0

0
0

500
500

500
500

500
500

1.500
1.500

(4.006)

97.636

97.635

178.473

Total Cash In from Goods/Services
Cash Out on Expenses
Variable Cost EPL
Variable Cost APL
Total variable cost
Fixed cost
Rent
Telephone
Loan interest
Insurance
Electricity and Gas
Business rates
Marketing Fixed cost- EPL
Marketing Fixed cost- APL
Adminstration- EPL
Adminstration- APL
Staff salary- EPL
Staff salary- APL
Total fixed cost
Total Cash Out on Expenses
Total Cash From Operations
Cash Used in Investing
Capital from Loan
Total Cash Used in Investing
Cash Used/From Financing
[Cash In/Out Financing 1]
Total Cash Used/From Financing
Total Increase/Decrease in Cash

212.520
121.440
0
0
333.960

This file is for educational purposes only. E&OE

Corporate Finance Institute®

https://corporatefinanceinstitute.com/

20200331155132excel_cash_budget

3/31/2020 5:57 PM

Sales
Price per Unit
Entry Level package (ELP)
Advanced Level package (ALP)
Units
Entry Level package (ELP)
Advanced Level package (ALP)

April
300
400

308
132

Sales revenue
Entry Level package (ELP)
Advanced Level package (ALP)

92.400,00
52.800,00

Cash revenue
Entry Level package (ELP)
Advanced Level package (ALP)

27.720,00
15.840,00

May

June
300
400

300
400

308
132

308
132

92.400,00
52.800,00

92.400,00
52.800,00

92.400,00
52.800,00

92.400,00
52.800,00


Running Head: Williams limited COMPANY ANALYSIS

WILLIAMS LIMITED COMPANY ANALYSIS
By (Name)
Course
Professor
Institutional affiliation
Date

1

WILLIAMS LIMITED COMPANY ANALYSIS

2

Executive Summary
We are a financial consulting company helping businesses to make better investment
decisions. In this assignment, we analyzed Williams Limited's investment proposals and
gave recommendations based on the analysis. We also understood that to invest, the
company needs finances. Therefore, we also suggested several financing options that
William Limited may use to finance its projects.
Introduction
Whereas every business aims to make a profit, it is the availability of cash that
keeps the business going. Cashflow is the amount of money that moves in and out of the
company over a specified period. Having enough cash flow, ensure that a company can
pay for its experiences when they fall due as well as order inventory. After experiencing
cashflow issues, Williams limited is considering investing in new software or a drop center
to improve the current situation. As financial specialists, we will analyze the suggested
investment proposal and offer recommendations on the best project to implement. To do
this, we will use accounting models, which include net present value (NPV), cash budget,
and breakeven analysis.
Accounting Model Literature Review
1. NPV
The net present value is the differenc...

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