FINANCIAL AND INVESTMENT ANALYSIS

Financial and Investment Analysis

[Instructor's Name]

Table of Contents

Task 1.11

Importance of Cost in Pricing Strategy1

Task 1.21

Design of Costing System1

Task 1.32

Recommendations for Improvement2

Task 2.13

Forecasting Techniques3

Task 2.24

Sources of Funds4

Task 3.15

Budgetary Targets5

Task 3.25

Master Budget5

Task 3.35

Comparison of Budget and Actual Cost5

Task 3.46

Budgetary Monitoring Process6

Task 4.17

Cost Reduction Process7

Task 4.27

Activity Based Costing7

Task 5.17

Financial Appraisal Method7

Task 5.29

Strategic Investment Decision9

Task 5.39

Appropriateness of Strategic Management Decision9

Task 6.19

Financial Analysis of Balance Sheet9

Financial Analysis of Income Statement10

Task 6.211

Financial Ratios11

Recommendations14

References15

Financial and Investment Analysis

Scenario 1

Task 1.1

Importance of Cost in Pricing Strategy

Cost is the most drastically critical part of pricing on account of it can entirely frequently choose the benefit edges which mean shape the cost of the unit. Thus, you will for the most part here the term Cost Slicing in terms of impressive conglomerations to expand the benefit edge but when costs quite go up they do change the cost of the unit but commonly makers could want to keep the cost steady when there are minor modification in cost (http://www.trainanddevelop.co.uk).

Task 1.2

Design of Costing System

A sagacious cost system design is one that is basic while still furnishing directors with informative content they ought to make decisions. As most obviously manufacturing methodologies were work concentrated at the turn of the century, a greater part of cost administration systems relied on immediate work to allocate backhanded costs to items and utilities. Aberrant or overhead costs are costs that are connected with or brought on by several or increasingly working exercises together but are not traceable to every of them separately. Administer costs; besides, are in particular traceable to or created by a particular venture or processing operation (Cooper, 1999, pp.18-20).

The rise of exceptionally computerized machines, which displaced regulate work with backing work, lessened the correctness of immediate work as an estimator of aberrant costs. This diminishment first advanced to the rise of machine hour-based cost systems. In any case both, work based and machine hour built cost systems, rely with respect to unit-level cost drivers and can give satisfactory experiences to supervisors concerning the costs of their items just in quite effortless manufacturing systems. As rivalry challenged by firms built, benefit levels started to fall, and it came to be more critical for the company's cost system to report faultless item costs. More correct items costs prepare firms to fine tune its unit intermingle so it is characteristically more gainful. Action based costing or administration is an apparatus that more exactly distinguishes and assigns backhanded costs to the units they underpin resulting from the fact that it recognizes the drivers of the circuitous costs. This distinguishing proof permits administration to recognize and enable cost savings opportunities (Dobler, 1996).

Task 1.3

Recommendations for Improvement

London Manufacturing Company can improve its cost system by adopting Activity Based Accounting so that, the cost of each activity can be identified which will be useful in cutting down the cost.

Task 2.1

Forecasting Techniques

Assumption: Cost will increase by 2 percent and Revenue increase by 3%

Months

Cost

Revenue

July

1500

2500

August

1750

2750

September

1925

2925

October

2300

3300

November

2650

3650

December

2630

3930

January

4048

4009

February

4129

4089

March

4211

4171

April

4296

4254

May

4382

4339

June

4469

4426

July

4559

4514

August

4650

4605

September

4743

4697

October

4838

4791

November

4934

4886

December

5033

4984

Task 2.2

Sources of Funds

The amount of capital that should be undertaken for proper set up, establishing and initiating the function ...