Type 1 ExaminationWittenborg University of Applied Scienceswww.wittenborg.eu Page 1 of 3Type 1 Examination Module name:Introduction to FinanceModule code:FIN12Location:Apeldoorn, Amsterdam & MunichTeacher:T. van Breevoort, L. De Silva, M. Mulder, A.Flip-BeilBlock:3 (Special Seat)Type 1 (Open Book Exam)100% of final markYear:2020-21Exam instructions:Please read carefully before you answer. Upload your final paper in wordfile format. You are required to read the Part 5 of the EEG and abide by theregulations of Academic Writing Handbook.Students are required to submit a working website link of the selected casestudy company’s financial statements used in answering the respectivequestions. The link is part of what has to be included in the introductionparagraph when answering questions. ONLY the excerpts of the case studyfinancial statements must be shown in the appendix. Note that failure tosubmit the said financial statements will cause your paper NOT to beassessed Type 1 ExaminationWittenborg University of Applied Scienceswww.wittenborg.eu Page 2 of 3Introduction to Finance [FIN12]Total Marks: 100QuestionsSelect a public company which is in the business of producing and marketing fast movingconsumer goods (e.g. Unilever). Be sure to timely enlist the company of your choice with yourteacher, as a company can only be used once in each class. The enlisting will be done on a firstcome, first served basis.To execute the tasks below consult the company’s annual report over the 3 year period 2017-2019. In addition to the requirements for each question, ensure to provide formulas,assumptions and models as appropriate. Analysis or conclusions which are not based on theapplicable theory will consequently limit your marks.Task 1. Ratio analysis (30 marks)Analyse the company’s consolidated financial statements using:A. 4 Profitability ratiosB. 5 Efficiency ratiosC. 2 Liquidity ratiosD. 2 Financial gearing ratiosReflect on the development of the ratio outcomes over the 3 year period and provide yourconclusions and recommendations to the Board.Task 2. Sensitivity analysis (35 marks)Treat the figures in the 2017-2019 Income Statement and Balance Sheet of the company of yourchoice as if it were a prognosis. You are asked to execute a separate sensitivity analysis on theoriginal figures as presented in the company’s annual report with each of the following 4 items,using the percent of sales method:A. Sales in each of the 3 years are 10% higher than currently “forecasted”B. Sales in each of the 3 years are 10% lower than currently “forecasted”C. Operating costs in each of the 3 years are 7% higher than currently “forecasted”D. Operating costs in each of the 3 years are 7% lower than currently “forecasted”Show the effects that each of the situations A, B , C , and D have on the total 3-year IncomeStatements and Balance Sheets, including the effect on the required financing.Discuss the implications of each of these effects with the Board and draw conclusions withrespect to the main risks in the business over this “prognosis” period.Type 1 ExaminationWittenborg University of Applied Scienceswww.wittenborg.eu Page 3 of 3Task 3. Working capital analysis (20 marks)In this task you are also to assume that the figures in the 2017-2019 Income Statement andBalance Sheet of the company of your choice are a 3 year prognosis. Discuss the effects ofeach of the following 6 deviations from the original figures on the operating cash cycle in all 3years:A. Trade receivables of each of the 3 years are 20% higher than currently “forecasted”B. Trade receivables of each of the 3 years are 20% lower than currently “forecasted”C. Trade payables of each of the 3 years are 30% higher than currently “forecasted”D. Trade payables of each of the 3 years are 15% lower than currently “forecasted”E. Inventories of each of the 3 years are 40% higher than currently “forecasted”F. Inventories of each of the 3 years are 20% lower than currently “forecasted”Based on your analysis provide recommendations to the Board on what the focus of theirworking capital management should be for each of the six (6) scenarios above.Task 4. Capital structure analysis (15 Marks)Discuss the capital structure of the company over the years 2017-2019, relating the term of thedifferent sources of funds to the term of the different uses of funds. Ensure to provide therationale for your conclusions for each of the ‘’term of sources and application (uses)’’ of fundsbased on the appropriate concepts used in capital budgeting.
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