Business take home exam
- a) The role of the Board of a company is to govern the company to increase shareholder (owners’) value. This means that they often have systems that align manager and shareholder interests. b) Based on the Note 11d which type of non interest-bearing debt is CSL primarily using to finance its operations? What are the risks and benefits of using this type of financing? (4 marks, LO2)
- c) CSL report all its economic activities in monetary terms. In which currency does CSL report all its transactions? How could exchange rates affect the financial position and performance and CSL’s financial statements. (3 marks, LO2)
- d) Explain whether CSL prepare Special Purpose Financial Reports or General-Purpose Financial Reports.
- e) Which expenses on the Income Statement would be regarded as variable. How can managers use this control controls its budgets? (3 marks, LO3)
- f) How has CSL’s ability to manage inventory changed from 2019 and 2020? Show using calculations. Why is managing appropriate inventory a challenge for firms? (6 marks, LO2)
- g) Find the closing price for the share price on October 16, 2020. How would investors feel about the value of their shares in CSL, if they purchased shares on the 17 February 2020? What if they had purchased the shares on 30th October 2019? What do these values suggest about risks of investing in the Share market and what would you recommend a potential investor? (8 marks, LO3)
Questions:
Part A: Accounting Report and Funding – 30 marks. Students must answer all questions
Consider the CSL 2019/20 Annual Report.
From the Remuneration section of Director’s report from CSL provide one brief example of a method used that encourages CSL executives to also grow the shareholders’ wealth (remember to use in-text referencing).
(3 marks, LO2)
(3 marks, LO3)
Consider the CSL Yahoo Finance data. Semester 2 Main, 2020 BUSN104 – National
5
PART B: Capital Budgeting – 20 marks. Students must answer all question
CSL division is considering installing a mass-production of vaccine plant at their NSW factory. They have two options. They can either purchase a plant that is locally built (Double-Helix) and is untried at this stage (but the sellers have built other, smaller plants) or one that can be purchased and installed in NSW by a company that has built super-plants in Russia (Вакцина Solutions which is a Russian Firm).
| Each supplier has quoted the costs on a delivered and installed basis and the after-tax cash returns per unit from each supplier are forecast below (All figures are in Australian Dollars): Years | Double-Helix | Вакцина Solutions |
| Initial investment | Cost: $1,900,000
(including $200,000 for installation & training) |
Cost: $1,800,000
(including $400,000 for installation & training) |
| 1 | $600,000 | $900,000 |
| 2 | $720,000 | $500,000 |
| 3 | $425,000 | $705,000 |
