The application of corporate finance theories in a real-life case

Project description
Details of the task

On October 1, 2014 British grocer Sainsbury’s cut its annual sales forecast and said it would review its dividend as part of a wider examination of the business, adding to the turmoil in a sector reeling from Tesco’s accounting scandal.

Requirements:

Write a report which covers the followings:
1.How does that announcement may affect the firms value?
2.If you are considering investing in Sainsburys, how does that announcement may affect your investment decision?

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Referencing Requirements:
4 sources from books
2 sources from internet

Learning outcomes evidenced by this assignment

1.    Apply investment appraisal techniques to project cash flows in different business scenarios and in situations of uncertainty, to arrive at investment decisions and to evaluate these decisions by reflecting on the procedures used.
2.    Evaluate the cost of each source of finance a company might have, calculate its weighted average cost of capital and comment on the reliability of such calculations.
3.    Critically evaluate theoretical models in corporate finance and comment on their application to financial management decision making.
4.    Assess the influence of risk in investment decision making, determine relevant risk premiums, and reflect on the methodology used to derive them.

Submission procedure

•    Students can only submit electronically via Turnitin (which will be available nearer the deadline for submission). NO hard copy submissions will be accepted at the RDBS helpdesk.
•    In a situation where a student cannot submit to the Turnitin link for whatever reason, he/she will need to email the work to [email protected] within deadline.
•    The RDBS has a zero tolerance on late work: 1 minute late will be marked as late submission and will be dealt with accordingly.
•    Students cannot submit their work in separate pieces, only one file as their last submission will overwrite their previous ones.

Return of feedback and marked work

Feedback will be given in writing to students and orally during seminars and tutor’s student hours.

Introduction

This assessment is an individual piece of work. The topic is the application of corporate finance theories in a real-life case. Please see below for details.

Details of the task

On October 1, 2014 British grocer Sainsbury’s cut its annual sales forecast and said it would review its dividend as part of a wider examination of the business, adding to the turmoil in a sector reeling from Tesco’s accounting scandal.

Requirements:

Write a report which covers the followings:
1.    How does that announcement may affect the firm’s value?
2.    If you are considering investing in Sainsbury’s, how does that announcement may affect your investment decision?

Special note: You are advised to use academic sources to support your arguments. Please make full reference to any sources you use since failure to do so may be regarded as plagiarism and would imply severe consequences. Please refer to the Referencing section below for more information and advice. To answer these questions, you need to make use of both relevant dividend policy theories and valuation models.

Assignment instructions

Structure

You have been asked to produce a report.  It should contain the following:
•    Title page, including the given title in full
•    Contents page
•    Introduction
•    Main body, which should also be organised under appropriate headings.
•    Conclusion

You are not required to provide recommendations. The use of appendices is discouraged unless they are crucially important. In such instances, make sure you refer to all appendices in the main text.

Presentation

Your work should be word processed in accordance with the following:
•    Font style, Lucida Sans, 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
•    Your student number should be included on every page

Skills advice

Refer to your material provided in your skills modules to make sure that you have conformed to academic conventions.  Pay particular attention to:
•    Your introduction,
•    Your conclusion,
•    The use of headings and/or signpost words
•    Paragraph structure
Do refer to Info skills at http://writeitright.uelconnect.org.uk/home/ and http://infoskills.uelconnect.org.uk/

Referencing

The university expects students to use Harvard referencing as specified in the book Cite them Right.
•    Refer to http://www.uel.ac.uk/lls/support/harvard.htm for further advice and a link to an online version of Cite them Right
•    You should be careful to include citations within your work as well as a reference list at the end. Unreferenced work will fail.

Word count

Your word count should not include appendices, reference list, table, figures and direct quotes.

Exceeding the word count by more than 10% will result in a penalty of 10% of your marks for your work.  If your work is significantly shorter, then you will probably have failed to provide the level of detail required.

Submission to Turnitin of work submitted for assessment

Our policy on the use of Turnitin recognises the educational desirability that all of our students should enjoy the opportunity to self-submit their work to Turnitin (before submitting for assessment).  We also recognise that Turnitin Originality Reports will sometimes assist in the identification of plagiarised work submitted for assessment.

Work that is submitted to Turnitin generates a Turnitin originality report, showing which parts of it have been reproduced from which sources. The system compares submissions to material that is to be found: on the world-wide web; in its database of previous submissions; and in its growing number of databases of published articles. You should not assume that a Turnitin originality report with a low similarity index is evidence that the piece of work concerned is free from plagiarism.

Our policy provides that a Module Leader may decide, in accordance with the policy of RDBS, that all student submissions for a particular component of assessment should be submitted to Turnitin, provided that the relevant Module Guide includes a notice to that effect.

Notice is hereby given that all submissions of reports for this Module must be submitted to Turnitin.  Detailed guidance on how to submit your work to Turnitin will be made available on this Module’s Moodle site.

If you fail to submit your report to Turnitin, in accordance with the guidance on the Moodle site, you will be awarded a mark of 0 for the component.

Please submit your work to the right Turnitin link. Submission to a wrong link may result in the work being awarded a mark of 0. Moreover, wrong submission could lead to very high similarity index when the student corrects it later, which again might imply severe consequences.

If you have any questions about Turnitin, you should go to “Frequently Asked Questions” at http://www.nlearning.co.uk/faqsearch.php?sol=turnitin.  If you have any further questions, please email the Head of Student Compliance and Responsibilities, Toby Grainger ([email protected]).

Submission

The material that you submit to Turnitin will be marked.  The deadline applies so you are advised not to submit after 11.00p.m, because it could take some time for your submission to upload, and the delay could cause the work to be received after 11.59.  A late submission will receive a mark of 0.

Please be aware that the Turnitin site will advise you that late submissions are accepted.  This is only for the purposes of allowing students who are claiming extenuation to submit their work.

Please read the material in the submission folder and make sure that you attach the feedback sheet as requested and save the document using the format for the name of the document as specified.

Assessment criteria

Assessment criteria
Weight (%)
Evidence of extensive and appropriate reading    25
Evidence of understanding of the key issues    25
Critical reflection and relation of theory to practice    30
Relevance of materials and appropriate referencing    10
Overall presentation    10
Total mark    100

Grading criteria used to assess work

These give you an overview of the required standard, although not all the criteria would apply to each assessment task.

General guidelines for standards expected at different levels of study.
Grade    Level 1    Level 2    Level 3
First
(70% or above)    Thorough understanding of relevant ideas.  Clear and well referenced argument.  Coherent structure.    Ideas critically analysed.  Argument is clear, succinct and well supported.  Evidence of a wide range of reading and some independent thought.    Critical work evidencing excellent synthesis and application of ideas.  Work is exceptionally well constructed and presented.
Upper Second
(60-69%)    Sound understanding.  Well written and relevant argument.  Appropriately referenced.    Critical consideration of relevant ideas.  Arguments are precisely defined and appropriately referenced.  The work is structurally sound and well written.    Ideas are critically applied and coherently presented.  Evidence of wide reading and some originality.  Well referenced
Lower Second
(50-59%)    Evidence of understanding and independent reading.  Adequate referencing, but some unsubstantiated material.  Weaknesses in spelling, structure & grammar.    Reasonable understanding of the relevant concepts, but some inconsistencies in application.  Arguments are referenced, but disjointed.  Poor structure, spelling or grammar.    Clear grasp of concepts and some critical application.  Appropriately referenced and relevant argument.  Reasonable structure and syntax.  Well presented
Third
(40-49%)    Indication of some understanding, but poor application of ideas.  Minimal referencing.  Generally weak structure.    Generally descriptive work with limited evidence of a critical consideration of ideas.  Inadequate referencing.  Weaknesses in structure, spelling and grammar.    Evidence of good understanding of issues, but crudely applied.  Work indicates some critical thinking, but tends towards description.  Argument may be unbalanced.  Poor structure and presentation
Fail
(below 40%)    Irrelevant or poorly analysed material.  Indication of weak grasp of concepts.  Inadequate structure.  Poor grammar and spelling.    Uncritical.  Poorly referenced.  Argument indicates little use of relevant literature.  Chaotic structure and generally badly written.    Poorly referenced and suggests inadequate exploration of relevant literature.  Chaotic structure and generally badly written.

Extenuating circumstances

Extenuating circumstances are circumstances which:
•    impair your examination performance in assessment or reassessment, or
•    prevent you from attending for assessment or reassessment, or
•    prevent you from submitting assessed or reassessed work by the scheduled date
If you need to apply for extenuating circumstances please find the relevant information at: www.uel.ac.uk/qa/documents/extenuatingcircumstances.doc

Student appeals

Students who wish to appeal against Field and Award Boards decisions can find the relevant information at:
http://www.uel.ac.uk/qa/qualityass_appeals.htm

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