Financial Aspect of Project Engineering

Financial Aspect of Project Engineering
Background: An engineering student studying finance, the following assignment is from the finance module.
Assignment:

Create an imaginary contracting company with about £10m/pa turnover. (Feel free to invent some comic
name for your creation – I’m afraid that’s the only fun to be had in this assignment). In this exercise you are
going to:
a. forecast the company’s performance in 2012, and then
b. show what actually happened in 2012.
The company’s financial year corresponds to the calendar year. Now set out these tables:
Table 1a.
This shows the Balance Sheet as it was on 31st December 2011, and reflects the state of the company at
the beginning of the 2012 trading year. Include a £500k bank loan under the liabilities, and don’t forget
the Provisions! Don’t have a share premium. Remember that the Balance Sheet conventionally shows the
previous year’s figures for comparison.

Table 2a.
This is your overall business plan for 2012 – i.e turnover, direct costs, overheads, finance costs, and profit –
this is effectively a forecast Profit & Loss account – identify the contribution to show that it’s realistic.

Table 3a.
Produce a cash flow forecast for 2012, in twelve monthly periods (it would be sensible to do this in Excel,
but show how the calculations were done so that I can see how you got the answers).
For this, you’ll need to make some assumptions about your contracts. Assume that you will start just four
contracts in the year. For realism make each different from the others and don’t start them at exactly threemonth
intervals. Include a half completed contract at both the start and the end of the financial year, so
there are five contracts in all for you to reckon with. Assume half the contract price is payable halfway
through each contract period, that there are no retentions, that all contracts carry the same percentage
contribution, that their direct costs are a straight-line graph, and that the company’s overheads are constant
over the year. (All these are simplifications and most unrealistic – but they do save a lot of work! ).
(When drawing up this plan for the year’s work, you might find it helps you to draw a graphic representation
to give yourself a better oversight of the year’s events. I don’t need to see this, so you can do it by hand or,
of course, use Excel.)
You have to repay the bank loan at £50k/month, so the last payment is in October. £200k tax falls
due in August. Apart from that, ignore tax and dividends, but don’t forget interest.
Now assume that it’s January 2013. As always, something unexpected happened during 2012. In less than
300 words say what it was and what action the company had to take as a result. Now draw up “actual”
tables:

3b the actual monthly cash flow for 2012 to reflect what really happened – including whatever you had
to do.
2b the Year End Profit and Loss account on 31st December 2012.
1b the Year End Balance Sheet on 31st December 2012.
Show the previous year’s results on each Balance Sheet and P&L Account.
It would be a good idea to put the “a” and “b” tables on t
—
ORDER THIS ESSAY HERE NOW AND GET A DISCOUNT !!!

You can place an order similar to this with us. You are assured of an authentic custom paper delivered within the given deadline besides our 24/7 customer support all through.