Managing And Business Finance Report

Running head: MANAGING AND BUSINESS FINANCE
ASSESSMENT - 2
Student Name - Rohit Simi
Student I’d - 102801
Paper Code - NZDB6213
Financial Management Plan

MANAGING AND BUSINESS FINANCE1
Table of Contents
Part A: Business details....................................................................................................................2
Part B: Agency theory......................................................................................................................2
Part C: Capital budgeting.................................................................................................................2
Part D: Key performance indicators of Warehouse Ltd...................................................................3
Part E: Financial risk analysis..........................................................................................................6
Part F: Impact of working in global context.....................................................................................7
Part G: Engagement with stakeholders.............................................................................................7
Part H: Analysis of business requirement compliance...................................................................11
Part I: Application of business knowledge for analysing financial information............................12
Part J: Usage of appropriate behaviour..........................................................................................13
Reference........................................................................................................................................14
Appendix........................................................................................................................................16

MANAGING AND BUSINESS FINANCE2
Part A: Business details
Warehouse Limited was formed in the year 1982 and the main line of its business include
retail sales for general line of hardware, apparel, housewares, dry goods, groceries and home
furnishing. Since the opening of its 1st store it enjoyed tremendous growth and the entity
revolutionised business of retail stationary through replacement of traditional stationers with
modern approaches. It operates the business through various sectors – (i) The Warehouse that is
engaged in selling apparel and general merchandise (ii) Warehouse Stationary that is engaged in
providing retail stationary goods (iii) Noel Leeming that deals in home appliances and consumer
electronics. At present the entity has 12,000 employees and the major financial goal of the entity
is to improve the EBIT as well as bottom line profit of its online business through optimum usage
of its available resources and supporting the online sales through developing national distribution
network (Thewarehousegroup.co.nz, 2019).
Part B: Agency theory
Principle of agency theory is applied for explaining as well as resolving the issues in a
relationship among agents and the business principle. Generally the relationship exists between
shareholders as the principle and the executives of the entity as the agents. In wider term, an
agency is the relationship among parties where one party is the agent who represents the principle
in daily transactions. Principle hires the agent for performing on their behalf and conflict of
interest does not exist there. In case of Warehouse Ltd the stakeholders are its customers,
suppliers, employees, community, shareholders and directors. Its shareholders are considered as
its principal and the management, board of directors and CEO Nick Grayston is considered as the
agent as they work for the interest of its stakeholder. Likewise the suppliers are interested in the
business as its performance signifies wether the entity will be able to make payment on timely
manner and placing big orders (Bosse & Phillips, 2016).
Part C: Capital budgeting
The process of capital budgeting is used for evaluating any project and the most widely
used methods for capital budgeting are NPV (net present value) and IRR (internal rate of return).
NPV is the present value of cash inflows after deducting the present value of cash outflows. On

MANAGING AND BUSINESS FINANCE3
the other hand, IRR is rate at which the cash inflows and cash outflows intersect. NPV suggests
that any project with positive NPV can be accepted whereas IRR suggests that the project with
the IRR of more than its cost of capital can be accepted (Rossi, 2015).
Based on the sales figure and different assumptions capital budgeting findings for
Warehouse Ltd will be as follows –
It is found that the NPV of the project is $258,078.88 and the resultant IRR is 12% against
the capital cost of 10%. Both of these approaches are suggesting that the project is acceptable.
Part D: Key performance indicators of Warehouse Ltd
Methods those can be used as the KPIs are ratio analysis and its trend as these can help in
determining the performance overview of the entity. Further the same can be used to compare the
performance with the previous years that determines whether the performance of the entity has
been improved or deteriorated over the years (Liang et al., 2016). Looking into the trend analysis
of Warehouse Ltd’s financial ratio for past 3 years it can be established that sales of the entity are
in uprising trend. However, as the major expenses like employees expenses have been increased
considerably, operating profits margin as well as net profit margin over the years has been
reduced. Further, the current assets as well as current liabilities both are in reducing trend (Vogel,
2014).