INDIVIDUAL ASSIGNMENT REQUIREMENTS Title: Understanding the Company’s Current Assets Management Scenario: You, as a fina

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INDIVIDUAL ASSIGNMENT REQUIREMENTS Title: Understanding the Company’s Current Assets Management Scenario: You, as a financial analyst, is assigned a task by your superior on reviewing a company’s current assets management (you need to pick one company from KLSE). You are required to review the cost of inventory, the optimal level of order quantity of the inventory, and the appropriate current assets financing policy of the company. You will need to generate a final report and present to the company’s chief executive officer. Hence, you will need to download the company’s annual report for 2021.
a) Introduction: In the Introduction of your report, discuss the company’s current assets to total assets, and the net working capital of the company. Comment on the company liquidity performance in 2021. The information of the company’s assets can be found from the Statement of Financial Position in the annual report. (15 marks)
b) Explaining Costs Incurred with Current Assets: Illustrate the effects of increasing current assets on shortage costs, carrying costs, total costs using a graph. Place the above-mentioned costs on the vertical axis and current assets on the horizontal axis. Based on the graph, indicate and explain the optimal investment in current assets. (15 marks)
Based on the graph in (a), elaborate the effect of increasing current assets on: (i) shortage costs (10 marks) (ii) carrying costs (10 marks) (iii) total costs (10 marks)
c) The Economic Order Quantity: Based on the Statement of Financial Position, 23% percent of the company’s total current assets are the intermediate goods used for production every year. The stockholding costs of the goods is RM1.50 per unit in a year. Each order of the goods is charged a fixed cost of RM50. The past experience shows that delivery always occurs within one week of placing an order. Calculate the economic order quantity (EOQ) for the component? Then, determine the minimum stock level that requires to place an order for the new stocks to be arrived exactly when the existing stocks are completely used up. (15 marks)
d) The Appropriate Financing Policy: Currently, the market’s long-term interest rates are higher than short-term interest rates. Explain how does this affect the company’s selection of a financing policy for its current assets. (20
marks) e) Conclusion: Summarize all of the above findings. (5 marks)
Choose the annual report of EUROSPAN HOLDINGS BERHAD 2021
http://www.eurospan.com.my/annual-reports/