AAF044-6 Accounting and Finance Assignment Sample
AAF044-6 Accounting and Finance Assignment Sample
1. Introduction
In this report, the company Aston Martin can be said as a modern, sports car brand in an exclusive manner with taking the identical heritage which has been recognized through the overall world. It has been set up in the year of 1913 by Lionel Martin and Robert Bam ford. This company can be acknowledged as a particular world basis brand with luxury, performance, style, and exclusivity.
Key features of the organization
Aston Martin has made a position in the overall history of the industry of British cars with the founders. This is a brand of luxurious car that has b been synonymous with elegance, high performance, and style for more than a hundred years. It has also captured the core heart of the people who are very much enthusiastic about the car with the design of the sleek, rich heritage and powerful engine.
Corporate objectives
The main vision of Aston Martin is to be the most desirable in the world with a luxurious brand of British by creating important addictive cars with overall performance. The most important strategy of the company is the actual combination of higher efficiency and the ultimate factor of luxury in a together manner in one industry of automotive. The main targeted audience of Aston Martin is both males and females 74.70% of males and 25.30% of females (Latapí Agudelo, et al. 2019, pg. 04).
A majority has been stake in Aston Martin in the year 2020 and continues it’s subsequent in the year 2021. It has also been announced that the brand would make launch a sports car in an electric manner and an SUV in the year 2025. This brand has also made a plan about the manufacture of not more than 999 vehicles with every of those costing about $800000. To understand extra information about the main reason behind the cost is a continuation of reading on to seek the actual concept of other vehicles.
Identification of the key resources
The main five key resources of an automotive company are human resources, financial resources, emotional resources, educational resources, and physical resources. The financial resources can also be gotten from various sources with the easiest factor from the personal account of the founder of the company (Agrawal, et al. 2021, pg. 08). Then human resources have been depending on the skill and knowledge of the employees.
The educational resources can also be gotten by the trade association of professionals which has been geared to the industry. The physical resources are the equipment and premises and the emotional resources of the industry would be mainly the support system. Then apart from these for the automotive industry steel, aluminum, rubber, and plastic would be the most commonly used commodities to make a car.
Comment on the management issues
The losses of Aston Martin in the year 2022 have risen to £495 million from £213.8 million but the business has said to begin to generate cash. In the last quarter of the year 2022, the company posted an operating profit of £6.6 million. The main objective is to make a demonstration that the company has made the area basis profitability of the new cars which has included much-required battery and hybrid cars of electric.
The company has made revealed that it has lost its money more than the double amount in the year 2022 as the maker of the sports car has spent on new models which have struggled through the overall problems of supply chain factors that have effectively hit the industry of car throughout the whole world.
2. Budget
A budget for the business can be the most effective method to keep the overall business and its overall finances on track. The most important thing is budgeting which can be able to help to control the overall business. The budgets can be also said the most significant and useful items that the upper-level management has used to measure the performance of the actual organization (Böckin, and Tillman, 2019, pg. 04).
The budgets are mainly perceived to make an existence for the various purposes of financial issues to present the figures and numbers by which the process of performing has been made.
Various ways of budgeting can be used to measure the performance
The most important three variances can be said as the significant factors to measure the overall performance of the financial factor.
- Identification of the significant variances:
A variance in the budget can be made as the difference between the budgeted amount and the exact amount of revenue or expenses. The variances in the budget can make an inclusion of the differences in cost by decreasing or increasing profits or sales. Variances can be better or worst. If the variance of the budget in the overall revenue can be higher than the actual amount of budget then it would be the favorable outcome of the budget variance.
If this overall scene can be reversed and revenue would be less than the amount of budget or the exact expenses are higher than the amount of budget then it would not be a good outcome (Giese, et al. 2020, pg. 04). It refers that the budgeted amount or projects requires to be made as a review because it cannot make a running factor sustainably or successfully. Apart from these budgets require observing end and the important variances require to be made as identified by which it can be investigated and then managed.
- Analyze the variances in budget
Identifying the important variances in the budget it has made it important of analyzing the variances. Without making any evolution of those variances no extra factors can be taken from those and nothing would be made to make an improvement or to make elimination about the overall variances to observe the sustainability and viability of the overall project. The main cause for the reason of variance has been identified and then to address it is a chance for the business activities to improve over the performance.
Through the analysis of the variances of the budget, the business would be able to decide about the problem on a short or long-term basis which may require a quick solution permanently. The price of the retail of the overall services or profits of the business can be enhanced for making up for the unfavorable variances. Even the sales have also dropped because of economic factors which have reduced the demand of consumers outside the control of the business.
In this manner, the input cost can also be increased into the service or the product because of the economical c conditions and that’s why the arrangements may require to be created in an alternative manner. All the trends of seasonal effects and the pattern of purchasing can also be made as identification if the overall variances would be monitored over a long period. Significantly, the variances of the budget can be analyzed by which the overall corrective actions can be maintained to improve the variances of the business.
- Determination of the revised budget
After making the identification of the important variances and evaluating those variances to make the issues in a detailed manner behind it would be the timing to analyze the overall information from the other analysis for revising the budget if needed. The revision of the budget can be said as the procedure which has allowed a manager of the budget or the team of budget management to do various changes to the budget (Friedlingstein, et al. 2022, pg. 05). A revision of the budget has made a requirement to be implemented according to get the budget back on track which has been dependent on the identification of the various issues.
Budgets can be said to the one part of the management’s responsibilities that can be able to help the management to create identical planning to fulfill all the objectives strategically. It has also been made a focus on the overall budget which can play an important role to evaluate the performance of the business by making a comparison between the actual performance to the budget or the planning.
Investigation of the favorable variances:
The variances of adverse have made the tend to make an attraction to indicate the problems. There would also agree to the overall investigation of the variances by which the business can be able to learn from the successes (Kleinert, and Volkmann, 2019, pg. 04). The business can be able to investigate both favorable and unfavorable variances which are large.
The main reason behind this is that it would make an effect on the income of the business. The favorable business should be made as an investigation. This can be done because variance may be favorable due to various types of reasons by which it has to underestimate the standard set. If the set of the standards has not made any accuracy then it would not lead to the overall utilization of various resources of the business.
3. Discussion of the reason for investment proposals
The analysts of business and financial factors would be able to use the capital cost to decide about the investment of the funding that can be made effectively. If the exact return on the investment would be greater than the capital cost then the investment would end up being the net advantage to the balance sheet of the company. The capital cost has made a dependency on the financing type which has been used in the overall business.
The business can also be financed through equity or debt. Even most companies can also make the employment of the mixed factors of debt financing and equity (Eldar, 2020, pg. 04). The capital cost can be said as the minimum return rate or profit which the company must be able to earn before making and generating the overall value. It has also been made by the accounting department of the business to decide the financial-related risk and the justification of the overall investment.
The capital cost would also be able to help to establish the return of the benchmark which the company must be achieved to make satisfaction the investors of equity and debt. The most important usable process of computing the capital cost is the relative factor weight of all the sources of capital investment by adjusting the return in a required manner (Shafi, 2021, pg. 04).
In the case of investment appraisal decisions or capital budgeting, the capital cost can be used as a potential rate of discount for the cash flow in a future manner from the project of capital to decide on the present value. It would help the investors of the company to analyze the investment features and an important decision on the venture on an accept or reject basis. If the return rate of the project would be higher than the capital cost then it has extra opportunities of being accepted.
The business can be able to use the overall combination of debt and equity in the structure of capital or the budgeting g of capital to reduce the financial risk. The capital cost can be said as a key metric to evaluate the company stock for investment. Even the decisions on the dividend can be taken after making factoring in the capital cost. By making a comparison of the capital cost with the IRR the nature of the business can be grown, and declined which has made an effect on the policy of the dividend and the interest of the investors (Al-ahdal, and Hashim, 2022, pg. 04).
Before the business can be able to turn into an earning manner before making the generation of value it must be able to generate adequate income to make coverage of the overall capital cost which can be used to fund the overall activities. The capital cost can also be referred to as the return in an expected manner on the securities factor which has been issued by the company. The needed return rate would be the premium of return which has been made a requirement on the overall investments to make a justification of the taken risks by all the investors.
4. Audit Committee
Identification of the main functions of the audit committee
The company has scattered its audit committee into two factors which are internal audit and external audit. In the internal audit committee, the main functions have been discussed along with the external audit also.
- It has approved the appointment of the internal function of head auditing.
- It would make an approval of the function of the internal audit which can be able to monitor and ensure the required resources and correct access to the information (Raimo, et al. 2021, pg. 04).
- It can also be able to review and make an assessment of the internal audit an annual basis which can be advised of the various reasons for the accountable changes.
- The committee would consider and create the recommendations formally to the exact board about the reappointment. It has also made a removal of the external auditor of the company to retain the main responsibility for such types of investments (Fariha, et al. 2021, pg. 09).
- The committee would agree with the policy of the board on the overall factor of employment of the auditor of the company then it would take into account the requirements of legal factors and standards of ethics to monitor the policy applications.
- The committee would ensure that in the ten years, at least one contract of the audit service can be put out to the tender to enable the audit firms of the committee which would oversee the procedure of selection of having the accessibility which is needed to the information at the time of the tendering procedure.
Membership of the committee
The committee of the audit ‘can be consisted of a lot of members as the b business would be able to wish to make an appointment at least of three people. But every member must be able to meet all the requirements of the overall criteria and would be a director of the business (Musallam, 2020, pg. 09).
The committee of the audit can be appointed by the overall boards and has made a composition of between three and seven directors of the board who has not made any part of the management of the corporation. EY (Ernst & Young) would take over the overall audit of Aston Martin Lagonda Global Holdings Plc for the user ended 2019 which has been subjected to make approval by the shareholders of the company at the general meeting on an annual basis.
Issues of the Committee
- Disconnection of decision-makers: The actual relationship between the decision-makers and the committee would be critical. An inadequacy of the involvement of the decision maker can make a reason which has made an effect on the belief among both parties (Martínez‐Ferrero, et al. 2021, pg. 08).
- Directionless committee: The reference terms can be written in the normal manner but a lot of committees have not cleared about the resolution of the problem and the influence level also. It can also make cause the committee to give a suggestion which has not aligned with the information.
- Overload of the information: all the committees have spent so much time receiving the information that it would not get overall enough time to make discussion of the overall factors. Meetings can be so rigid therefore there would not make any capacity to make an identification of the various concept of everyone and weigh up the advantages and disadvantages of various options (Salvioni, and Gennari, 2019, pg. 08).
Suggestions for the improvements
- various types of methods can be made an involvement by the decision-makers in the overall procedure. Some committees can be chaired by the maker of the decision. This approach has made the merit and demerit factors by which the capability has been focused.
- It has to ensure that the makers of the decision would be clear and have made an agreement to these overall parameters. In this manner, it has to create a roadmap at a high level that can be able to guide the overall activities of the committee and make the reviews regularly.
- If the information has to be shared then at the time of meeting the effective techniques have to be used to avoid all the costing. All of the issues can be assisted through the facilitator’s uses like the overall discussions of small groups. These operations would help to provide effective discussion about mitigating all of those issues.
5. Reflective Conclusion
After making all the factors of this study I have shown that the company has been taken as Aston Martin. The key features, c corporate objectives, and various types of management have been analyzed in this report. Then the overall relationship with the budget has also been made in an effective manner by which the evolution has been created to measure the financial performance. Under this section, it has been shown that the budget can also be revised and the variances can be identified and analyzed.
The introduction about budgeting and investigation of the favorable variances have also been discussed and analyzed. The business can also be able to the large variances of favorable and unfavorable factors also. Then the important reasons have also been discussed for the acceptance of the investment proposals in relation to the dependency of the capital cost.
Then the main function of the committee of Aston Martin Company has been identified. Even it has also been observed that the audit committee has also some issues by which the problem has been made. Apart from this various types of mitigation strategy has also taken into account under the factors of discussion. The approval of the internal appointment of the head of auditing can be done by which the functions of internal and external audit can be approved.
References
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