A. Gamage 24 .2 2015 - 6.20 pm

Case Study -1

To: Head of Research DepartmentFrom: AN Accountant

Early Launch of Look Chat

Look has created a grate image of people around the world over past 17 years preserving our mission “do only good”. A big team of experts have been working in developing “Look chat” more than 12 months. Furthermore, our Marketing research team headed by Noel in parallel busy with conducting market research and product appraisal and provided his feedback end of every month. Our finance team led by Tom submitted two reports based two independent due diligence and feasibility conducted.

Our research and feasibility study shows very high potentials for LOOK CHAT,. As per our study the following are our best estimates:

There is 30% chance that Look Chat would generate of $ 80 m pa There is 50% chance that Look Chat would generate of $ 40 m pa There is 20% chance that Look Chat would generate of $ 20 m pa

In a worst case scenario it would generate a minimum of 10m profit pa as the cost pa would only be $10 m.

With regard to posting photos in public domain, we do not anticipate any major issue as the existing market leader “Friend Time” has been doing the same over past 6 years and successfully tackled all constitutional barriers. From ethical point of view Look always take the maximum care to protect the privacy of our customers.

Together with other market research outcome, we are confident and it’s proven that LOOK CHAT would very successful.

Corporate Governance:

As far as CG is concerned HRD would replace Vijay so there will not be any effect to the BOD. Its however important that HRD shall shave executive powers to maintain imbalance of the board. The company’s MOA need to be amended accorndingly.

Best Regards,

TASK -2

To: Director FinanceFrom: AN Accountant

Business Achievement and Financial Highlights of Middle East Venture

It’s my pleasure to submit this progress report of our ME venture for the 12 month period ending 30 Sep. 2015. The report is based of forecast figures but every effort has but to make it as accurate as possible.

The venture’s gross profit for the year is $ 2.2M and net income is $ 1.149M. Operating profit margin of 35% shows the venture’s R&D, marketing and admin costs are very under control. This would bring a return on capital employed and return of equity (ROE) of 25% and 20% respectively. Based on these numbers the revenues per share invested for the period would be $ 0.7 This is a huge achievement as the venture is still at growth stage.

The venture’s net assets and working capital remain positive. Whilst maintaining a healthy gearing ratio the venture has adequate current asset base to deal with short term liabilities. The venture’s liquidity and solvency remains positive at all the time.

New Investment

Middle East is a rapidly growing area with lots of investors from all over the world. Despite temporary decline in oil price the ME market has huge potentials for Look’s business. Taking into account the entire region with full of foreign businesses and expatriate employees, Our mission of “connecting people to the world” is best matching for the region.

We however, need to carefully consider certain regional and cultural characteristics before taking any big decision. I would to note some important points which would affect our business:

1. Government motive and influence2. Cultural and religion importance3. Political situation4. Human life style5. Growing economy high use of electronic media and systems by the Governments work. 6. Recent trend of the government’s push for young nationals for higher education.7. Young people’s ever rising interest for social media and increasing use of internet, mobile phones and tablet etc.

Considering the forgoing and rapidly developing IT infrastructure, there is very hi potential for the proposed investment.

Best Regards

Task – 3

To: Director Finance

From AN Accountant

Role of Risk Manager

The terms “risk” and “risk management” are the most commonly spoken words in every corner of the world. Risk management has become very important not only for business people but also public institutions and the governments.

Considering the various risks stemming from every segment of business the role of Risk Manager(RM) is becoming more and more important and indispensable. The duties and responsibilities of RM can be summarized as follows:

1. Mange Financial risks2. Dealing with Reputational risk3. Mitigate business risk

Financial risk to be assessed well in advance by carrying out financial due diligence and appropriate Financial risk assessment. It’s worth noting that financial risk assessment shall be carried out well in advance of any activity and shall be continuously monitored. The subject tax issue which could tarnish the Look’s image could have avoided if there was a qualified professional responsible for risk management.

Risk is not all about finance, the reputation of a market leader like Look worth billions of dollars as even a small damage to it’s goodwill and reputation could be significantly affected. All hard work of other directors and expertise’s hard work could go in vain if the services of Risk Manager is not sought.

Risk assessment and mitigation is an essential element of today’s business. It’s imperative that continuous risk assessment of Look business as minor incident would bring a drastic results to the business.

Ethical Points Relating to Tax Issue

Look’s has been paying tax on it’s world wide revenue over past years and all tax payments and provisions have been audited by the internal audit department and well as external auditors.

So far neither IA or EA has not raised any queries in respect of Tax Avoidance. Looks has an engaged external tax consultant’s to take care of the corporations taxation issues and I am sure the tax consultants have been vigilant in this issue. It’s worth noting that Finance is working with tax consultants on certain tax planning but I can assure they do not attempt any tax avoidance.

Immediate investigation has been arrange to look into this issue and investigation report is expected within 48 hours.

Hedging OperationsHedging is a financial risk management tool is commonly used in certain businesses. Oil supply market is one of the famous market for heading as oil transactions involve various currencies from all over the world. The financial institutions have created special departments and positions deal with hedging business. Although hedging is a good financial risk assessment tool for Air lines on fluctuating oil prices, hedging may not be a effective risk assessment methodology for Look due to the following reasons:

Looks revenue comes from small units instead of bulk saleLooks customers pay mainly in $ or major currencies the exposure to currency risk is lessLook has regular income flowsCost over benefit may not be significant.

Considering the above I am of the opinion that hedging is not an attractive risk mitigation tool for Look.

Best regartds,

TASK 4

To: AmandaFrom : SM

Valuation of Lens Division

The following four traditional methods are used to evaluate the businesses:

a. Net assets method

b. Dividend methodc. EPS methodd. PV of future cash flows.

Each method has it’s merits and demerits and is used according to the business environment.

If the business is floated the stock price provide the market value of a share.

Should Vijay be kept informed of sale of Lens

It’s important to note that Vijay is holding about 30% of founders shares which is very critical for Look. Vijay is being one of the founders it may not ethical to take a decision to sell his brain child.Such a decision may not only upset Vije but also may have significant detrimental effect to Look. In the other hand if this is conveyed to vije, he may agree to the majority’s decision.