Case Study «Finance»

ISSUE

You work for a limited company employing 150 workers. The company’s main business is printing but it also has its own design studio. This month’s regular finance committee meeting has a number of items on the agenda. For each item, use your own knowledge.

AGENDA

1. Valuing goodwill

2. Reductions in overhead costs

3. More transparent management accounts

4. Bank charges

Notes to the agenda

1. Valuing goodwill

Over the last two or three years, there have been one or two approaches from other bigger printing companies interested in buying your company. The Managing Director would like an approximate valuation of goodwill.

2. Reductions in overhead costs

Suggestions for cutting overheads further would be welcome.

3. More transparent management accounts

Some of the management have difficulty in understanding the management accounts. How can they be made easier to read and interpret?

4. Bank charges

Your annual turnover is £3.1 million. You pay £7,500 in bank charges every year. This covers all your costs of banking. Are there any ways to reduce these charges?

Brainstorming

Think over the task and sound your decision, providing with effective arguments.

Selling old stock

The manufacturing company you work for needs to make space in its warehouse to stock its new products. The company would like to sell off end-of-range products at discounted process.

You have been asked to make recommendations.

Discuss the situation together:

• how much discount should be offered

• whether to offer the same discount on all products

• how customers could be informed of the discounts.

INDIVIDUAL PROJECT / 3-Minute Pitch:

Adoption and Implementation of ABC Accounting Method in Russia or in other countries (1 by choice)

Unit 12 theory: «The concepts of microfinance»

«Microfinance has become the buzzword of the decade, raising the provocative notion that even philanthropy aimed at alleviating poverty can be profitable to institutional and individual investors»

Forbes Magazine

Microfinance is the provision of financial services to low-income people – these are consumers and the self-employed who live on less than $1 a day. These people lack access to traditional banking services such as current accounts, savings accounts, credit facilities, insurance and the ability to transfer funds across borders mainly because they do not have the assets which a traditional bank requires as collateral.

In developing countries, particularly in rural areas, many activities do not involve money at all. Low-income people tend to fulfil their everyday needs by bartering things that are surplus such as agricultural products, jewelry and hand-made crafts. However, there are cases such as weddings, sickness and improving housing where some form of finance is necessary. This usually means recourse to moneylenders, who charge very high interest rates, but are extremely convenient.

Microfinance is considered a tool for socio-economic development and is not part of the charitable network. It is hoped that microfinance will help low-income people out of poverty, whereas destitute people should be the recipients of aid.

FOLLOW-ON QUESTIONS…

1. What is microfinance and how does it work? When is it an inappropriate tool?

2. Who are microfinance clients?

3. What kind of institutions deliver microfinance?

4. What is microcredit? Why do MFIs (microfinance institutions) charge high interest rates to poor people?

5. What financial services do you use? How have they changed with the development of information technologies?