For information and reference only – not to be submitted as your own work.
This accounting and finance sample extract shows how a strong answer to the European Business University Accounting and Finance brief can be structured. It follows the three tasks in the EnerGenz, Tasties vs FastEat and plant-location NPV brief: recording transactions and preparing statements, comparing ratios, and appraising an investment. The question page does not print the underlying data tables, so every figure below is illustrative and invented for teaching. Only the 12% cost of capital and the $12,000 bad debt come from the brief. For a step-by-step method, read our guide on how to answer an accounting and finance ratios and NPV assignment. The answer is abridged; a full submission would show every journal line.
Planning table
| Brief part | Marks | Suggested words | What markers look for |
|---|---|---|---|
| EnerGenz: accounting equation table | 20 | 250 plus table | Every transaction and adjustment analysed; equation balances after each line |
| EnerGenz: income statement and balance sheet | 8 and 7 | 200 plus tables | Correct classification, subtotals, adjustments carried through |
| EnerGenz: financial status comment | Included | 200 | Interpretation of profit, liquidity and risk, not a restatement of numbers |
| Tasties vs FastEat: ten ratios and comment | 20 | 450 | Formulae stated, workings shown, like-for-like comparison, reasoned verdict |
| Plant location: NPV and recommendation | 20 | 250 | Correct discounting at 12%, clear decision rule |
| Plant location: discounted payback, ARR, final choice | 20 | 350 | Both methods calculated, limits discussed, justified location |
Check your own brief for the exact word limits and mark split before copying any of these proportions.
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Accounting and finance sample, Case Study 1: EnerGenz transactions and statements
Accounting equation table (abridged, illustrative)
Each transaction is analysed as a change in assets (A), liabilities (L) and owner’s equity (E), so that A = L + E holds after every line (Atrill and McLaney, 2025). Opening position, illustrative: prepaid insurance $5,000 financed by capital of $5,000.
| No. | Transaction | Assets ($) | Liabilities ($) | Equity ($) |
|---|---|---|---|---|
| 1 | Owners add cash capital | +150,000 cash | 0 | +150,000 capital |
| 2 | Buy drilling equipment for cash | +72,000 equipment, -72,000 cash | 0 | 0 |
| 3 | Buy machinery on credit | +30,000 machinery | +30,000 payables | 0 |
| 4 | Services provided on credit | +60,000 receivables | 0 | +60,000 revenue |
| 5 | Cash services | +40,000 cash | 0 | +40,000 revenue |
| 6 | Wages paid | -25,000 cash | 0 | -25,000 expense |
| 7 | Cash received from customers | +35,000 cash, -35,000 receivables | 0 | 0 |
| 8 | Depreciation: equipment (illustrative 10 years, nil residual) and machinery (5 years) | -600 and -500 | 0 | -1,100 expense |
| 9 | Insurance: December share of a prepayment | -500 prepaid | 0 | -500 expense |
| 10 | Bad debt written off (given in the brief) | -12,000 receivables | 0 | -12,000 expense |
Adjustments 8 to 10 follow the accruals concept: the cost is matched to the month that benefits (Elliott and Elliott, 2019). Depreciation follows the cost-less-residual approach in IAS 16 (IFRS Foundation, n.d.).
Income statement and balance sheet
| Income statement, December ($) | Amount |
|---|---|
| Revenue (60,000 + 40,000) | 100,000 |
| Wages | (25,000) |
| Depreciation | (1,100) |
| Insurance | (500) |
| Bad debts | (12,000) |
| Net profit | 61,400 |
| Balance sheet, 31 December ($) | Amount |
|---|---|
| Equipment, net (72,000 – 600) | 71,400 |
| Machinery, net (30,000 – 500) | 29,500 |
| Receivables (60,000 – 35,000 – 12,000) | 13,000 |
| Prepaid insurance (5,000 – 500) | 4,500 |
| Cash (150,000 – 72,000 + 40,000 – 25,000 + 35,000) | 128,000 |
| Total assets | 246,400 |
| Payables | 30,000 |
| Capital (5,000 + 150,000) | 155,000 |
| Retained profit | 61,400 |
| Total liabilities and equity | 246,400 |
Presentation follows the headings and subtotals expected under IAS 1 (IFRS Foundation, n.d.).
Commentary on financial status
On these illustrative figures EnerGenz earns a 61.4% net margin on revenue of $100,000, but the $12,000 bad debt consumed 12% of revenue, which signals weak credit control. Liquidity is strong: current assets of $145,500 cover payables of $30,000 about 4.9 times. Cash is, however, 52% of total assets, so management should consider whether idle cash could fund growth. Only one month of data is available, so no trend can be claimed. A fuller answer would also recommend a tighter credit policy, for example credit checks before large contracts, and would explain that depreciation is a non-cash charge, so profit overstates the cash the business has generated from operations.
Case Study 2: Tasties vs FastEat ratios
Group the ten ratios under liquidity, profitability, efficiency, gearing and investor returns. This keeps the commentary short and lets you draw one conclusion per group before reaching an overall verdict.
Ratio analysis only makes sense against a benchmark, so each result is compared across the two firms and the same formula is used for both. The figures below are illustrative, in $ million, for year 20×1.
| Ratio and formula | Tasties | FastEat |
|---|---|---|
| Current ratio: current assets / current liabilities | 420 / 280 = 1.50 | 310 / 190 = 1.63 |
| Quick ratio: (current assets – inventory) / current liabilities | 360 / 280 = 1.29 | 240 / 190 = 1.26 |
| Gross margin: gross profit / revenue | 960 / 2,400 = 40.0% | 630 / 1,800 = 35.0% |
| Net margin: net profit / revenue | 168 / 2,400 = 7.0% | 90 / 1,800 = 5.0% |
| ROCE: operating profit / (equity + long-term debt) | 200 / 1,300 = 15.4% | 150 / 900 = 16.7% |
| Asset turnover: revenue / total assets | 2,400 / 1,500 = 1.60 times | 1,800 / 1,100 = 1.64 times |
| Inventory days: inventory / cost of sales x 365 | 60 / 1,440 x 365 = 15.2 days | 70 / 1,170 x 365 = 21.8 days |
| Gearing: debt / (equity + debt) | 400 / 1,300 = 30.8% | 480 / 900 = 53.3% |
| Interest cover: operating profit / interest | 200 / 32 = 6.25 times | 150 / 48 = 3.13 times |
| Earnings per share: net profit / shares (300m and 200m) | $0.56 | $0.45 |
Tasties earns higher margins and carries much less debt. FastEat edges ahead on ROCE and the current ratio, but it does so with gearing of 53.3% and interest cover of only 3.13 times, so a fall in sales would hurt it first. Tasties also turns inventory faster, which suits perishable food. On balance Tasties shows the stronger and lower-risk position, although a single year cannot show whether the gap is lasting (Atrill and McLaney, 2025).
Case Study 3: India or Vietnam plant
This case asks you to choose between two mutually exclusive sites. Start by stating the method and the rate, then show the discounting, then decide. Markers want to see that you know why the cost of capital matters: it is the return investors require, so any project earning less destroys value.
NPV at 12%
The decision rule is to accept projects with a positive NPV, and to choose the higher NPV when options are mutually exclusive (Brealey et al., 2023). Illustrative cash flows ($000) are shown with discount factors of 1/(1.12)^t.
| Year | India cash flow | India PV | Vietnam cash flow | Vietnam PV |
|---|---|---|---|---|
| 0 | (5,000) | (5,000.0) | (4,200) | (4,200.0) |
| 1 | 1,500 | 1,339.3 | 1,300 | 1,160.7 |
| 2 | 1,800 | 1,434.9 | 1,500 | 1,195.8 |
| 3 | 2,000 | 1,423.6 | 1,700 | 1,210.0 |
| 4 | 2,200 | 1,398.1 | 1,800 | 1,143.9 |
| 5 | 2,400 | 1,361.8 | 1,900 | 1,078.1 |
| NPV | 1,957.8 | 1,588.6 |
Both sites add value, but India has the higher NPV by about $369,000, so it is the more profitable choice on this measure.
Discounted payback and ARR
| Measure | India | Vietnam |
|---|---|---|
| Cumulative PV after year 3 | (802.2) | (633.5) |
| Discounted payback | 3 + 802.2 / 1,398.1 = 3.57 years | 3 + 633.5 / 1,143.9 = 3.55 years |
| Total inflows less investment | 9,900 – 5,000 = 4,900 | 8,200 – 4,200 = 4,000 |
| Average annual accounting profit (over 5 years) | 980 | 800 |
| ARR on initial investment | 980 / 5,000 = 19.6% | 800 / 4,200 = 19.0% |
Discounted payback is almost identical, with Vietnam recovering its outlay about a week sooner. ARR slightly favours India. Payback ignores cash flows after the cut-off and ARR ignores the timing of money, which is why practitioners tend to rely on NPV first (Graham and Harvey, 2001). Recommendation: build in India, because it has the higher NPV and ARR and an almost equal payback. The Vietnam site would be preferable only if liquidity or political risk made a faster return decisive.
Need help with a brief like this? Our accounting assignment help and finance assignment help pages explain what support is available, and you can submit your assignment details for a tailored quote. Other EBU modules are listed in our European Business University question library.
References
Atrill, P. and McLaney, E. (2025) Accounting and Finance for Non-Specialists. 12th edn. Harlow: Pearson. Available at: https://www.pearson.com/en-gb/subject-catalog/p/accounting-and-finance-for-non-specialists/P200000003619/9781292334752
Brealey, R.A., Myers, S.C., Allen, F. and Edmans, A. (2023) Principles of Corporate Finance. 14th edn. New York: McGraw Hill. Available at: https://www.mheducation.com/highered/ideas/i/1453491-brealey-principles-of-corporate-finance-14e
Elliott, B. and Elliott, J. (2019) Financial Accounting and Reporting. 19th edn. Harlow: Pearson. Available at: https://www.pearson.com/en-gb/subject-catalog/p/Elliott-Financial-Accounting-and-Reporting-19th-Edition/P200000004140/9781292256023
Graham, J.R. and Harvey, C.R. (2001) ‘The theory and practice of corporate finance: evidence from the field’, Journal of Financial Economics, 60(2-3), pp. 187-243. Available at: https://econpapers.repec.org/RePEc:eee:jfinec:v:60:y:2001:i:2-3:p:187-243
IFRS Foundation (n.d.) IAS 1 Presentation of Financial Statements. Available at: https://www.ifrs.org/issued-standards/list-of-standards/ias-1-presentation-of-financial-statements/
IFRS Foundation (n.d.) IAS 16 Property, Plant and Equipment. Available at: https://ifrs.org/issued-standards/list-of-standards/ias-16-property-plant-and-equipment/
