elton Melton plc (‘Melton’) owns a number of subsidiaries that operate high quaity coffee bars. You are a recantly appointed investment analyst for a major investment bank that owms 6% of ths used seplgrof akon: Youhave been asked to analyea the ruitabng, cochlear toaster esti cia Veal gail ic cresse iotet ora acca wih Wile REGRETS determine whether the ivestment bank should consider disposing of ts ivestment (One of your colleagues has left you a note of background information concerning Melton (Exhibit) and some financial information (Exhibit 2). usefulaess and limitations 0 diluted eamnirigs per shafe formation tc investor ans (b) Analyse the profitability, cash Tlow and investor ratios of Melton ple, calculating additional ¢ 1Grodby. Fo assist in Bur analy. Yournates shoullT len and justify matters that you consider requite further investigation. (c)_ Explain the validity or otherwise of your colleague's statement that Melton ple is, unable to para duvide becouse ofthe debt blo RECON contd etaied ornngs (sh 1 (4/9) point(7. SS 7 id) Discuss the reporting implications ofthe issue raised in the director's commentin Exhibit 1, Sgn nowonesnvensnmsrmcmearnene (4/6) Requirement Prepare the meeting notes for the investment tea Exhibit 1: Notes on background information for Melton (1), Meltonhas a reputation for depreciating its assets more slowly than others in the sector. (2) The strategy of the group is to fund new outlet capital expenditure from existing operating cashflows without the needto risenewdebt carnnaniaanitl (3) Like for like revenue growthin the sectors estimated 2 (4), Grow ‘outlet profits (gross profits) asa percentage of outlet revenue year on year Ge. (5) Increase promotional and advertising spend on new olitlets to encourage strong kitial ai atelae, sales. —— ama — — ros of eT Cole Lad, wflich persion schain of "While RT. Cats Ltd ie proto, long-term itis not® geek fit with the image we are ying irae eM Conk Mle. Melton ple: Consolidated statement of profit or lose for the year ended 20 Septembel "7, z Pansy Be, / “eee pests expanses 33h 34 — ge rings ber shete for nem year. Se oF he aye Seep ended 30 September annem ea ae‘Note: Reconciliation of profit before tax to cash generated from operations for the year ended fe Sa owe 2 Ty : i Tatar ire Sy Sep EPS. pee EPS inchde ea © Fel Ser twhereny ae ia ef ee Son odo. walt Gat pdentil ee te Resour is faa d. Shave in FMkive . ae Dialed EPS “en 6m idea to foun nverts , ete Fulwe Soe Tere Nin te ES, ara tam Tvedor Con take Gnrestment pinta Forly with men, here ane Sum [iwi ae died ER. 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