Economics and Financial Management Assignment Sample

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Economics and Financial Management Assignment 

Introduction

Endeavour Academics is a trust which connects with different schools to provide them resources. The trust ensures to interconnect various schools with each other for better knowledge and information sharing. Endeavour academics has a broad vision with which it believes in the transformative power of education. The trust aims to inspire students with the values and vision of trust. The trust operates with a wide range of educational institutes like schools which look for education of children between 4-18 years. The trust believes that all schools with which it connects should work collaboratively for securing excellence.

This report will focus on analyzing internal and external factors of Endeavour Academics. The micro and macro factors affecting the trust will be identified and analyzed. The economic decisions of Endeavour Academics will be reviewed. Under the economic review of the trust, the pricing strategies, rivals of the trust will be discussed as well. Recommendations will also be given to the trust for its betterment. This study is conducted to analyze the financial information of Endeavour academies trust in which financial factors and non-financial factors are discussed from the perspective of stakeholders and investors for the company. Further, Ethical Issues of the company are discussed which help management to identify the CSR policy and ethical behavior of trust in the society and the importance of ethical behavior of trust in companies for the society and the improvement of trust as well. In further financial management analysis conducted in which financial strategies are discussed along with this practice which can be associated with various initial factors for the company and at the end the critical connection management analysis conducted on the financial information recorded in the balance sheet and profit and loss for the company or trust.

Endeavour Academics- Historical background

Endeavour Academy has been working for so long intending to inspire students to make their future better. It was founded in 2001 with the merger of two schools. By the time, it has collaborated with more schools for providing educational facilities to the schools. Many investors invested in the merger of schools to make the trust grow by the time.

Earlier when it started, it was just a group of schools for Juniors and Seniors with different buildings. The students used to be taught in a formal system in classes. So, the learning pattern for them was completely different from the way it is today. The school, in its initial years, used to serve the students of the local area. Later on, the school started expanding its region of providing services.

By the time, when the teachers started realizing that the academic awareness has enhanced among the students, they started to expand the services and in a different way. In the year 2017, after the struggle of so many years, the school has joined a learning trust to achieve its goal, and then it became the 'Endeavour Academy' (Endeavour Academy, 2021). Since then, it has started providing community services, guiding students for their future, and making them realize the importance of developing self except in academic areas. Since then, the school has converted into trust, it has set up the core values of the organization.

Operational activities of the firm

The trust majorly operates with both primary and secondary schools. Some of these include Macmillan Academy,             Macmillan Post 16, and Archibald Primary. Endeavour Academy is a service-based organization that gives educational services to students through schools. The trust operates to provide exposure to students to learning experiences and quality education for creating adaptability for them. Endeavour Academic's operational activities aim to help the students in getting exposure towards diverse educational experiences by organizing co-curricular activities and other things.

The trust also operates to ensure the promotion of healthy students. Health and well-being I one of the major core operational areas of Endeavour Academics. This aims to empower the students for making correct choices to stay healthy. The operational services of the trust give a sense of belongingness to students.

Endeavour Academy provides services to students for the development of certain skills with which they can prepare themselves for the life they have beyond school. The trust provides career counseling to the students and supports them throughout their preparation journey for the achievement of a better future (Endeavour Academy, 2021).

Profitability is not the purpose of the operational activities of the firm, but it moves forward with a mission of ensuring a better future for the students. Endeavour Academics has a link with other North Eastern trusts having similar values, who are education providers and have national citizenship service. The operational services- the educational services of the trust are more beneficial for those students who have aspirations to make their horizons wider.

The trust offers different guidance programs and career educational programs supported by commercial partners and local industries. Endeavour Academics has a pursuit of excellence in school leadership, providing a unique experience to students in terms of learning and teaching excellence. The trust commits to building a community with its operational activities where the students will be proud to belong along with the teaching staff (Endeavour Academy, 2021).

The firm also provides support services with its highly qualified service team. The finance team of the trust provides services to foster academic funding for schools. The Human Resource team of the trust offers a range of services from solving employment issues to staff welfare. The firm also operates with a creative studio that provides services like lesson support. Also, the ICT team of the trust is involved in providing printing solutions and web designing.

Internal factors- Organizational structure

There are various internal factors that have direct and indirect impacts on the operational and other activities of Endeavour Academics. These include the trust's organizational structure because it demonstrates and decides the way everything functions within the organization.

Organizational Structure and Organizational Chart

Source: Endeavor academy, 2021

From the above, it can be seen that there is a vertical organizational structure that is present within the academy. Through this structure, it can be clearly seen what the roles are of each team member. This helps to provide a clear outline of whom is to be contacted when help is needed in any area.

Merits and demerits

Merits

One of the clear advantages is that all of the employees have a clear idea of what their roles and responsibilities are. This helps to create proper management within the organization hence creating a friendly and adequate environment within the academy.

Career planning can be done quickly within such a structure. This is because a clear hierarchy is provided on what are the skills that would need to be attained in order to take up the role that is above an individual (San et al., 2018).

De-merits

This is a rigid structure and the level of flexibility is not present at all. It seems that innovative concepts might only be accepted at the top management levels and not at the lower ones which is not effective at all (Moon et al., 2020).

Endeavour Academics- Economic decisions

Market expansion

Endeavour academics have not only stayed in one place but have shifted to international markets are well. Recently it has moved to Colorado from which there have been early childhood schools that have been targeted. These are middle schools that have been targeted as most of a child's development is done at these stages. It seems that education is a much-needed area that should be focused upon because if students do not possess the particular skills, then there would be a clear outline of what are the certain competencies that would need to be focused upon.

Takeovers and M&As

This trust has taken over many small schools within the United Kingdom. This has been done in order to increase the market expansion and also to provide a clear level of high educations that should be provided within schools. A few of the takeovers that have been accounted as are:

  • Little Mead Primary Academy
  • Henbury Court Primary Academy
  • Charlton Wood Primary Academy
  • Fonthill Primary Academy

These four takeovers or even acquisitions have been the core aspects for the organization in terms of economic decisions made. Since the impact of COVID 19, it seems that the organization has taken a hit here as many of the schools seem to have closed down and are not able to adequately impart knowledge.

Leigh Street School was a merger that took place in 2017 which showed that different communities from around of UK are also welcome to join the trust. This specific economic decision helped the organization to show that they were open to help any school or any type of educational institution irrespective of the fact on whether it was big or small. Further market expansion was done through this exponentially (Manchester Evening News, 2019).

External factors affecting Endeavour Academics

Market Structure

The market structure that is set up in the UK is mainly divided into four parts being primary, secondary, further, and higher education that is provided. The education sector seems to be one of the most profitable sectors that seems to be available within the UK as there had been a £19.9 billion contribution that had been made by it (Times Higher Education, 2021). This shows that Endeavour Academics can increase this expansion within the market as the profits that can be made from the industry are high.

Another area of the education market structure that should be understood is that it is very diverse. The amount of immigration that was done within the UK has shown that there is bound to be an increase in the number of foreign students that would arrive within the country. This shows that all schools should be prepared beforehand so that they can impart knowledge to such a student base. This is a huge opportunity for the organization due to the fact that there would be many small schools that would not be able to compete and provide such knowledge. So acquisitions and mergers could take place hence increasing the reach of the organization (Mayhew 2017).

Rivals

There are several schools that are present across the UK but only a few of them rank the highest which makes them top competitors of the organization. However, it should be understood that within the market structure that has been mentioned above it seems that immigrants would want to enroll their children into a school that is affordable. Hence, it seems that St Mary's School – Ascot which is an academy would be a key player here. This school charges a relatively low fee structure than its competitions and also has developed high goodwill within the market. However, it seems that Endeavour Academics can gain a competitive edge over this school as it is known for partnering up with different schools all around the UK which gives it an edge in diversification. This is what would help the organization to grow within the education industry structure of the UK.

Pricing strategies

Endeavour Academy has been stuck to the competitive pricing strategy. This strategy allows the trust to select strategic pricing points so that it can take full benefits of the services it is providing. Endeavour academics set its prices as per the prices of its competitors. Like, the key competitor of the trust is St Mary's School as discussed above in the report, the trust decides its pricing on the basis of this competitor. Once, the R&D department of the trust researches over the pricing of this competitor and others, and then they pass this information to the trust's marketing department. After that, marketing officials decide the price of the trust's services.

To use this pricing strategy better, there are some recommendations for Endeavour Academics:

  • It is recommended for the trust to deeply research the competitors' pricing. If the research is not done properly, then the competitive price cannot be set properly. Without deeply understanding the strategies of competitors, Endeavour Academics cannot attain a competitive advantage in the market with this pricing strategy
  • The recommendation to the trust is that they should categorize the competitors into two categories including direct and indirect competitors. It will help the trust to better analyze the effects of direct and indirect competitors which will ultimately lead to the better formation of competitive-price strategy of the organization

Governmental agencies affecting Endeavour Academics

There are 2 governing agencies that have the most effect on the work that is being done Endeavour academics which are Depart of Education present within the UK and the British Council. The Department of Education provides various guidelines that have to be followed by all educational institutions. Various factors like how effective governance is to be maintained and what curriculum is to be followed are advised by the department. There are also various rules and regulations that have been set out in regards to the statutory guidance through which proper reasons should be provided on why they are not being followed. Endeavour academics should be concerned about the concept of schemes for financing schools as it seems that funding is done to schools around the UK by the trust (Gov.UK, 2021). Hence, the Department of Education along with the Education and Skills Funding Agency has provided a clear guidance document that has to be followed.

The British Council has a 'Study' concept within their work which helps to outline various educational institutions that can be considered by individuals. This can affect the way students are attracted to Endeavour due to the fact that it would need to show its worth in order to make the list. The British Council needs to see how well the school is performing in order to recommend students to it (Garcia and Cox, 2018). The British Council also deals with immigrants who want to move to the UK and suggest schools and higher educational institutions for them. Endeavour needs to make sure that its performances are kept high and it follows the rules and regulations that have been set out.

Recommendations for the betterment of Endeavour Academics

One of the recommendations is that focus on expansion should be moved to providing higher quality so that the competition can be countered. There are a number of schools present within the UK but if Endeavour focuses on providing higher amounts of innovative educations techniques that provide effective results. By doing this there would be more goodwill created within the market which shows that a note-able appearance upon the British Council. All of this should be done while considering the strategic guidance provided by the department 0f education.

Implementation of technology into the teaching services should be considered by the organization. This is because the education industry seems to be growing and the pandemic seems to have shown that the use of technology could play a huge role within it. Hence the adoption of technology like Zoom or digital learning would help to impart education to students even when they are at home during the lockdown. Machine learning should also be adopted as the institution would be able to identify the struggling schools that are present (Villegas-Ch et al., 2020).

Marketing Penetration pricing should be set out by the educational institution. This is because in order to acquire and partner up with more schools there would need to be proper prices set out so that both the students and schools can stay satisfied. However, the level of quality should not be dropped of teaching through this (Kienzler and Kowalkowski, 2017).

Endeavor Financial Statement - 2020         

Statement of Financial Activities

Group Balance Sheet

(Source – Endeavor Annual Report)

Key Financial Indicators

  1. Net Loss/outflow

Net Profit/ Loss is a key financial factor that helps stakeholders and investors for the profitability of the company and the surplus which company can achieve to their business activities (Kaganski, et. Al., 2017). As per the financial activities treatment of Endeavour academy trust company had a financial loss of $1128 which is four-time higher than last year as last year just had a Loss of $208.     

  1. Pension Benefits Scheme

Trust is providing a pension benefit scheme to the remember in which this pending $ 2,371 in 2019 and 2020 they spend fund of $ 512 which is four times less than last year (Kaganski, et. Al., 2017). This financial figure Indicates that the company is overcome the additional expenses are fund utilization which they performing in last year.

  1. Donation and Grants

Donations and grants are key factors for any kind of business activity. Although trust or non-profit organizations majorly depend on the donations and grants received from external stakeholders of the company like government bodies and local bodies. In this financial statement endeavor academies, the trust received a donation of $824 in 2019 and $28 in 2020 which is a very high variance in between donation receipts for the year to the trust.

  1. Current Ratio

Working capital ratio = Current Assets/Current Liabilities

2020 = £m.2, 252 /£m.297 = 7.58

2019 = £m.2, 408 /£m. 555 = 4.34

As per the current ratio reflex positive growth in settlement of current liability against current assets for the year. In last year company had more current assets as compared to their current liabilities which increased up to 7.5 times as compared to current liabilities for FY 2020 (Kaganski, et. Al., 2017). In 2019 Company had current assets of 4 times more than current liabilities which indicates that the company is more effective and better managed their working capital cycle so that they can easily pay off their regular liabilities.

Effect of Non-Financial Factors on Performance of Company.

Performance is dependent on financial and non-financial factors in the environment of society which can influence operational activities of the company and also reflects major increase and decrease in the profitability of the company as per the monetary term or as per the sustainability in near future.

Here are some of the non-financial factors are discussed which can be influenced on the financial performance of the company

Buyer Satisfaction

The financial statement never reflects any data related to buyer satisfaction which can help evaluate the quality of products that the company delivered in the market. Demand is solely dependent on the satisfaction of the buyer if buyers are not satisfied in the market then there is a decrement in demand of the company as well as the profitability of the company (Li et. Al., 2017). As for the perspective of long-term survival, management needs to make adequate strategies or implement them for better performance in satisfaction through their products in the market so that they can achieve sustainability in their long-term goal for the industry.

Risk Management

Risk management is a key control technique that helps the company to take risks in the complex or diversified market which assists them to grab the opportunity through their strength and convert them into a favorable condition where the company can attract more market share in the industry. Financial statements are not covered their respective risk associated with the products of the company and the market and also the risk associated with the source of income which the company attribute through the market although there are certain risk factors are indicated in the balance sheet of the company in regards of financial funding to the various business or financial institute for the disclosure purpose of stakeholder.

Internal Control

Internal control is the system that operates the flow of information and data within the organization effectively and efficiently so that company can achieve its sustainable goals. Internal control never is discussed and financial statements but it has a huge impact on the financial performance of the company. This factor overcomes the risk or leverage engaged with the operational and financial performance of the company.

Ethical Issues for the Company

Ethics defined the code of conduct in which the company and management need to operate the business activities under the borders of society in exchange for goods and services to achieve their sustainability goals in the industry. The company had financial or social responsibilities towards society as they getting resources of society and delivered their product also in the society for revenue generation so achieve sustainability company needs to improve along with the society (Welc, 2017). There are many kinds of CSR policies and ethical issues are faced by the company as the environment. For the trust, Ethical issues can be the major cause of their liquidation as if they are not performing well in the welfare of the society along with the growth of the trust.

Financial Management Analysis of the Company

Financial Strategies adopted by Trust

  1. Evaluation of historical data

Trust Prepared their financial statements on Historical financial data which included a time limit of one year which means they used financial data or historical data of last one year for the preparation of the financial statement and also compared the same with last year's ended financial statement for identified the key variance.

  1. Building Income Statement

Trust prepared an income statement to identify the net earnings from the business activities of the trust throughout the year which can be helpful in better assessment of the financial performance of the Trust.

  1. Liquid Management

Liquidity can be the key factor that helps investors or stakeholders to identify the net cash and cash equivalents that can be convertible in Cash on Emergency Requirements for the Trust. Here for trusts as they are more interactive in expenditures and received cash through grants and donations so they are more influenced by the liquidity status for the trust as they are required to meet up their routine expenses in the form of cash expenses.

Risk Factor associated with the financial statement of Trust

  1. Liquidity Risk

Endeavour Academies Trust is majorly influenced by excess payment for their expenses in the year which highly impacts the performance of liquid assets in the financial year. Although Trust had enough assets to meet up their current obligations and also current assets can assist in the settlement of their current assets.

  1. Operational Risk

As the Endeavour Academies Trust reflects the loss in the financial year 2020 so they are more engaging in expenses for academic operations for the trust. As Trust received less donation than the actual expenses so this can highly be influenced on Operational leverage of the business activities for trust.

  1. Credit Risk

Endeavour Academies Trust had an increment in their Long-term liabilities for their pension holding scheme in which they required to settle down the amount of £m 5,959 in near future. This can be the major credit risk that trusts need to make provision so that they can settle down with monthly or yearly repayment to the fund for their business activities.

Critical Financial Management Analysis and Strategic Recommendations

  • Trust has declined in the income through other donations and capital connections which they received Australian taxation office for the year. Last year trust received a government grant of £m 824 and in 2020 trust received a grant of £m 28 which is approx. 29 times less than last year (Karale, U., 2020). The major variance in Government grants received is highly affecting the net surplus for the trust in the financial year 2020 as compared to 2019. The net expenditure carries forward by the trust is an all-time higher than last year which is usually due to a decline in the donation and capital grant received from ATO.
  • Further, in this year trust overcome the expenses associated with defined benefit pension schemes which is also a key factor in deficit for the fund of trust. In 2019, they had a loss from a definite benefit pension scheme of £m 2371 and in 2020 just overcome losses by £m 1859 and achieved losses of £m 512 in 2019-20.
  • There is a decline of approx. £m 700 in intangible assets of the trust which reflects that the company sold out some of their tangible assets during the year (Karale, U., 2020). Although trust also figures out to overcome their account receivables as in last year they have received less of £m 705 but in the current team, they have the decline of £m 230 in their Debtors which increased the additional cash inflow or additional revenue generation for the business.
  • The financial statement of trust reflects major variants of £m 1200 in pension results for their members in the near future which reply that the company is tried to overcome their pension liabilities which can provide additional benefits in near future for the generation activities of the trust.

Recommendations

  • As for the financial analysis of trust financial data, the study is recommended that they be required to add on more donations and government grants from which can increase the net surplus and also provide additional funds to settle down their liquid emergencies. Although in the current scenario trust are stable in their financial statement but additionally, they can overcome the net deficit generated from the operational activities of the trust which can help them to achieve more growth through their business activities.
  • Trust can go for the external borrowings from any financial institution which can be helpful for them to settle down their pension liabilities to the members of the trust. It is advisable to trust that management can borrow cash credit and bank overdraft facilities to meet up their working capital liabilities so that they can overcome the net financial deficits in their income and expenditure accounts.
  • As of now trusted to work on overcoming the debtors but trust to rethink on credit policy and setter down their net creditors with a recovery cost of 2% on net Debtors which can be a good strategy to increase the cash inflow for the business activity.

Conclusion

The report concludes that Endeavour Academics has been initially started as a school and later on, got developed as a trust. It has been identified that the trust majorly operates with the schools to provide guidance services to the students in order to make their future better. It has been identified that profitability is not the major goal of this trust but it uses a competitive-pricing strategy to get a competitive advantage. The market expansion decisions of the trust have also been identified from an economic point of view. It has also been identified that the trust has taken over many schools within the UK. The market structure of the organization has been identified to be classified into primary and secondary. It has also been identified that there are two governmental agencies that affect the academy the most.

Overall performance of the task is not appropriate as trust generating deficit income in their operational activities which cause additional funding for the trust required. As per the analysis to writing on a study for operational activities and although they need to go for government grants and donations on the high school so that they can survive in the complex environment where the liquidity is the risky area or key financial indicator for the investor or stakeholders.

In the current scenario, covid-19 has a major impact on the various operational areas where does perform their business activities. The donation can be the source of income which is majorly in the covid-19 pandemic as individuals had the absence of cash sources in their hand which they can donate to the trust. Although there are many of the incentives and subsidies provided by the various government to boost the cash flows of business activities and relieve the business who are on the stage of liquidity. Hair trust is required to identify that Easton and try to attract the opportunity in the microenvironment so that they can achieve their goals and achieve sustainability and stay in the market in tough situations like the covid-19 pandemic.

References

  • Endeavour academy, 2021. OUR SCHOOL. Endeavour Academy. Available at: https://endeavouracademy.org.uk/about-us/who-s-who [Accessed on: 21 August 2020]
  • Endeavour-Academies, 2021. Annual Reports. [Online], Endeavour-Academies. Available at: http://www.endeavour-academies.org.uk/finance1920.pdf [Accessed om 24.08.2021]
  • Garcia, B. and Cox, T., 2018. The British Council and the UK City of Culture Programme. Study Report & Thought Piece.
  • UK, 2021. Schemes for financing schools. (Online) GOV.UK Available at: https://www.gov.uk/government/publications/schemes-for-financing-schools [Accessed on: 21 August 2020]
  • Kaganski, S., Majak, J., Karjust, K. and Toompalu, S., 2017. Implementation of key performance indicators selection model as part of the Enterprise Analysis Model. Procedia Corp, 63, pp.283-288.
  • Karale, U., 2020. Financial Statement Analysis: Definition, Meaning and Multi-step Income Statement; Methods of Financial Statement Analysis Continued..; Ratio Analysis: Definition, Meaning, Importance and Limitations; Ratio Analysis: Types of Ratios: Liquidity Ratios and Interpretation; Turnover or Activity or Efficiency Ratios; Profitability Ratios; Solvency or Leverage Ratios; Ratio to Balance Sheet: Simple Sum on Preparation of Balance Sheet; How to Prepare Balance Sheet from Accounting Ratios: Simple and Easy Sums ....
  • Kienzler, M. and Kowalkowski, C., 2017. Pricing strategy: A review of 22 years of marketing research. Journal of Business Research78, pp.101-110.
  • Li, Y., O’Donnell, J., García-Castro, R. and Vega-Sánchez, S., 2017. Identifying stakeholders and key performance indicators for district and building energy performance analysis. Energy and Buildings, 155, pp.1-15.
  • Manchester Evening News, 2019. Ind out how Endeavour Primary Academy rates compared to other primary schools in Tameside with our school ratings. (Online) Manchester Evening News. Available at: https://www.manchestereveningnews.co.uk/news/local-news/leigh-primary-school-6487726 [Accessed on: 21 August 2021]
  • Mayhew, K., 2017. UK higher education and Brexit. Oxford Review of Economic Policy33(suppl_1), pp. S155-S161.
  • Moon, C., Morais, C., de Moura, G.R. and Uskul, A.K., 2020. The role of organizational structure and deviant status in employees’ reactions to and acceptance of workplace deviance. International Journal of Conflict Management.
  • San Cristóbal, J.R., Fernández, V. and Diaz, E., 2018. An analysis of the main project organizational structures: Advantages, disadvantages, and factors affecting their selection. Procedia computer science138, pp.791-798.
  • Times higher education, 2021. Meeting the global demand for UK higher education. Times higher education. Available at: https://www.timeshighereducation.com/hub/hsbc/p/meeting-global-demand-uk-higher-education
  • Villegas-Ch, W., Román-Cañizares, M. and Palacios-Pacheco, X., 2020. Improvement of an online education model with the integration of machine learning and data analysis in an LMS. Applied Sciences10(15), p.5371.
  • Welc, J., 2017. Impact of Non-Controlling Interests on Reliability of Consolidated Income Statement and Consolidated Balance Sheet. American Journal of Business, Economics, and Management, 5(5), pp.51-57.
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