A Financial Case Study Analysis - Free Essay Example

Sample details Pages: 5 Words: 1529 Downloads: 5 Date added: 2017/06/26 Category Finance Essay Type Case study Did you like this example? Efficient market hypothesis- An investment theory that states it is impossible to beat the market because stock market efficiency causes existing share prices to always incorporate and reflect all relevant information. According to the EMH, stocks always trade at their fair value on stock exchanges, making it impossible for investors to either purchase undervalued stocks or sell stocks for inflated prices. As such, it should be impossible to outperform the overall market through expert stock selection or market timing, and that the only way an investor can possibly obtain higher returns is by purchasing riskier investments.à ¢Ã¢â€š ¬Ã‚ (Investopedia web site). Required: . Don’t waste time! Our writers will create an original "A Financial Case Study Analysis" essay for you Create order Using the regression analysis calculate the line of best fit through the data and interpret your values of a and b. where, a=120 b=3 Y=a+bx =120+3(let x=0) =120+0 = £120( £000) = £120,000 Forecasts sales when advertising expenditure is:  £50,000 Let x= £50,000 Y=a+bx = £120,000+3( £50,000) = £120,000+ £150,000 = £270,000 Identify and appraise the sources of finance available to Jeronimo Inc. Give various sources so that the board of directors can discuss at the next board meeting. Jeronimo Inc. amass its investment commencing the basis: Lengthy period sources of finance Ordinary shares no fixed burden, permanent capital, credit worthiness, dividend. Debt à ¢Ã¢â€š ¬Ã¢â‚¬Å" commercial bank loan, asset based borrowing, bonds, small business investments companies, insurance company, stock broker house. Mortgage, lottery funding, retained profiting asset also other sources of finance As well as the Jeronimo Inc. rummage sale their merchandise in a altered business promotion, sale plus reduce the manufacture price via decreasing other redundant cost. Answer, Calculation of Payback Period for Business A and Business B Business A Payback period= 4 yrs.+100,000 300,000 = 4 yrs.+0.33 = 4.33 yrs. Business B Payback period= 2 yrs.+200,000 400,000 = 2 yrs.+0.5 = 2.5 yrs. Calculation of Net Present Value for Business A and Business B Business A Year Inflows( £) Outflows( £) Net Cash flows( £) Cost of capital @ 12% Present value( £) 0 à ¢Ã‹â€ Ã¢â‚¬â„¢ -1000000 -1000000 1 -1000000 1 200000 à ¢Ã‹â€ Ã¢â‚¬â„¢ 200000 0.893 178600 2 200000 à ¢Ã‹â€ Ã¢â‚¬â„¢ 200000 0.797 159400 3 200000 à ¢Ã‹â€ Ã¢â‚¬â„¢ 200000 0.712 142400 4 300000 à ¢Ã‹â€ Ã¢â‚¬â„¢ 300000 0.636 190800 5 300000 à ¢Ã‹â€ Ã¢â‚¬â„¢ 300000 0.567 170100 6 400000 à ¢Ã‹â€ Ã¢â‚¬â„¢ 400000 0.507 202800 Net Present Value 44,100 Business B Year Inflows( £) Outflows( £) Net Cash flows( £) Cost of capital @ 12% Present value( £) 0 à ¢Ã‹â€ Ã¢â‚¬â„¢ -800000 -800000 1 -800000 1 300000 à ¢Ã‹â€ Ã¢â‚¬â„¢ 300000 0.893 267900 2 300000 à ¢Ã‹â€ Ã¢â‚¬â„¢ 300000 0.797 239100 3 400000 à ¢Ã‹â€ Ã¢â‚¬â„¢ 400000 0.712 284800 4 à ¢Ã‹â€ Ã¢â‚¬â„¢ à ¢Ã‹â€ Ã¢â‚¬â„¢ à ¢Ã‹â€ Ã¢â‚¬â„¢ 0.636 à ¢Ã‹â€ Ã¢â‚¬â„¢ 5 à ¢Ã‹â€ Ã¢â‚¬â„¢ à ¢Ã‹â€ Ã¢â‚¬â„¢ à ¢Ã‹â€ Ã¢â‚¬â„¢ 0.567 à ¢Ã‹â€ Ã¢â‚¬â„¢ 6 à ¢Ã‹â€ Ã¢â‚¬â„¢ à ¢Ã‹â€ Ã¢â‚¬â„¢ à ¢Ã‹â€ Ã¢â‚¬â„¢ 0.507 à ¢Ã‹â€ Ã¢â‚¬â„¢ Net Present Value 8,200 Justifiable Decisions as per Payback Period Here business A, payback period is 4.33 years and business B, payback period is 2.5 years it shows whether Christine plc. devote in Business A, payback period is extended contrast among Business B. As a result I think if Christine plc. invest for the business B, company will be beneficiary rather than invest for business A. Justifiable Decisions as per Net Present Value Business Aà ¢Ã¢â€š ¬Ã¢â€ž ¢s net present value is  £44,100.00 and business Bà ¢Ã¢â€š ¬Ã¢â€ž ¢s net present value is  £8,200.00 it shows whether Christine plc. Invest for Business A , then net present value is too high rather than business B.As a result I think if Christine plc. invest for the business B, company will be beneficiary rather than invest for business A. Select appropriate and relevant financial information for use in the process of making strategic decisions on the investment by Christie plc. Upper level executive makes a strategic decision for investment. Because of they can extent the long term cost of such decisions. Usually a major capital venture decision such as promoting a new item for consumption, spend for new-fangled division will vary to examine make ultimate decision. In general the Christie plc. have diverse scheme for creating strategic decisions on the investment which is valuable for the organization. Also subsequent are the most important;  ® Return on Capital Employed (ROE)  ®Payback Period  ®Discounted Cash flow (DCF) Net Present Values (NPV) Internal Rate of Return(IRR) On the other hand I consider to decide on Payback Period method for Making strategic decisions on the investment portfolio of Christie plc.. The payback period is the couple of years it capture to recover the unique investment. This is a cash measure and as such it procedures the couple of years taken to regain the speculation in cash terms. How would your decisions change on Business A and Business B if the net cash inflows for Business A were  £200,000 throughout the six year period and also the net cash inflows for Business B were  £300,000 throughout the three year period. The initial investment for business A is  £1,000,000 and for business B is  £800,000. Answer, Calculation of Payback Period for Business A and Business B Business A Payback period= 4 yrs.+200,000 200,000 = 4 yrs.+0 = 4 yrs. Business B Payback period= 2 yrs.+200,000 300,000 = 2 yrs.+0.67 = 2.67 yrs. Calculation of Net Present Value for Business A and Business B Business A Year Inflows( £) Outflows( £) Net Cash flows( £) Cost of capital @ 12% Present value( £) 0 à ¢Ã‹â€ Ã¢â‚¬â„¢ -1000000 -1000000 1 -1000000 1 200000 à ¢Ã‹â€ Ã¢â‚¬â„¢ 200000 0.893 178600 2 200000 à ¢Ã‹â€ Ã¢â‚¬â„¢ 200000 0.797 159400 3 200000 à ¢Ã‹â€ Ã¢â‚¬â„¢ 200000 0.712 142400 4 200000 à ¢Ã‹â€ Ã¢â‚¬â„¢ 200000 0.636 127200 5 200000 à ¢Ã‹â€ Ã¢â‚¬â„¢ 200000 0.567 113400 6 200000 à ¢Ã‹â€ Ã¢â‚¬â„¢ 200000 0.507 101400 Net Present Value 177,600 Business B Year Inflows( £) Outflows( £) Net Cash flows( £) Cost of capital @ 12% Present value( £) 0 à ¢Ã‹â€ Ã¢â‚¬â„¢ -800000 -800000 1 -800000 1 300000 à ¢Ã‹â€ Ã¢â‚¬â„¢ 300000 0.893 267900 2 300000 à ¢Ã‹â€ Ã¢â‚¬â„¢ 300000 0.797 239100 3 300000 à ¢Ã‹â€ Ã¢â‚¬â„¢ 300000 0.712 213600 4 à ¢Ã‹â€ Ã¢â‚¬â„¢ à ¢Ã‹â€ Ã¢â‚¬â„¢ à ¢Ã‹â€ Ã¢â‚¬â„¢ 0.636 à ¢Ã‹â€ Ã¢â‚¬â„¢ 5 à ¢Ã‹â€ Ã¢â‚¬â„¢ à ¢Ã‹â€ Ã¢â‚¬â„¢ à ¢Ã‹â€ Ã¢â‚¬â„¢ 0.567 à ¢Ã‹â€ Ã¢â‚¬â„¢ 6 à ¢Ã‹â€ Ã¢â‚¬â„¢ à ¢Ã‹â€ Ã¢â‚¬â„¢ à ¢Ã‹â€ Ã¢â‚¬â„¢ 0.507 à ¢Ã‹â€ Ã¢â‚¬â„¢ Net Present Value 79,400 Justifiable Decisions as per Payback Period Here business A, payback period is 4 years and business B, payback period is 2.67 years it shows whether Christine plc. devote in Business A, payback period is extended contrast among Business B. As a result I think if Christine plc. invest for the business B, company will be beneficiary rather than invest for business A. Justifiable Decisions as per Net Present Value For business A ità ¢Ã¢â€š ¬Ã¢â€ž ¢s net present value is  £1, 77,600.00 and for business B its net present value is  £79,400.00 it shows whether Christine plc. Invest for Business A , then net present value is too high rather than business B.As a result I think if Christine plc. invest for the business A, company will be beneficiary rather than invest for business B. Task-3 Tesco plc The following information has been extracted from the recently published accounts of Tesco Plc: Balance sheet as at 31st May 2008 2007  £000 à ‚ £000 Fixed assets1,800 1,400 Current assets Stock1,200 200 Debtors 400 800 Cash100 100 1,700 1,100 Creditors: amounts falling due within one year Loans and other borrowing(200) (500) Other creditors(300) (800) (500) (1,300) Net current assets1,200 (200) Creditors: amounts falling due after one year 10% Debentures(1,000) (600) 2,000 600 Capital and reserves Ordinary share capital (50p shares)1,200 500 Share premium 600 0 Reserves200 100 2,000 600 Profit and loss accounts 2008 2007  £000  £000 Turnover2,000 1,000 Cost of sales(1,300) (700) Gross profit700 300 Distribution costs(260) ( 90) Administration expenses(100) ( 60) Operating profit340 150 Interest(100) (60) Profit before taxation240 90 Task-4 Taxation(50) (20) Profit after taxation190 70 Ordinary dividends(90) (50) Retained profit for the year 100 20 Balance brought forward100 80 Balance carried f orward 200 100 Share price 1.301.26 Industry P/E ratio 22 20 Other industry ratios: Return on capital employed 15% Asset turnover 6 times Current ratio 2.3:1 Quick ratio 1.5:1 Interests cover 8times Required Calculate the ratios for both years Return on capital employed =PBIT ÃÆ'—100 Capital employed For Year 2008= 340,000 ÃÆ'—100 2,200,000 = 34,000,000 2,200,000 = 15.45% For Year 2007 = 150,000 ÃÆ'—100 1,100,000 = 15,000,000 1,100,000 = 13.64% Where, Capital employed= ownerà ¢Ã¢â€š ¬Ã¢â€ž ¢s equity+ long term liabilities For year 2008 = 1200, 000+1000, 000 =  £ 2,200,000 For year 2007 = 500,000+600,000 =  £ 1,100,000 Asset turnover = Sales Capital employed For year 2008= 2000,000 2,200,000 = 0.91times For year 2007=1000, 000 1,100,000 =0.91times Current ratio =Current assets Current liabilities For year 2008=1700, 000 500,000 = 3.4:1 For year 2007= 1100,000 1300,000 = 0.85:1 Quick ratio = Current assets-Stock Current liabilities For year 2008=1700, 000-1200, 000 500,000 = 500,000 500,000 = 1:1 For year 2007=1100, 000-200,000 1300,000 = 900,000 1300,000 = 0.69:1 Interest cover =PBIT Interest For year 2008=340,000 100,000 =3.4 times For year 2007=150,000 60,000 =2.5 times Total gearing =Long term loans+ Preference share Capital employed For year 2008=1000, 000 + 0 22, 00,000 =0.45 For year 2007=600,000+0 11, 00,000 =0.54 Earnings per share (EPS) =Profit available to ordinary shareholders Number of shares in issue For year 2008=190,000 2400,000 =0.08 For year 2007=70,000 250,000 =0.28 Earnings yield =EPSÃÆ'—100 MPS For year 2008=0.08ÃÆ'—100 1.30 =6.15% For year 2007=0.28ÃÆ'—100 1.26 =22.22% Dividend yield =Dividend per share ÃÆ'—100 Market price per share For year 2008=0.0375ÃÆ'—100 1.30 =2.88% For year 2007=0.2ÃÆ'—100 1.26 =15.87% Where, Dividend per share=Total ordinary dividend Number of shares in issue For year 2008=90,000 24, 00,000 =0.0375 For year 2007=50,000 2, 50,000 = 0.2 Dividend cover =Profit available to ordinary shareholders Dividends For year 2008=190,000 90,000 = 2.11 times For year 2007=70,000 50,000 =1.4 times P/E ratio = MPPS EPS For year 2008=1.30 0.08 =16.25:1 For year 2007=1.26 0.28 =4.5:1 b) Use the ratios below to assess the financial viability of Tesco Plc. 2007 2008 industry average Gross profit percentage 23% 19.4%21% Quick ratio 1.41:1 1.83:12.1: Return on equity 19.24% 16.39%20% Return on capital employed 15%13%16% Earnings per share 20p17p 19p Debtorà ¢Ã¢â€š ¬Ã¢â€ž ¢s collection period 40 days 54 days 35 days Answer, Tesco Plc. gross revenue decrease in the year 2008 contrast to the year 2007 where return on equity decrease in year 2008 compare to the year 2007, come back on capital employed decrease in year 2008 comparing the year 2007, bring in per share also decrease in year 2008comparing the year 2007.Even though debtors collection period has increased in year 2008 to 6 days comparing the last year 2007.In general it shows the year 2008 is not make profit comparing the last year 2007. c) Use these ratios, how can Tescoà ƒ ¢Ã¢â€š ¬Ã¢â€ž ¢s performance improve? 2007 2008 industry average Gross profit percentage 23% 19.4% 21% Quick ratio 1.41:1 1.83:1 2.1: Return on equity 19.24%16.39% 20% Return on capital employed15% 13% 16% Earnings per share 20p 17p 19p Debtorsà ¢Ã¢â€š ¬Ã¢â€ž ¢ collection period 40 days 54 days 35 days Answer, Develop the commerce performance of Tesco have to exploit diverse policy for make organization revenue. They must reduce the debtorsà ¢Ã¢â€š ¬Ã¢â€ž ¢ compilation time, aim to discover reduce the costs, and hit upon the technique to develop the excellence with production. d) How would you use the balanced scorecard by Kaplan and Norton to assess the performance of Tesco Plc? Executing the Balanced Scorecards habitually contains the four procedures: Interpreting the vision into set the operational objectives; Corresponding the vision along with connect on the way to individual portion; Production development; directory ambiance Feedback, also regulating the policy consequently. The Balanced Scorecard is a structure of strategic planning and commences methods that are utilized in a business, government and non profit association whole over the world support the trade conduct into the vision, mission and strategy of the company; develop inner and outer communiquÃÆ' © and supervising the execution aligned with organizational achievement. According to Drs. Robert Kaplan and David Norton, The Balanced Scorecard is a performance related measurement framework to manager that gives them a scale to review the organisational performance. Fig. Adapted from The Balanced Scorecard by Kaplan Norton. In my opinion Tesco Plc must have to follow the Norton and Kaplanà ¢Ã¢â€š ¬Ã¢â€ž ¢s Balanced scorecard to procedure their business by gathering organisational goal. 1

The Economics Of Renewable Energy - 3177 Words

This paper reports on the microeconomic aspect of obtaining the energy that is present in the environment. A number of factors including the rapidly growing demand for energy to fuel economic development, the need by countries to diversify their energy production into environmentally sustainable supply sources while concurrently taking into careful consideration climate change, energy security and economic factors have all served to greatly contribute towards the current accelerated private and public investment in renewable energy. While numerous countries around the world have been able to design attractive incentive structures that aim at inducing private investment in obtaining the renewable energy that is present in the environment,†¦show more content†¦The cost of producing renewable energy from the environment has undergone a significant decrease of the past 15-20 years as a result of drastic enhancements in not only the economies of scale, but also the technology tha t is related to production. Renewable energy’s future prospects are noted to be even more promising in light of the continually falling costs involved in producing this energy as well as the growing awareness of the energy and environmental security benefits that these technologies provide. Renewable energies have variously been defined as those energies that are easily derived from simple natural process and can be constantly replenished from these sources without exhausting these sources. This form of energy is usually derived either indirectly or directly from the sun or from the geothermal heat that is that present from deep within the earth (Jordan-Korte, 2011). The growing global concerns pertaining to the issue of climate change and the effect that this is having on the planet have led to growing interest in the renewable energy technologies. This is exemplified by the fact that a number of industrialized countries have over the years moved to make significant investments in developing countries aimed at developing renewable energy sources under the provisions of the Clean Development Mechanism that was included in the Kyoto Protocol (UNEP, 2008). Developing countries are investing in renewable

Free Snow Falling On Cedars Essay Example For Students

Free Snow Falling On Cedars Essay Throughout the film Snow Falling on Cedars the director Scott Hicks has used symbolism to convey a number of his ideas. He used the fog and snow to symbolise hidden secrets, the sea to represent life and death, and he used the Cedars to symbolise a place of secrecy and protection. By using these three symbols, Scott Hicks ideas could be conveyed without anything being said at all. Fog and snow are used in the film to symbolise hidden secrets and to convey the idea that nothing can stay hidden forever. The fog is first seen in the opening scenes when Carl Heine Junior died and throughout the film, the fog is seen covering the seas secrets. Like the fog, the snow also covers secrets but the snow covers the secrets on the land. It covers up Ishmael and Hatsues relationship, and it covers up the racism on the island. Both the fog and the snow look cold and lonely with no sign of life, but in reality, they act as a security blanket, covering up the islands secrets and keeping them safe. Fog and snow convey the idea that everything is being covered from someone or something and that it cant stay protected forever. Fog and snow will slowly drift away and as this happens the secrets will be revealed because the snow wont last forever. Throughout the movie Snow Falling on Cedars, the sea represented life and death on many occasions and Scott Hicks was trying to convey the idea that one mans blessings can also be his downfall. The sea was a way of life for the fishermen, but it also proved to be the downfall to one of their own. During the movie, the sea was used to represent life and death by the fish washing up on the shore. As the fish were swept onto the land they slowly suffocated and died, and this is what happened to Carl Heine Junior when he got caught in his fishing net. The seawater was also very black, making it unable to see what was going on under the surface, leaving a sense of mystery. The sea can be a way of life for some, it can also be tormenting memories for others, and Scott Hicks was able to use this idea to show the sea as a means of life and death. The cedar trees throughout the movie symbolised protection and Scott Hicks has used this to convey the idea that skin colour, size and race dont make a difference to who we are on the inside. The cedars were used to exemplify this by protecting Ishmael and Hatsue throughout the film. The cedar trees protected them from the outside world and when they were amongst the trees nothing else in the World mattered to them. Neither of them were bothered by the fact that they werent meant to be together because the Cedar trees werent bothered and this was their place of refuge. The cedar trees were oblivious to the racial differences between the two of them and because of this protected them from the outside world, which did notice that they were different. The cedar trees were tall, strong, and wise throughout the film were able to look beyond Ishmael and Hatsues race and look to their hearts to find true love. Scott Hicks created a place of refuge in the Cedar trees and tried to convey the idea that some things only go skin deep. During the film Snow Falling on Cedars Scott Hicks was able to use symbolism largely to convey many of his ideas. He used the fog and snow to send the message that nothing can stay hidden forever because the fog and snow will slowly melt away and reveal the truth. The sea represented life and death and Scott Hicks was trying to convey the idea that many things can be a blessing for some and the downfall of others, and lastly he used the cedar trees to convey the idea that some thing sonly go skin deep. Overall Scott Hicks has used symbolism at its greatest and was able to convey many of his ideas without any extra dialogue.

The Effects of Low Interest Rates on Housing Markets free essay sample

A paper which discusses how lowered interest rates are affecting the housing industry in the United States. The paper shows that bank interest rates have been steadily decreasing since the September 11th attack on America and that the attack caused the business failures of major corporations, such as World Com and Enron. It discusses that one of the areas that are going stronger then ever is the real estate industry and many homeowners are taking the option to refinance their homes. The paper shows that banks and financial institutions are not in favor of this procedure as a homeowner who refinances his house may lower his monthly payments several hundred dollars banks are making significantly less money on the lowered monthly payments through refinances. The purpose of the essay is to discuss how the lowered interest rates are affecting the housing industry. House sales are running a record high this year, according to Reaser, chief economist of Bank of America. We will write a custom essay sample on The Effects of Low Interest Rates on Housing Markets or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page The refinancing of mortgages is supporting a major portion of the economy that is surviving and thriving. At the present time, refinancing is showing no signs of slowing down; in fact it is steadily increasing. People are putting the extra money into home improvements and buying new cars, another low interest financing option.