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Abc company case analysis
Abc company case analysis
Abc company case analysis
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The aim of my paper is to attempt to help the ABC company better grasps their options in order to be able to arrive at a more authentic and cost worthy end game. I will take a look at many different aspects such as their probable risks factor, cash flow, and also potential depreciation that could change over time. My recommendation will then be given to the company’s CEO to help he/she better arrive at a fluent decision for the ABC Company. The association has an overall liability profile based on many different aspects of industry issues as well as some current budgetary problems as well. First let us take a look at the different economic issues and the way they can affect the overall production value of a business such as ABC. Rises in prices of materials as well of production costs are a few things that could be affected. ABC Company’s cash flow statement involves different cash receipts and cash payments divided into 3 different categories and they are as …show more content…
So although “the investment has a positive impact on the cash flow of the firms as the form of cash flow from operating and investing activities the project should not be accepted as NPV is negative. The discounted present value of the equipment’s depreciation is much lower than the initial investment.”
So as the management accountant it is my duty and responsibility to make sure all of the management’s coordination and participation in planning and controlling are on par with one another. I need to make sure that everyone is on the same page with every aspect of the company that way we can have an overall successful year while taking all of the different aspects into consideration. It is imperative that all parties involved are on the same page financially, it makes for smoother sailing in the long
In SIVMED’s case, based on the definition of WACC, all capital bases should be included in its WACC. These include its common stock, preferred stock, bonds and long-term borrowings. In addition to being able to compute for the costs of capital, the WACC also determines how much interest SIVMED has to pay for all its activities. The value of the firm’s stock, which we want to maximize, depends of the after-tax cash flow. Hence, after-tax values for WACC are also needed. Furthermore, cost of capital is used to determine the cost of each debt, stock or common equity. Being able to analyze these will be essential into deciding what and how new capital should be acquired. Hence, the present marginal costs are ideally more essential than historical costs.
A key factor in determining a project's viability is its cost of capital [WACC]. The estimation of Boeing's WACC must be consistent with the overall valuation approach and the definition of cash flows to be discounted. Note that this process is a forward looking focus and is laden with uncertainty. It is how the assumptions are modeled that many costly mistakes can be made. While finding a rate of return for an individual project, it is important to remember that WACC is only appropriate for an individual project.
This analysis shows that the projects NPV as 13.37 million dollar. Our result is slightly different than the presenting team because of rounding. But both of our teams had positive NPV which suggest that the project should be accepted.
The final model used to compute the cost of capital was the earning capitalization model. The problem with this model is that it does not take into consideration the growth of the company. Therefore we chose to reject this calculation. The earnings capitalization model calculations were found this way:
The high-risk, cyclical nature of our business demands a strong financial base. We must retain the capital resources to meet our current commitments and make substantial investments to develop new products and new technology for the future. This objective also requires contingency planning and
The cash flow statements for Microsoft, Corp. for the past three years had an up and down
Hammond Cards, Inc. is a small player of the greeting cards industry in the United States of America due to the fact that their annual revenues equate to less than 1% of the industry leaders as described in the case. In their effort to stimulate growth, however, Wendy Hammond has employed me to analyze the potential acquisition of another company, Creative Designs. My analysis will firstly look at the main issue behind this acquisition and then further break it down into sub-issues that I will address individually. Since both of these companies follow a different strategy I will evaluate the two different companies and discuss the implications of their strategies on the merger. I will then perform various cost analysis to determine the cost structures of the two firms which will help me identify whether Wendy’s intentions can be carried out. In my analysis I will aim to figure out the practical capacity of the firms and get an indication on whether their current operations are using the optimal level of capacity and minimizing waste. This data will help me with my strategic recommendation of acquiring Creative Designs and fitting it in with the current strategy of Hammond C...
Management accounting in organisation is very important for decision-making and to make the business more efficient and therefore increasing its profits. Is the process of preparing accounts that can help managers to make day-to-day and short-term decisions, by providing them with accurate and timely key financial and statistical information...
ABC LTD COMPREHENSIVE INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE 2012 NOTE 2012 Revenue 2 828,500 Cost of sales 3 (460,000) Gross profit 368,500 Other income 4 2,500 Operating expenses 5 361000 Profit before income tax 10000 Income tax expense (30%) 3,000 Profit for the year 7000 Other comprehensive income change in revaulation surplus 38500 Other comprehensive income for the year, net of tax 38500 Total comprehensive income for the year 45500 ABC LTD STATEMENT OF FINANCIAL POSITION FOR THE YEAR ENDED 30 JUNE 2012 NOTES 2012 ASSETS Current assets Cash and cash equivalents 6 100500 Trade and other receivables 7 45,200 Inventories 8 87700 Other current assets 9 7000
The Net Present Value (NPV) is a Discounted Cash Flow (DCF) technique that relies on the concept of opportunity cost to place a value on cash inflows arising from capital investment, where opportunity cost is the "calculation of what is sacrificed or foregone as a result of a particular decision".
Subsequent to obtaining the accounting information, managerial accountants will then proceed to use it to plan, evaluate the company performance and also control the business operations. With regards to planning, the managers are required to make decisions concerning the kind of product to introduce into the market, when to introduce the product and where the production should take place. In performance evaluation, individual product lin...
It should be pres... ... middle of paper ... ... o monitor the health of the company and also to make the right choices. They are the most important users of financial information as without this group using the information properly the company could cease to survive. Bibliography Biz/ed 2004, Accounting [Online], available http://www.bized.ac.uk Duncan Williams 2004, User of Financial Statements, [online], available http://www.duncanwill.co.uk Finance Demon 2004, User of Financial Information, [online], available http://www.financedemon.co.uk Financial Reporting Council 2004, About the FRC [online], available http://www.asb.org.uk Hacker Young Chartered Accountants 2004, Accounts Explained [online], available http://www.account-explained.co.uk Joe Corbett 2004, Class Notes, Borders College, Galashiels
Heisinger, K., & Hoyle, J. B.(2012). Accounting for Managers. Creative Commons by-nc-sa 3.0. Retrieved from: https://open.umn.edu/opentextbooks/BookDetail.aspx?bookId=137
Coordinating: Manager must ensure aimed the alignment and harmonization of the contributions of various components of the organization through
In Management, the accountant gives advices to the individuals and business people, how to manage their business. The account information is considered and some business decisions are taken in both financial and non-financial departments. Budgeting, tax filing, and financial statements. Other activities like involve in planning com...