Global management/Industry market and country analysis
Forecasted financial costs and benefits that Riordan might expect from implementing this project. Your projections should include the following:
a. The instruments you will use to finance your project and their costs, including the project's weighted average cost of capital (WACC)
b. Break-even analysis with a clearly demonstrated break-even point
c. Pro forma cash flow statement
d. Pro forma balance sheet
e. A sensitivity analysis for your projections
f. Analysis of the assumptions that were made to generate these projections
Any help is appreciated.© BrainMass Inc. brainmass.com October 24, 2018, 9:14 pm ad1c9bdddf
Please see the attached files.
Sound Planning is the first step of the success of the business. It will act as a guidance and road map for the organization. Our business is based on two important attributes:
1. Impeccable management that has a knack of choosing the correct product and the premium service at the right time with a finesse of knowing what its total market is and how to acquire and maintain a greater share of that market.
2. Providing an excellent product or service that is not only well accepted now but also whose acceptance and use will continue to grow at an accelerated rate into the future.
For this purpose we have made a comprehensive financial plan comprising the financial statements, break even analysis and sensitivity analysis. Financial statements are useful tools for evaluating both profitability and liquidity. Used separately, or in combination, the income statement and balance sheet help interested parties to measure a company's current financial performance, and to forecast its profit and cash flow potential. Accountants summarize this information in a balance sheet, income statement, and statement of cash flows. The statement of cash flows provides information about cash receipts and cash payments of an entity during a period. A secondary objective is to provide information about the operating investing and financing activities of the entity during the period. This will act as a road map for the organization. The benefits of financial plan are:
? Will help maximize efficiency and minimize waste.
? To facilitate management and control.
? Effectiveness and efficiency of operations include the use of the entity's resources.
? Help in strategy implementation
Our initial investments are at $5mn, 80% for capital expenditure and 20% for working capital purposes. Our assumption of production levels are at 370 tons. We have forecasted the revenues; it has been planned as per the market environment, current and expected economic conditions. For the forecast to be useful, careful consideration has been given to the timing and pattern of cash collections and level of accounts receivables. Pricing shall be set to cover immediate operating expenses, the replacement costs of building and equipment capital, the anticipated replacement cost of new technology, anticipated working capital costs, reasonable venture capital costs, and a reasonable profit margin. The ability to regenerate capital is one of the basic principles of successful and solvent organization.
Thus we have developed the financial plan with the awareness that cash and the bottom line are key components of any successful company. Revenues for the company will come from charges and fees generated from the sales of plastics. To assure that bottom line adequately follows increases in revenue every cure possible is being taken to control all areas of expenses and overhead. The basis of its financial plan is solid growth, increase in revenues, and controlled expenses. Our profitability is more than $600000 and the Balance sheet size is more than $5 mn. The operating cash flow is positive and it's more than $1 mn. The break even point is at 270 tons. We will be constantly monitoring the flow of revenue to the company as well as the expense requirements that deplete the company of its cash. The organization will always try to improve the ratio of revenue and expenses to generate a healthier bottom line in addition to a ...
Solution is 2,248 words plus four references and projections and breakeven in excel. The solution is generic enough to let you select the product or industry.
International Finance Statements
1. Political risk management strategies should be managed carefully and integrated with other risk management structure. Who in your point of view should be in charge of the political risk management and how should that strategy be handled?
2. Once a project is accepted, country risk analysis for the foreign country involved is no longer necessary, assuming that no other proposed projects are being evaluated for that country. Do you agree with this statement? Why or why not?
Respond to following statements:
3, Political risks that MNCs face are business risks and foreign exchange risks which can be classified into two types of risks, Macro risks and Micro risks. Macro risks are where foreign operations are affected by adverse political developments in the host country. Micro risks are where only selected areas of foreign business operations are affected. MNCs can face political risks that originate at the country level such as a transfer risk and cultural risk. Transfer risk concerns mainly the problem of blocked funds, and or sovereign credit risk. Cultural and institutional risks come from ownership structure, human resource norms, religious heritage, and corruption. There are also intellectual property rights and protectionism. Additional political risks like terrorism, the anti-globalization movement, environmental concerns, poverty, and cyberattacks are global specific risks. An example of political risk is that of Niger Delta in Nigeria. Local groups regularly launch attacks against company compounds and kidnap foreign oil workers, demanding that more oil revenue be spent in the local area. Oil companies operating in these areas, such as Shell Oil, often manage these risks by hiring security firms to protect workers, and by negotiating to create schools, hospitals and jobs for locals. Another example of political risk would be in the area of economic changes for a company. For example, a government may decide to increase taxes on a particular product, industry, or company; an economic downturn or changes to the currency can also affect a company's ability to make a profit.
4. The optimal capital structure evolves constantly, and successful corporate leaders must constantly consider six factors, the company and its management, industry dynamics, the state of capital markets, the economy, government regulation and social trends. When these six factors indicate rising business risk, even a dollar of debt may be too much for some companies. Do you agree?
5. The cost of equity increases with an increased use of debt in the capital structure because the risk to investors also increases with the risk of the debt. Business risk is the risk to stockholders when debt is not used by a corporation. Business risk represents the uncertainty in the firm's projected free cash flows and capital investment requirements. Shareholders and managers have a great deal of control over business risk.
What would be the impact on the dividend to stockholders?
6.The cost of equity increases as the firm uses more debt since it makes the investment or the firm providing the debt financing a riskier investment. As the cost of debt goes up so do the leverage and the threat of bankruptcy. Taken to the extreme, if a company is over leveraged and cannot pay its debt then the company is at risk which therefore makes the investment even riskier. Can you illustrate how the financial leverage increases the expected return on equity?