Analyse the company capital structure, Financial Management

Assignment Help:

1. Analyse the company's capital structure and critically assess different types of financing options available to the company. Calculate the cost of these different types of financial sources. Recommend currently which financing option is more justifiable for the company and explain how this can improve the overall business performance.

2. Critically analyse the company's performance in managing effectively its financial resources. Consider working capital management, accounts receivable management and financial control systems.

3. You are working for JD Printing Ltd., as a Finance Assistant and your manager asked you to perform an investment appraisal analysis on a new capital investment. The company is considering renewing one of their printing machines and they have found three possible options. You are required to evaluate these different options in your report and recommend one of them for purchasing. The company's cost of capital is 15% and the company usually accepts projects with payback period shorter than 5 years period. (2.1, 2.2, 2.3, 2.4)

Perform an investment appraisal analysis using some appraisal techniques (Payback period, Net Present Value, Internal Rate of Return etc.) Write a report on your evaluation and justify your recommendations.  

Table 1: The projections with regards to the printing equipments

 

Machine A

Machine B

Machine C

Price (£)

1,000,000

550,000

400,000

Expected economic life

6 Years

6 Years

6 Years

Year 1 revenue (£)

150,000

85,000

70,000

Year 2 revenue (£)

230,000

120,000

125,000

Year 3 revenue (£)

400,000

190,000

150,000

Year 4 revenue (£)

300,000

195,000

165,000

Year 5 revenue (£)

250,000

200,000

120,000

Year 6 revenue (£)

140,000

180,000

80,000

Scrap value (£)

150,000

40,000

Nil

 Table 2: Present Value Factors

Year/Rate

14%

15%

16%

17%

18%

19%

1

0.8772

0.8696

0.8621

0.8547

0.8475

0.8403

2

0.7695

0.7561

0.7432

0.7305

0.7182

0.7062

3

0.675

0.6575

0.6407

0.6244

0.6086

0.5934

4

0.5921

0.5718

0.5523

0.5337

0.5158

0.4987

5

0.5194

0.4972

0.4761

0.4561

0.4371

0.419

6

0.4556

0.4323

0.4104

0.3898

0.3704

0.3521

7

0.3996

0.3759

0.3538

0.3332

0.3139

0.2959

8

0.3506

0.3269

0.305

0.2848

0.266

0.2487

9

0.3075

0.2843

0.263

0.2434

0.2255

0.209

10

0.2697

0.2472

0.2267

0.208

0.1911

0.1756


Related Discussions:- Analyse the company capital structure

Financial mangement enviroment, 1. role financial intermediaries 2. nature ...

1. role financial intermediaries 2. nature and role of money markets

What are the objectives or goals of financial management, What are the Obje...

What are the Objectives or goals of Financial Management? Objectives of Financial Management: - It is the responsibility of the top management to lay down the objectives or goa

Unity of command, Unity of Command Unity of command is the principle in...

Unity of Command Unity of command is the principle in which each subordinate should be responsible to only one manager.

Valuation using multiple discount rates, We have seen computation of presen...

We have seen computation of present value using single discount rate. But the right way to value a cash flow of a bond is to use multiple discount rates, i.e valuing th

Income statement, Income Statement A formal statement of the parts...

Income Statement A formal statement of the parts used in determining an organization net income that is called profit and loss statement. The several categories reported

Budget, •What categories and in what amounts should Jenny allocate her fund...

•What categories and in what amounts should Jenny allocate her funds to reflect a balanced monthly budget? Include the main categories as well as examples of other categories.

Define why it is hard to maintain a fixed exchange rate, Once capital marke...

Once capital markets are integrated, it is hard for a country to maintain a fixed exchange rate. Explain why this may be so. Answer: one time capital markets are integrated int

Computation of the value of the firm, Q. Computation of the Value of the fi...

Q. Computation of the Value of the firm? The argument given by MM in favour of their hypothesis is that whatever increase in the value of the firm results from the payment of d

What are the limitations of ratio analysis, What are the Limitations of rat...

What are the Limitations of ratio analysis A ratio on its own is meaningless. Accounting ratios should always be interpreted in relation to other information, for illustration:

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd