...- Assignment 8 – Cash Flow Forecasting Assignment Objective To be able to create a cash flow forecast Scenario Dial A Pizza is hoping to go to the bank soon to ask for initial funding for the business. In order to help them achieve the loan from the bank, they would like you to help them to create a 12 month cash flow forecast. Assignment Outcomes P6 – prepare an annual cash flow forecast using monthly data M3 – analyse the implications of regular and irregular cash inflows and outflows for a business organisation D1 – evaluate the importance of cash flow and break even for the effective management of business finance |Task |Grading Criteria |Evidence | |Task 1 |P6 |Cash flow forecast | |Using the data provided, produce a cash flow forecast. This must show the: | | | |Cash inflows (capital, sales, loans) | | | |Cash outflows (purchases...
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...Pro forma analysis cash flow forecasting Apartment Investment Case Study Scenario An investor is considering buying an apartment building with 140 units offered for sale at $16,500,000. The subject apartment building has the following unit mix: Additionally, the following assumptions are also being made by the investor in order to construct a 5-year cash flow pro forma: Vacancy and Credit Loss In the current market, vacancy and credit losses are running at 9%. Due to the improving market conditions as well as the investor’s prior experience leasing and operating multifamily buildings, it’s expected that vacancy will steadily decline over the next 5 years to 5%. Potential Rental Income Potential rental income is based on the above unit mix. The 1-bedroom and studio rental rates are expected to increase at 1% annually. The 2-bedroom units are expected to increase at 2% annually. Financing After a preliminary discussion with a relationship manager at a local bank it’s determined that a loan can be extended based on the lesser of a 1.25x debt service coverage ratio or 80% loan to value. Additionally, assuming the underwriting process doesn’t reveal any red flags, it’s expected that the loan will be based on a 20 year amortization and a 6% interest rate. Operating Expenses The following table breaks out historical operating expenses for the property as well as projected increases over the holding period. Reserves for Replacement In addition to the above operating expenses...
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...ANALYSIS OF FIANANCIAL STATEMENT MUSTEHKAM CEMENT LIMITED PRESENTED TO: TAHSEEN MOHSIN PRESENTED BY: MUHAMMAD USMAN GHANI 105221003 (03454657966) PREFACE This is the project of financial statement analysis in which we have to apply the financial technique to doo the financial analysis in deep by firm comparability, by ding credit analysis, making pro forma statements and showing reality in it, we were asked to do long term solvency analysis, profitability analysis and valuation in which we have to calculate expected return through DDM and CAPM model. We do the analysis of whole firm in detail on its financial data, calculate the whole ratios of business through which we can analyze in which position the business is running and what problems are faced by the firm and is the firm having any financial risk or in case of solvency measure the firm has through which it can pay its obligations. The project was full of problem because to apply the financial technique we need financial data have to find out which element have to put in that formula and first time I have visit the KSE site to collect the previous stock price of share which was learning point for me that which place how you have to collect data have to do interpretation. ...
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...uillermo Furniture Store Analysis Week one individual paper was centered on Guillermo Furniture Store location, the production of work and the company finance. Week three individual paper will state three alternative measures for Guillermo Furniture Store working capital policy by weighting the average cost of capital, and by implementing multiple valuation techniques toward reducing the business risk. Business within Guillermo Furniture Store started to decline in the early part of 1900s. The effect of outside influences has opened up a new era of business for foreign competitors. The competitors have allowed their customers to crave the new technology of produced furniture by creating a lower price range. The simulation stated that housing were inexpensive, the location of business had mild weather, and beautiful scenery, along with uncongested roads a new International Airport and plenty of new development (University Of Phoenix, 2011). Alternatives To make a profitable decision the implementation of alternative needs to be considered. The three alternatives investment projects (the currently used approach, the high-tech approach, and the broker approach) needs to be categorized in a distinct order. The currently used approach consists of the company not changing their position, they will continue with their business lifestyle since the 1900s. High-tech alternative will allow the company to produce more custom furniture at a lower cost. The broker alternative...
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...Financial Effects and Constraints Health care organizations throughout the world are facing many financial challenges. Management has to find ways to streamline processes, reduce waste, and bring profit to the organization. Pharmacies in the health care system tend to be one of the major departments that bring in a very large amount of revenue for an organization. Therefore, it is extremely important for management to focus on processes that will result in the smooth operation of the pharmacy department. Management must be cognizant of the revenue constraints and financial factors that the pharmacy department faces and be able to make good business decisions that benefit the organization. Additionally, to forecast accurately the future of a hospital’s pharmacy, management must have the required knowledgebase to review and interpret the appropriate financial reports. Pharmacy Effects on Operations Management Health care managers must continually monitor the processes and operations of the pharmacy in their organization. Pharmacies are one of the major profit producers of a health care organization, therefore ensuring that required workflow processes are efficiently and effectively in place are critical. Pharmacists and pharmacies play a major role in the delivery of quality health care as they distribute safe medications to the patient population. To prevent disruptions in services and to make a positive impact on the hospitals bottom line, pharmacy management...
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...The statement of cash flow's primary purpose is to provide information regarding a company's cash inflows and outflows during a specified accounting period. This paper will focus more on how cash flow is helpful to external users. The statement of cash flow complements the income statement and the balance sheet. When credit decisions are made, many factors must be assessed. According to FASB (SFAS-95, paragraph 5) the information on actual cash flows is useful to help creditors, investors, and other external parties asses (1) the ability of an enterprise to generate positive future net cash flows, meet its obligations, and pay dividends; (2) the needs for external financing; (3) the reasons for the differences between cash flow from operating activities and net income (or change in net assets); and (4) the effects on financial position of cash and non-cash investing and financing activities. Cash flows are classified as operating, investing, or financing activities. Operating activities relates to company’s primary revenue generating activities such as cash generated from the sale of goods and cash paid from merchandise. Investing activities includes lending money and collecting on loans related to noncurrent assets. For example, cash generated from the sale of land. Financing activities include borrowing and repaying money from creditors related to noncurrent liabilities and owners’ equity. The goal is for company to have a positive cash flow from operating. This is the area...
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...Convert WRDS OUTPUT Building a Financial Statement Analysis and Valuation Spreadsheet Income Statement-66 This case starts with raw financial statements and then a) develops standardized financial statements, b) constructs a statement of cash flows, c) builds all the key ratios, d) links forecast inputs to future financial statements, and e) builds discounted cash flow and residual income valuation models based on the forecasts. The result is a simplified version of eVal4, the spreadsheet model that is provided with “Equity Valuation and Analysis” by Russell Lundholm and Richard Sloan, but one that you should completely understand (because you built it yourself!). To save you some time, many of the cells are completed; you only need to finish the blue-shaded ones. There are five parts to this case, corresponding to the five tasks listed above. The case requires two files: Building eVal4.xls and General Mills 10-K.pdf. Part A: Standardized Financial Statements The financial statements filed with the SEC are not standardized, meaning that the company is free to report and label line items however they please (within obvious limits). For this reason, there is an intermediary business that takes the filed financial statements and sorts the line items into a predetermined set of accounts. We will explore this important part of the reporting process in this part of the case. 1) Find the “as reported” financial statements in General Mills’s 10-K filing (in the...
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...Lawrence Sports Simulation University of Phoenix FIN/571 Professor Helen Horton-Brown June 25, 2012 Lawrence Sports Simulation Lawrence Sports is both a distributor and manufacturer of sports equipment and protective gear. Because of the company’s size and industry, it is critical for Lawrence Sports (LS) to integrate an effective cash budget to become less reliant on short-term financing. Cash budgeting is an integral component for effective capital working policy (Emery, Finnerty, & Stowe, 2007). Establishing a cash budget is a means to observe a company’s inflow and outflow of cash, which in turn, will assist in adequate forecasting and planning, especially concerning when it comes to short-term credit (Emery et al, 2007). A high-quality working capital policy would also free up cash, which may be allocated to strategic areas for the company’s growth. LS must cease from financing shortages through credit lines with heavy reliance on selling inventory and receiving prompt payments. To understand the changes needed, a review of LS current policy will be analyzed and alternative working capital policies will be compared. Recommendations will be represented regarding which policy LS should implement. Alternative working capital policies The first alternative working capital policy is for LS to negotiate better collection on sales terms with Mayo Stores. The initial arrangement is to receive 20% collection...
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...Correct: | Multiple Choice | 5 | 3 | | | Grade Details - All Questions | 1. | Question : | You work for Athens Inc. and you must estimate the Year 1 operating cash flow for a project with the following data. What is the Year 1 operating cash flow? Sales revenues: $15,000 Depreciation: $4,000 Other operating costs: $6,000 Tax rate: 35% | | | Student Answer: | | $7,250 | | | | $7,431 | | | | $7,617 | | | | $7,807 | | | | $8,003 | | | | Points Received: | 6 of 6 | | Comments: | | | | 2. | Question : | Which of the following is not a cash flow and thus should not be reflected in the analysis of a capital budgeting project? | | | Student Answer: | | Changes in net operating working capital | | | | Shipping and installation costs | | | | Cannibalization effects | | | | Opportunity costs | | | | Sunk costs that have been expensed for tax purposes | | | | Points Received: | 6 of 6 | | Comments: | | | | 3. | Question : | Which of the following is not a key element in strategic planning as it is described in the text? | | | Student Answer: | | The mission statement | | | | The statement of the corporation's scope | | | | The statement of cash flows | | | | The statement of corporate objectives | | | | The operating plan | | | | Points Received: | 0 of 6 | | Comments: | | | | 4....
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...Financial Statements The financial statement is a written report that shows the company’s financial status in a specific date range such as yearly, quarterly and monthly. The four reports that are part of the financial statements are the balance sheet, income statement, retained earnings statement, and statement of cash flows. The financial statements for companies are important because it shows how the company is doing. It is also a way for internal and external users can evaluate a company in specific time periods. Each statement serves a purpose when examined by internal and external users. Internal and external users have their own agendas when reviewing the financial statements. This paper will explain the purpose of each of the financial statements. As well as how financial statements are used by internal and external users. The balance sheet consists of assets, liabilities, and stockholders’ equity. The easiest way to explain the purpose of a balance sheet is it shows what a company owns and what it owes. The balance sheet allows investors and manager to see easily the company’s liabilities in comparison to the assets. For a financial institution possessing the ability to review this information can determine if they would want to grant a loan to the company. A creditor may use the debt to total assets ratio to evaluate if a company can repay a long-term debt. A manager may use the balance sheet to determine if the company is doing well. Decisions can be made from the...
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...Financial Management in NHS Name: Course: Professor’s Name: University: City (State): Date: Sources of funding There are different sources of financing that the hospital uses to finance its operations. The hospital uses both internal and external sources to fund its operations. One of the internal sources of financing that the hospital utilizes is the revenue that is collected from the services offered to both inpatients and outpatients. The second source of internal finance that the company uses is the sale of fixed assets that are not require in the hospital. The hospital on annual basis carries out an evaluation of the assets that it no longer requires and disposes them as a way of financing its operations. The hospital further uses external methods of financing its activities. One of the main sources of finance is through the use of bank loans and overdrafts. The company seeks for both long-term and short-term loans to finance its operations. Other sources include government grants and charities from non-governmental institutions. Financial stakeholders and their various expectations Stakeholders are referred to those individuals who have an interest in the running of Moorfield’s Eye hospital. These stakeholders may commit their resources towards running of the hospital directly...
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...Corporate Management Financial forecasting is an imperative too for a management team. This is because it helps how much cash should be generated from operations hence shaping decisions regarding expenditures that need be made. With an accurate forecast, it is possible for a company to maintain adequate cash levels that helps the company meet its financial obligations such as timely payment of payable accounts and payroll (Alice, 2009). However, financial forecasting is bound with challenges due to circumstances that are difficult to predict. Therefore, due to these challenges, actual financial results are rarely consistent with financial forecasting challenges due reasons that this paper deliberates. First, unpredictable economy is the major challenge. For all companies, the strength and weaknesses of the economy does affect their sales. This is because consumers and business tend to spend depending on the confidence they have for the future (Alice, 2009). With a weak economy, there is usually a downturn in confidence amongst businesses and consumers. This consequently reduce their thrill for spending. Therefore, company sales consequently reduces leading to flaws in financial forecast for the company. This is despite the companies having enough economists in their staff who often find it difficult to predict direction of economy at any point in time. Secondly, unknown competitive threats are another major challenge in financial forecasting. Unless where there is information...
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...huge impact on every kind of businesses, whether from a small noodle shop to a big shopping mall, the location is one of the most important aspects to a successful business. In order to create the best service and product, the restaurant or business must know what they are going to sell. Do you want to focus more on your food than your services or do you want to have a balance of both food and services? The menu item is very important since customers generally are persuaded by the image on the paper. Their perception and cognitive thinking influence what is call “stimulus” by which a customer is affected psychologically through their thoughts internally and externally. To achieve success, management must be strong and capable of forecasting the profit and loss of the business. That’s why companies implement objectives and missions to maintain their foundation. The objectives in general, is broader in scope than a goal, and may consist of several individual goals. Objectives are a basic tools that underlying all planning and strategic activities. The Company summary generally explains if the business is a self-proprietor, partnership, limited-partnership or a corporation. This summary also speaks about how many investors are willing to invest in the business and how much are they getting back through...
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...Introduction | This is the assignment for the Understanding Financial Management unit. The aim of this unit is to develop understanding of finance within the context of an organisation, as required by a practising or potential middle manager.The task requires you to demonstrate your understanding of finance and the value of recording financial information within the context of your organisation. You are then asked to explain the process of budget setting in the organisation and how budgetary techniques are used to contribute to controlling cost in your own area of operation.If you are not currently working within an organisation, then you may complete this task in relation to an organisation with which you are familiar. This could include experience working in a voluntary capacity.The tasks you need to undertake are:- * read all the questions * complete the learning activities associated with this course * discuss the assignment with your coach at your tutorial * complete any other activities that you need to undertake for your assignment * answer the questions in the spaces provided Here are some tips on completing the assignment, based on submissions from previous students: * make sure you read and answer all the questions! Even the most accomplished writers have fallen down by providing answers that are exceptionally well written – but well off the mark. This is usually because they have not gathered a full understanding of the questions before embarking on...
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...Procedure Cash Management Cash Management 1. DEFINITIONS............................................................................................................. 3 1.1. Cash Management ............................................................................................................................... 3 1.2. Cash Flow Analysis ............................................................................................................................. 3 2. SCOPE ....................................................................................................................... 3 3. TARGET/PURPOSE .................................................................................................. 3 3.1. Cash Management on plant/location level ........................................................................................3 3.2. Cash Management on group level ..................................................................................................... 3 4. CASH MANAGEMENT PROCESS ............................................................................ 4 4.1. Golden rule for cash and finance management at CO. ................................................................... 4 4.2. Cash Management Instruments ......................................................................................................... 4 4.3. Payment terms .............................................
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