Abc Company Risk Profile Paper

ABC company 's Risk Profile
Name
ACC206 : Principles of Accounting II
Instructor
Date

ABC Company Risk Profile The ABC company is a manufacturing firm that specializes in making cedar roofing and siding shingles, with recent sales at $1.2 million, the company wants to reach the $3 million mark over the next 3 years. As a newly hired Corporate Controller for this company, I have been assigned the task of developing and overlooking a new plan made by the CEO that will use some of the shingle scrap materials to build cedar houses. The newly develop plan will certainly bring new challenges for the company on the form of increased cost and labor; However it will also provide additional revenue and gross profit to help reach the growth targets.
iii. Can this project be financed with current cash flow from the company? Why or why not?
Unfortunately the current cash flow from the company (-$172000) would not allow the financing of the future manufacturing addition, having to increase the inventory as well as the payroll among other expenses will undoubtedly increase the pressure on the firm towards reaching higher performing goals. iv. If the company needs additional financing beyond what ABC Company can provide internally (either now or sometime throughout the life of the project), how would you suggest the company obtain the additional financing, equity or corporate debt, and why?
The best way of getting working capital for the ABC company will be by first offering stocks available to the public and private investors, second factor that can be used to the company 's advantage will be offering a percentage of equity on the company in return for a good investment that will guarantee the coverage of all future expenses and purchase of materials; lastly getting loans from lenders can be perhaps the last option available if the previous two don 't work, since capital financed will incurred on the accumulation of
What is the net present value of the proposed investment ignore income taxes and depreciation?
$2362.42
Assuming a 5-year straight-line depreciation, how will this impact the factory’s fixed costs for each of the 5 years (and the implied product costs)? What about cash flow?
Straight line depreciation follows the principle of the purchase or investment price minus salvage value divided by time; thus assuming a 5 year depreciation formula, each year the company will be hit by a depreciation amount of $8,400 . The cash flow will systematically be affected each year, however due to the new investment, new income will offset the