Finance project proposal
1 Abstract
The following report is intended for the management team and investors in Sky-blue. The financial report will provide detailed analysis on the feasibility of ‘mutually exclusive projects’, in which a recommendation will be made on one project, in which alternative proposals cannot be followed simultaneously (Dayananada D et al,2002). The report will represent the detailed research and financial analysis of each proposal taking into consideration the investment amount, subsequent returns and related risks. The analysis will include the necessary financial models NPV,IRR and Sensitivity by calculating the discounted cash flows, but also take into consideration economic characteristics (PESTLE) as well as other driving forces in relevant to the mobile phone industry such as competition (Porter’s Five Forces )
2 Recommendations
(See Figures 1 & 2 for visual representation of NPV and IRR)
The ethos of Sky-Blue’s business activities are based on technological advances and market capitalisation therefore the company must seek an applicable investment in order to maintain revenues and profits on a secure basis as well as developing its innovative product range. In the recommendation of this corporate vision and the financial analysis I advise CEO Jose Mourinho and the board of directors for the selection of P2 for the realisation of the financial analysis solely.
P2 yields an expected NPV of £ 5.4 million with an expected IRR of 29% and an expected payback period of 3.45 years which represents a better financial outcomes of the three proposals (Greater IRR and Greater NPV) . The expected sensitivity is 21% therefore P2 may compensates for any decrease in the value of NPV or any fluctuations which may affect the expected cash flows and subsequent NPV.
In relation to market dynamics, Porters 5 forces states late entry into the market may make products obsolete In relation to dated or substituted technology therefore this report advises the
The following report is intended for the management team and investors in Sky-blue. The financial report will provide detailed analysis on the feasibility of ‘mutually exclusive projects’, in which a recommendation will be made on one project, in which alternative proposals cannot be followed simultaneously (Dayananada D et al,2002). The report will represent the detailed research and financial analysis of each proposal taking into consideration the investment amount, subsequent returns and related risks. The analysis will include the necessary financial models NPV,IRR and Sensitivity by calculating the discounted cash flows, but also take into consideration economic characteristics (PESTLE) as well as other driving forces in relevant to the mobile phone industry such as competition (Porter’s Five Forces )
2 Recommendations
(See Figures 1 & 2 for visual representation of NPV and IRR)
The ethos of Sky-Blue’s business activities are based on technological advances and market capitalisation therefore the company must seek an applicable investment in order to maintain revenues and profits on a secure basis as well as developing its innovative product range. In the recommendation of this corporate vision and the financial analysis I advise CEO Jose Mourinho and the board of directors for the selection of P2 for the realisation of the financial analysis solely.
P2 yields an expected NPV of £ 5.4 million with an expected IRR of 29% and an expected payback period of 3.45 years which represents a better financial outcomes of the three proposals (Greater IRR and Greater NPV) . The expected sensitivity is 21% therefore P2 may compensates for any decrease in the value of NPV or any fluctuations which may affect the expected cash flows and subsequent NPV.
In relation to market dynamics, Porters 5 forces states late entry into the market may make products obsolete In relation to dated or substituted technology therefore this report advises the
References: Revenue (2013)(£) 2.2 Bill 1.8 Bill 870 Mil 560 Mil 470 Mil Revenue Growth (> 2012) 16.40% 10% 25.50% -5 % -.8% Employees (2005) 79,900 49,800 70,300 32,00 22,616 Market Share 45.00% 25.00% 10.00% 12.9 % 7.10% Weetman, Pauline (2011). Financial accounting . 2nd ed. UK: Mcgraws. 20-26. Grant M. et al (2012). Foundations of Strategy. UK: John Wiley & Sons Ltd. 13-89. Brewer et al (2008). Introduction to Managerial Accounting. 4th ed. Boston: McGraw-Hill Irwin. 490-520. Brealey et al (2008). Principles of Corporate Finance. Singhapore: McGraw-Hill. 1-50. Dayananda Don (2002). Financial Appraisal of investment Projects. Cambridge: Syndicate of Cambridge Press. 1-15.