Business Accounting and Finance INTRODUCTION 3 2. Economic and Industry Analysis 3 3. Finance

Business accounting and
finance

Table of Contents
INTRODUCTION...........................................................................................................................3
2. Economic and Industry Analysis.................................................................................................3
3. Financial Management.................................................................................................................4
A) Choose a business...................................................................................................................4
B) Projected cash flows for next five years.................................................................................5
C) Sources of finance...................................................................................................................6
4. Risk Analysis...............................................................................................................................7
A) CAPM Model.........................................................................................................................7
B) Cost of Capital (WACC)........................................................................................................7
C) Valuation.................................................................................................................................8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Starting new venture requires proper planning of activities in order to attain desired
results. Present report deals with choosing business in Malaysian market to earn revenue. New
business is named as Exotic manufacturers which will be engaged in automobile sector. In
relation to this, projected cash flows are calculated from assumed income statement. Moreover,
WACC, CAPM are computed to analyze risk. Moreover, multiple valuation methods are used for
analyzing whether business will be profitable or not.
2. Economic and Industry Analysis
The local markets of Malaysia can be explained with varied elements. The business will
require various aspects to perform well and remain long in the market. New venture will be
named as Exotic manufacturers which will be engaged in automobile sector. Company would
require to perform in adequate manner so that desired profits may be garnered in the best
possible way. The automotive industry of Malaysia is the third largest in South East Asia.
Moreover, sector is 23rd largest across the world. Furthermore, production of vehicles on annual
basis is around 500,000 which clearly shows that GDP is largely influenced by this industry.
Economic growth is provided to the country as more of goods are produced over the year. This
enhances automotive industry as it is able to garner profits in good quantum which imparts
overall growth of the nation with much ease (Loughran and McDonald, 2016).
Furthermore, stock markets are also positive as it can be discovered by market share of
the sector. The passenger vehicles total sales were increased by 2.3 % in 2017 as compared to
previous year. This means that in 2018 financial year, sales are expected to increase by 2 %. It
implies that automobile sector will continue to grow at a rapid rate. The industry provides more
than 4 % of total GDP to the nation. Malaysian currency which is Malaysian Ringgit also has
good exchange rate in external value. Thus, all these factors would impact business as
competitors in the market are trying their level best to gain more market share in effectual
manner. Hence, it is required that well-structured strategies would lead path for effective
launching in local market and sustain quite long so that revenue may be achieved with desired
market share (Cleary and Quinn, 2016).

3. Financial Management
A) Choose a business
The proposed business is Exotic manufacturers in the automobile industry of Malaysia.
The form of entity will be Limited Company. This form is chosen because goods may be
provided to customers in effective way as large operations are possible when company is formed.
Greater variety of products can be imparted in exchange of money. Moreover, investment can be
attained from shareholders in the best possible manner for carrying out operational activities.
Additional funds may be raised as well with this form of business. Thus, company is chosen in
automobile sector as a new venture. SWOT analysis is listed below-
 Strengths
The main strength of new venture will be use of advanced technology for producing cars
in the best possible manner. The cars would be provided with reasonable guarantee as well.
Moreover, customers will get delighted good quality of cars will be provided and that too at low
prices in order to gain market share (Collis, Holt and Hussey, 2017).
 Weaknesses
One of the major weakness is that there are no varieties of cars that would lure customers
to buy as compared to the rivals present in local market. Diversified product portfolio will be
required to capture market. Thus, such weakness might be reduced in future by injecting
operations in effectual manner.
 Opportunities
Exotic manufacturers will have ample of opportunities in Malaysian market. This will be
achieved by introducing cars at lower range with adequate quality. It means that prices of goods
will be kept low as compared to rivals so that customer base can be gained. Moreover, product
portfolio might be expanded and as such, hybrid cars would also be manufactured by the
company (Wood, 2016).
 Threats
There are various threats to new business. First of all, major competitors in the market are
Proton Cars, Perodua Company are consistently maximizing their market share and as such, it