Business Finance: Case Study, Ratios, Non-Financial Indicators, Pricing Strategy Impact

Business Finance

Table of Contents
MAIN BODY..................................................................................................................................3
2: A Case Study (a)..........................................................................................................................3
 The Payback Period...........................................................................................................3
 The Net Present Value.......................................................................................................3
 The Internal Rate of Return...............................................................................................4
Advising on the suitability of the project....................................................................................4
(b).....................................................................................................................................................5
 Calculating Ratios..............................................................................................................5
 Identifying and Explaining the non-financial performance indicators..............................7
 Evaluating the Impact of Pricing Strategy on the Performance of Netflix........................8
REFERENCES................................................................................................................................1

MAIN BODY
2: A Case Study (a)
 The Payback Period
Computation of Payback period
Year Cash inflows Cumulative cash inflows
1 150000 150000
2 180000 330000
3 140000 470000
4 110000 580000
5 150000 730000
100000
Initial investment 550000
Payback period 3
0.7
Payback period 3 year and 7 months
 The Net Present Value
Computation of NPV
Year Cash inflows PV factor @ 12%
Discounted
cash inflows
1 150000 0.893 133928.57
2 180000 0.797 143494.90
3 140000 0.712 99649.23
4 110000 0.636 69906.99
5 150000 0.567 85114.03
6 100000 0.507 50663.11
Total discounted cash inflow 582757
Initial investment 550000
NPV (Total discounted cash
inflows - initial investment) 32757
 The Internal Rate of Return
Computation of IRR