Importance of Capital Investment Appraisals for Business - Desklib

BUSINESS REPORT

Table of Contents
BUSINESS REPORT............................................................................................................................1
INTRODUCTION.................................................................................................................................3
Part A....................................................................................................................................................3
TASK 1.................................................................................................................................................3
1. Importance of capital investment appraisals for business..............................................................3
Preparation of cash flow analysis statement......................................................................................3
Analysation of Payback period..........................................................................................................4
Determination of the net present value for new investment and explanation of viability of the
proposal.............................................................................................................................................5
Describtion of the logic of net present value appraoch and its relation with cost of capital...............6
Question 7.........................................................................................................................................6
Question 8.........................................................................................................................................7
Part B.....................................................................................................................................................8
Part C.....................................................................................................................................................9
Question 1.........................................................................................................................................9
Question 2.........................................................................................................................................9
Question 3.......................................................................................................................................10
PART D...............................................................................................................................................10
Difference between strategic, preferred and transactional suppliers................................................10
Comparing advantages of single sourcing and multiple sourcing in context of procurement..........11
Cross sourcing and its benefits........................................................................................................12
CONCLUSION...................................................................................................................................12
REFERENCES....................................................................................................................................13

INTRODUCTION
Cost accounting is a practice involves analysing the cost of different business
operations entertain by the venture. This report will discuss about the significance of the
investment appraisal process. Cash flow analysis will prepare in this report. Information
about the payback period and certain investment appraisal technique will be given.
Furthermore, bank finance as a long term funding source will be elaborate in this project.
Information over supplier categories will also give.
Part A
TASK 1
1. Importance of capital investment appraisals for business
Capital investment appraisal is important for S plc because it gives the business the
money decisions it needs for achieving their goals which are typically three main reasons for
a business to make the capital investments. Following are the other importance of capital
investments appraisals,
 It helps in the acquiring of additional capital assets for the expansion of the business
which enables the increase of unit production and creation of new products and
addition of values.
 For taking advantages of new technology and advancement with the help of better
investment decision making which will help them for increasing efficiency and
reduction of costs (Su and et.al., 2018).
 It helps in replacing the existing assets which have no productive value for the
business which provides the business better productivity.
Preparation of cash flow analysis statement
Cash flow is the analysis of the financial statement which records the flow of money into
the business during the specified and unspecified period of time. It helps in the better
management and understanding of the cash which is flowing in the business for its daily
operations. The cash flow analysis is said to be the major reason which influences the
business decision making towards management of the liquidity in their operations (Holcomb
and Smith, 2020). It helps the business in the management of the short term obligation which

helps in the development of the services. The following is the preparation of the cash flow
analysis for S plc.
This cash flow analysis shows that the sales revenue of this organization was the most
in the 3rd year as a result of which the net cash inflow is calculated to be 740 which is the
most effective out of all the year. Thus, the conclusion that can be drawn from the cash flow
analysis which is prepared is that S plc needs to focus on increasing its total revenue with
efficiency in cost which will help the business in growth of cash inflow (Vecchi and Casalini,
2018).
Analysation of Payback period
It is the time which is needed for the recovery of the cost of investment which is said to
be very helpful for the investment which needs to be taken into break-even point. It helps the
retrieved investment cost of the project to be soon be possible for making profit, the payback
period is the time take for the recovery of the cost of project which is essential for taking the
time that can recover the cost of the project. The following is the calculation of the payback
period,