Assignment Economics and Finance
12 Pages2114 Words154 Views
Added on 2019-11-08
Assignment Economics and Finance
Added on 2019-11-08
ShareRelated Documents
Running head: ECONOMICS AND FINANCEEconomics and FinanceStudent’s Name:University Name:Author Note
1ECONOMICS AND FINANCETable of ContentsInvestment Detail.......................................................................................................................2Opportunities and Threats..........................................................................................................3Operating Plans / Strategies.......................................................................................................5References..................................................................................................................................6
2ECONOMICS AND FINANCEInvestment DetailThe capital investment project is of utmost importance in relation to investmentcontrol. The purpose of capital investment project is to check and measure the acceptabilityof the project in terms of the benefit it generates.The aspects of the investment project that have been asked to identify and describe areCapital Expenditures, Raw Materials and Cash for operations.Capital Expenditures can be defined as those expenditures whose perks are to beconsidered for a time period more than one year. Capital expenditures do not get created veryoften, but they are essentially for larger sums of money. Capital Budgeting or CapitalExpenditure Analysis involves determining the value potential of a project/investment. Thisis known as Net Present Value (Cvijanović, 2014). Capital Expenditure can be divided intothree different forms that are cost reducing expenditures, increasing the revenue relatedexpenditures and non-economic expenditures. In simple terms of accounting, a particularexpenditure is said to be a capital expenditure when a capital asset is purchased or a specificinvestment is incurred that extends the utilizable life of the capital asset. The value of capitalexpenditures a firm will most probably incur is dependent on the type of industry it occupies(Cho, Freedman & Patten, 2012).Raw materials are essentially substances that are used in the primary manufacturing ofinventory or goods. Raw Materials have a totally different or separate market which is calledthe factor market, as raw materials are primarily factors of production including capital andlabor(Kingsman, 2014). In more simple accounting terms, when the raw materials are used,there is a reduction in the raw materials inventory and simultaneously the work in progressaccount increases and finally transferred to the finished goods(Tung, 2012).
3ECONOMICS AND FINANCECash for operations or cash flow analysis is a very complex process for both investorsand companies. Cash for operations primarily refer to the monetary benefit generated by thecore or major business activities of the company. It provides a clear image of the entirepicture of the of the company’s health. Upgrading or installing new equipment andpurchasing another company, these types of activities lead companies to incur expenseswhich are record as negative cash flow. Similarly, in case a company decides to sell the oldequipment, these activities are also treated as investing activities(Chen et al., 2012).Financial Detailsa.Profit and Loss ProjectionsParticularsYear 1Inflation RateSales Growth RateSales Volume10000Selling Price Per Unit$3,500 Total Sales Revenue$35,000,000 Cost of Good Sold per unit:Raw Material Consumed($1,500)Direct Labor Cost($1,000)Total Cost of Goods Sold p.u.($2,500)Total Cost of Goods Sold($25,000,000)GROSS PROFIT$10,000,000 Variable Manufacturing Overhead p.u($650)Total Variable Manufacturing Overhead($6,500,000)Depreciation on Property,Plant & Equipment($350,000)
End of preview
Want to access all the pages? Upload your documents or become a member.
Related Documents
An Evaluation of Budgetslg...
|15
|3290
|157
ACT507 : Accounting for Managerslg...
|15
|2844
|53
ACT507 Accounting for Managers - Assignmentlg...
|16
|2734
|59
Assignment about Cost of Goods Manufactured Statementlg...
|16
|3245
|18
Financial Decision Makinglg...
|10
|1704
|37
Management Accountinglg...
|7
|750
|246