Finance Management: Capital Structure, Working Capital, Pro Forma Balance Sheet, Pro Forma Profit and Loss Statement, Investment Appraisal Techniques

FINANCE MANAGEMENT

INTRODUCTION
Finance is at heart of every business. Financial management is
core activity of business to maintain its financial health and
improved performance every year.
 Capital structure of business is calculated in this report using
various ratios and forming Pro forma balance sheet and Profit and
loss account for a German company XYZ.
 Moreover this reports specifies the investment appraisal
techniques and detailed insight into calculation of overall cost of
capital.

CALCULATION OF WORKING
CAPITAL
2013 2014 2015 2016
Particulars Amount
in€millions
Amount in€
millions
Amount in€
millions
Amount
in€
millions
Current Assets (A) 5668 10083 13038 15581.6
Current Liabilities (B) 3826 7290 9378 13298.48
Working Capital (A-B) 1842 2793 3660 2283.12

INTERPRETATION
 Working capital is calculated by deducting current liabilities from
the current assets. Working capital is expected to decrease in 2016
due to decrease in cash. Account payables and Inventory are
increased for 20% in respect to sales.
 It can be observed form working capital calculations that
company has efficiently managed the working capital since 2013.
 Working capital is continuously growing depicting the efficiency
of current assets over current liabilities.