Financial Analysis

Running head: FINANCIAL ANALYSIS
Financial Analysis
Name of the Student:
Name of the University:
Authors Note:

FINANCIAL ANALYSIS
1
Executive Summary:
The assessment aims in evaluating the two-product line that is aimed by ALLCURE Inc. to
produce in future, for increasing its revenue generation capability. The analysis is based on
Investment appraisal techniques, which is used for detecting the financial viability of the
proposed projects. In addition, adequate evaluation of the qualitative analysis has been
conducted in the assessment for identifying social viability in approving the project.
ALLCURE Inc. deals with medicines, which can have negative and positive impact on the
health of the consumer that directly raises the social concerns of the CFO, while making any
kind of investment decisions. However, after evaluating all the relevant information
regarding the qualitative and quantitative analysis, it can be detected that investment T-REC
is highly beneficial for the organization. Therefore, ALLCURE Inc. can start the project with
T-REC and after getting the report from R&D about P-REC, the next project can be started.

FINANCIAL ANALYSIS
2
Table of Contents
1. Introduction:...........................................................................................................................3
2. Findings:.................................................................................................................................3
2.1 Quantitative Analysis:..........................................................................................................3
2.2 Qualitative Analysis:............................................................................................................5
3. Recommendation and Justifications:......................................................................................6
4. Detailed comparison and Further Recommendations:...........................................................6
5. Conclusion:............................................................................................................................7
Reference and Bibliography:......................................................................................................9
Appendix:.................................................................................................................................11

FINANCIAL ANALYSIS
3
1. Introduction:
The assessment aims in evaluating the two-product line that is aimed by ALLCURE
Inc. to produce in future, for increasing its revenue generation capability. The analysis is
based on Investment appraisal techniques, which is used for detecting the financial viability
of the proposed projects. In addition, adequate evaluation of the qualitative analysis has been
conducted in the assessment for identifying social viability in approving the project.
ALLCURE Inc. deals with medicines, which can have negative and positive impact on the
health of the consumer that directly raises the social concerns of the CFO, while making any
kind of investment decisions. The recommendations an adequate justification for the
recommendation is demanded by the CFO who intends to start one of the proposed projects
for ALLCURE Inc. Detailed comparison and justification for the proposed project has been
conducted for allowing the CFO to make adequate investment decisions based on both
quantitative and qualitative analysis.
2. Findings:
2.1 Quantitative Analysis:
The quantitative analysis evaluates the net present value, discounted payback period,
and internal rate of return of the two proposed project. From the evaluation, it could be
identified that T-REC project is acceptable, as it complies with the requirements of the firm.
According to the case study, the organization needs the minimum 5-year discounted payback
for the project to be accepted, as an adequate investment options. Moreover, the payback
period of P-REC is at 6.1 years, whereas T-REC payback period is 4.9 years. Therefore, in
accordance with the payback period criteria the T-REC project needs to be selected by the
organization. The investment appraisal techniques such as present value and internal rate of

FINANCIAL ANALYSIS
4
return are also evaluated in the calculation, which indicates alternative results. The internal
rate of return directly highlight that T-REC project is viable for the organization as it has a
value of 25.61% in comparison to 24.35% for P-REC. However, the net present value
evaluation of the project provides an alternative recommendation, as P-REC value is higher
than T-REC. As per the investment appraisal rules, the project with higher net present value
needs to be selected by the organization, as it evaluates the future cash flow by using time
value of money. The analysis of the project based on 18% discount rate, where project P-RE
C needs to be selected by the organization. Baum and Crosby (2014) stated that projects are
evaluated on the basis of NPV, as it allows the organization to detect the investment options,
which can increase firm value in the long run.
The analysis of the investment appraisal technique has been conducted with the
discount rate of 24% to identify the financial viability of the projects. After revaluating the
investment appraisal techniques such as net present value and discounted payback period
with a discount rate of 24%, the financial viability of the project the is detected. The cashew
conditions of the project will not be altered, as only the discounting rate has been changed
from 18 % to 24%. From the overall calculation, it is detected that Net present value of P-
REC has declined exponential, which has increased the financial viability of T-REC project.
In addition, the payback period calculated about the projects directly highlight that T-REC
project is much more viable for investment P-REC project. However, raising the discounting
rate will not allow the project comply with the discounted payback period terms of the
organization. Harris (2017) argued that without adequate research the investment appraisal
techniques could provide wrong information and data to the company.
The third quantitative measure that is conducted in the calculation in accommodating
research and development cost for P-REC. This mainly helps in detecting whether the
investment will provide adequate returns to the organization. After implementing research

FINANCIAL ANALYSIS
5
and development cost, the net present value of the project P-REC is higher than T-REC.
Hence, under the circumstances, it could be understood that the financial capability of project
P-REC is considered viable in comparison to project T-REC. Therefore, from the valuation it
can be understood that the investment appraisal techniques highlight P-REC, as the most
viable investment options if NPV is considered. On the other and, T-REC projects in only
consider if the company emphases more on discounted payback period and internal rate of
return calculations. Throsby (2016) mentioned that investment appraisal techniques allow the
organization to evaluate the project under present value, which clears the investment
prospects for the organization.
2.2 Qualitative Analysis:
Qualitative analysis helps the CFO of ALLCURE Inc. to identify the socially
acceptable investment option, which does not have negative impact on the image of the
organization. The analysis is based on the image and social commitment ALLCURE Inc. for
using adequate investment option that does not affect the consumer’s health. The qualitative
analysis of P-REC indicates that the project is not adequate for commencement, as there is
huge controversy regarding the long-term health hazard that can have negative impact on
health of the consumers. Moreover, the P-REC drug is introduced as a revolutionary pre-
version of the actual medicine, where it has alternative flaws, which can negatively affect the
health conditions of the consumer. On the other hand, the analysis of T-REC drug indicates
that there is no harmful effect on the consumers as projector in the report. In addition, the T-
REC drug is considered to be less effective with the traditional treatment plan. This would
directly reduce the demand among potential customers, as its impacts are relatively low
(Vesty and Oliver 2014).
Hence, the qualitative analysis mentions about the ethical viability, while making
adequate investment decisions. Therefore, from evaluation it could be understood that