Financial Decision Making - Assignment

Financial Decision Making

Executive Summary
Financial decision making is the essence for business so that it may flourish in the
market.In the context of business unit, the main motive of manager is to attain goals and
objective by making optimal use of financial resources. For the purpose of appropriate
decision making manager is required to make evaluation of all the alternative options
available by taking into account financial tools and techniques.
Table of Contents

INTRODUCTION......................................................................................................................3
Part 1: Business Performance Analysis......................................................................................3
Calculating and using ratios for the purpose of decision making in the context of Hi-Tech
plc...........................................................................................................................................3
PART 2: Investment appraisal.................................................................................................10
2.1 Challenging management forecast and listing advantages and disadvantages of
investment appraisal techniques...........................................................................................10
CONCLUSION........................................................................................................................15
REFERENCES.........................................................................................................................15

INTRODUCTION
Financial decision making implies for the processwhich lays emphasis of making
selection of best option out of several alternatives availableThe present report is based on the
case scenario of Hi-Tech Plc which involved in the manufacturing of computer hardware and
accessories.In this, report will provide deeper insight about the extent to which profitability,
liquidity and solvency position of the business unit is good. Further, report also entails the
manner in which capital budgeting tools help in evaluating the viability of investment options
or projects. It also depicts benefits and drawbacks associated with investment appraisal
techniques.Report also presentsnon-financial factors which Hi-Tech Plcneeds to consider for
decision making. In this, report will exhibit funding sources which firm should consider for
meeting monetary requirements.
Part 1: Business Performance Analysis
Calculating and using ratios forthe purpose of decision making in the context of Hi-Tech plc
Ratio analysis may be served as a financial toolwhich in turn facilitates quantitative
evaluation of final accounts from several perspectives such as profitability, liquidity,
solvency and efficiency. By using such toolmanager of Hi-Techplc can get quick indication
about financial aspects and thereby become able to take strategic decisions for future growth
or success (Financial ratio analysis, 2018). In order to asses trends over the time frame ratios
analysis technique has been usedby Hi-Tech Plc. Ratio analysis of Hi-Tech plc for year ended
on 31st December 2016 & 2017 is as follows:
Statement of profit &loss
Particulars Formula 2016 2017
Gross profit 517 541
Operating profit 151 225
Net profit 82 130
Sales revenue 2022 2528
Average Total
assets
1177 1177 + 1632 / 2
= 1404.5