Report on Strategic Financial Management- Hunter and Pride Co

Added on -2020-02-05

| 14 pages| 4100 words| 63 views

Trusted by 2+ million users,
1000+ happy students everyday

Showing pages 1 to 4 of 14 pages

Strategic FinancialManagement
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................3a) Appraisal of the Project...........................................................................................................3b) Analysis and evaluation of investment appraisal techniques..................................................7CONCLUSION .............................................................................................................................12REFERENCES..............................................................................................................................132
INTRODUCTIONStrategic financial management is referred to as study of finance that possess long termview that takes into account strategic goals of the business. In the present era financialmanagement is regarded as strategic financial management in order to enhance its importance forthe business (Sofat and Hiro, 2015). In the present report strategic financial management hasbeen discussed in context of Hunter and Pride Co. The firm is involved in manufacturing leathergoods that includes footwear as well as clothing. The present study entails to understandappraisal of the project by the means of calculating net present value, payback period as well asinternal rate of return. a) Appraisal of the Projecti) Calculation of net present value, pay back period as well as internal rate of return The calculation of investment appraisal techniques have been enumerated in the mannerbelow:Net present valueYear Sales (in units)Selling priceper unit (£)Sales/Revenue (£)Variable cost (£)Annual salary(£) Annual rent (£)Depreciation (£)Total expenses (£)Profit before tax (£)Tax(£) Profit after tax (£)016000.0065.00390000.00195000.0035000.0050000.0090000.00370000.0020000.006000.0014000.00210000.0068.25682500.00341250.0035700.0050000.0090000.00516950.00165550.0049665.00115885.00310000.0071.66716625.00358312.5036414.0050000.0090000.00534726.50181898.5054569.55127328.95412000.0075.25902947.50451473.7537142.2850000.0090000.00628616.03274331.4782299.44192032.03512000.0079.01948094.88474047.4437885.1350000.0090000.00651932.56296162.3188848.69207313.62Year Profit after Tax allowancesDepreciatioTaxationCash flowDiscount Present 3
tax (£)(£) n (£)(£) (£) rate 12%value (£)0-58500011400010000090000.006000.002100000.893187530.0021158859000090000.0043665.003395500.797270621.353127328.957775090000.004904.55299983.50.712213588.254192032.0297000090000.0027729.89379761.920.635241148.825207313.6183311225090000.006549.25416112.87090.567235936.00Residual value 500000.56728350.00Total present value £1177174.42(Less): Initialinvestment £585000Net present value £592174.4190003Depreciation Value £500000Residual value £50000Life of machinery 5Depreciation £90000Interpretation: From the above calculation of Net present value it has been examined that theNet present value of the new project that relates with expansion of the catalogue is positive. Thisis£592174.41. In case of net present value the decision is made by the firm regarding selectionwhen the value of net present value is higher and positive. Here in the present case scenario, thevalue of net present value is positive. Thus Hunter and Pride Co. can take decision regardingselection of the new proposal that relates with expansion of catalogue by adding new range ofleather briefcases. This is because such can be beneficial for the company as it would yieldmaximum amount of profitability in long run course of time. 4

Found this document preview useful?

You are reading a preview
Upload your documents to download
or
Become a Desklib member to get accesss

Premium

$45

Q&A Library Access

Chat support

12

Document Unlocks

4

Answer Unlocks

Students who viewed this