Accounting Information System Report: Philly Landscaping Investment

This report presents an analysis of accounting information systems, specifically focusing on investment decision-making for retirement plans. The analysis centers on a case study involving Philly Landscaping and its owner, Steve, who is considering various investment options after retirement. Three scenarios are examined: selling the company and investing the proceeds, building the company by taking out a loan, and a buyout. The report evaluates the impact of each scenario on annual cash flows from 2018 to 2027, forecasting future cash flow to aid in assessing the investment options. The analysis includes a 'Do Nothing' scenario, along with loan scenarios with varying returns on investment. The conclusion highlights that the buyout option generates the highest total cash flow over the forecasted period, making it the most feasible investment choice for Steve. The report incorporates a decision support system to guide informed decision-making, and includes a list of relevant references to support the analysis.

Running head: ACCOUNTING INFORMATION SYSTEM
Accounting information system
Name of the University
Name of the Student
Authors Note

1ACCOUNTING INFORMATION SYSTEM
Table of Contents
Business situation and purpose of analysis:...............................................................................2
Description of tested scenarios:.................................................................................................2
Conclusion:................................................................................................................................4
References list:...........................................................................................................................5

2ACCOUNTING INFORMATION SYSTEM
To: Mr Steve, Owner of Philly landscaping
From: XYZ
Date: 25th October, 2017
Subject: Investment decision making of retirement plans
Business situation and purpose of analysis:
The present business situation is of Philly landscaping who has been in business for
quite long time and its owner Steve is concerned about his retirement plan. In this regard,
owner of business is provided with their investment options after his retirement. He would be
guided with informed decision making using the decision support system software. The three
investment options comprise of selling the company and investing the proceeds generated
that would yield annual income of $ 100000. Secondly, building company by taking out loan
that help in running operations by hiring general manager at an annual salary of $ 85000.
Thirdly, he has the options of buying out. The main purpose of analysis is to determine the
impact on annual cash flows in all the scenarios mentioned above. Moreover, the analysis is
done to forecast the future cash flow that would help in assessing all three investments
options.
Description of tested scenarios:
Do Nothing Loan-Low ROI Loan-High ROI Buyout
Sum of Cash Flow from 2018 to 2027 $591,205 $179,878 $713,261 $1,000,000
Year with enough profit to general manager? 8 0 6 NA
Year with income over expected annuity earnings? 0 0 3 10
If Steve considers doing nothing then this would lead to reduction in customer base by
5% and generates an annual income of $65000. The forecasted amount of cash flow stood at

3ACCOUNTING INFORMATION SYSTEM
$ 4311999. Forecasted annual income till year 2027 stood at $ 668751. Now, if he accept low
from bank at lower return on investment, would lead to an increase in annual income $
100000. The total value of annual income for forecasted period is computed at $ 257423.
Now, considering loan from bank at higher return on investment would generated total annual
income for forecasted year at $ 790807. Now, if Steve seeks buying out then, it would
generate total annual income till forecasted year at $ 1077545. Therefore, it can be inferred
from the calculated figures that buying out generates higher amount of total annual income
till forecasted year as compared to other three scenarios.
Do
Nothing Loan-Low
ROI Loan-High
ROI Buyout
$0
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
Sum of Cash Flow from 2018 to 2027
Sum of Cash Flow from 2018
to 2027
Do Nothing Loan-Low ROI Loan-High ROI
0
1
2
3
4
5
6
7
8
Year with enough profit to general
manager
Year with enough profit to
general manager?

4ACCOUNTING INFORMATION SYSTEM
Conclusion:
From the analysis of all the scenarios, it can be concluded that option of buying out
the business generates significantly higher cash flow from year 2018 to 2027. Highest value
of total cash flow stood at $ 1000000 as against accepting loan from bank with lower return
on investment at $ 179878. The expected annuity earnings are higher for buyout. Therefore,
after carrying out thorough analysis of all the scenarios, it can be said that the feasible
investment options for Steve after retirement would be buying out business.

5ACCOUNTING INFORMATION SYSTEM
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