Financial Analysis of DuoLever Ltd. Business Case Study - ACC00716

This report presents a financial analysis of two investment alternatives for DuoLever Ltd, a personal care product company. The analysis, conducted through the use of net present value (NPV) and annual monetary flows, assesses the potential of incorporating the development of reused "sachet plastic" versus utilizing copyright processes. The report details the inputs, hypotheses, and financial implications of each alternative, including investment costs, sales revenue projections, and variable costs. The analysis reveals that the second alternative, involving the utilization of copyright processes, presents a more favorable financial outcome due to a higher NPV and annual cash flow, primarily driven by lower depreciation, finance, and management costs. The report also includes recommendations considering the risks associated with each alternative, emphasizing the importance of ensuring the quality of goods and the need for follow-up measures to maximize profitability and sales revenue.

Running head: BUSINESS CASE STUDIES 2
Business Case Studies 2
Name of the Student:
Name of the University:
Author’s Note:
Course ID:

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BUSINESS CASE STUDIES 2
Table of Contents
Financial assessment spreadsheet..............................................................................................2
Memo:........................................................................................................................................2
Reference list..............................................................................................................................7

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Financial assessment spreadsheet
Memo:
Memorandum
To: The CEO of DuoLever Ltd
From: The Manager

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Dated: 18-05-2019

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Sub: Assessment of the suggested alternatives
This particular memorandum is known to provide significant acumen of the two
alternatives, which are known to be accessible to the authorities of “DuoLever Ltd”. The
reason behind this is that the business is not sure of whether it will be incorporating
development of reused “sachet plastic” to the portfolio or whether the business should be
authorizing the utilization of the copyright processes. Therefore, both non financial as well as
financial forms are used for assessing the suggested alternatives that is accessed by the
business.
Definition and rationale
The systems, which are known to examine the usefulness of the alternatives, include
the use net present value (NPV) and the yearly monetary flows. When the company will be
having enough profit on “paper”, the company will not pay to retain their employees or the
dealers who supply substances might not get their payment on time (Adusumilli, Davis and
Fromme 2016). Also, not completing the orders will lead to hearsay related to the company
where the customers will go for a new dealer. For this reason, the monetary flows are
important in the form of venturing noteworthy investment decisions (Patassini 2017). The net
present value is known to get selected because it will be considering the time value of money.
On top of that the cash flows are being appraised over the life span of the project while risk
and profitability is considered to be important. It also helps in increasing the business worth
Inputs and hypothesis constructed
For incorporating the development of the “sachet plastic” that is being reused, it has
been found out that “DuoLever Ltd” should be investing $20 million in order to acquire
“plant and equipment” that is also known to have a projected life span of around five years.

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There is absence of any remnant value after the project has been accomplished. in order to
fund “plant and equipment”, the business needs to take a five-year loan which that will
provide an outcome of yearly interest expenditure of “$1.4 million” that needs to be paid at
the end year. The hypothesis is known to involve increase in the sales revenue by 4 percent
from the second year. It will increase by the extra revenue which takes place as an advantage
of the reused wrappers (Kim, Bansal and Haugh 2019). The all included varying pieces
presently will be around $22 million that will be reducing by 15 percent in the basic year of
the project. The variable cost will also get reduced by extra 15 percent escaping the dealer
limit. It is left untreated since it can be counter balanced by repaying the partner. It will be
then contributing to the current situation. The depreciation expenditure is then subtracted
from the revenue in order to achieve profit after tax. After achieving the profit after the tax it
is added back for calculating the yearly monetary flows.
There is also no need of investing the in equipment’s as well as plants since it is
known to be associated to the licensed utilization of the "pat then it will be contributed"
process. For this reason, the business no need to carry the project initiation. For this reason,
DuoLever Ltd only needs to get experience of the expenses of the goods supplied including
the yearly generic, selling and the management expenditures for the alternatives (Basher. and
Raboy 2018). Also there is no requirement for any kind of extra generation expense of
management. The firm will also able to keep the anticipated advantages of the sales revenue
which is shows in the first alternative. However, in both the cases both WACC and the tax
amounts will be 8 percent and 25 percent.
Summary
The chart which has been presented above presents the yearly monthly flows along
with the net present value of the alternatives. It can also be stated that the yearly cash flows

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for the first alternative have been noticed to be much less when compared with the yearly
cash flows of the second alternative. It is known to mostly own to the non existence of the
depreciation expenditure, management and selling cost of the second alternatives. It also
includes finance cost along with lesser yearly generics (Manganaris, Spathis. and Dasilas
2016). Since the business need not acquire plant as well as equipment, when the firm will be
selecting the second alternative there will be absence of any cost regarding depreciation and
the finance cost through publishing debt. When the net present value is evaluated, it has been
found out that the second alternative is known to be much more than the net present value
which totals $608,033,202 when compared to the NPV of the first alternative. The value of
the NPV of first alternative is equal to "$589,011,380". When the net present value is greater
as well as positive in nature, it will be good for the business because it will help the firm to
grow. Therefore, it can be said that the second alternative is comparatively the better method
both in terms of annual cash flow as well as net present value.
Recommendations and follow up measures
Both the NPV and the monetary cash flow are known to be suitable for investment
from the view point of DuoLever Ltd as a result of positive worth. When only one alternative
is chosen, the second alternative is seemed to be much more profitable compared to the first
one since it is known to have greater NPV as well as annual cash flow. Also, there are
presence of other operations that needs to be noted by the authorities of DuoLever Ltd before
taking the ultimate commitment.
The risk that is involved with the investment commitment with respect to second
alternative is the quality of goods that will that needs to be used by Clean World Ltd. When
the substances delivered will be of low quality there will be a reduction in the anticipated
advantage of the sales revenue. For this reason, the consumers will be shifting to the dealers

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who is known to provide quality items and then there will be decline in comprehensive
profitability that will be gained from the project. When the substance quality will not meet
the actual grade, actions should be taken by Clean World Ltd to ensure anticipated sales
advantage and profitability that needs to be attained from the project.

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Reference list
Basher, S.A. and Raboy, D.G., 2018. The misuse of net present value in energy efficiency
standards. Renewable and Sustainable Energy Reviews, 96, pp.218-225.
Kim, A., Bansal, P. and Haugh, H., 2019. No time like the present: How a present time
perspective can foster sustainable development. Academy of Management Journal, 62(2),
pp.607-634.
Manganaris, P., Spathis, C. and Dasilas, A., 2016. How institutional factors and IFRS affect
the value relevance of conservative and non-conservative banks. Journal of Applied
Accounting Research, 17(2), pp.211-236.
Adusumilli, N., Davis, S. and Fromme, D., 2016. Financial Evaluation of Irrigation
Efficiency Improvement Practices in Row Crop Production in Louisiana (No. 1376-2016-
109830).
Patassini, D., 2017. Beyond benefit cost analysis: accounting for non-market values in
planning evaluation. Routledge.
Drummond, M.F., Sculpher, M.J., Claxton, K., Stoddart, G.L. and Torrance, G.W.,
2015. Methods for the economic evaluation of health care programmes. Oxford university
press.
Lu, H.L., Zhang, J.J., Tan, X.H., Li, X.P. and Zhao, J.H., 2017. A fractal analysis for net
present value of multi-stage hydraulic fractured horizontal well. Fractals, 25(04), p.1740011.