BUSM4741 Financial Analytics for Managerial Decisions Case Study

This case study solution provides a financial analysis focusing on managerial decisions. It includes a detailed examination of cash budget, cost-volume-profit (CVP) analysis, weighted average cost of capital (WACC), and net present value (NPV). The analysis offers recommendations for improving cash budget management, such as leasing equipment instead of purchasing. It also assesses the net present value of different brand options, advising the selection of the brand with the higher NPV. The report concludes with key findings and recommendations to aid in effective financial decision-making. Desklib provides similar solved assignments and past papers for students.

CASE STUDY FOR FINANCIAL ANALYTIC
FOR MANAGERIAL DECISIONS

TABLE OF CONTENT
 Introduction
 Key aspects or findings in cash budget and CVP analysis
 Recommendation to Mr. Lopez
 Weighted Average cost of capital
 Net present value
 Conclusion
 References

INTRODUCTION
 Decision-making is the most crucial factors and features which affects the overall
performance of the company and are the responsibility of finance manager.
 The report will be based on the financial analyses in which cash budget and
WACC will be calculated and analysis.
 At last, the report will recommend the one type of membership out of the flexible
and dedicated desk membership to the company.

KEY ASPECTS OR FINDINGS IN CASH
BUDGET AND CVP ANALYSIS
 The Cash Budget is helpful for managing the minimum cash
balance within the organization and is also helpful for PenHub
Coworking company to expand their business in international
market.
 The monthly cash budget of PenHub Coworking ltd. is reflecting
that the company's total cash inflow is higher than the total cash
outflow.
 The company's opening cash balance in the month of January is
$40000 which indicate better performance of the company at initial
stage.

RECOMMENDATION TO MR. LOPEZ
Improvement to the original Plan of cash budget and CVP analysis
 On the basis of above calculation and analysis, it is recommended to the Mr.
Lopez that the company are performing very well but they need to follow some of
factors to improve their cash budget and break-even analysis.
 For improving cash budgets, it is advisable to the Mr. Lopez that they must take
the equipment and other assets on lease rather than buying it.

Weighted Average cost of capital
 Weighted average cost of capital is a technique denoted about the overall weight at which company is generating its financial resources for
matching up with different requirements associated with business entity.
 The practice of weighted average cost of capital is to identify the overall cost organisation would need to bear in against to generate overall
funding requirements of the organisation.
 In process to channelize any single functional activity financial resources are one of the most significant need and requirement of the business
house which organisation needed to overlook.
 The concept of weighted average cost of capital is to determine the overall cost which organisation require to bear in against to generate the
financial resources.
 Cost of capital is about to denote that the value organisation needed to suffer in against to utilise the respective financial resource.
 This is the overall cost company bear in process to utilise the financial resources.
 There are multiple sources are available with the company that can be utilised in against to generate the funding requirements of company.
 Weighted average cost of capital denote the individual cost of each funding source explored by the company to meet up all its financial need and
demand.

Net Present Value
 Net present value is a method or technique which denote about the net benefit or advantage that
business entity will incur in against to channelizes the particular investment option.
 This is the total net benefit or advantage company will get against directing the funds in favour of
the business organisation.
 The concept of net present value is about to direct and guide the business entity in respect to the
particular investment option that can bring out or generate the best possible financial advantage or
outcome in favour to the company.
 The role of the net present value method or technique is to highlight about the potential level of
financial outcome that company can entertain in against to approach the different investment
proposals or options available with the company.

Cont.
 In the current situation two types of brand options are available with the organisation.
 This is projected that the brand name such as JD and ZP are available in context to the organisation.
 Both the brands are the two most prioritised choices in respect to the business entity.
 In both the brands both small and large category of machines are available that can be selected by the companies as a part of investment choice.
 For the JD brand the small machine will consume a net present value of 2814462 and in context to its large machine the respective value is
1051315.15.
 On the other hand in context to the ZP brand the small machine will consume a net present value worth of 2663368.05 and for the large machine
the respective amount is 1949095.66.
 The total net present value in respect to the JD brand the value is 3865777.27 and for the ZP brand the respective value is 4612463.71.
 This is clearly indicated that for the ZP brand the net present value is higher than the other brand.
 This is interpreted that company should select the ZP brand as it contain more number of net present value.

CONCLUSION
 The report has concluded the monthly cash budget calculation along with the CVP
analysis in the financial analytics.
 This are the most important part which help in the decision-making process of the
managers.
 Further, the report has also recommended the facts which can improve the original
plan.
 The report has also conclude the calculation of WACC and net present value.

REFERENCES
 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.
 Gálvez, A. M. T., 2021. Aplicación regulatoria del WACC.
Boletín económico de ICE, Información Comercial Española. (3137). pp.57-68.
 Guan, W. and et.al., 2021. Pacific Sea Surface Temperature Anomalies as Important Boundary Forcing in Driving the Interannual Warm Arctic–
Cold Continent Pattern over the North American Sector.
Journal of Climate. 34(14). pp.5923-5937.
 Nicita, A. and et.al., 2020. Green hydrogen as feedstock: Financial analysis of a photovoltaic-powered electrolysis plant.
International Journal
of Hydrogen Energy. 45(20). pp.11395-11408.
 Pinha, A. C. H. and Sagawa, J. K., 2020. A system dynamics modelling approach for municipal solid waste management and financial
analysis.
Journal of Cleaner Production. 269. p.122350.
 Richmond, A., 2018. Direct net present value open pit optimisation with probabilistic models. In
Advances in applied strategic mine
planning (pp. 217-228). Springer, Cham.
 Roth, A. and et.al., 2021. Renewable energy financing conditions in Europe: survey and impact analysis.