FNSACC511: Financial and Business Performance Information Report

This report provides a detailed analysis of financial and business performance, focusing on key aspects such as Net Present Value (NPV) and Internal Rate of Return (IRR) for investment decisions. It evaluates different investment proposals for Thorne Manufacturing, recommending the best option based on NPV and IRR calculations. The report also explores tax implications, risks involved, and the impact of political factors. Furthermore, it covers essential principles of cash budgeting, different business structures, and ways to gather customer feedback to improve services. The analysis includes financial projections, depreciation calculations, and a discussion of strategies to enhance customer satisfaction and overall business performance. The report is structured in three parts, with Part A focusing on investment analysis, Part B providing detailed financial projections, and Part C discussing customer feedback and strategies.

Running Head: Financial and business performance 1
Financial and business performance

Running Head: Financial and business performance
Table of Contents
Part A..........................................................................................................................................................3
Expected performances............................................................................................................................3
Tax implications......................................................................................................................................3
Risks involved.........................................................................................................................................3
Graphs.....................................................................................................................................................4
Recommendation of investment to be chosen..............................................................................................4
Political impact............................................................................................................................................4
Source of information for researching.........................................................................................................5
Key Principles of cash budget.....................................................................................................................5
Different business structures........................................................................................................................5
PART B.......................................................................................................................................................6
PART C.......................................................................................................................................................8
Ways to get feedback...............................................................................................................................8
Strategies.................................................................................................................................................8
References.................................................................................................................................................10

Running Head: Financial and business performance
Part A
NPV and the internal rate of return are treated to be as the two major capital budgeting
decisions that are used in assessing the viability and the future potential of the project if accepted
by the company. The NPV of the project defines the difference between the present value of the
cash inflows and the present value of the cash outflows. The internal rate of return on the other
hand is the rate at which the NPV of the cash flows is equivalent to zero. Overall the capital
budgeting techniques are used to assess the five proposals for the owners of the Thorne
Manufacturing (Crosby, Devaney & Wyatt, 2018).
Expected performances
In terms of the performances, the current proposal entertains the IRR of 34%, whereas
that of the replacing of the machinery is 16%. On the contrary if the dividends that will be
declared are of $52000. The debentures are giving the cash flows of $1347790. So in overall
cases the proposal current proposal is worthy and beautiful.
Tax implications
From the perspective of the tax implications the debentures have the advantage of the tax
deduction and the current proposal as well replaced proposal also have accessed the benefits of
the tax.
Risks involved
The risks that are involved is the company might lose its dollars if the net present value is
negative and the company accepts the project just on the basis of higher IRR than the cost of
capital.

Running Head: Financial and business performance
Graphs
0 1 2 3 4 5
-5000000
-4000000
-3000000
-2000000
-1000000
0
1000000
2000000
3000000
4000000
5000000
Net present value
Net present value
The net present value of the current proposal is shown in the form of the graph whereby
the value tends to be greater than the future value of the cash flows.
Recommendation of investment to be chosen
The best proposal that shall be selected by the company is the current business as it has
highest NPV as well as the internal rate of return. The NPV is $3929291 whereas IRR is 34%.
The other options have lower NPV and the less rate of return even lower than the cost of capital.
Hence, the proposal of purchasing the current business shall be opted.
Political impact
When the economy is accelerating and moving so fast and inflation is moving
significantly higher, the banks control the situation by the introduction of the short term rates of
the interests, which constitutes restrictive or tight monetary policy (Mumtaz & Theophilopoulou,
2017). On the other hand the economy is of sluggish nature, the bank will adopt an accepted

Running Head: Financial and business performance
policy or say accommodative policy by lowering short-term interest rates for faclitatingthe
potential growth and get the economy back on track. O, overall it can be concluded that impact
of the monetary policy on the investments showcases direct as well as indirect relationship
(Enterprnuership, 2018).
Source of information for researching
The sources of the information that could be used for the purpose of the researching are
magazines. newspaper, annual report of the company and websites.
Key Principles of cash budget
There are several principles of the cash budget if Thorne Manufacturing is taking it to
consider and some of the principles are management and the availability of the support, the
involvement of the employees, accounting with full responsibility, keeping flexibility, preparing
a solid organizational structure and communication of the results along with the proper
accounting system to record the cash budget (Oulasvirta, 2016).
Different business structures
The different types of the business structure that are available are presented below along
with its advantage and disadvantage.
Basis of the business Advantages Disadvantages
Sole proprietorship It’s easily to establish.
It carries little formalities.
Owners have the option to
The capital of the business is
not possible by selling an
interest.

Running Head: Financial and business performance
freely mix business and
personal assets
The unlimited personal
liability prevails and the
business could rarely survive
the death or incapacity.
Partnership Owners can start partnerships
relatively easily and
inexpensively.
This kind of business offers
favorable taxation and the
partnerships often have to pay
minimum amount of taxes
(Spadaccinni, 2018).
The liability is on restricted on
one person, an all the owners
have equal share of liability
like equal share of profit.
Poorly organized partnerships
can lead to mismanagement in
the organization as well as
disputes and conflicts among
the owners.
Limited Liability Company Simplicity and flexibility and
offers the liability protection.
This also helps to gain the
overall benefits of the
corporation without the
formalities
The LLC is a new business
form, and as of now there is
no ruing body (Zha & Cai,
2016).
PART B
Particulars 0 1 2 3 4 5

Running Head: Financial and business performance
Initial cost of capital
-
4000000
Cash inflow 1600000 1728000 1866240 2015539 2176782
Cash outflow 1050000 1102500 1157625 1215506 1276282
Profit 550000 625500 708615 800033 900500.8
Depreciation 400000 400000 400000 400000 400000
Profit after depreciation 150000 225500 308615 400033 500500.8
Less: Tax @30% 45000 67650 92585 120010 150150
Profit after tax 13500 20295 27775 36003 45045
Estimated value
Annual cash flows
-
4000000 413500 420295 427775 436003 445045
Discounting factor 1.000 0.870 0.756 0.658 0.572 0.497
NPV
-
4000000 413500 365474 323460 286679 254456
NPV
-
2356431
IRR -18%
This kind of proposal shall not be accepted as it would not give any kind of future
potential growth to Thorne Manufacturing.

Running Head: Financial and business performance
PART C
Ways to get feedback
The analytics and the data gives all sort of the insights into what our customers want from
the business. There are several ways in which the customer’s feedback can be taken from the
Thorne Manufacturing. One of the best ways for taking the feedback from the customers is
Surveys, as it’s like a bread jam for the business. The surveys are easy to handle, analyze and
most importantly set up. The scale of doing the survey is very well known in the corporate
organizations. The surveys are also bifurcated into the long surveys as well as short surveys.
The second most opted method for the feedback is through feedback boxes. This is
necessary as the customers are constantly thinking of how to develop the business in the better
manner. The customers start shopping out for the alternatives and the feedback boxes help in
gathering the suggestions and feedback under one umbrella.
The easiest way is to reach out the customers directly and yet it is one of the most
undervalued methods. The right way to understand the preference of somebody is to have a
conversation with them. This also lets the organization dig a little deeper to identify any
suggestions for the customers.
Strategies
There are several strategies which can also be helpful in improving the overall customer
service and the standards from the point of view of the future. Some of the strategies are
determined below in detail.

Running Head: Financial and business performance
It’s required to be aware that the customer service team has the right skills for your
managing customers’ needs. The shortcomings cannot be replaced due to the presence of the
CRM software.
If there is any kind of the bad customer experience, it can ruin the relationship between
the client and the company. The firm must be crucial with the demonstration of the right skills,
and paying the attention to the key points. The overall view of the customer must be taken into
consideration to avoid any kind of the lapses in case of the risk (Ferguson, Keyworth & Tully,
2018).
The last and the most important strategy to follow is the improvement of the customer
satisfaction as half of the problems can be eradicated with the help of the clear and the
transparent customer interactions. If the organization admits the mistakes before the customers
do, this creates a trust amongst the clients and restores it for the longer duration (Jayarathna, et al
2019).

Running Head: Financial and business performance
References
Crosby, N., Devaney, S., & Wyatt, P. (2018). The implied internal rate of return in conventional
residual valuations of development sites. Journal of Property Research, 35(3), 234-251.
Enterprnuership, (2018). MARKET RESEARCH – WHAT IS IT, BENEFITS, PROCESS &
INFORMATION SOURCES. Retrieved from
https://www.entrepreneurshipinabox.com/80/market-research-what-is-it-benefits-process-
and-information-sources/
Ferguson, J., Keyworth, C., & Tully, M. P. (2018). If no-one stops me, I'll make the mistake
again’: Changing prescribing behaviours through feedback; A Perceptual Control Theory
perspective. Research in Social and Administrative Pharmacy, 14(3), 241-247.
Jayarathna, H. M. P. P., Priyanga, E. A. I., De Silva, B. P., Karunarathne, K. R. R., Perera, R.
M., & Senanayake, S. H. D. (2019). Automated Collection of Customer Feedback Using
Facial Expression and Machine Learning Techniques.
Mumtaz, H., & Theophilopoulou, A. (2017). The impact of monetary policy on inequality in the
UK. An empirical analysis. European Economic Review, 98, 410-423.
Oulasvirta, L. (2016). Accounting Principles. Global Encyclopedia of Public Administration,
Public Policy, and Governance, 1-9.
Spadaccinni, M (2018). Advantages of business structure. Retrieved from
https://www.entrepreneur.com/article/200516

Running Head: Financial and business performance
Zha, L., & Cai, J. (2016). Research on the application of NPV method in medical equipment
procurement. China Medical Equipment, 13(3), 129-131.