Financial Analysis of Curl plc., Clippers, and Hose plc. - IFM Report

This report provides a detailed analysis of international financial management practices through case studies of Curl plc., Clippers, and Hose plc. It begins with an introduction to international financial management and then delves into specific scenarios, including the evaluation of outsourcing versus in-house production for Curl plc. using Net Present Value (NPV) calculations. The report also determines the optimal time for cutting trees for Clippers, based on discounted cash flow analysis, and advises Hose plc. on a strategic investment decision, calculating the NPV under inflation. The report emphasizes the importance of financial decision-making, considering factors influencing these decisions, and provides recommendations for maximizing financial outcomes. The analysis includes the use of capital appraisal techniques and the evaluation of various factors impacting financial strategies. The conclusion summarizes the key findings and highlights the significance of effective financial management in achieving organizational goals. The report uses NPV, discounted cash flow, and other financial tools to derive insights and recommendations for each company.

INTERNATIONAL
FINANCIAL
MANAGEMENT-1

TABLE OF CONTENTS
INTRODUCTION.......................................................................................................................................4
QUESTION 1..............................................................................................................................................4
QUESTION 2..............................................................................................................................................7
QUESTION 3..............................................................................................................................................8
CONCLUSION...........................................................................................................................................9
REFERENCES..........................................................................................................................................10

INTRODUCTION
International financial management business practices that company conducts at global
level for monitoring and managing monetary transactions. In competitive world it has become
essential for organization to implement such practices for gaining competitive advantages. The
present report will give emphasis on Curl plc. for analyzing best option for organizational
activities along with factors influencing decisions. Current case study will involve the
calculation of present value for determining the best time for cutting trees. Present case study
will also comprise computation regarding Hose plc. and advice on the same.
QUESTION 1
In order to compute the best option for continuing operational activity of Curl plc.
manager can assistance through determined values. There are two options available for Curl plc
is procuring the widgets from supplier or producing itself in firm. In addition to this, the better
evaluation can be made by comparing both available options for reducing expenditures in order
to generate more profits (What is the importance of Financial Management? 2021).
Net present value of outsourced Widgets can be computed by below shown method. Curl
Plc. would be able to get an idea regarding its expenditure activity by analyzing each period
discounted cash flow (Moșteanu, 2019). This will give company an overall view of total value
that is incurred by organization in 5 years. From the below illustrated structure manager can take
view of NPV of outsourced widgets.
Year Cash outflow PV factor @16% Discounted cash flow
1 -100000 0.862068966 -86206.90
2 -110000 0.743162901 -81747.92
3 -121000 0.640657674 -77519.58
4 133100 0.552291098 73509.95

5 -146410 0.476113015 -69707.71
Total PV of cash
flow £-241672.16
For the purpose of producing specified item company need to bear the following
expenditure. In addition to this, it will prove deep insights regarding the clear picture of business
for comparing.
For conducting this course of action particular method for computation is shown below
Year Cash outflow
PV factor
@16%
Discounted cash
flow
0 -70000 1 -70000
1 -80000 0.862069 -68965.5
2 -82000 0.743163 -60939.4
3 -84000 0.640658 -53815.2
4 -86000 0.552291 -47497
5 -78000 0.476113 -37136.8
-338354
Loss of net income -48000
Total PV of cash flow £-386354
Both the options has shown the expected expenditure for span of 5 years. From the above
computation it can be analyzed that company need to spend in case of outsourcing widgets from
suppliers is £-241672.16. The amount of expenses while initiating production for the same in
house is £-386354. From comparing both figures it is evaluated that company would be more
beneficial when it go with option of taking widgets from suppliers rather than manufacturing
(Shapiro and Hanouna, 2019). The reason behind the selection is that amount obtained by
computing present value in case of first table is less than the other.
Factors Influencing Decision

Finance related decisions need to give more focus as operational effectiveness is
dependent on company’s ability to optimize the available resources. There are various
components that need to give considerations in decision making procedure of organization. In
addition to this, manager is evaluating available alternative for attaining competitive advantages
through making appropriate investment & capital appraisal techniques (Seabrooke and Tsingou,
2021). Budgeting plays crucial role in impacting firm’s overall operational practices. This
provides assistance in making strategy regarding allocation of financial resources. The manager
of Curl plc. Would be more satisfied if he is getting more profitability from the selected
alternative therefore it profit is another component. With respect to this, main motive of any
company for implementing any business practice is earning maximum revenue by conducting
less expenditure. Enterprise need to give emphasis on every element that affect partially as well
fully on business decisions (Konstantin and Konstantin, 2018). Important components are cost of
capital, payback period, risk, sensitivity, etc.
In order to make suitable decision which can help business to accomplish its
organizational objectives firm need to focus on several factors? These elements required to be
analyzed by finance manager for attaining positive outcome on company practices (Madura,
2020). Cost of capital, risk such factor can be evaluated with help of applying capital appraisal
technique which includes payback period, net present value, accounting and internal rate of
return. These will resource firm to get appropriate knowledge related to all aspects which will
lead business to move towards right direction. There are numerous other things as well which
enables business to take decisions (Kembauw and et.al., 2020). Competitors’ strategy should be
analyzed by business in order to know prevailing level of competition. In addition to this, there
are numerous other factors as well which influences both positive and negatively. Having
analytical thinking skills for judging crucial components in regards to know available
opportunities & threats for adapting changing business environment with innovative strategies.
Marketing forces such as demand and supply help to assess the existing trends so that outdated
usage of tools can be avoided. Company requires to indulge into right practice by considering
both financial and non monetary factors which is largely impact its profits and business culture.
Company’s employees skills, knowledge, attributes, experience for continuing course of actions
for achieving the desirable position highly affect the decision making criteria (Slinger, 2021).
Management , technology, economic influencing factor, wage & exchange rate, political, social,

legal factors will equivalent impact on taking decisions. Growth in terms of wealth and profit
maximization is contributed largely in firm success. Availability & reliability of essential data
for overcoming both internal & external challenges require more emphasis in respect to avoid
failure. Marketing, operational, financial, manufacturing, etc. functional areas require
observation for cooperating with changing circumstances of business environment. Customers
changing preferences & taste, suppliers, competitors, lenders, etc. their efforts in succession the
business activities as company is partially dependent on for carrying out operational activities
(Brigham and Houston, 2021). Moreover, it becomes important for company to give emphasis on
mentioned elements for effective decision making procedure.
QUESTION 2
To determine the best time for cutting trees company require to evaluate discounted
amount for deriving suitable outcome. Clippers will become able to assess the applicable
decision by validating it through the information available below
Calculations of NPV
Year Cash inflow PV factor @10%
Discounted cash
flow
0 10000 1 10000
1 12000 0.9091 10909.09
2 14000 0.8264 11570.25
3 15500 0.7513 11645.38
4 16500 0.6830 11269.72
Total present value of
cash flow £55394.44
From the above computed figures it can be analyzed Clippers can obtain maximum
amount of cash inflows in 3rd year. The other years inflow is lesser than the selected period so
the decision will be most beneficial for organization (Chrysafis and Papadopoulos, 2021).

QUESTION 3
For making a strategic investment decision Hose company requires overall view to go
with right direction in order to acquire success. By analyzing case it can be interpreted that
company is willing to invest into a project of £800000 for the life span of 7 years. In order to get
the accurate return of project in terms of changing value of money, NPV method of capital
appraisal can be given emphasis (Willigers, Jones and Bratvold, 2017). The inflation rate at
which money value increasing mentioned in case study is 6 %. Moreover, Hose plc should focus
on all this aspects for obtaining positive accomplishment of objectives. It will be convenient for
company to validate project through referring information regarding discounted cash flow
(Gaspars-Wieloch, 2019). For advising on the specific subject matter following method can be
taken into consideration. All years cash inflow will incline at same rate so acquiring the same
concept while computing cash flow will give fair knowledge for validating project.
Actual discount rate can be computed by determining by making adjustment in nominal rate:
NPV under inflation rate:
Years cash flow Inflation rate @6% Cash Flow
1 150000 1.1 159000
2 150000 1.1 168540
3 150000 1.2 178652
4 150000 2.1 309000
5 150000 1.3 200734
6 150000 1.4 212778
7 150000 1.50 225545
Years cash flow Discount rate @13% Cash Flow
1 159000 0.8850 140708
2 168540 0.7831 131992
3 178652 0.6931 123815
4 189372 0.6133 116145
5 200734 0.5428 108950

6 212778 0.4803 102201
7 225545 0.4251 95870
Total NPV 819682
Initial
investment 800000
Net Present
Value 19682
NPV under both the approaches is favorable so it can be interpreted that organization
should go with the project for attaining sustainability and profitability. From the calculated
method it can easily understand that mentioned company for the particular case study will get
immense help through this (Benamraoui and et.al., 2017). There are several methods also
available but choosing this specified approach would be provide various benefit such as
evaluation of present value through inflated amount .
CONCLUSION
From the above report it can be concluded that financial management play important part
in succession. The present report has included calculation for Curl plc. for assessing information
regarding suitable option between outsourcing and production in house. The outcome derived
from it is that company should select buying from suppliers as it costs lower than producing. In
addition to this, influencing factors are also mentioned. The best time for cutting trees has been
mentioned in present case study which is in year 3. Decision for knowing inflated present value
has been derived in current case study for evaluating viability of project.
REFERENCES
Books and Journals

Benamraoui, A. and et.al., 2017. Net present value analysis and the wealth creation process: A
case illustration. The Accounting Educators' Journal. 26.
Brigham, E. F. and Houston, J. F., 2021. Fundamentals of financial management. Cengage
Learning.
Chrysafis, K. A. and Papadopoulos, B. K., 2021. Decision Making for Project Appraisal in
Uncertain Environments: A Fuzzy-Possibilistic Approach of the Expanded
NPV Method. Symmetry. 13(1). p.27.
Gaspars-Wieloch, H., 2019. Project net present value estimation under uncertainty. Central
European Journal of Operations Research. 27(1). pp.179-197.
Kembauw, E and et.al., 2020. Strategies of Financial Management Quality Control in
Business. TEST Engineering & Management. 82. pp.16256-16266.
Konstantin, P. and Konstantin, M., 2018. Investment appraisal methods. In Power and energy
systems engineering economics (pp. 39-64). Springer, Cham.
Madura, J., 2020. International financial management. Cengage Learning.
Moșteanu, N. R., 2019. International Financial Markets face to face with Artificial Intelligence
and Digital Era. Theoretical & Applied Economics. 26(3).
Seabrooke, L. and Tsingou, E., 2021. Revolving doors in international financial
governance. Global Networks. 21(2). pp.294-319.
Shapiro, A. C. and Hanouna, P., 2019. Multinational financial management. John Wiley & Sons.
Slinger, P., 2021. Financial management in partnerships. BDJ In Practice. 34(4). pp.36-37.
Willigers, B. J., Jones, B. and Bratvold, R. B., 2017. The net-present-value paradox: Criticized
by many, applied by all. SPE Economics & Management. 9(04). pp.90-
102.
Online
What is the importance of Financial Management? 2021. Avaialble through: <
https://www.lsbf.org.uk/blog/news/importance-of-financial-management/
117410#:~:text=Financial%20management%20refers%20to
%20the,important%20part%20in%20fiscal%20management.>