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Finance - Research Paper Example

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Research Paper
Pages 10 (2510 words)


The ultimate goal of an enterprise is shareholders value creation and maximization and for this to be realized, receipts and payments or expected stream of cash inflows (Receipts) should be compared with the outflow (payments) (Penman 2003). Berlin & Lexa (2003) argue that most of us and certainly all businesses are constrained by limitations on their capital…

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Many metrics have been developed to ease this process.
Faced with too much information, Investors at times get confused with no clear indication of what the true prices of stocks should be. (Penman, 2003). Under such circumstances, the investor either make decision based on his or her instinct, such investors according to Penman (2003) are intuitive investors while others who make their decision based on capital market efficiency are referred to as passive investors.
This part of the question addresses the performance of a new venture to be set up to enable us make informed judgment as to a hold a buy or sell decision. Thus, the objective of this question is to analyse the liquidity, the profitability and solvency position of the new set up from information extracted from the projected profit and loss account, the balance sheet and the cash flow statement. The report do not only provide a financial overview of the new venture for the projected three years period. The question also, guide potential investors on where the business is coming from and where it is heading to.
Gross profit margin assumes that in the absence of other expenses what percentage of sales comes to the corporation as profit, while net profit m ...
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