StudentShare solutions
Triangle menu

Finance Analysis of Jones Limited(small, specialist marine engineering company based in Aberdeen) - Coursework Example

Nobody downloaded yet

Extract of sample
Finance Analysis of Jones Limited(small, specialist marine engineering company based in Aberdeen)

Payback period for the investment of £250,000 needed to generate the earnings of £125,000
Thus, will be
250,000 ÷ 125,000
= 2 years
In another approach, Net Present Values of Profit Streams to be received in next 3 years and 5 years can be calculated to see if they are positive.
New investment needed is £250,000. If the same debt/equity ratio for financing the project i.e 50% each is considered then debt burden will be £125,000 and that will incur 8% interest charge.
The interest charge comes to £10,000.
Since the dividend declared is 16%, weighted average cost of capital employed can be taken as arithmetic mean of debt and equity for both being equal in magnitude.
Thus, the cost of capital to the company for this new project is 12% amounting to £30,000 per year. The cost of capital needs to be deducted from the yearly earnings to arrive at the net cash flow to the company and that amounts to 125,000-30,000= £95,000
However, the net profit of the operation after interest charge comes to 125,000-10,000=115,000
The depreciation of the plant and equipment is calculated on straight line method considering its useful life of 5 years.
That is calculated as £250,000/5= £50,000.
Thus, net profit to the company after charging interest, and depreciation is £65,000.
Development cost of £25,000 can be apportioned as per the laws towards its useful life; however, in absence of the details, we right now assume it to apportion in 5 years. Thus, development cost for each year comes to ?5,000 and can be deducted from the net profit of ?65,000. Thus, actual net profit is ?60,000. However, depreciation is not creating any cash outflow though dividend on the equity is an out flow for the company. So net cash generated to the company is ?90,000 only. (Adding depreciation of ?50,000 back to the net profit and deducting dividend of ?20,000 at the rate of 16% on equity of ?125,000) Assuming Demand Will Last for 3 Years The forecast is that the demand will last for only 3 years due to the advancement in technology, which means net cash flow of ?90,000 will be available to company for three years only. It will be appropriate to know the present worth of the cash flow generated based on the discounting factor of 12% (equivalent to the weighted average cost of capital), and the same can be given as 90,000/1.12+ 90,000 /1.122+ 90,000/1.123 =80,357+71,747+64,060 =?216,164 …………… …. (A) Assuming Demand Lasts For Full 5 Years of Equipment Life If the demand lasts for full 5 years to make a full utilization of equipment and machinery installed then the cash flow of ?90,000 will be generated for five years until the useful life of equipment and ...Show more


Finance for Managers Jones Limited Given details can be summarized as per the following.
Annual turnover 4,000,000
Annual profit before tax 750,000
Development costs of “Points North” 25,000
New Investments Sought in capital equipment 250,000
Annual production capacity – 5,000 units
Equipment life – 5 years
Author : oconnellmarcell
Finance Analysis of Jones Limited(small, specialist marine engineering company based in Aberdeen) essay example
Read Text Preview
Save Your Time for More Important Things
Let us write or edit the coursework on your topic
"Finance Analysis of Jones Limited(small, specialist marine engineering company based in Aberdeen)"
with a personal 20% discount.
Grab the best paper

Check these samples - they also fit your topic

Managing Finance: Financial ratio analysis
The first two sections of the paper focuses on analyzing the financial soundness of Barney Bakes plc as well discuss some the management practices that should be adopted to enhance the profitability of the organization. This includes beyond budgeting and corporate governance.
15 pages (3750 words) Coursework
Huawei Technologies Company analysis report based on a case study
With this information and reputation one can safely say that the company is one to reckon with. The company has taken a bigger step towards globalization through its innovative ideas. This brief analysis based on the case of ‘globalization through innovation’ will focus on the profile of Huawei Company, counterparty debates, as well as other news making technological management issues such as outsourcing, alliances and so on.
4 pages (1000 words) Coursework
Engineering manager doing research and analysis
There are numerous green practices and strategies that are being implemented to go green but only few of them would be effective in enabling the students of the university to go green. Practicing energy conservation if one of the most simple and effective ways of going green.
5 pages (1250 words) Coursework
The Baron Finance Company
The law in this case involves the aspects of negligence from both parties.The law that applies to this circumstance involves contributory negligence as outlined in the case law Brown v. Kendall Application Its application points to the fact that negligence was committed by the two parties.In regards to the staff capacity of a building,both the seller and the buyer were required to ascertain before making any decision.Like in the case Brown v.
6 pages (1500 words) Coursework
Analysis of company (Netflix)
Conclusion 11 6. References 12 7. Appendices 14 Introduction Netflix Inc. presents as a leading global subscription service organization that serves over 12 million subscribers (Netflix, Inc. SWOT Analysis 2013, p. 3). The company provides online flat rate Blu-ray Disc and DVD video streaming and rental-by-mail in Canada (streaming only) and United States.
7 pages (1750 words) Coursework
Beckman (2013:3) observed that oil companies are increasingly exploring offshore drilling as a means of producing energy that can make countries energy independent. The increased exploration of offshore oil and gas has also resulted in the increased use of large amounts of drilling fluid (mud), including water-based, oil-based, and synthetic-based fluids to enhance the drilling activities (International Association of Oil & Gas Producers 2003:13).
7 pages (1750 words) Coursework
Report on marine engineering industry in the uk
This is good news to the United Kingdom marine (engineering) industry since 90% of visible trade in the region moves by sea. With a turnover of more than
2 pages (500 words) Coursework
Based on an industry sector of your choice (not IT sector); select an appropriate company for analysis
An understanding of a building a solid foundation of information systems in business is utilized form e-business, e-commerce operations, enterprise collaboration and management. Data and information are critical components of information
4 pages (1000 words) Coursework
Engineering/Value Analysis
Attainment of the mentioned elements calls for an examination of the functions of products and processes by considering alternative cost effective options to attain particular product
1 pages (250 words) Coursework
Quantitative Analysis for Finance
In regards to the calculations of the return on the stock, bond and total portfolio of the investors during the year, the first step was to calculate the percentage returns of both the stock and the bond portfolio basing on the initial investment of 50000 pounds. The next step
8 pages (2000 words) Coursework
Hire a pro to write
a paper under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Your email
Comments (0)
Click to create a comment
Contact Us