It intends to expand business to other EU countries. For this purpose, it is planning to build a larger and modern warehouse and distribution facility which would cost around $10 million and would be completed by June, 2013. This cost includes machinery worth $2 million. It also plans to renovate its existing warehouse for $200000. The projects, to be completed by January, 2013 could increase 25% revenue. For this new project, capital is planned to be acquired through a local UAE bank. The current document dwells into the complete financial analysis of the organization. The financial analysis includes: 1) Cash Flow analysis 2) Ratio analysis and 3) Analysis by a long term creditor 4) Examining the collateral security to be offered by the firm in case loan is granted for the firm. 5) Conclusion The cash flow analysis details about the cash generated through various activities of the firm like operating, investing and financing. Operating cash flows elucidate the increase and decrease in cash pertaining to income statement. Investing cash flows depict increase and decrease in assets while financing activities revolve around dividend and other payments to stock holders. If the cash flows are positive and growing year on year, they are considered to be favorable for any creditor. The ratio analysis is extensively studied through a variety of ratios. The meanings of those ratios are explained for comprehensive understanding of their purpose. They are then compared to previous year and industry average to ascertain their degree of favorability and non-favorability of ratios. Recommendations are made to improvise the ratios in the long run. The only area of concern identified was that of interest expense servicing which could be easily done by increasing sales through upgraded warehouse. Once the analysis is completed, as a banker, we can analyze the outcomes. For analysis, we need to arrive at the requirements of criteria for firm’s suitability to be bestowed with a long term loan. The requirements are the positive cash flows, favorability of crucial ratios, a discussion of property which would be available as security, credit history of the loan taking firm and perfect documentation giving all relevant details. Positive cash flows are examined by the cash flow analysis. The crucial ratios namely debt-equity ratio, return on capital employed and proprietor ratio are calculated to know whether a long-term creditor would be interested to extend finance for Marvel toys. It is understood that these ratios are favorable and the firm is qualified for further finance. Land and buildings which were valued conservatively at $50 million could be offered as collateral security for further finance and overdraft. The credit history is always positive as the firm has never exceeded its overdraft limits. The only requirement which the firm would need to perform is to file documentation giving details of expected revenue from such investment so that the bank authorities would be convinced to extend the required loan and overdraft for the firm. Introduction Marvel Toys Pvt. Ltd which imports and exports toys from China to UAE are now planning to build new warehouse of larger capacity and also renovate its existing warehouse. It plans to expand its business to cater to total EU customers. It wishes to
Financial Analysis of Marvel Toys Pvt. Ltd. In APA Format By Abstract Executive summary, Introduction, Discussion, Complete Financial Analysis of the Firm covering Cash Flow Analysis, Ratio Analysis, Analysis from a Long Term Creditor’s point of view, Examining the Collateral Security offered by the Firm, Recommendation to the Loan Granting Bank, Other Factors to be Considered, Conclusion, Decisions, References, Presentation…
Financial Statement Analysis
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