1. Introduction
This report is about a company Tricol plc, which makes a range of furniture and kitchenware, is now considering the development of its own distribution arm. It is provided assumptions, application of pay back period and NPV, evaluation and recommendation and other factors to be considered in this report. It could has important significance for asssing the rationalization of investment.
Part A
危险品运输企业The budget and calculation is showed on Appendix
There is a company policy to apply a rate of significance of 3% for any variance analysis. And the direct material variance can be analyzed in two aspects which are direct material volume and direct material price.
The direct material price variance is adver. The company has recently switched suppliers and it is now using high-grade materials. This may make the company lo the discount offered by original suppliers
Direct labour variance is adver. Reason may be that insurance is more than the budget insurance. T
he new machines u may result in this kind of situation, for the same reason overhead, including installation charges, staffing fees, maintenance increa and so on.
There are two aspects what are weight of the direct materials and direct material price to analysis the total variance of direct material. From the weight of the direct materials, the budget for 6400 kg weight, the
手工卡片>任务看板actual weight for 4600 kg, and the weight of each unit nt a kg. The reasons are: the company changed suppliers, u the advanced materials to reduce the material waste; the production of equipment get upgrades, improve the production efficiency; Raid salary for employees to keep the higher technology and reduce the error, improve the efficiency in the u of materials
Overhead variance: total overhead variance is caud by administration and insurance. Each factor has £200 variance, so the total overhead variance is £ 400 and it is adver. In addition, on side of insurance, Improving mechanical efficiency will need to pay more insurance cost, the employee of operate the equipment insurance costs also will be incread Recommendation
There are some Suggestions can make the situation improved. The first, Ensure the quality, the price is cheap, but u the material. Secondly, The Company can establish policies to control administrativ
e costs. They can try to u material price discount. The variance of labor, for enterpri is a must for the long-term cost of place, and wage increa, and may continue to increa, but Labour had reduced rate. Also has some advice. The company can provide the plan of the training, in order to improve production efficiency. Can also make employees responsible for the machine can be ud a longer time.
Part B
Assumptions
There are some views in the u of the data.
The effects of the tax and inflation are neglected. Second, a given market returns will not change.
In the initial outflows of cash flow is satisfied, the time value of money be ignored, not including interest is for the initial capital investment.
老人与海精彩片段The expected return on the investment, here is to point to deduct the net cash flow from all the relevant costs.
Uncertainty does not exist
猴子养殖
All the market factors are stable
Net Prent Value (NPV): The NPV method calculates the prent values of cash inflows and outflows and establishes whether, in total, the prent value of cash inflows is greater than the prent value of cash outflows.
Calculation of net prent value, It is showed by Appendix.
Payback: Tho ways of in order to restore the original investment cost methods have to investment and project evaluation have many years, in order to received effect in shortest time. (1) year 0 means now (2) year 1 means at the end of 12 months from now (3) year 2 at the end of 2 years from now.
Calculation of the payback period method, It is showed by Appendix.
Analyze
The analysis of two investment appraisal techniques
Disadvantages of the payback method
·It ignores cash flows after initial outflow has been met
·It ignores risk
将军英文·It ignores time value of money
·It ignores the fact that benefits from different projects may accrue at an uneven rate
·No allowance is made for interest on the initial capital investment.
Advantages of the NPV method
·Provides an objective basis for evaluating and lecting investment projects
·Takes account of both magnitude and timing of expected cash flows in each period of a project’s life
Investors can not u a single formula to calculate the rate of return, they should consider the value of the time.
In view of the data calculated above, payback will take four years and one-and-half month to complete, therefore, it ems to be reasonable to accept and invest this kind of project. However, in
other method, it is impossible to fulfill a requirement of a 10% return. The actual rate of return must be less than 10%.
皇家马德里队徽Taking this two methods into consideration, firstly, net prent value methods is more accurate than payback period method, condly, although it cannot realize the expected return in 10% in the first 5 years, mainly basing on growing slowly and low return at beginning, it may bring a higher revenue and positive cash inflow in the future years.
Personally, I think we can accept the new project for a period time.
Recommendation
There are some Suggestions to continue to do investment company. We can from the financial factor analysis and the financial factors. The first. Form the economic factors. There are some Suggestions. The company must make sure that they have enough money to complete this investment. The company also need to consider budget control and the ability to solve problems. And then sure need to move on this investment. The company should consider whether to profit the most for the company long-term interests. Then from non-financial aspects. Focus on the information about the change in the current social economic, political and legal. Whether can increa employm
葛根粉禁忌ent guidance. Clearly know people are willing to pay is suitable for this investment. Finally, the investment is in accordance with the company's strategy.
3. Conclusions
The company's consultants, this report can help the company bend of the budget and variance and u the two kinds of methods are analyzed, and help the company choo investment investment method. The company will make much profit.
