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Essay / Research Paper Abstract
This 6 page paper shows the student how to calculate different figures in a case study, such as the operating income, free cash flow and net present value. The bibliography cites 1 source.
Page Count:
6 pages (~225 words per page)
File: TS14_TEquet10.rtf
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Unformatted sample text from the term paper:
operations. To calculate this the first aspect is to calculate the level or revenue that will be seen by the company in the first ten years. We are given the
growth rate year on year of the expected revenue and the starting revenue, this is calculated by taking the starting revenue, then calculating what the increase will be base on
the past year and then adding that to the past year. For example if there was a 50% increase in sales in the second year this would mean there is
a further 6 million generated, to get total sales this needs to be added to the past years sales, giving 6 million. In the case study this will give the
following Year 1 2 3 4 5 Rate of growth expected (%) 420 215 65 60 Income ($millions) 12.00 62.40 196.56 324.32 518.92 6 7 8
9 10 60 40 35 20 10 830.27 1,162.38 1,569.21 1,883.05 2,071.36 The next stage is to look at costs. Operating profit is defined as the profit less the
cost of good, therefore it is only the cost of good that needs to be deducted to give operating profit (as opposed to net profit). We are told the percentage
of the cost of sales, therefore we can calculate this and then deduct it from the revenue to give operating profit. This is seen below. Year 1 2
3 4 5 Income ($millions) (a) 12.00 62.40 196.56 324.32 518.92 Cost of sales (%) (b) 85 77 83 82 77 Cost of sales $ (millions) (a/b*100) (c) 10.2
48.05 163.14 265.95 399.57 Operating profit (a-c) 1.80 14.35 33.42 58.38 119.35 6 7 8 9 10 Total 830.27 1,162.38 1,569.21 1,883.05 2,071.36 72 70 68 68
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