Question

Part 2. Investment Analysis (1–2 pages) For this part of the assessment, imagine that you are looking into investing in a manufacturing company, such as a car company or a steel company. Your goal is to create a plan for determining the potential strength of an investment in the company (investment analysis) and determining how the company might perform over a selected period of years (forecast).

Using the same hypothetical manufacturing company described above, address the following questions related to forecasting the performance of the company: •

How would you forecast revenue, profitability, and asset management, such as inventory control and accounts receivable, for a hypothetical manufacturing company?

• What ratios would you analyze?

• What techniques would you use? Why? •

What non-financial factors would be important in your analysis?

Answer 1

ANSWER 1 - PART A -

RATIOS WHICH WILL BE USEFUL FOR ANALYSIS -

1. PRICE EARNING RATIO

2. PRICE TO BOOK VALUE

3. DEBT EQUITY RATIO

4. OPERATING PROFIT MARGIN

5. ENTERPRISE VALUE/EBITDA

6. RETURN TO EQUITY

7. CURRENT RATIO

PART B - THERE ARE FOLLOWING WHIHC CAN BE USEFUL FOR INVESTOR TO BE PROACTIVE -

1. CAPITAL BUDGETING DECISION

2. CASH FLOW STATEMENT ANALYSIS

PART C - NON FINANCIAL FACTORS LIKE -

1. LOCATION DECISON

2. LAYOUT PLANNING

3. MANPOWER QUALITY

4. SOCIAL FACTORS ETC