DRAFT BALANCE SHEET 31st october 2010-11-10

£m 2011 2012 2013 2014

Net Assets 50 60 70 80 95

Financed by:
Long term Debt 20 24 28 32 38
Share Capital 15 15 15 15 15
Retained Profit 30 30+ 3.5=33.5 33.5+ 4.5=38 38+5=43 43+7=50
=50 =72.5 = 81 =90 =103

2010 2011 2012 2013 2014

Sales 100 120 140 160 190
Pbit 12.4 15.8 17.5 23.8
Nopat 8.7 11.1 12.3 16.7
Pat 6 7 9 10 14

Now answer how would you finance the plug in??

Any take by authorities ?look in text books tical
Using methods and articles you can find on financing the gap or plug in?

Task 2)critical
Will the business make a profit in the future? might want to comment on it?
Returns goes had in hand with risk?
Therefore what risk lies in this business of bankruptcy? explore using financial gearing?
Sensitivity analysis? What other theories lie in the risk analysis?
will the business survive long-tem(2010-2014).? Using these theories?

After having looked at the risk element we look at the shareholder wealth? Increasing
shareholder wealth? theories on adding value to shareholder wealth?

Theories on maximizing shareholder wealth?

Npv what does it assume in finding an appropriate cost of capital for the business and the
What do the authorities say?
What is on the ground current market scenarios?
What does our example illustration
Can we make shareholders wealthy in our example?Benchmarking very important?
current industry figures? Look at other businesses in the industry? Might even employ
CAPM?and see what the results look like? Read a few journals and add to support
arguments and decisions taken.

3)whether or not you would advise the m to go into the business?

Compare and contrast? What does the risk involved look like? Question if investors are
risk averse or not? How much profit could be made? If invested in other similare business
at present how much would they made? If invested in risk free investment how much
could they make?Conclude