Finance essay
Budget: $30 – $250 USD
This assessment has 2 sections. Answer both sections.
Section 1 (70 marks)
You are a financial analyst working at a stock brokerage and have been approached
by a client to assess two investment opportunities on his behalf.
You are provided with the financial statements for both companies for two consecutive recent years.
Required:
1. Abriefexecutivesummary:
a. highlighting the core operations of both companies
b. giving a brief for the overall industry performance in Egypt in the last 3
years.
2. A detailed and critical evaluation and interpretation of both companies’ recent financial performance, summarizing your findings on their performance for both years in light of wider industry and economic factors based on:
a. your computation of a range of different financial ratios for both companies for both years.
b. any other credible sources at your disposal.
3. Basedonyouranalysis,
a. explain which company performed better during the two-year period
b. recommend and explain which company would make a suitable
investment option to your client.
c. discuss limitations of your analysis, including the ratio analysis
technique.
Section 2
A company is trying to decide which of two new product lines to introduce in the coming year. The predicted revenue and cost data for each product line follows:
The company has a 30% tax rate, it uses the straight-line depreciation method, and it predicts that cash flows will be spread evenly throughout each year. Calculate each product's payback period. If the company requires a payback period of three years or less, which, if either, product should be chosen?
Section 1 (70 marks)
You are a financial analyst working at a stock brokerage and have been approached
by a client to assess two investment opportunities on his behalf.
You are provided with the financial statements for both companies for two consecutive recent years.
Required:
1. Abriefexecutivesummary:
a. highlighting the core operations of both companies
b. giving a brief for the overall industry performance in Egypt in the last 3
years.
2. A detailed and critical evaluation and interpretation of both companies’ recent financial performance, summarizing your findings on their performance for both years in light of wider industry and economic factors based on:
a. your computation of a range of different financial ratios for both companies for both years.
b. any other credible sources at your disposal.
3. Basedonyouranalysis,
a. explain which company performed better during the two-year period
b. recommend and explain which company would make a suitable
investment option to your client.
c. discuss limitations of your analysis, including the ratio analysis
technique.
Section 2
A company is trying to decide which of two new product lines to introduce in the coming year. The predicted revenue and cost data for each product line follows:
The company has a 30% tax rate, it uses the straight-line depreciation method, and it predicts that cash flows will be spread evenly throughout each year. Calculate each product's payback period. If the company requires a payback period of three years or less, which, if either, product should be chosen?