Finance Research Paper Example | Topics and Well Written Essays - 2500 words

Finance - Research Paper ExampleMany prosody charter been developed to ease this process.Faced with too much information, Investors at times get confused with no clear indication of what the true prices of stocks should be. (Penman, 2003). nether such circumstances, the investor either make conclusiveness based on his or her instinct, such investors according to Penman (2003) are intuitive investors spot others who make their decision based on capital market efficiency are referred to as passive investors.This part of the question addresses the performance of a new venture to be set up to enable us make informed judgment as to a hold a buy or sell decision. Thus, the accusing of this question is to analyse the liquidity, the profitability and solvency position of the new set up from information extracted from the projected profit and loss account, the balance sheet and the cash hunt statement. The report do not only provide a financial overview of the new venture for the project ed three years period. The question also, guide electromotive force investors on where the business is coming from and where it is heading to.Gross profit security deposit assumes that in the absence of other expenses what percentage of sales comes to the corporation as profit, while net profit margin takes into consideration all the expenses and measures what percentage of sales comes in as profit after all the other expenses must have been deducted. It is important to note here that, ratio analysis in them is useless except when compared with the industry benchmark or other competitors. 201020112012Key Data gross sales488000536312589943Cost of Sales277650358168392947Gross remuneration210351178144196996Operating Profit/Loss394418417393080.8Percentages %201020112012Growth in Sales (%)10.010.0Gross Profit Margin (%)43.233.133.4Net Profit Margin (%)8.115.715.8From the above analysis and interpretation, one will see that our proposed new venture is a feasible and profitable business . While gross profit margin for the first three years under projection is above 30%, net profit margin also portrays a favorable situation.Analysis of hood EmployedAccording to Penman (2003), assets and liabilities are distinguished based on the nature of the operations the underlying operation and the funding structure. The underlying operation is delineated by the operating assets of the business. Operating assets are also known as capital employed - the amount of capital that is employed in the business. Here, it is defined as being the total assets without any deduction for the creditors of the business. 000s201020112012Key DataCurrent Assets131079167081229919Fixed Assets3336289033127526Total Assets164441256114357445Percentages %201020112012Current assests806564Fixed Assets203536Key data & ROCE201020112012Total Assets164441256114357445Profit Before Interest& Tax52588112230124108ROCE (%)324435This ratio ROCE measures how well a business has performed in terms of the capital use d to carry out the daily operations. According to Penman (2003), it is a key performance indicator and may show a decline even though the net profit margin has gone up. This will reveal the fact that the increase in