Calculation of Payback Period for Investor Return

Calculation of Payback Period for Investor Return Executive Summary The report exclusively deals with the Accounting and Financial Management. The report has been divided into two broad types. The first part deals with the calculations regarding the payback period, average accounting return and break-even analysis. This part of the report also explains the various aspects of the same. The next half of the report is based on the calculations related with the Horizontal and vertical analysis. Further, it also explains the different patterns and trends present in the Income Statement and Balance Sheet based on the calculations done. Introduction The primary objective of accounting in any business is to help that business make the maximum profit after tax. Unless accounting makes its full contribution to that objective, its cost cannot be justified. In today’s industry, one of the ways accounting pays for itself is to help management to control operations. Another way is to help management utilize its working capital to the greatest possible advantage. Every business has important financial concerns and its success or failure depends in a large part on the quality of its financial decisions. Effective financial decision making requires an understanding of the goal(s) of the firm. The widely accepted objective of the firm is to maximize the value of firm for its owners, i.e. to maximize shareholders wealth (MAYER, R. et al, 2005). Hence, the accounting and financial management has become an integral part of business in the twenty-first century. The concept of payback period, average accounting return, breakeven analysis, trend analysis and vertical analysis are very important for any business, big or small. Discussion 2.1 Problem 1 A company is considering a capital project costing  £ 400,000. The sales forecasts, together with the forecast expenditure are shown below: Table 1: Sales and Expenditure Forecast Year Sales ( £) Cost of Sales ( £) Other variable costs ( £) Fixed costs except depreciation ( £) Depreciation ( £) 1 200,000 60,000 20,000 30,000 100,000 2 300,000 90,000 30,000 30,000 100,000 3 400,000 120,000 40,000 30,000 100,000 4 300,000 90,000 30,000 30,000 100,000 1,200,000 360,000 120,000 120,000 400,000 The above problem can be formulated in the form of Income Statement as below: Table 2: Income Statement of the Company Years 1 2 3 4 Sales 200,000 300,000 400,000 300,000 Cost of Sales (60,000) (90,000) (120,000) (90,000) Gross Profit: 140,000 210,000 280,000 210,000 Variable Cost (20,000) (30,000) (40,000) (30,000) Earnings before Fixed Charges: 120,000 180,000 240,000 180,000 Fixed Cost (30,000) (30,000) (30,000) (30,000) Earnings before tax and depreciation: 90,000 150,000 210,000 150,000 Depreciation (100,000) (100,000) (100,000) (100,000) Net Income: -10,000 50,000 110,000 50,000 2.1.1 Calculation of Payback period for the Project The payback period for the project is the length of time to get your money back (FABOZZI and PETERSON, 2003). In this problem, the company has invested  £ 400,000. The table below shows the expected cash flows in the four years: Table 3: Expected Cash Flows of the Company End of Year Expected Cash Flows Accumulated Cash Flows 1 90,000 90,000 2 150,000 240,000 3 210,000 450,000 4 150,000 600,000 From the table above, it is clear that at the end of Year 2, the full  £400,000 will not be paid back. We need to have some amount from Year 3 as well. The amount needed from Year 4 will be  £400,000 – 240,000 =  £160,000. Hence, the payback period is calculated as: Payback Period: 2 years + 160,000/210,000 = 2.762 years = 2 years and 9 months (Approx.) Thus, the Payback period for the company is 2 years and 9 months. Calculation of the Average Accounting Return The Average Accounting Return (AAR) measures the return on an investment, after taxes and depreciation, over a specified period. Mathematically, the ratio is equivalent to the expected average earnings less taxes and depreciation, divided by the average book value over the duration of the investment. According to table 2 above, we need to find the values of: Average project earning after tax and depreciation Average Net Income = Sum of all Net Incomes / No. Of Years = (-10,000 + 50,000 + 110,000 + 50,000) / 5 =  £ 50,000 Average book value of the investment during its life time The depreciation for each year is  £ 100,000. Thus, the yearly book value of investment is given by: Table 4: Book Values Year Book Value 1 400,000 2 300,000 3 200,000 4 100,000 5 0 Average book value = Sum of all book values / No. Of years = 400,000 + 300,000 + 200,000 + 100,000 + 0 / 5 =  £ 200,000 Average Accounting Return (AAR) = 50,000 / 200,000 = 0.25 Therefore, the Average Accounting Return for the invested  £ 400,000 after taxes and depreciation is 25 %. Break-Even Analysis for the Project One of the most common tools used in evaluating the economic feasibility of a new enterprise or product is the break-even analysis. The break-even point is the point at which revenue is exactly equal to costs (HOLLAND, 1998). At this point, no profit is made and no losses are incurred. The break-even point can be expressed in terms of unit sales or pound sales. That is, the break-even units indicate the level of sales that are required to cover costs. Sales above that number result in profit and sales below that number result in a loss. The break-even sales indicate the pound of gross sales required to break-even. So, a break-even cannot be calculated only once. It should be calculated on a regular basis to reflect changes in costs and prices and in order to maintain profitability or make adjustments in the product line. 1 Break-even (Sales) = Total Fixed Cost / (1- Total Variable Cost / Sales) For Year 1, BEP (Sales) = 130,000 / (1- 80,000 / 200,000) =  £ 216,666.67 For the Year 2, 3 and 4 also same BEP (Sales) value came due to proportionate change in total fixed cost, total variable cost and sales. This figure is the level of sales that the company must reach in order to break even. Again, if the company is reaching more than this, then it should be making a profit and if it is not, the company will not be selling enough to cover the fixed expenses. Thus, no profits are made from the sale of product until more than  £ 216,666.67 in gross sales is generated. ____________________ Source: 1, HODGETTS KURATKO,1986. As sales increases, variable costs are incurred, meaning that total costs (fixed + variable) also increase. At low levels of output, costs are greater than income. At the point of intersection (total sales and total cost intersection), costs are exactly equal to income, and hence neither profit nor loss made. This point of intersection is called the Break-even point which is found to be  £ 216,666.67. In the first year, the total sale made by the company is  £ 200,000. But BEP (Sales) is found to be  £ 216,666.67. That means, the company is still short of  £ 16,666.67 in order to make neither profit nor loss i.e. BEP. In the second year, the total sale made by the company is  £300,000. Compared to the BEP (Sales) which is  £ 216,666.67; the company is now making profit. And it continues to do that for year 3 and 4 as well. Thus, break-even analysis helps a company to maintain profitability when costs and prices changes. 2.2 Problem 2 The Horizontal and vertical analyses on financial statements of the Geneva Palace Hotel are as follows: Table 5: Income Statement (Horizontal Analysis) Income Statement Geneva Palace Hotel For the Years Ending 31 December 2005, 2006 and 2008 2005 % ( 2005-2006) 2006 % (2006-2007) 2007 Food Sales Revenue  £ 1,700,500 5.26  £ 1,790,000 4.00  £ 1,861,600 Cost of Goods Sold 471,128 6.38 501,200 8.00 541,296 Gross Profit 1,229,372 4.83 1,288,800 2.44 1,320,304 Operating Expenses Salaries and Wages 541,654 12.36 608,600 9.00 663,374 Employee Benefits 63,008 13.64 71,600 11.00 79,476 Laundry Expenses 17,005 5.26 17,900 3.50 18,527 Supplies Expenses 52,089 3.09 53,700 3.50 55,580 Advertising 16,826 6.38 17,900 6.00 18,974 Utilities 36,860 3.09 38,000 1.50 38,570 Maintenance 16,910 12.36 19,000 10.00 20,900 Other Expenses 38,800 3.09 40,000 1.50 40,600 Total Operating Expenses 783,152 10.67 866,700 8.00 936,001 Income Before Fixed Charges 446,220 -5.41 422,100 -8.95 384,303 Fixed Charges Rent 19,400 3.09 20,000 4.00 20,800 Property Taxes 9,400 6.38 10,000 5.00 10,500 Insurance 4,250 17.65 5,000 20.00 6,000 Interest 76,000 5.26 80,000 4.00 83,200 Depreciation 19,200 4.17 20,000 4.00 20,800 Total Fixed Charges 128,250 5.26 135,000 4.67 141,300 Inc

Leadership Style Essay

According to Reh (2014), a leader is a â€Å"person who has a vision, a drive and a commitment to achieve that vision, and the skills to make it happen† (para. 2). I want to be a leader; however I must understand my leadership style at this moment to understand where I am at, where I want to be, and what I need to do to get there. Raines (2014) states â€Å"your style defines your values and perspective, and being aware of it will aid your communication with those you work with† (para. 1). For the purpose of this paper I have chosen former President Bill Clinton as a leader that I admire. I will analyze his leadership style to identify characteristics and will provide specific examples of leadership qualities that I believe contributed to his success. I will finally examine my leadership style and offer ideas and plans for improving my effectiveness as a leader based on my work with my mentor. Read more:  The person whom I admire Bill Clinton Former President Bill Clinton is a transformational style leader. A transformational leader garners â€Å"trust, respect, and admiration from their followers† (Cherry, 2014, para. 4). President Clinton started his path to great leadership at the age of 13 when he became a comic book entrepreneur (Florida, 2013, para. 1). He learned that he could support himself and that gave him a confidence in himself that stays with him to this day. The qualities that I see in President Clinton that make him an excellent transformational leader is that people really do trust and admire him. When asked to describe his leadership style he states â€Å"explain where we are and  decide where we want to go. Figure out how to get there, get good people and trust them to do the job as long as they’re competent, realistic, and flexible when change is required† (Florida, 2013, para. 10). He also believes that the main skills necessary to motivate a team are â€Å"good listening and the ability to build consensus for action† (Florida, 2013, para. 16). President Clinton is also very charismatic. It has been told that he has the ability to make someone feel like they are the most important person in a room of many when he talks to you. He is a visionary, as seen in his many humanitarian efforts, and has that knack to make you believe in his vision. Personally, when I hear him talk I feel a calming presence, he talks in a language I can understand, and I trust him. One of the best examples of his leadership abilities in play was his ability to work productively with the Republican Party to solve the multi-billion dollar national debt during his term of presidency. It is well known that our current president very rarely has bipartisan support in anything he wants to do. My Leadership Style After reviewing all the leadership style theory’s and discussing this with my mentor it became evident that I am currently considered a participatory leader. WiseGeek (2014) defines participatory leadership as a â€Å"style of leadership that involves all members of a team in identifying essential goals and developing procedures or strategies to reach those goals† (para. 1). This is how I lead, by involving others in the entire process. While this is not a bad type of leadership style, the motive behind why I do these things illuminates a flaw in my leadership abilities. I have the tendency to not have enough confidence in myself to make decisions without a lot of input from others and permission seeking. My mentor used to be my boss and he told me that while I was ultimately one of his best program directors he had ever supervised; my journey to the directorship was exhausting and sometimes a bit frustrating for him. He stated that I would ask questions about every minute detail because I seemed to fear making a mistake. He said that for me to become a leader I need to believe in myself, have confidence that I am capable and I do know what I am  doing. He told me that until I learn to trust myself, I am going to have a difficult time getting others to trust me as a leader. He also told me that I have the capacity to become a transformational leader, which is my goal, but I have to let go of the fear, and allow myself to make mistakes. According to him, mistakes teach valuable lessons, and the way I react to the mistake builds character. My Plan My plan to transform into a transformational leader is to take risks, allow myself to make mistakes, and find the lessons in them. I am going to begin by taking initiative at work and in my personal life. I have historically taken initiative when I knew (for the most part) that things would work out. I can’t always have that luxury of seeing into the future, I just need to believe in myself and my abilities. I also plan to look at failure as an opportunity to start over and do better. I am not shy in asking for help, or asking questions when I am unsure of something. I do need to stop asking questions when I really do know the answer and take accountability for my decisions. I am a very good talker, and I have the ability to make confusing situations seem clear to others. For example, on our learning teams, I am the one that can break down the assignment and make it make sense for others, so it doesn’t seem so overwhelming. I plan to take that same confidence and apply it to all aspects so that I may one day become a leader like former President Bill Clinton. Conclusion In conclusion, President Clinton is a well-known transformational leader and the one I admire the most. He started young believing in himself and it has translated into great success for this man. My goal is to become a transformational leader and while I have traits of a participatory leader, I believe that it is possible to become the leader I aspire to be. I just need to have faith in myself so others will have faith in me. References Florida, R. (2013). President Bill Clinton: Don’t worry about yesterday, embrace tomorrow. Retrieved from http://www.huffingtonpost.com/rana-florida/president-bill-clinton-do_b_3697725.html Raines, S. (2014). The advantages of knowing your leadership style. Retrieved from http://smallbusiness.chron.com/advantages-knowing-leadership-style-18924.html Reh, F. J. (2014). What is a leader. Retrieved from http://management.about.com/od/leadership/a/whatisaleader.htm WiseGeek.org. (2014). What is participative leadership?. Retrieved from http://www.wisegeek.org/what-is-participative-leadership.htm

The Awful Side of Aspiration Essay Samples Manager

The Awful Side of Aspiration Essay Samples Manager What to Expect From Aspiration Essay Samples Manager? It's a lengthy essay on career targets and aspirations you may write a quick essay on the exact same tune too. The readers, however, may want to hear more than just 1 career objective. Make it your objective to connect to your industry in ways that permit you to learn and advance. For your college scholarship essay, you might be asked about your career objectives. Keep in mind that the secret to an inspiring career vision statement is to maintain it short and memorable. Below you'll discover a list of career goal examples which are both realistic and achievable. It's also important to show what steps you've already taken to attain the objective. Before setting career aspirations, you need to consider few things to learn about your desired goals because you're able to set them on distinct levels. The cost is dependent upon the size and urgency. Taking stand needs action that is taken to be able to be relevant. If you forget listing your aspirations, you wind up giving a negative signal which you are still confused or you are a newcomer to the expert world. Another option I would like available to me is a possiblity to run their office in their opinion. Aspiration Essay Samples Manager - Dead or Alive? Lots of people don't wish to devote the entire life in their working place and are attempting to combine it with their personal lives a nd to get a superior salary. They want to improve their career and quality of life but don't know how to make it happen. Responsible the 1 thing some individuals are scared to be. Usually from 18 to 35 decades, many of the individuals have an urge to begin their own enterprise. Business management is important for me because I have a wonderful desire to successfully manage people and company projects, in addition to to create effective business-related policies. A great manager need to know how to prevent stressful situations which might lead to conflicts at work. To develop into an actual professional in business management, it is essential to learn more regarding the crucial small business strategies which will help to increase management practices and create the right skills and abilities. To be a great manager, it's essential to develop not just effective interpersonal communication skills, but in addition superior intuition, which helps to make effective management decisi ons. New Step by Step Roadmap for Aspiration Essay Samples Manager Personal qualities, experience and interests linked to the career field needs to be detailed too. My career aspirations should be a successful manager within the field of marketing research. You could find that you have more ideas on how best to begin and articulate your introduction. Creating a personal brand will be able to help you acquire respect and it might force you to feel more involved in your work. If you wish to make executive or management position, you may set your goals ranging from 6 months to around five years, according to your present-day field. Whether you're seeking to make yourself a better project manager or you wish to determine where you are going to land in 10 decades, you should come up with a few actionable goals to check in on. The scholarship committee would like to observe how investing in your education will aid your career. It is crucial to remember that, Boston University is also the major university in regards to the amount of international students it admits each year. In the end, towards the conclusion of your conclusion, you might reflect on the way in which the essay compares to something else such as modern occasions or the future. The knowledgeable and eminent essay writers will assist you with eminent personal statement writing services for college at economical prices. Every portion of the essay in writing by doing fantastic research on th e subject and it might serve as an essay template for writing scholarship and admission essays in the sort of personal statements for graduates. The graduate student writing this kind of essay should be able to convince the reader with his goals for the future in a specific field. At our essay assistance, essays are always delivered in a brief moment. So if you're requested to compose a career goals essay in engineering or English literature in the sort of a personal statement then you may seek expert assistance. So whether you're writing a brief essay on career targets or a very long essay for this matter in every circumstance you ought to stick to a set pattern of rules. Writing an essay that explains what goals you would like to pursue in your upcoming career is a skill you are going to have to demonstrate a lot for a student.

Industrialization Of The Industrial Revolution - 1996 Words

The Industrial Revolution started advancing in the mid-18th century after many sought new and more efficient methods of production to accomplish the needs of society . The Industrial Revolution brought with it an array of changes: an increase in population, the rise of new building typologies, redistributions of wealth and fluctuations of living conditions. The Industrial Revolution broke out in England with most of the important technological innovations being British ; with the application of reliable steam power to enhance productivity in machinery this fueled the ability to transport goods worldwide. Industrialism marked a major turning point in history with almost every aspect of daily life being influenced, in particular how Britain†¦show more content†¦Industrialism started exhibiting signs of affecting the visual landscape as seen in Philip James de Loutherbourg, ‘Coalbrookdale By Night’, foreshadowing a new architectural response. The urban landscape be came a darkscape; new building types such as The Mill and The Factory can be seen with regular windows, smoke stacks that blackened the skies and a strict geometry of cubic masses that were in stark contrast to the natural surrounding, creating a visual gravity of shifting hierarchy in the city. All did not accept these new building types, in 1829 K. F. Schinkel traveled across Britain visiting major industrial centers starting from London and working through Birmingham, Dudley, Manchester and Liverpool . Schinkel recorded his architectural encounters in notes, sketches and personal letters documenting his observations of factories and the new methods of production; in particular Schinkel recorded his personal encounters with health and the life of the people around him . Schinkel concluded that the architect as an artist does not control the factories affect over the surrounding cities and that they were buildings of a non-architectural nature . Similarly, Pugin produced a series of sketches known as A Catholic Town, two sketches of an imaginary town, one depicting 1440 and the other 1840 . Pugin highlights the truth of the impact industrialism on the urban landscape, in