2 Finanical Cases – Essay Example

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12th January 2012Question oneThe percentage increase in sales is 24%Therefore, Sales= 124 % * 4,800= $5,952Costs=124 % * 3,840= $4,761.6Current assets = 124 % * 6,084= $7,544.16Fixed assets = 124 % * 5,183= $6,426.92Current liabilities = 124 % * 1,244= $1,542.56To get long term debt and equity; Net income = 60 % * 624 = $374.4Long term debt = 2,487 + 374.4= $2,861.4Equity = 7,536 + 374.4= $7,910.4Pro-forma Income statement for next yearSales5,952Costs4,761.6Taxable income1,190.4Taxes (35%)416.64Net income773.76Pro-forma Balance sheet for next yearAssets Current assets 7,544.16Fixed assets6,426.92Total assets13,971.08LiabilitiesCurrent liabilities1,542.56Long term liabilities2,861.4Equity7,910.4Total 12,314.36The imbalance is; assets $13,971.08 and liabilities $12,314.36In order to balance the pro-forma balance sheet, the company should issue new stocks, bonds, borrow from banks or use internal funds (Greene, 2011). Question twoWe will use 13% discount rate to compare the Internal Rate of Return for four projects. The table below shows the benefits from a project in dollars. Design0123456NPVIRRA-12, 0003, 5003, 5003, 5003, 5003, 5003, 5002, 00018.8B-20, 0006, 0006, 0006, 0006, 0006, 0006, 0004, 00019.9C-29, 0008, 0008, 0008, 0008, 0008, 0008, 0003, 00016.6D-32, 6008, 8008, 8008, 8008, 8008, 8008, 8001, 80014.9Source: Belli, (2000)Design B has the highest IRR and NPV and therefore, it is optimal.

Design D has the lowest IRR and NPV. Fro the economic point of view, Design B is the best to opt because it produces much. Question threeAccording to the head of strategy of a governmental body, the Emiratis will fill 300,000 jobs based in seven sectors by the end of year 2020. The seven sectors include real estate, media, energy, health care, tourism, financial services. This will help in dipping the inequity between demand and supply of working hours within the population in a certain economy.

When there is increased rate of unemployment, the economy faces reduced production as more people are laid off. This means that, the nation at large records few sales leading to slow growth of the economy (Samir, 2012). Creating job opportunities in the seven sectors of business will be very beneficial to the citizens and the economy at large. In media, people will be creative and innovative since it is a growing industry. It will help develop sophisticated tools and machines needed for media purposes. Machines needed for recording, taping, video shooting and other purposes will be developed marking the growth of the industry.

Creating new jobs is the only best way of bringing innovative ideas in the industry. In real estate industry, people will be encouraged to invest and hence growth of the economy. Some if not all of the employed people will be very determined to invest in the real estate industry. This will also enable many of the urban dwellers own houses and homes in town instead of renting. This is a way forward towards growth of the economy (Samir, 2012). Having in mind that, the head of policy of a legislative body, Al Bishr is determined to record 7 % to 9 % economic growth rate, the Emiratis will highly benefit not only from jobs but also in good standards of living.

Creating more than 600,000 jobs for the next decades will show government’s commitments towards improving the living standards of its citizens. It will be very effective in dissemination of quality education where the citizens will become literate in almost all sectors.

They will in turn become innovative and hence come up with ideas which will be effective towards economic growth (Samir, 2012).

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