Financial Report and Analyzation
Prepare a 3-4 page report in which youanalyze financial information and risks associated with an investment to expandan organization and make a recommendation on whether or not to invest inexpansion.
Introduction
This portfolio work project will allow you toreview information and risks associated with an investment to expand anorganization. As this information will be shared broadly across theorganization, you will have a choice in your final deliverable audience andwill organize your deliverable to meet the needs of that audience.
Scenario
ZXY Company is a food product company. ZXY isconsidering expanding to two new products and a second production facility. Thefood products are staples with steady demands. The proposed expansion willrequire an investment of $7,000,000 for equipment with an assumed ten-yearlife, after which all equipment and other assets can be sold for an estimated$1,000,000. They will be renting the facility. ZXY requires a 12 percent returnon investments. You have been asked to recommend whether or not to make theinvestment.
Your Role
You are an accounting manager. Your boss hasasked you to review and provide a recommendation on the expansion based oninformation that has been provided.
Requirements
In preparing and supporting yourrecommendation to either make the investment or not, include the followingitems as part of your analysis:
Analysis of financial information.
Identification of risks associated with the investment.Consider:
o How risky theproject appears.
o How far off yourestimates of revenues and expenses can be before your decision would change.
o The difference ifthe company were to use a straight line versus a MACRS depreciation.
Recommendation for a course of action.
Explanation of criteria supporting your recommendation.
Financial Information
As part of your analysis you might find thatadditional information from marketing, accounting, or finance would be usefulin making an informed and well-supported recommendation. In a real workplacesetting you would have the ability to ask for that information. However, forthe purposes of this assessment, you can make assumptions about the values ofthat data or ratios in support of your recommendation.
Accounting worked with the marketing group tocreate the (attachedspreadsheet called cf_ZXY_company financial_statement) spreadsheet for the newproducts business and the new facility.
Notes about the financial information:
The expense line labeled SQF FDA Mandates refers to the costs ofcomplying with Food and Drug Administration requirements.
Depreciation expense is calculated using 7-year life modifiedaccelerated cost recovery system (MACRS).
Deliverable Format
Depending on the audience you choose toaddress, use one of the following options:
Report for a mid-managementaudience. Prepare a 34 page report detailing your recommendation and theinformation you used to make your recommendation.
Presentation for topleadership. Prepare a presentation of at least 12 slides detailing your recommendationand the information you used to make your recommendation. You may use yourchoice of presentation software. Include notes with additional details.
Keep in mind that your recommendation may beshared with others, so your materials should be designed for clarity andreadability.
Related company standards for either format:
The recommendation report is a professional document and shouldtherefore follow the corresponding MBA Academic and Professional DocumentGuidelines, including single-spaced paragraphs.
In addition to the report or presentation, include:
o Title (slide orpage).
o References (slideor page).
o Appendix withsupporting materials.
o At least twoAPA-formatted references.
Evaluation
By successfully completing this assessment,you will demonstrate your proficiency in the following course competenciesthrough corresponding scoring guide criteria:
Competency 2: Apply principles of accounting to assess financialperformance.
o Analyze financialstatements for decision support.
o Explain risksassociated with an investment decision.
Competency 3: Analyze accounting information to support businessdecisions.
o Recommend a courseof action based on financial information.
o Explain howfinancial criteria support a decision.
Competency 4: Communicate financial information with multiplestakeholders.
o Communicateaccounting information clearly.
Faculty will use the scoring guide to reviewyour deliverable as if they were your boss. Review the scoring guide prior todeveloping and submitting your assessment.
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