You estimate that, by the third full year, the new business will turnover 150 million per...

Transcribed Image Text:

You estimate that, by the third full year, the new business will turnover £150 million per annum with net profits at £48 million, and profits, after tax, will be £31 million. You think the capital requirement for the expansion is in the region of £60 million. The directors have indicated that you can borrow some, or all, of the funding required if you think it is appropriate. They have indicated that they would not support issuing new shares. The Board have agreed that you need to present financial information for the proposal as if it is in the third year only, (you will not need to provide information about years one and two). The board is expecting to see some financial analysis to cover by business, at least the operating profit, return on capital employed, capital, and debt and interest if there is any. You estimate that, by the third full year, the new business will turnover £150 million per annum with net profits at £48 million, and profits, after tax, will be £31 million. You think the capital requirement for the expansion is in the region of £60 million. The directors have indicated that you can borrow some, or all, of the funding required if you think it is appropriate. They have indicated that they would not support issuing new shares. The Board have agreed that you need to present financial information for the proposal as if it is in the third year only, (you will not need to provide information about years one and two). The board is expecting to see some financial analysis to cover by business, at least the operating profit, return on capital employed, capital, and debt and interest if there is any.

Answer rating: 100% (QA)

Operating Profit The operating profit is the total amount of income generated by the business after deducting all the operating costs such as cost of ... View the full answer