Memorandum
To: Nittany Nation’s CEO and Penny
From: Financial analyst
Date: 29th April 2020
Subject: Financial performance of the company
I am writing this memorandum to advise on the financial status of the company. The report contains findings from the analysis of the company’s profitability. The project is viable and indicates going concern. Investing in the project will yield returns over a certain period of years. From the analysis, the project has a positive Net present value of $49,410.Now is a technique that reveals the balances between the current value of cash inflows and outflows.
Furthermore, this means that the company can cater to its operating expenses and any sunk costs incurred. The company is far from making any looses, and there is a high possibility of achieving a breakeven point in the future. The above investment is worthwhile, and my financial advice would be to implement the above project due to the untapped potential it has. The Annual margin is at 37.5 per cent, considering its a start-up then it is performing well in the market. Don't use plagiarised sources.Get your custom essay just from $11/page
The Rate of Return On Investment is a performance tool that measures the profits or losses that a particular investment can produce. It analyzes and compares different investments intending to determine the most efficient investments. It is a tool that guides investors and managers to make decisions. From the above findings, the current year’s Rate of Return from the investment is 18.75% as compared to the previous figure of 22%, which was consistent for the last three years. This is a negative indicator as the ROI should be increasing rather than decreasing. The investment is not ideal to the store manager since it has a lower ROI but also considering that ROI is higher than the Required Rate of Return. The organization shall recommend the store manager to pursue the investment.