Business plan - (investment) - Coursework Example

Business Plan - (Investment) Investment operations can only be conducted after thorough analysis which promises safety of investment along with high return. Usually from the cash flow the cash for investing, operating and financing activities is prepared. Investments are either in shares or in bonds. Investment in shares is risky but it generates high profit while investments in bonds are safe but it generates less profits. “It is most important to analyze the cash flow statements of a business before making investment.

Cash flow statements of a company show how well the company has planned and managed all their expenditures and collections” (Blogger 2010). Investments are usually done from the closing balance of cash flows and not from the surplus or deficit that is incurred in the financial year. In this firm three scenarios are given and the cash flow results of two financial years are given on the basis of which investments are prepared. From the cash flows of the year 2011 – 2012 (Worst case scenario)Investment for the period 2011- 2012 – worst case scenarioIn the financial period 2011-2012 the cash flow on the closing balance is 1,750,766 only.

Therefore the investment choice is in shares and bonds. 100000 shares @ 10 1,000,000750000 in bonds 750,000Total1,750,000Investment for the period 2012–2013 worst case scenario:In the financial period 2012-2013 the cash flow on the closing balance is 2,489,948 only.Therefore the investment choice is in shares and bonds. 200000 shares @ 10 2,000,000480000 in bonds 4,80,000Total2,480,000From the cash flows of the year 2011 – 2012 (Mean Case Scenario)In the financial period 2011-2012 the cash flow on the closing balance is 2,335,766 only.

Therefore the investment choice is in shares and bonds. 200000 shares @ 10 2,000,000335000 in bonds 335,000Total2,335,000From the cash flows of the year 2012 – 2013 (Mean Case Scenario)In the financial period 2012 – 2013 the cash flow on the closing balance is 9,119,948. Therefore the investment choice is in shares and bonds900000 shares @ 109000000119,948 in bonds 119,948Total9,119,948From the cash flows of the year 2011 – 2012 (Best Case Scenario)In the financial period 2011 – 2012 the cash flow on the closing balance is 2,500.766.Therefore the investment choice is in shares and bonds200 shares @ 102000500.

766 in bonds500.766Total 2500.766From the cash flows of the year 2013 – 2014 (best case scenario)In the financial period 2013 – 2014 the cash flow on the closing balance is. 17234.948.Therefore the investment choice is in shares and bonds 1000 shares @ 10100007234.948 in bonds7234.948.Total 17234.948The items on the cash flow statement that information the collective transform in an organization’s cash situation resulting from any profits or losses from savings in the operating subsidiaries and financial markets, and changes ensuing from values spent on savings in capital assets for instance plant and equipment.

Cash Flow statements have most fundamental information’s for depositor’s who are examining the financial report of the organization with savings objectives.Reference ListCash Flow Statements Analysis for Investment Objectives. 2010. Investment Blogger. [Online] Available at < http://www.getmoneyrich.com/cash-flow-statements-analysis-for-investment-objectives/> [Accessed 29 Nov. 2011].