International financial management - Essay Example

spect to be kept in mind is that the only source of revenue generation for Temple Hill is from Guests and if there are any lacunae in this area it could affects future revenue and dips in profits. Since this project has a 35 % returns on investments it could be considered to be a safe one and its implementation could be further enhance by increasing the guests’ strength. By increasing the number of guests from 12 to 40, the net profit on Sales increases from 8% to 25.65 %. The future trend of profitability for this venture is also commendable.

However, it needs to be studied that these illustrations assumes that the variable costs remains constant in the short period which may not always be the case. If any guest discontinues during the period it could further affect the profitability levels in the short run although it could be compensated by others in the long run, but this risk factor needs to be evaluated. Return on Common Equity, which is measured as the Return on Common Equity. In other words, this would display what proportion of the capital is being returned as profits to the investors.

It is by far, the most important aspect of business, because the ultimate motive of business is the Returns to Investors/.Stakeholders. In this case we find the following: ₤ 6,946/₤ 20000 or 34.73 %. Therefore it could be said that there is a a return of around 35% on this proposed venture. Normally the industry standard for ROE is around 15%. Therefore, it could be said that for the present moment, this seems to be a profitable venture which has financial viability. From the above it is found that Returns on Sales is 8.

03 % which is much above the industry standard of 5 %. However, it is suggested that this Returns on Sales could be further improved by 1. Either increasing the Revenue or 2. By cutting costs. The fixed costs could not be reduced in the short run, since this is a trial measure for seeking the feasibility of this project. However, the major costs