Week 6
There are two companies to look at. While looking at each company it is important to keep in mind that the numbers being shown reflect very important parts of what makes or break a company. With this in mind, there are 2 key areas that will be looked at when deciding which company should be acquired in the end, part C, the Net Present Value and part D, the Internal Rate of Return.
In part C, this section shows that through the various forms of cash flows company A has a net present value (NPV) of $20,979.20. While company B has a NPV of $40,251.47. This shows us that company B has more money moving through the company at any one time than company A does. While in part D, this section shows that over the course of five years company A has had an internal rate of return (IRR) of 13.05%. While over that same time frame company B has had an IRR of 16.94%. This tells us that company B has a higher IRR on the money that comes through the company. Allowing it to be more profitable. Based on all the information shown in the excel charts through budgeting, NPV, cash flows and IRR, company B would be the better company to acquire. Currently over the last five years company B shows that it is a stronger company overall. The company is currently worth more based on NPV, it has a higher cash flow, and the IRR is also higher showing that they are getting a faster turnaround time on their returns.
In the end company B is the more profitable company all around. All of the numbers shown in the excel chart point to the profits company B is making. Which leads us to decide that company B is the company that should be acquired, based purely on the numbers.
In part C, this section shows that through the various forms of cash flows company A has a net present value (NPV) of $20,979.20. While company B has a NPV of $40,251.47. This shows us that company B has more money moving through the company at any one time than company A does. While in part D, this section shows that over the course of five years company A has had an internal rate of return (IRR) of 13.05%. While over that same time frame company B has had an IRR of 16.94%. This tells us that company B has a higher IRR on the money that comes through the company. Allowing it to be more profitable. Based on all the information shown in the excel charts through budgeting, NPV, cash flows and IRR, company B would be the better company to acquire. Currently over the last five years company B shows that it is a stronger company overall. The company is currently worth more based on NPV, it has a higher cash flow, and the IRR is also higher showing that they are getting a faster turnaround time on their returns.
In the end company B is the more profitable company all around. All of the numbers shown in the excel chart point to the profits company B is making. Which leads us to decide that company B is the company that should be acquired, based purely on the numbers.