PENTA LTD

Penta Ltd

Penta Ltd

Question # 1

Investment Opportunity 1

The estimates of revenue of a company is important for a company, its creditors and investors. The business usually prepares its annual profit forecast as part of its budget process. The estimated revenue is very difficult because it depends on several variables. If Penta Ltd, sales are expected to grow 30% per year for three years after the first operation in real terms after which they return to a growth of 1% real, working capital will be increased according to increases in sales during the first 3 years and no change thereafter.

To provide for the income of a company, three main factors should be considered: 1. Sales Forecasting 2. The company's cost structure, and 3. The company's capital structure and, just to complicate matters, the numerical results of these considerations may be affected by the accounting policies of the company. The starting point of any sales forecast. Sales forecasting is the main revenue projections. Although management exerts some degree of control over expenditure, which has little ability to direct the buying habits of individuals, the level of sales depends on the whims of the market. However, a sales forecast must attain a reasonable degree of reliability to be useful.

The analysis should know capacity utilization, unit costs of production, the expected rate of inflation, general economic and business standards and government regulations, competitive forces and social changes that have an impact on the cost marketing and sales, labor and raw materials, etc. The analysis will determine the impact of these variables in the industry and specific company to project growth rates of sales.

Given the volume and selling price forecasts will differ by product or business segment, sales ideals and estimates of costs should be made for each product or segment of the company. This is especially important when products or manufacturing segments have different cost-sharing structures. The volume of unit sales and unit sales prices should be designed.

The level of sales for future periods depends not only on what the company has in the past but also what they think they can do in the future. Some ancillary issues to be addressed in the context of sales forecasts may arise. For example, if sales increase, will the company should redesign their production processes, purchasing new equipment, obtain additional capital, hire more employees, or the purchase of new types of materials? The increase in sales can lead to bottlenecks and inefficiencies. The decrease in sales may help the company to achieve an optimal level of production. Statistical techniques or econometric forecasts are often used to assist in developing volume projections. Marketing personnel may be useful in forecasting expected sales prices per unit. Marketing executives can obtain forecasts for each individual seller of a particular product or territory. The company forecast sales becomes the sum of individual forecasts.

Investment Opportunity # 2

$ 5,000,000 shows that there is a significant market in SA Ltd Penta Penta can sell in these two different markets with ...