Question

In: Finance

LG Electronics is planning to invest in additional machinery facilities. To determine investment conditions, select two...

LG Electronics is planning to invest in additional machinery facilities. To determine investment conditions, select two accounting subjects for the financial statements you want to look at and explain why.

Solutions

Expert Solution

By, "Investing in additional Machinary Facility" , i am assuming LG Electronics is planning to aquire another company.

Two accounting subjects for the financial statements that i want to look at are :-

1) Debt-

How much amount is owed by the company to others will be a crucial factor on deciding which facilities to aquire. Noone wants to buy a facility which owes too much debt to others. Debt acts as a hurdle in the growth of company. Huge debt payment eats up the cash of the company.

2) Cash Flow

Cash flow refers to the net inflow of cash which a business earns. Availability of cash means that company will be able to meet up unexpected problems which might come in future. If net cash flow during the life of project from our investment is negative then there is no point of making investment.

Please upvote the answer if it was of help to you.
In case of any doubt just comment below, I would love to help.

jeff jeffy answered 1 year ago
Next > < Previous

Related Solutions

Carper Company is considering a capital investment of $390,000 in additional productive facilities. The new machinery...
Carper Company is considering a capital investment of $390,000 in additional productive facilities. The new machinery is expected to have useful life of 6 years with no salvage value. Depreciation is by the straight-line method. During the life of the investment, annual net income and net annual cash flows are expected to be $20,000 and $85,000, respectively. Carper has an 8% cost of capital rate, which is the required rate of return on the investment. Instructions (Round to two decimals.)...
Vilas Company is considering a capital investment of $183,600 in additional productive facilities. The new machinery...
Vilas Company is considering a capital investment of $183,600 in additional productive facilities. The new machinery is expected to have a useful life of 5 years with no salvage value. Depreciation is by the straight-line method. During the life of the investment, annual net income and net annual cash flows are expected to be $10,557 and $51,000, respectively. Vilas has a 12% cost of capital rate, which is the required rate of return on the investment. Compute the cash payback...
Vilas Company is considering a capital investment of $190,700 in additional productive facilities. The new machinery...
Vilas Company is considering a capital investment of $190,700 in additional productive facilities. The new machinery is expected to have a useful life of 5 years with no salvage value. Depreciation is by the straight-line method. During the life of the investment, annual net income and net annual cash flows are expected to be $15,700 and $50,000, respectively. Vilas has a 12% cost of capital rate, which is the required rate of return on the investment. cash payback period is...
The LG Electronics is classified as one of the most sustainable companies in the world. Two...
The LG Electronics is classified as one of the most sustainable companies in the world. Two leading research organizations in the world stated so: The Canadian Corporate Knights Magazine, mentioned in its 2015 annual list of the 100 most sustainable companies in the world; and the Swiss Agency RobecoSAM, in its annual sustainability report of 2015. The Canadian Corporate Knights Magazine lists the sustainability companies according to a set of sustainability criteria in specific industrial sectors, by focusing on the...
Christopher Electronics bought new machinery for $5,030,000 million. This is expected to result in additional cash...
Christopher Electronics bought new machinery for $5,030,000 million. This is expected to result in additional cash flows of $1,225,000 million over the next 7 years. What is the payback period for this project? Their acceptance period is five years.
Ways of determine investment decision in investment planning
Ways of determine investment decision in investment planning
As part of financial planning for an organization, being able to determine the amount of Additional...
As part of financial planning for an organization, being able to determine the amount of Additional Funds Needed (AFN) by an organization to achieve its growth goals is an important part of this financial forecasting. Please explain what we mean by AFN, the sources of funds, and how an organization goes about determining its AFN.
As part of financial planning for an organization, being able to determine the amount of Additional...
As part of financial planning for an organization, being able to determine the amount of Additional Funds Needed (AFN) by an organization to achieve its growth goals is an important part of this financial forecasting. Please explain what we mean by AFN, the sources of funds, and how an organization goes about determining its AFN.
Exercise 12-10 (Video) Vilas Company is considering a capital investment of $198,900 in additional productive facilities....
Exercise 12-10 (Video) Vilas Company is considering a capital investment of $198,900 in additional productive facilities. The new machinery is expected to have a useful life of 5 years with no salvage value. Depreciation is by the straight-line method. During the life of the investment, annual net income and net annual cash flows are expected to be $13,923 and $51,000, respectively. Vilas has a 12% cost of capital rate, which is the required rate of return on the investment. Click...
The Deli Company is planning an investment in the consumer electronics market. The company already has...
The Deli Company is planning an investment in the consumer electronics market. The company already has an established brand recognition in this market, and believes it can capture 5% of the whole market. Table 1 sets out data on the relevant consumer electronics market. Table 1: Consumer electronics market (numbers in millions) Annual sales revenues £100,000 Annual costs (variable) £50,000 Annual growth in sales/costs 3% Beta of sales and cost cash flows 1.5 Table 2: Deli's investment project Investment cost...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT