Analysis On Financial Requirements Of The Business For Achieving Success

FINANCING ENTREPRENEURIAL INITIATIVES

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Table of Contents INTRODUCTION ...........................................................................................................................3 1.Key value drivers for Juner and features of business model of Juner ..................................... 3 2. Advantages and disadvantages of Initial public offer ............................................................. 5 3. Factors need to be consider while choosing listed of shares .................................................. 6 4. Advantages and disadvantages of market comparable approach ............................................ 7 5. Market multiplies approach .................................................................................................... 8 6. Application of free cash model ............................................................................................... 9 CONCLUSION ..............................................................................................................................11 REFERENCES ..............................................................................................................................12

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INTRODUCTION An entrepreneur is the risk takers who take risky decisions without thinking twice as the business efficiency has increases with the growing number of entrepreneurs(Verbeke. and Yuan, 2013).

Juner has been selected for this project report in order to define the capabilities of an

entrepreneur in order to support their organization by applying funds. This report is all about explaining the existing skills of an entity in order to take external market fund in order to strengthen their enterprise. It also emphasizes on defining different valuation models to assess the existing business efficiency of Juner. The business challenges can be removed by using the future forecasting models in order to help an entity in return by using variety of valuation techniques.

1.Key value drivers for Juner and features of business model of Juner There are various kinds of key determinants which drives the overall china market which will directly give impact on the business performance of the Juner which are given as below: Entrepreneurial capabilities- The Juner has applied their unique and innovative capabilities and skills which are applied by this enterprise in order to strengthen their current business. The current business is operated in the intense competition of the china market (Campopiano, Minola and Sainaghi, 2016). It is regarded as the challenging market where lot if competitors lies in the same market. The decision of starting new materials of opening modified plastic industry as this is not the single entity operating in this particular industry. It can be said that an entity has reached 44.8 million tonnes of the plastic production in the year 2009 which is higher values in the history of china.

Scale of production- The current production level set for modified plastics are higher which enhances the sales and the revenue of an enterprise (Jaiswal and Gautam, 2016). The higher products offer to the customers will enhance the overall scope of an entity. The current entity will be able to serve more than 10000 per year tonnes of plastic to cater the needs and the expectations of all the clients.

Market share- The company has increases its overall focus by emphasizes on the regional customers in order to achieve higher level of sales and the revenue(Goffee. and Scase., 2015). The Get Finance Assignment Help in UK @ 30% lesser price.

production of this organization will be able to serve the segments of the Eastern coast such as Zhejiang, Jiangsu and shandong. The output generated by an enterprise from local areas will approximately up to 80% of the overall market share.

Key features of business models and strategy of Juner Capacity-The Juner has divided its overall production into 29 lines of production activities which will able to generate an annual capacity of 40000 tonnes of around 5000 types of plastics.

Research and development- It also stresses on building good research centers to test the quality of plastics produces by an enterprise.

Incentives- the ratio of overall employees incentives has increases from one period to another out of total of 5 years. It has been ascertained that living costs is around 200000 RMB.

120000 100000

100000 80000

80000 60000

60000 Incentives(RMB)

40000 20000

12000

14000

0 31/12/1899 01/01/1900 02/01/1900 03/01/1900 04/01/1900

Illustration 1: Incentives provided by Juner (Source: Rangone, 2016) Sales- The sales of Juner has increased due to presenting of different variety of products or services offered to all the customers will be result into increment of 98% The sales are divided into various segments such as pre-sale, to-sale and post-sale.

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14.35

32.05

shandong Jiangsu Guangdong

53.6

Illustration 2: Sales and revenue generated by Juner (Source:Kuratko, 2016 )

2. Advantages and disadvantages of Initial public offer Initial public offering is that process through which entire firm can issue shares of stock to general people(Bruton. and et.al., 2015). The decision of offering public shares will require further permission from external regulatory bodies in order to operate their business in a systematic way. IPO is regarded as the significant stage which enhances the existing working conditions of an enterprise which helps in achieving the growth of an entity. The characteristics of public entity includes those which helps in achieving a specific target that increases the credibility and global exposure of a small business enterprise.

Advantages

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

It helps an enterprise in order to take advantage by utilizing additional capital which helps an entity in order to uplift their existing organizations. The current capital will be strengthen by taking extra advantage of new capital from external entities.



It brings lot of opportunities for both the users the employer and an individual who take the shares of as entity by utilizing this particular option. An entity can utilize these opportunities in order to take advantage of the capital which can be used by an entity in order to expand their existing business conditions.



The credibility is that power gained by an organization in order to lure all kinds of business users such as suppliers, creditors, customers who are integral parts of an enterprise in order to increase their capabilities and strength by supporting an organization in tough business situations.



The shares offered to the public can be helpful for an entity in order to take up business opportunities as an entity can acquire another important enterprise as the external capital can be generated in order to purchase the company.

Disadvantages 

Apart from seeking business opportunities by using this form of capital obtained from the external parties it can be negative for an enterprise in terms of control. An entity can lose control over their own enterprise as the parties who take up the shares of an entity will participate in the ownership of an enterprise(Kuratko, D., 2016). The participants who take shares will enjoy equal number of powers in the same entity.



The basic limitation of this method is time consuming as selling of IPO will be expensive process for an enterprise. This process is very time consuming as the mangers will be fully involved in the overall process which wastes its normal time that can be invest in an entity.



Expenses is another important threat for an entity which includes legal fees required in order to get permission of issuing shares through this mode(Kuratko, D., Hornsby, J. and Covin, J., 2014).

The appointment of underwriters is another issue faced by an entity as an

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enterprise will not sell the shares personally among the general peoples in order to convince them towards the purchasing of shares.

3. Factors need to be consider while choosing listed of shares There are various factors which needs to be consider by an enterprise while choosing one of the important option of listing of shares in a recognized stock exchange control which are given as follows: Market share- The existing production level of an enterprise will be helpful for an entity in order to take advantage of listing of their shares in a stock exchange by enhancing their existing overall market share. The production capabilities of the modified plastic industry will be able to gain advantage by using internal business tools(Lemieux., 2013). The achievement of this enterprise states that this entity achieved a larger market share of 70%. The existing achievement will be enough for an entity in order to list their shares on a global expense.

Market growth- It is another factors which can help an entity in order to list all oftheir shares in a recognized stock exchange. The growth of dividend will reflect an entity's abilities in order to payback all of their obligations in a give time frame which will help an entity to lost their entity in a recognized stock exchange.

Volatility- It is another important thing which need to be identified by an enterprise in advance before list their share are recognized stock exchange as this can affect their existing working conditions. The risk level need to assess the current capabilities of an enterprise in order to face complex business situations which will help an entity in order to take up new opportunities of increasing their current skills and knowledge(Le B., Miller. and Bares., 2015). The volatility factor can enhanced or suppressed the existing potential of the corporation.

Volume- It is considered as another important aspects to be covered while selecting this option as the number of shares bought and sold in a day which will helps in identifying the average number of shares purchased or sold in a day is enough to obtain the volume of shares deal by an enterprise. This particular volume option used by an enterprise which helps an entity in order to use their strengths by helping an enterprise in achieving their objectives or goals while dealing at a global level while exposed itself to wider competition level of the business.

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Price earning share- This ratio will help an entity in order to expand their existing business conditions of an enterprise by assessing their own capabilities. The judgment is based on this ratio which will define the ratio of price in generating good sales and the revenue for an enterprise.

4. Advantages and disadvantages of market comparable approach Discounted cash flow Advantages It is that method which helps in assessing the intrinsic values of all the equity shares held with an enterprise. The equity shareholder's value will need to assess by taking advantage of the time value of money(Finkle, T. and et.al., 2013). The present figures are assessed on the basis of future criteria by using time value of money in which present figures are observed in order to find out the future values.

The current method will rely on the free cash flows generated throughout the method as it can gain reliability in their figures as it is based on the cash flows obtained during the period rather than imposing accounting figures which has based on certain assumptions used in the enterprise.

Disadvantages The deflating growth rates and certain assumption may lead an enterprise towards the path ofd the failure as wrong figures can prove negative for the business as it affects its performance(Chatterji. and et.al., 2013). The business needs to be strong enough in order to face external market complexities as future cash flows based on these growth rates.

Comparable methods Advantages It is more accurate as compared to the results obtained in the application of discounted cash flow analysis.

The results obtained by applying this form of technique will be beneficial for an entity as the results are not based on using different assumptions.

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Disadvantages The different options used by an entity in using option can deflate the primary objective of this analysis.

The results obtained from using different forms of variables will be result into different results which cannot be identical for achieving the primary aim of an enterprise.

5. Market multiplies approach Sensitivity - EV/EBITDA Exit Multiple WACC

PV of FCF

9.90%

102500

6.80%

112500

7.80%

115500

7.80%

128500

8.60%

135200

PV of Terminal Value (EV/EBITDA) 6

7

7.5

204100

238117

255125

206508

240926

258135

205707

239992

257134

205738

240028

257173

205123

239310

256404

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Intrinsic Value 6

7

7.5

762

846

888

793

878

920

798

883

925

830

915

957

845

929

971

Interpretations 6. Application of free cash model Particulars 2008

2009

2010

2011

2012

2013

2014

Revenues

209.95

228.49

475

740

1000

1400

1800

15.38

54.56

59.61

408.92

84.68

137.22

232.89

1.27

4.59

14.32

28.69

71.26

54.29

83.56

14.11

49.97

45.29

380.23

13.42

82.93

149.33

Operating cash flow Capital expenditur e Free cash flow

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Interpretations It has been observed from the above table which has calculated free cash flows by considering operating cash flows of an enterprise. It can be seen that the cash flows initially at low position then increases and again get lower position and again shows stable. It is showing fluctuating position which is clearly observed that the value of operating cash flows are directing the values of these free cash flows as it totally based on the values of the operating cash activities. The capital expenditures is also played a significant role in ascertaining the figure of the free cash flow as these figures are deducted from the main figure of operating activities of the current cash flows(Guerrero. and Urbano., 2012). The capital expenditure are also increases gradually over the years which will decreases the fire cash flows from one period to another. The current figures of the cash flows are determined by an enterprise in order to ascertain the business efficiency of an entity.

Cash flow ratios Operating cash flow/reven

0.0732555 0.2387850 0.1254947 0.5525945

ues

37

672

368

946

0.0980142 0.08468

857

Free cash flow/Oper ating cash

0.9174252 0.9158724 0.7597718 0.9298395 0.1584789 0.6043579

flow

276

34

504

774

797

653

Interpretations Cash flow statements is regarded as one of the important statements in an enterprise as it determines the movement of cash inflow and outflow in order to maintain the liquidity in the business enterprise(Mousa, F. and Wales. 2012). This cash will be used by an entity in order to pay off all its short term obligations in an enterprise. The operating cash flow ratio is based on the

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values obtained fro the operating activities and the sales and the revenue of an entity. This ratio is decreasing over the period which shows the deficiency of an entity. Another ratio has based on the figure4s obtained from the free cash flows and the operating cash flows. This ratio stable position as it is not decreasing with a significant rates and not increasing.

CONCLUSION It can be summarized from the above project report that financial requirements of the business are the primary objectives of an entrepreneur which needs to be fulfilled in order to achieve this aim in a given time frame. This report stresses on the market risk which has been analyzed by using market approaches which will help an entity in order to reduce their risks arises in the current business. This is alps emphasizes on the valuation models which can be used by an entity owner in order to decrease their future prospective risks level.

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REFERENCES 

Bruton, G. and et.al., 2015. New Financial Alternatives in Seeding Entrepreneurship: Microfinance, Crowdfunding, and Peer‐ to‐ Peer Innovations. Entrepreneurship Theory and Practice. 39(1). pp. 9-26.



Le B. I., Miller, D. and Bares, F., 2015. Governance and entrepreneurship in family firms: Agency, behavioral agency and resource-based comparisons. Journal of Family Business Strategy. 6(1). pp. 58-62.



Verbeke, A. and Yuan, W., 2013. The Drivers of Multinational Enterprise Subsidiary Entrepreneurship in China: A New Resource‐ Based View Perspective. Journal of Management Studies. 50(2). pp. 236-258.



Belleflamme, P., Lambert, T. and Schwienbacher, A., 2013. Individual crowdfunding practices. Venture Capital. 15(4). pp. 313-333.



Kuratko, D. F., Hornsby, J. S. and Covin, J. G., 2014. Diagnosing a firm's internal environment for corporate entrepreneurship. Business Horizons. 57(1). pp. 37-47.

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