Accounting Information Of Philly Landscaping: Investment Options Analysis

Business situation and purpose of analysis

Discuss about the Accounting Information Of Philly Landscaping.

The present business situation is of Philly landscaping who has been in business for quite long time and its owner Steve is concerned about his retirement plan. In this regard, owner of business is provided with their investment options after his retirement. He would be guided with informed decision making using the decision support system software. The three investment options comprise of selling the company and investing the proceeds generated that would yield annual income of $ 100000. Secondly, building company by taking out loan that help in running operations by hiring general manager at an annual salary of $ 85000. Thirdly, he has the options of buying out. The main purpose of analysis is to determine the impact on annual cash flows in all the scenarios mentioned above. Moreover, the analysis is done to forecast the future cash flow that would help in assessing all three investments options.

If Steve considers doing nothing then this would lead to reduction in customer base by 5% and generates an annual income of $65000. The forecasted amount of cash flow stood at $ 4311999. Forecasted annual income till year 2027 stood at $ 668751. Now, if he accept low from bank at lower return on investment, would lead to an increase in annual income $ 100000. The total value of annual income for forecasted period is computed at $ 257423. Now, considering loan from bank at higher return on investment would generated total annual income for forecasted year at $ 790807. Now, if Steve seeks buying out then, it would generate total annual income till forecasted year at $ 1077545. Therefore, it can be inferred from the calculated figures that buying out generates higher amount of total annual income till forecasted year as compared to other three scenarios.

Conclusion:

From the analysis of all the scenarios, it can be concluded that option of buying out the business generates significantly higher cash flow from year 2018 to 2027. Highest value of total cash flow stood at $ 1000000 as against accepting loan from bank with lower return on investment at $ 179878. The expected annuity earnings are higher for buyout. Therefore, after carrying out thorough analysis of all the scenarios, it can be said that the feasible investment options for Steve after retirement would be buying out business.

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