Essays on Making Investment Decisions - Rustica Industries Case Study

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The paper 'Making Investment Decisions - Rustica Industries" is a good example of a management case study. The investment decision is the determination by the management on where, how, when and how much capital will be spent and the debt to be acquired for the purpose of making profits. The investment decisions are contributed by several factors that include projects available, capital on hand, general market conditions and specific investment strategy. Before choosing which company to recommend for investment, Martin Smith should consider certain factors. First, he should determine the financial performance of potential business investment.

It involves identifying the profitability of the business and how it has been performing over the past years. It can be done by requesting financial reports that consist of recent year’ s tax and budget returns, current accounts receivable, projection of cash flows and their balance sheet. He should pay close attention to the balance sheet since it will give him a list of assets, liabilities and the capital in the business. Second, he should determine the market analysis that the company he wants to recommend for investment is involved.

He can do this by studying and assessing the target customers and the marketplace before making the investment decision. He should also identify the competition status to determine whether the company is gaining market share. Third, Martin Smith needs to consider the amount of investment by examining the operating capital and the credit needs of the company. It is important to reassess the current cash reserves, accounts payable and receivable, credit access and the cash flows to determine whether the funding is enough to sustain the company as a going concern (Korniotis and Kumar 2011). The type of private equity deal that will be conducted is acquisition.

It is the process where one corporation purchases another. The acquisition agreement should be signed subject to satisfactory conditions. Martin Smith chose to recommend Rustica Industries for the investment due to a number of reasons.  

References

Arrow, K. J., & Lind, R. C. (2014). Uncertainty and the evaluation of public investment decisions. Journal of Natural Resources Policy Research, 6(1), 29-44.

Bakke, T. E., & Whited, T. M. (2010). Which firms follow the market? An analysis of corporate investment decisions. Review of Financial Studies, hhp115.

Bazerman, M., & Moore, D. A. (2012). Judgment in managerial decision making.

Bonini Baraldi, S., Shoup, D., & Zan, L. (2013). Understanding cultural heritage in Turkey: institutional context and organisational Issues.International journal of heritage studies, 19(7), 728-748.

Hitchner, J. R. (2011). Financial valuation: applications and models (Vol. 545). John Wiley & Sons.

Koller, T., Goedhart, M., & Wessels, D. (2010). Valuation: measuring and managing the value of companies (Vol. 499). John Wiley and Sons.

Korniotis, G. M., & Kumar, A. (2011). Do older investors make better investment decisions?. The Review of Economics and Statistics, 93(1), 244-265.

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