Evaluating The Project Of Shopping Mall †MyAssignmenthelp.com

Question: Discuss about the Evaluating The Project Of Shopping Mall. Answer: This particular memo is prepared for evaluating the project of opening new mall using financial tools such as ratio analysis. The project is undertaken for opening new mall on the north end of Calgary and the projected cost for new mall is $ 200 million. Viability of project has been done by the computation of financial ratios for ten years. Computed ratios for evaluation involves net profit margin, return on equity, return on assets, current ratio, debt ratio and debt to equity ratio (Winston, 2016). Net profit margin of project is increasing consistently from 11.14% in second year of operation to 28.98% and 31.2% in ninth and tenth year of operations. Return on equity of project is increasing continuously throughout the project life from 2.73% in first year of operation to 10.25% in tenth year of operation. Assets used in the projects are efficient for generating returns as the return generated is increasing continuously, although at lower pace than other ratios (Kraus, 2014). Curr ent ratio of project has kept on decreasing until eighth year of operation and thereafter it increased. It is indicating of the fact that efficiency of current assets for financing short-term obligations has been decreasing. Debt ratio of project has been decreasing since the initial year of project operation. It stood at 0.726 in first year of operation to 0.457 in tenth year of operation. Debt to equity ratio also witnessed decline from 2.65 in first year of operation to 0.840 in tenth year. Therefore, it can be inferred from the ratio analysis that it is feasible to undertake the project. References: Kraus, D. (2014). Consolidated data analysis and presentation using an open-source add-in for the Microsoft Excel spreadsheet software.Medical Writing,23(1), 25-28. Winston, W. (2016).Microsoft Excel data analysis and business modeling. Microsoft press.