Financial Decision Making and Investment Analysis for Amcor Plc

Accounting And Finance For Decision-Making at Amcor PLC Assignment Sample

Introduction of Accounting And Finance For Decision Making Assignment

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Financial information, as well as the decision-making process, is necessary and that involves smooth investment flow in the business of ‘Amcor Plc’. Accounting and financial knowledge are necessary and that improves investing decision-making process. The study aims to control the financial activity of Amcor Plc by the appropriate decision-making process. The objective of the study is to identify and analyze the financial decision-making process of the company.

1. Executive summary

The present report has shed light on Amcor Plc in the global packaging industry and produced flexible packaging for foods and personal services. The specific company manufactures and distributes its flexible packaging, cartons, and containers for home and personal care. Individual suppliers of the business organizations are searching for a flexible business unit for improving global packaging. The company's background is manufacturing and distribution of containers for personal as well as professional use. The purpose of the report is to make a flexible financial performance by the financial decision-making process. A sustainable investment process is necessary for long business opportunities and the financial decision-making process also improves the company's performance. The company is operating at a global level through flexible business packaging.

In the current scenario, the company is growing positively and long-term demand can be created by the smooth business flows. The conclusion of the analysis is based on the above information of Amcor Plc. An appropriate financial decision-making process is necessary for Amcor Plc to enhance long-term business sustainability. Investment recommendation includes accurate investment strategy with the help f individual investors. The financial activity is more transparent by the investment and individual financial resources are involved. The overall income of Amcor Plc is more accurate by the appropriate investment strategy that can meet the basic requirements of the business. Growth investment techniques are needed to follow by the company and future outcomes are more accurate. Investing activity is played a passive role to increase the fixed income of the business.

2: Motivation of the proposed investment

2.1: Purpose of the Investment

In order to feasibly identify the relevant issues for packaging the purpose of the investment is mainly concerned with the enhancement of distribution channels. This is being deemed as an important consideration for the managerial spearhead of Amcor Plc to ensure an enhanced distribution channel of packaging products with suitable integration and coordination with suppliers. According to (), the effects of covid-19 has hampered the overall business influence and this new project is necessary to recover lost ground in the packaging industry.

2.2: Proposal of the Investment

The arrival of covid-19 pandemic has possessed a large variety of challenges for Amcor Plc, in which the primary area of concern was determined as the inefficiency in management of distribution channels. The inefficient management of distribution channels further created a backlog of orders from large pharmaceutical companies to facilitate doorstep medicine delivery for needy patients. As per opinions of (), the casual drivers mostly include the financial paradigms and large scale changes are required to establish feasible financial returns from the project.

2.3: Proposition of the Investment

The major capabilities possessed by the financial drivers mainly consist of providing suitable revenue generation streams and profitability streams by the feasible implementation of the new distribution based project. Moreover, the propositions also provide room for ensuring the suitable deliverables, which emphasises on the management of Amcor Plc fruitfully distributing packaging services to all major industrial activities and thus determining a dynamic market and industry dominance.

3. Conduct investment appraisal

3.1 Conduct a Payback analysis

Payback period of the investment appraisal
Year	NET Cash flows (£`Million)	Balance	Payback period (Years)
Year 0	-750	-750	3.8
Year 1	-100	-850
Year 2	200	-650
Year 3	900	250
Year 4	1100	1350
Year 5	1950	3300
Payback period = (Initial investment / Cash flows per year)

Table 1: Payback period

(Source: Self-created)

Payback analysis is determined by the investment methods and the sustainable business requirements are followed by the investment appraisal techniques. PBP is the necessary investment appraisal process and the direct cash flows of the business are measured in a particular way. Payback period investment appraisal techniques are necessary for the business and that can particularly maintain the appropriate business process. An investment appraisal technique is necessary and that can be conducted by a financial professional (Horvat and Mojzer, 2019). The investment decision is necessary for financial accounting and the payback period is the appropriate way to calculate investment return. In year 0 the net cash flows almost (-750) and the payback period is calculated which is around 3.8 (Years). In financial accounting investment appraisal techniques is necessary and can be calculated the investment return of the business.

3.2 NPV and IRR

IRR of the investment appraisal
Year	NET Cash flows (£`Million)	Balance	IRR (%)
Year 0	-750	-750	23%
Year 1	-100	-850
Year 2	200	-650
Year 3	900	250
Year 4	1100	1350
Year 5	1950	3300
IRR = (Valuation based on Net cash flows of the investment)

Table 2: IRR

(Source: Self-created)

"Net present value" is calculated by the basic difference between cash inflows and outflows or the present value of the business. The basic difference between cash inflows and outflows is calculated by the NPV method. Sometimes capital budgeting, as well as investment planning methods, is necessary and that can be calculated by the NPV. The Internal rates of return, as well as NPV, are required for initial investment during the calculation. In order to, compare similar investment activities NPV is necessary and that can be calculated by the different periods of the company. The techniques of the investment appraisal both are necessary and sometimes calculated to identify the investment techniques of the business.

3.3 Conduct a PESTEL and SWOT analysis for the investment

Political	Initiate fiscal policy of the individual business organization and minimize the competition-related issues. Most of the opportunities of the business are involved in investment appraisal techniques (Cockcroft and Russell, 2018). Sometimes future threats of the business organizations are appropriately identified by the external business threats and minimized by the investment appraisal techniques.
Economical	Identifying the employees' rate of return, as well as interest rates, is exactly followed by the investment appraisal techniques. Many financial services analyze the economical activities by the investment appraisal techniques.
Social	Identifying the demographic consideration, as well as tangible interest rates, are necessary for the social factors. In the post-pandemic situation, the basic lifestyles of the individual business have been changed.
Technological	Rapidly growing technology is effective for the individual business organization and can maximize several opportunities such as accounting automation as well as cyber security and that can be improved by the appropriate investment techniques.
Environmental	Environmental factors are sensible and do not change with the company's performance. The company is using the environment (Protection) Act, of 1986 to improve environmental quality (India code.nic.in, 2022). Natural resources are common for the business and they cannot be changed due to investment techniques.
Legal	The legal factors are necessary for the business and individual business organizations are enhancing basic opportunities through the legal factors. The company is using The Juvenile Justice Act, of 2015 to maximize business opportunities by the criminal law (Legislative.gov.in, 2022).

Table 3: PESTLE Analysis

(Source: Self-created)

Strength ? Clearly meet operational goals and objectives ? Maintain appropriate responsibilities of the organization	Weakness ? The financial requirements do not meet ? Lack of monitoring business process
Opportunities ? The financial portfolio is appropriately monitoring ? Accurate performance measurement techniques	Threats ? Continuous market-changing situation ? Lack of financial resources

Table 4: SWOT Analysis

(Source: Self-created)

4. Critically discuss the risk and return and their potential impact

4.1 Sensitivity analysis

Investment appraisal
Assumptions
Particulars	Amt	Products sold
Products sold	500000	480000	500	750	1000	1250	1500
Price per product	200	200	15000	15750	17325	20790	25987.5
Store rent of the business	4500	175	20000	21000	23100	27720	34650
Total payroll	15000	150	25000	26250	28875	34650	43312.5
Profit & loss statement		125	30000	31500	34650	41580	51975
Particulars (Assumptions)	Amount (Assumptions)	100	35000	36750	40425	48510	60637.5
Total revenue	480500	75	40000	42000	46200	55440	69300
Cost of sales	225000
Gross profit	255500
Standardized costs	19230
Operating profit	236270

Table 5: Sensitivity Analysis

(Source: Self-created)

Sensitivity analysis is a financial model that exactly determines the variable which is described by the analysis. The specific analysis is measured the current fluctuation of the business and can systematically shows the future benefits. A reliable prediction of the decision-making process is measured by sensitivity analysis. A better decision-making process, as well as a reliable prediction process, is involved in the sensitivity analysis process (Faisal et al 2018). Individual variables are needed in the business organization and sensitivity analysis is appropriately measured.

4.2 Risk of the variable

Individual companies' minimum return is measured by the cost of capital and that can be used to identify the potential risk. The average cost of capital is needed for an individual business organization and that can be calculated by the debt and financial abilities of the business. Amcor Plc is trying to identify the future threats by the capital investment techniques.

4.3 Return on NPV

The basic difference between the present value of cash inflows and cash outflows is measured by the NPV. The initial investment is necessary to calculate the return on NPV and measured the expected cash flows of the business (Hirshleifer et al. 2018). The NPV is calculated by the investment return and sometimes ROI is calculated by the particular method.

4.4 Discounted Payback Period

The capital budgeting procedure, as well as the profitability of the project, is measured by discounted payback period. Cash inflows, as well as cash outflows of each company, are calculated by the discounted payback period (Goh, 2019). DPP is helping to calculate the basic profitability and describe whether a business project is acceptable or not.

4.5 Financial ratios

The financial ratios are necessary to compare the overall business performance of the organization. Cost of sales is necessary during the calculation of gross profit margin. The gross profit, as well as operating income, is necessary during the calculation of the operating profit of Amcor Plc (Amcor.com, 2022). The gross profit ratio is almost (-33.33) % and that can be compared to the financial performance of Amcor Plc.

Conclusion

Based on the above discussion it can be concluded that the financial decision-making process is necessary to enhance future outcomes. An investment appraisal technique is necessary and that can be enhancing the basic opportunities. The discounted payback period is necessary and more accurate for the business process of Amcor Plc. The difference between the present values of the cash inflows as well as cash outflows is necessary to calculate the return on NPV.

References

Journals

Brooks, C. and Oikonomou, I., 2018. The effects of environmental, social and governance disclosures and performance on firm value: A review of the literature in accounting and finance. The British Accounting Review, 50(1), pp.1-15.

Cockcroft, S. and Russell, M., 2018. Big data opportunities for accounting and finance practice and research. Australian Accounting Review, 28(3), pp.323-333.

Faisal, K., Khan, A.K. and Al-Aboud, O.A., 2018. Study of Managerial Decision Making Linked to Operating and Financial Leverage. International Journal of Accounting and Finance Research, 7(1), pp.139-143.

Goh, C., 2019. Optimizing Accounting Decision Making Using Goal Programming. Journal of Corporate Accounting & Finance, 30(1), pp.161-168.

Hirshleifer, D., Jian, M. and Zhang, H., 2018. Superstition and financial decision making. Management Science, 64(1), pp.235-252.

Horvat, T. and Mojzer, J., 2019. Influence of company size on accounting information for decision-making of management. Naše gospodarstvo/Our economy, 65(2), pp.11-20.

Monk, A., Prins, M. and Rook, D., 2019. Rethinking alternative data in institutional investment. The Journal of Financial Data Science, 1(1), pp.14-31.

Neyland, D., 2018. On the transformation of children at-risk into an investment proposition: A study of Social Impact Bonds as an anti-market device. The Sociological Review, 66(3), pp.492-510.

Website

Amcor.com, 2022, Financial performance, Available at: https://www.amcor.com/ [Accessed on: 5^th May, 2021]

Indiacode.nic.in, 2022, Environmental act, Available at: https://www.indiacode.nic.in/bitstream/123456789/4316/1/ep_act_1986.pdf [Accessed on: 05th May, 2022]

Legislative.gov.in, 2022, Legal.