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IMTG_ACES.pptx

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Business Case Challenge for “The Maverick” Season 3 Milco - Aerospace & Defense provider By Team Aces – IMT Ghaziabad Mahashweta Chaudhuri Anirban Sharma Kaustuv Roy 1 Executive Summary ã Overall financial health of Milco is good enough with sufficient cash and good financial leverage ãWith the available data of demand for the products and services, the bottom-line of the income statement improves year by year till 2019 ãMilco has dominant position in the Military Flight Simulator Segment wit
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  Business Case Challenge for “The Maverick” Season 3 By Team Aces  –   IMT Ghaziabad Milco - Aerospace & Defense provider Mahashweta Chaudhuri Anirban Sharma Kaustuv Roy 1  Executive Summary 2 ã  Overall financial health of Milco is good enough with sufficient cash and good financial leverage ã With the available data of demand for the products and services, the bottom-line of the income statement improves year by year till 2019 ã Milco has dominant position in the Military Flight Simulator Segment with major market share ã Milco should exit from military facility construction as it has a high level of rivalry in both US and global market ã Milco should focus more on the Military Flight Simulation Instruction (as it has high impact on the profitability) and MRO services (there will be scope of getting a good market share) ã It should focus on JV with some smaller player  Financial Performances  –    Income Statement 3 Profit & Loss statement (in Million USD) Year 2014 2015 2016 2017 2018 2019 Sales 2,005 2,090 2,177 2,268 2,361 2,458 COGS 1,050 1,097 1,144 1,194 1,244 1,296 SG&A 401 418 435 454 472 492 Gross Profit 554 575 597 621 645 670 Interest 59 63 57 51 46 40 Depreciation & Amortization 153 160 160 160 160 160 PBT 341 352 380 409 439 470 Tax Rate 15% 15% 15% 15% 15% 15% Tax 51 53 57 61 66 70 PAT 290 300 323 348 373 399 Assumptions: considering the production plan increases linearly and it follows the  prediction availble. 1.Interest Rate  –   3.3% (source  –   WorldBank ) 2.Loan repayment in 10 years 3.The investment of USD 150 mill is considered to be sourced from equity having no interest to pay, hence not considered in the income statement 4.Interest rate for long term debt (current portion) or short term loan  –   3.3% 5.Interest is calculated on annual basis, as payment history is not available 6.For depreciation, Average life considered 15 years 01,0002,0003,0004,0005,000201420152016201720182019PATTaxDepreciationInterestSG&ACOGS  Financial Performances  –    Overall Health 4 Indicator 2014 2015 Industry Remarks Current Ratio 2.29 2.13 1.20 Its higher than industry Quick Ratio 1.57 1.63 0.90 lower industry Inventory Turnover 2.10 2.74 2.56 At par with, industry Debt Equity Ratio 1.23 1.31 1.24 At par with, industry Total Debt / Total Assets 44% 45% 24% More debt burden Total shareholders equity / Total Assets 36% 34% 28% More equity oriented Gross Profit Margin 25% 25% 32% closer to industry  Net Profit Margin 14% 14% 13% At par with, industry Operating Ratio 72% 72% 59% better than industry Cost of goods sold Ratio 52% 52% 59% At par with, industry Return on Assets (RoA) 8% 8% 14% Just below industry Total Assets turnover 56% 55% 15% better than industry As a whole, Milco is perfoming moderately, with sufficient cash for smoother operation and investing for the Future, they are strategically aligned with long term mission

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Jul 23, 2017
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