Innovation and Entrepreneurship Competition (IEC) – Prosperity through Creativity

(PTC)
The focused areas:
1. Technology – Investment Analysis Program
Project Format:
1. Project Summary: Describe the main ideas of the project and present your creativity.

The focal idea focuses on the concept point of investment. This process is
usually carried out by business evaluators and financial analyst. It is the
combination of the two different yet similar experts’ work. Business
evaluators assess the business strategy within its operational industry in close
relation to its competitiveness. Financial analysist are the brains behind the
process of pinpointing sound and accurate accounting reports. The
consolidated analysis outputs are taken in consolidation view to form a 360
degree information on investment.

Another focal idea is the minimization of investment risk. The field of

investment is an area of uncertainties regarding the invested stocks. These
invested stocks are valued according to companies’ business performances.
The better the business performed the higher it shares value incremented. The
business performance is evaluated via companies audited financial report. The
financial report is the end result of business strategy. An incrementing
business share value means the business strategy is effective within its
operational industry.

The end result is however a forecast that must be accurately pinpointed for
investors. Knowledgeable and competence investors are able to put their
money where it will grow instead of shrink. In other words, they are able to
forecast the possible end result of their invested company at which they
successfully minimized their investment risk and uncertainty.

The employment opportunity will be attained via the establishment of

Investment Company (either owned privately or publicly) on Kiribati. The
operation will be split between the business evaluation and the financial
analysis. The business evaluation process is more decision making in nature at
which Kiribati current IT development had not yet attained such technology
(A.I) for it hence it will be carried out manually. The financial analysis will be
a one-go process at which consecutive processes will be automated to
inputted programmed formulas. Also, it is planned that the incremental
earnings earned from these investments will be used to fund other Kiribati
high priority projects that at the same time create more employment for the
people of Kiribati.

This project proposal essentially will standardize the analyzed companies

financial reporting for effective and efficient evaluations. These standardize
reports will be then identified as data-collection and input phase at which
second is the automated and inputted program formulas for a full analysis on
its profitability, liquidity with solvency, efficiency, returns, cash flows,
 financial structure, Altman bankruptcy score and share price. In addition, the
evaluation report for the business strategy with the stated financial factors
evaluations, the investment process will be predictive given that the both the
targeted market behavior and operational industry changes are kept at bay.

The overarching idea is the establishment of an investment company or

institution within Kiribati and applied a formulated software or program via
the established standardized financial reports for better cross referencing and
comparison between businesses within different industries. Combined with a
manually brainstormed and research information for a targeted market
industry, an investment outcome will be more controllable in an indirect way.
Any invested securities being on the down tread for the next reporting and
valuation period will be sold while up treading shares will be bought
reasonable numbers in. With the successful continuance of such earnings, the
significant amount of passive extra income for Kiribati will be available for
the investment of other pressing Kiribati projects.

2. Project targets: Describe the main goals, what problems and bottlenecks can be
solved.

Project Goals:

 The establishment of Investment Company or Institution:

So far within Kiribati there is no established investment company or
institution. The establishment of such body will enable Kiribati to have its
own investing activities that which can amply provide for continual stream of
passive income to Kiribati. This is a huge missed out opportunity that Kiribati
Government could further exploit to make it money works for Kiribati. With
the establishment of such body, Kiribati can significantly link its growth with
its invested companies. By investing in promising companies’ startups and
well-established companies, Kiribati will then attain a continual stream of
passive income.

 Facilitating the efficiency and effectiveness of investment activities:

The process of security analysis is a cumber some work. It requires both the
business strategy evaluation and the financial report analysis. These two
processes further give valuable information about the analyzed companies, its
competitors within their operational industry. The business strategy evaluation
is a manual work at which decision makings will be drawn based on the
analyzed companies’ annual report and industry report. The financial report
analyzes is a routine type of work that which a formulated calculations and
formulations with graphing can be designed. The data collection is the initial
phase that which will be done manually as well into the formulated database.
The data collection process for the analyzed companies’ financial statements
are all inputted into a standardized format to enable the comparison of
different businesses performances within their respective industries.

 Investment Employment Opportunities:

Security Analysist will be a newly introduced job that in a developing
 economy like ours will be highly valued. The overall process of both the
business strategy evaluators and financial analyzes is known as Security
Analysist. If such positions were already introduced, Kiribati would have been
main investor for companies such as ATH within the Pacific listed companies,
Telsa Inc within the American listed companies and the investment in digital
coins to name a few major examples. Having an investment account on such
ultra-performing and earning companies could easily 10x even provide greater
return for an invested amount. However, such gains could easily turn into a
loss if a security analysist is careless with its continual monitoring process of
the invested company performance, economy and market behaviors. Still this
process is predictable and controllable in an indirect way.

 Establishment of Kiribati Investing Activity:

With the successful application and performance for these “Security
Analysists”, Kiribati will then be amply provided its newly own investing
activity within its current strategies for earning revenue. This which further
strengthen Kiribati current investing activity.

 Continual Stream of Passive Income:

Another most prevalent positive impact the successful work for security
analysists will be the continual stream of passive income to Kiribati. Given the
different materiality of invested amount within different companies, no doubt
that the investment of listed companies with major economics influence will
greatly benefit Kiribati. The returns on these investments could provide for
Kiribati reliable source of financing for its other high priority projects and
activities.
Project Addressed Problems:

 Lack of or insignificant investment activity:

The popular mindset now within Kiribati with that extra cash is saving. This is
good but the process of saving is being impacted by inflation. Unknowingly
these saved cashes are being devalued within its economy. This is a major
mistake as such extra cashes should be put to work via the process of
investment. The process of investment is like making money work for you or
an investor. Instead of working and trading hours for cash, money now works
to makes or eat what you invested. This all resulted due to the lack of proper
investment activity which should had been already established along operating
and financing activities.

 Lack of Investment Institution or Company:

Evidently this could be all alleviated via the collaborative help of Kiribati own
Investment Institution or Company. Given that such knowledge is quite new
and out of reach to the public, this body will facilitate the flow application of
investment activities.

 Kiribati weak economy, business and natural environment:

Kiribati economy, business and natural environment are in a pretty coping
side. This could had been improved if all the worthy ideas had been realized
so far. Kiribati economy and business are mainly depended on few monopolies
which could be even improved if such monopolies are faced with competition
 within their respective industry. Kiribati natural environment is a messed,
recycling industries and land reclamation should be inputted in place to better
improve Kiribati current infrastructure. However, these are all held also due to
lack of funding which I strongly believe the utilization of investment in
addition to Kiribati current major earning activities could be highly
compliment their input and even fast pace the realizations of these worthy
ideas for Kiribati.

 Financing dependence:
The major point to be addressed is Kiribati Government dependent on donors
for financing its projects of all aspects. This is reasonable for our developing
beloved country Kiribati. However, to enable Kiribati to attain developed
country status the attainment of financing stability is among many steps to be
achieved. With the proper utilization of investment passive earnings, Kiribati
will be able to fast track it processes which had been hold due to lack of
availability of financing only. Even if the project is that of urgent and serious
manner, lack of funding will still an hinderance. Not only Kiribati projects but
also financing its own contingencies operations.

3. Project advantages: Explain why this will be a successful project and what the
business potential is.

Reasons supporting the successful implementation of the project:

This project will be successful in the sense that the implemented action plan had been
supported by previous studies on financing and accounting. The key performance
indicators with minimum financial ratios plus characteristics of analyzed
companies within their business environment will be the leading decision making in
the security analysis process and investment of companies’ shares. These
predetermination factors give the investors a basis for forecasting the possible future
performances for the invested securities and stocks.

These predetermination factors include:

 Strong business strategy within the business industry for a big

growing market:
This is a foundational predetermination factor for evaluating and
forecasting a business performance. It is the business implemented
strategy that determine its competitiveness within its industry. A strong
positioned and a progressing company means that the evaluated
company will have a strong market share within their competing
industry. This fact is often reflected and supported within their
financial report.

 Strong Financial Ratios:

A financial report is a reflection of how the company performs so far.
A good financial report implies a sound business within its industry
serves its market well. For investment purposes the profitability,
liquidity with solvency, efficiency, returns, cash flows, financial
structure, Altman bankruptcy score strong ratios hints an outstanding
 candidate for investment.

 Market, legal and political environment:

A supportive market, legal and political environment is another
minimum requirement for a sound investment. These three factors can
present a major business hinderance. It is then best that the invested
companies have both the market, legal and political influences on their
sides and not against them.

The characteristics of analyzed companies

The companies’ nature and competitive strategy are dualistic in nature.
The companies’ nature can be either a start-up companies and a well-
established listed companies whereas at which their competitive strategy
can be either cost differentiation and product differentiation.

Getting a share within companies that is either a start-up company or well-

established listed company with a strong product and/or service
differentiation with a big and growing market will be luck shot worth
taking. Mostly the shareholders of these type of companies were their
initial investors who applied for such companies Initial Public Offer. And
with a high market demand for their companies shares due to such
companies outstanding performances, other public offers will be very hard
to get. Thus the challenges lies in the identification of potential market
trends for start-up companies with product and or service differentiation
strategy emphasis as few succeeded while most of its fails.

The same situation goes with the analysis of either start-up company or
well-established listed company with a strong emphasis on cost
differentiation strategy.
Key Performance Indicators
Businesses within different industries have different key performance
indicators. The financial key indicators are common and similar across
business industries. These financial key indicators can be used to reverse
engineer a company specific key performance indicator and also to further
validate company report with their given key performance indicators. The
identification of key performance is crucial in for a more thorough analysis
of business preferred business strategy within their competing industries.
**Within this project write up, the phrase start-up companies refer to
`newly started business within it chosen industry for a particular market**
Business Potential
The pinnacle goal of this project write up is the establishment of Kiribati
Investment Institution or Company. From this body, Kiribati will finance and own
most future entrepreneurship efforts and established businesses. Given that Kiribati
economy is not yet developed, the era of entrepreneurs is to be expected. This
expected time should be prepared for especially the financing needs.
Initially, this body is to take advantage of foreign markets to secure its source
of funding. The start-up of this proposal will need initial funding. This financing will
 be used to invest at listed companies, securities, and even worthy startup companies.
Through the successful implementation of it, Kiribati will be able to attain passive
income at the proportionate of their investment that is greater than of the returns of
saving. If securities are used, it should be ensured that a greater return is also attained.
Over the years of investment, the returns on investments and securities will exceed the
initial provided funding for investing. This which could be used for further expanding
the base of earning the proposed Investment Institution or used for funding Kiribati
entrepreneurship business that have a major impact toward our economy.
Funding entrepreneurship business within Kiribati is another good way to have
another form of passive income and increase aggregate income of Kiribati. To name a
few conceptual yet Kiribati main source of business include establishing Kiribati own
Fishing Vessels, aquafarming, tourism to name a few. This conceptual business ideas
tap into Kiribati main and abundant resources that greatly utilizes Kiribati natural
resources. By financing these worthy businesses ideas into realization, this will enable
us to have a major share within this companies’ ownership and earning. Thus, in turn
gives a secure source of passive income at the same time increases Kiribati aggregate
income.
Overall, the establishment of Kiribati newly investment activity and business
with a strong base of passive and continual income will provide additional funding in
place for implementing Kiribati worthy ideas in terms of attaining Developed Country
Status and of course KV20 goals.
4. Project beneficiary: Describe who will be benefited and how.
Project beneficiary:
Upon the continual successful results of this project, Kiribati will be benefited
in a major way. Given this project ending goals, the benefits include:

 Increase of Kiribati overall aggregate income earning:

It is no a brainer that the establishment of Kiribati first and significant
investment company increases it income earning. This area, upon it
successful implementation, Kiribati will be able to use its money to
earn money in a moderately passive way for security financial assets
while completely passive income for investment in shares. Still
categorized as passive, a continual monitoring of an investment assets
should be kept at bay for forecasting incoming businesses catastrophes.

 Financing of Kiribati pressing projects and operations:

Kiribati is country with certain pressing issues. This could be mitigated
if financing was in place. But with the current situation of Kiribati, it is
mainly dependent of donor funding for financing most of its projects.
With the availability of investment earnings, such earnings could be
used to further undertake these pressing projects such as improving
Kiribati infrastructures, waste management system and governmental
funding.

 Creation of employment:
Upon the creation of this investment institution or company plus the
financing of other entrepreneurship businesses here at Kiribati,
employment will be mostly created for the population of Kiribati. This
provides the people of Kiribati with more access of jobs opportunities
 and a high chance of establishment of higher employment rate hours.

 Capitalization of Kiribati main Natural Resources:

Kiribati is a place with a big ocean. This is Kiribati main assets that
could be fully capitalized on. As envision, the earning of this
investment company can be further invested into financing Kiribati
Fishing vessel with its facilities and establishment of Kiribati own
Tourism business to name a few of Kiribati major earning areas.

 Utilization of Investment earnings:

The money earned via the investment process is an output of an
invested money. This could further used to expand investment earning
base or fund other relevant projects. Through the successful application
of this investment activity, Kiribati could used all the earned income
from this investment activity and fund its operation while at the same
time fast pace it realization of KV20.

 Improvement of Kiribati business economy:

These earning also could be utilized to improve Kiribati business
economy. Given Kiribati have few monopolies that provide essential
products and services, the funding and establishment of competing
companies for these monopolies could turn the tables to the favor of
Kiribati people. If competition is established for these monopolies, the
Kiribati economy will change in good way as competition will
influences these duopoly companies to provide a better service or
product all in the name of profit and that is closely connotated with
superior customer service.

5. Project Sustainability: Describe how the project will be implemented and sustain.

Project Implementation
For this competition’s sake, the sampled investment analysis will focus on a
well-established and listed company that initially emphasized the application of cost
differentiation strategy till it slowly dominate its Pacific market industry. This
company is Amalgamated Telecom Holdings.

The sample data used to derive the result of these findings can be access in Fijian
Listed Companies Annual Reports for ATH for the year 2017 to 2019. Can be access
via this link https://www.spx.com.fj/Explore-SPX/Annual-Reports.

**Given the work to be shared is mostly work of my own and to protect it from
being copied, I will not disclose the calculation part of it from which mostly of
the investment sample analysis write up is comprised from**

**This investment analysis is made for the year 2020 as it only analyzes 2019 as
the latest year of performance. For an updated investment decision making, the
year 2020 investment analysis should be undertaken**

**Investment Sample Analysis Starts Here**

a) ATH Brief Background

ATH is a company that is mainly operated within the Telecommunication industry. It had
been slowly and persistently taking a huge market share within its operational industry.
Within the Pacific Region it had been facing little competition as it had been making mergers
and company pay outs in order to further secures it market share. This company now has its
subsidiary at Kiribati, Samoa, PNG, Australia, Singapore, Cook Islands, New Zealand etc.

The company Board directors had never been changed and it included Ajith Kodagoda
(Chairman), Arun Narsey (Director), Taito Waga (Director), Tom Ricketts (Director), Umarji
Musa (Director), David Kolitagane (Director) and Ivan Fong as Chief Executive Officer and
Company Secretary.

The company Amalgamated Telecom Holdings Limited is incorporated as a public company

on 10 March 1998. The current ownership of this company is now that FNPF share is 72.6%
while the Fijian Government share is 17.3% while the rest of shareholders consist of
companies and individuals with a 10.10% of share.

The Group structure of ATH now consists of Telecom Fiji Pte Limited, Vodafone Fiji Pte
Limited, DAtec Pte Limited, Fiji International Telecommunication Pte Limited, Fiji
Directories Pte Limited, ATH Kiribati, Bluesky Group etc.

ATH Board has it sub committees that include Corporate Governance Committee, Finance
and Audit Committee with Human Resources Committee. The Corporate committee is
responsible for ensuring the company operation are carried out in an effective and efficient
manner. The Finance with Audit Committee ensures that financial processes are of standard
along with that of that audit while Human Resources Committee is delegated with issues such
as conditions of employment and remuneration for all concerned employees.

b) ATH Risks

ATH operational is one of the major areas with high contingencies for risks. It is every
business area of revenue earning also with close prudence to avoid the occurrence of potential
operation risks. ATH as well as with other businesses will have to establish then a strong
framework for monitoring and minimizing identified risks. These operational risks ranges
from hackings, fixed assets failures and repairs, human errors and of course fraud. Given the
growing size of the business, emphasis should be inputted into the establishment of the
control and prevention framework. Thus computing and networking, accountings, operation
and financial framework must be thorough designed, implemented and enforced.
Another major area of risk concerns the Regulatory Bodies. This is one major risks for
businesses as these institutions hold the power to make business laws. The employee
composition of these bodies are mostly lawyers with little or even no technical background
on the passed acts for certain businesses. Valid examples included that of setting up price
limits, prohibiting certain business products and services, settings up depreciation rates for
certain fixed assets, passing a new rate of income tax and or even creating certain type of
taxes like Value added tax, withholding tax to name a few. Even these bodies can block
essential innovation factors for the business growth and for better service and product
delivery. Hence it is essential that ATH to have insiders to Regulatory Bodies in order to
have a thoroughly passed act given that major purpose of the Law is the Rule of Law.

ATH financial risk is one area of significant manner. For the current year, liquidity had been
an issue with ATH. The approach ATH had been implementing is prudent liquidity risk
management. The major issue is that credit sales had been not properly handled in ATH while
at the same time there had been a major borrowing ATH had been implementing for
financing its required operation and operational fixed assets. This move in essence is essential
and valid as the fixed assets are the major sources of net earnings. However, for the current
year its liquidity factor is of concern hence it should be noted that improvement is needed in
terms of ATH Trade payables, provisions and borrowings.

The last but not the least risk ATH is currently facing is its current market situation. The
impact of covid-19 had been very detrimental to the overall market within the Pacific Region
as also witnessed in Global Market. As such, ATH will need to adjust it operation to meet its
customers need within this current market situation as well adjust it operation to meet the
minimum safety regulation upheld by Regulatory Institutions. This primarily causes ATH to
move to virtualize it business operation and business transactions in order to facilitate the
smooth flow of its business. This however, further increases it risks toward black hat hacking.
In terms of the safety of ATH workforce, it will also have to develop and implement WHO
procedures in minimizing the risk and the spread of this contagious diseases. Also to account
for the forecasted decrease in net earning due to pandemic impact toward the global market,
ATH will also have to downsize its workforce otherwise decreases payroll rates or think of
other more ethical solutions.

c) Accrual Ratios

3.1 Profitability Ratio:

Profitability Ratio 2018 2019

Gross Profit Margin 65% 64%
 Net Profit Margin 20% 16%
EBITDA Margin 38% 36%

The above three ratios primarily focus on the analysis of net sales or revenue in terms of
gross profit, net profit and earnings before interest, tax, depreciation and amortization. The
sales or revenue is the basis of benchmarking at which portions of it are to commensurate for
gross profit, net profit and EBITDA per dollar of recorded revenue. Net revenue or sales is
the amount of earning which necessary operations deductions to be taken from. From this
amount as per the context company annual operation earning and expenses, such analysis is
made.

As the calculations demonstrated, all are calculated on the basis of net revenue or sales.
Simply for gross profit margin, it is stated that for every $0.65 cents from every dollar of
sales is accounted for gross profit in 2018 while $0.64 cents for every dollar of sales to be
inputted to gross profit in 2019. This gives the implication that the remaining 35% and 36%
for sales for the year 2018 and 2019 respectively are the available funding to fund operational
and financing costing.

This means that operational expenses, interest, tax, depreciation and amortization costs
should at least fits in the remaining 35% and 36% for the year 2018 and 2019 sales or net
revenue respectively to make a profit otherwise net loses will be incurred.

Another implication of the gross profit margin involves ATH involves the price its can be
accepted within its targeted market and the efficiency of its procurement (for services) and
production (for products). Given ATH had been continually erasing it competitors via
mergers and buying competing companies, such figures shows how effectively the company
had been handling it selling costs (cost of goods sold) with its current implemented market
price, procurement and production.

Viewing it from another perspective, such ratio indicates the extend at which revenue is able
to provide for costs related with sales. The gross profit margin is directly impacted by these
two factors: the premium price of its marketed product and services that enables the company
to attain it competitive advantage and the efficiency of the company’s procurement and
production.

The earnings before interest, tax, depreciation and amortization costs margin demonstrated
the percentage of such earning on the basis of net sales or net revenues for the given financial
years. The EBITDA result shows all the cash-related earnings while at the same time exclude
certain non-cash expenses such as depreciation and amortization.
As per the calculations show, the EBITDA margin is 38% and 36% for the year 2018 and
2019. This shows that for the total revenue earned for the given consecutive years, 38% and
36% of the net sales or revenue earned is accounted for all cash related earning and cost
transactions. This means that the remaining revenue earned from the benchmarked revenue is
accounted for non-cash revenue at which from this amount all non-cash expenses are to be
financed from this remaining amount.

However, the application of such ratio should be highlighted that the exclusion of
depreciation directly implies that no allocation funding will be provided for property, plant
and equipment. Hence by the time such used PPEs are non-functional, there will be no
available funding if financial users primarily use such ratio for decision making. This is like
saying that without the relevant fixed assets, ATH is able to get such revenue which is of
course not a relevant picture.

The net profit margin is what shows the overall performance of the business on the basis of
its net revenue or sales. This is a more useful ratio to be used for decision making giving that
it takes all operational aspects in terms of revenues and costings (both in cash and non-cash).

As per the calculations shows, ATH is able to get a percentage of 20% and 16% of net profit
margin for the year 2018 and 2019 respectively. This shows a decrease in percentage of profit
margin. For the actual figures, the net profit is $113,069 and $112,727 for the year 2018 and
2019 while the net revenue is $460,416 and $523,950 for the year 2018 and 2019
respectively. As can be seen, it can be concluded that there had been an increase of operating,
financing and investing costs for the year 2019 that may explain the reasons behind the
decrease of net profit margin whereas there is a notable increase of net revenue for the 2019
in comparison with 2018 net sales.

3.2 Liquidity & Solvency Ratio:

Liquidity Ratio 2018 2019

Current Ratio $0.85 $0.99
Quick Ratio $0.75 $0.87
Working Capital -$38,495.00 -$1,756.00
Liquidity ratio focuses on the firm’s ability to generate needed funding to meet its
operational, investing and financing needs.

The current ratio shows the firms capability to handle short term debts with its current assets.
As per the calculations shows, it indicates that during the year 2018 the company is able to
meet $0.85 cents and $0.99 for the year 2018 and 2019 respectively. This means that the
remaining $0.15 cents and $0.01 cents was the company short term owing for every current
liability dollar for the year 2018 and 2019 respectively.

The quick ratio is similar in nature with the current ratio but in this instead it focuses on cash
and near-cash accounts for the business current assets and current liability. As per the
calculation shows, the company can meet every $0.75 cents of every dollar of cash and near-
cash accounts for current liability for the year 2018 while it can meet $0.87 cents for every
dollar of current liability.

The working capital shows the company values of its operation if it were to settle all of its
short term debts. It is shown here that the working capital for the company are negative,
meaning that most of the business current operation are financed by its short term financing.
The reason behind this figures may be explanatory if the company strategy for the current
year is assessed as well as its market positioning within its industry. By assessing this
negative amount with the given current ratio percentage, the remaining percentages actual
figures such as 15% and 1% are the result of such negative figures for the given years.

Solvency Ratio 2018 2019

Debt to Equity $0.74 $1.94
Debt to Asset $0.50 $0.59
Interest Coverage Ratio $13.87 $10.98

The solvency ratio shows the capability of the company to meet its long term debts in terms
of its total assets and total shareholder equity.

The debt to equity shows the proportion of total shareholders’ equity to that of total liability.
This shows the portion of equity being financed by its total liabilities. This shows that for
every dollar provided for equity is financed by total debts. The figure for 2019 shows that the
company had been mainly financed with total liability as in $1.94 per every one dollar of
current liability.

The debt to asset shows the proportion of total assets to that of total liability. The calculation
shows that for each dollar of liability, $0.50 is total asset in 2018 while $0.59 for each dollar
of liability is total asset mainly financed. This shows a mainly balanced financing in between
total assets and total equity.

The interest coverage shows the total amount of financing available from earnings before
interest, tax, depreciation and amortization to cover for the interest expense. As the
calculations shows, for every dollar interest expense $13,87 is available to cover for interest
expense in 2018 while in 2019 $10.98 for every interest expense is at the company disposal
for usage.
3.3 Efficiency Ratio:

Efficiency Ratio 2018 2019

Account Rec turnover $0.18 $0.19
Working Capital Turnover -$6.37 -$26.03
Fixed Asset Turnover $0.98 $0.81

The account receivable turnover shows the proportion of credit sales received. It measures the
company effective credit management and collection. As the calculations show, for the year
2018 for every dollar of account receivable only $0.18 cents is received by the company
whereas in 2019 only $0.19 cent is received for every dollar of account receivable. This
clearly shows that the account receivable sales collection had been managed in an ineffective
way. This figures $0.18 or 18% are very low whereas the uncollected credit sales is 82% and
81% for the year 2018 and 2019 respectively. A new account receivable policy should be
developed that the uncollected credits sales must be lesser than 40% to further improve this
identified issue.

The working capital turnover indicates how the company is effectively managing it current
assets and current liabilities to support its current operation. A high ratio is favorable while a
low ratio is unfavorable. As the calculation shows, the company is primarily running on short
term debts to finance it operation. The company current liability far out weights its current
asset. This is further substantiated with the account receivable turnover. If the account
receivable would be had improved, the working capital turnover will then be improved in a
big notable way.

The fixed asset turnover shows how the company is handling its fixed asset to derived earned
revenue. As stated, it is shown that for every dollar of sales $0.98 of it is generated from its
fixed asset in 2018 while for the year 2019 for every dollar of sales $0.81 is obtained from
fixed asset. This shows that ATH had been effectively using it fixed asset to gain its attained
net sales or revenue.

3.4 Return Ratio:

Return Ratio 2018 2019

Return on assets $0.13 $0.08
Return on equity $0.20 $0.25
Return on Investment $1.88 $3.29
Operating return on assets $0.24 $0.21
Return on assets shows how the company is utilizing its earned investment to derive the
company net profit. The above calculation shows that for every earned dollar of net profit,
$0.13 cents of it is amply provided from total assets for the year 2018 while for the year 2019
only $0.08 cents from every dollar of net profit earned is generated from total assets.

Return on equity shows the company capability to generate its net profit from the available
equity. It shows how the company is effectively managing its equity to provide for its
provided net profit. As the calculations show, for every dollar of net profit $0.20 from it is
provided from the invested equity while $0.25 for the year 2019.

The return on investment shows the changes of investment value in terms of net profit. As the
calculations show, for every dollar invested there had been an increase of $1.88 for each
dollar invested for the year 2018 while for the year 2019 it had been tripled to $3.29 in value.

The operating return on assets shows how much the net asset is able to provide for the
attained net profit after tax value for a given year. The net asset is the sum of working capital
and fixed asset. This in turn takes in the actual financed total assets and compares it on the
basis of net operating profit after tax. As per the calculation shows, for the year 2018 the
operating return on assets had generate 24% of the net profit after tax while for the year 2019
it had attained the percentage of 21%.

d) Cash Flow Ratios

4.1 Liquidity & Solvency

Liquidity & Solvency 2018 2019

Dividend Payout Ratio $0.31 $0.34
Free Cash Flow to Operating Cash Flow $67,847 -$268,707
Cash Flow Margin $0.28 $0.27

The cash flow ratios further analyse the company capability to meet its obligations and
percentage of major categories of cashflow such as cash from operation, investing and
financing. This analysis gives the investor more information about the company in terms of
its cash flow.

The liquidity and solvency as per understood, it deals on the company capability to provide
for its short-term commitments.

The first ratios analyzed involves the company ability to pay its dividend from its operation
cash flow. As per the calculation shows, for every dollar of the net cash flow from operation
it has $0.31 and $0.34 to be used for every dollar of dividend payment for the year 2018 and
2019 respectively. This means that after dividend payment, the company may have 69% and
66% of its total net cash flow from operation for the year 2018 and 2019 accordingly.

The second ratio shows at what cash level available the company of its net operating cash
flow has after the reinvestment of the company into its fixed assets and of course has at its
disposal. As the calculation shows, for the year 2018 it has the remaining cash of
$67,847,000 while for the year 2019 it has a negative amount of -$268,707,000. This major
decrease may explain the management movement of paying more fixed assets and
safeguarding certain portion in order to able to amply provide for the ‘depreciated’ fixed
assets.

The last ratio indicates the percentage of net cash flow from operation on the basis of the net
revenue. This shows how much net revenue is gained from business operation. As per
calculated, in percentage wise for the year 2018 only 28% of net sales is comprised of net
operating cash flow while for the year 2019 a percentage of 27% of net sales is derived form
net operating cash flow. This could imply that there is a high account receivable and lesser
debt collection efficiency policy.

4.2 Financial Structure

Financial Structure 2018 2019

Short-Term Debt Coverage $0.52 $0.46
Capital Expenditure Coverage $0.28 $0.27
Cash flow to Total Liabilities $0.38 $0.28

The financial structure shows the further in-depth view of the company cash strength and
positioning. It focuses on the actual cash transactions while at the same time analyzes cash
related earning and spending disregarding the non-cash transactions. Financial structure
shows the business financing capabilities in terms of its equity and liability financings.

The short-term debt coverage shows the company position in terms of providing for its short-
term debt from its net cash flow from its operation. Hence the higher this ratio the more
favorable it is. As per the calculations, it is shown that for every dollar of net operation net
cash flow every $0.52 will be remaining for financing the company short-term debt for the
year 2018 while for the year 2019 it is $0.46 will be remaining after the utilization of every
dollar of the net cash flow from operation will be used to finance short term debt.

The capital expenditure coverage shows the company cash positioning in terms of financing
its capital expenditures. As per the calculation shows, for every dollar of the earned net
operation cash flow only $0.28 will be accounted for every dollar of capital expenditure for
the year 2018 while for the year 2019 only a portion of 27% will be covered for capital
expenditure from the net operation cash flow for the year 2019.

The cash flow to total liability also similar with that of short-term debt coverage but here all
the liabilities are considered. As calculation shows, for the year 2018 only a total percentage
of 38% of total liabilities can be covered with the net cash flow from operations while for the
year 2019 a total portion of 28% can be provided for with the net cash flow from operations.

4.3 Return Ratios

Return Ratios 2018 2019

Cash return on invested Capital $0.28 $0.18
Asset Efficiency $0.20 $0.16

The cash return on invested capital shows how effective the invested shares are being utilized
to generate certain portion of earning before interest, tax, depreciation and amortization. The
implication is then the higher this ratio is the better it had effectively managed the invested
shares into the attainment of a EBITDA. As the calculation shows, for the year 2018 for
every shares invested it had able to generate every $0.28 cents of EBITDA while for the year
2019 it had generated a lesser amount of $0.18 cents for every cents of EBITDA.

The asset efficiency ratio shows how effectively the company is utilizing its fixed assets to
generate the account net operation cash flow. Within this ratio, the higher it is the better and
vice versa. As per the calculation shows, the fixed asset can generate $0.28 cents from every
dollar of net operational cash flow for the year 2018 while for the year 2019 $0.18 cents were
provided from fixed assets for every dollar of net cash flow from operation.

e) Altman Bankruptcy Score

Altman Formula 2017 2018 2019

Working Capital -$106,120.00 -$38,495.00 -$1,756.00
Total Assets $635,313 $682,586 $1,121,468
Retained Earnings $138,733 $175,689 $219,309
EBIT $108,411 $118,803 $121,570
Market Value of Equity $550,420 $950,814 $1,368,153
Total Liabilities $342,832 $341,114 $661,926
Net Sales $394,702 $460,416 $523,950
EBITDA $153,611 $173,384 $187,877
Atman $1.89 $2.56 $1.83

  2017 2018 2019

T1 -$0.17 -$0.06 $0.00
T2 $0.22 $0.26 $0.20
 T3 $0.17 $0.17 $0.11
T4 $0.87 $1.39 $1.22
T5 $0.62 $0.67 $0.47

T1 shows the company capability to meet it short term debts. It basically focuses on the
company liquidity. An improving figure shows that the company can provide for the its
current liabilities over its total assets. As the figures shows, clearly for the year 2017 the
company may have issues in facing its debts as in percentage wise there had been a result of
-17%. The year of 2018 shows a more favorable improvement has this percentage had been
decrease to -6% while in the year 2019 it balances out.

T2 states the company extend at which it relies on debt or leverage. The higher the ratio is, it
shows that the company is relying on its retained earnings to fund its assets while on the
contrary shows that the lower the ratio is the more the company is relying on borrowing to
finance its assets.

T3 shows the return on total asset with focus on net earning without the influence of interest
and tax. It shows the total number of earning based on the company total asset. It shows how
effectively the company is managing its total asset to generate the given net earning before
interest and tax.

T4 indicate the company investment proportion funded by its total liability. The lower this
ratio is the favorable it is. From the calculations, it is pointed that increases in a significant
manner hence showing that company debt is increasing thus implying that the company
decreasing dividend payment.

T5 shows the company ability of utilizing its total assets to generate a certain portion of its
net revenue. This shows how the company is effectively managing and using it total assets
during it operation to gain its net revenue. And as the calculations show, the total assets
primarily generate more than half of the earned net revenue.

The altman factor interpretation is widely basis its value closer to 3 as favorable while the
value closer to 1.8 from this benchmark value is unfavorable in terms of bankruptcy. This
factor takes into account the company’s profitability, activity, solvency, liquidity and
leverage to determine the analyzed company probability of insolvency. As per the
calculations, the company shows that it has an unfavorable altman value of $1.89 at 2017,
$2.56 at 2018 and $1.83 at the year 2019. These results show that for the year 2017 and 2019
were unfavorable for the business solvency while it is favorable for the year 2018 in terms of
its solvency.
 f) ATH Overall Financial Structure Status

The overall evaluation of ATH company financial status is quite good.

The analysis of the company profitability shows a bit of minor decrease in its overall
performance. This implies that there had been a decrease in net revenue and net profit after
tax while at the same time there is an increase in expenditures in a certain area. However the
given decrease in insignificant in a macro view, this decrease is of minor nature and if the
increase of expenditures were of capital investments then it offsets by future efficient
operations. Still the remaining net profit can be used to account for other relevant and urgent
expenses.

The view on the liquidity also shows major improvements. Given that the value of the
company obligations far exceeds the value of its own resources, there had been an increase in
the company’s possessed resources (total assets) while at the same time a decrease of its
obligations (total liabilities). As per the context of ATH, the values of such improvement is
$36,736,000 in its liquidity capability. Within the overall view, an improve of greater than
10% had been noted for the year 2018 and 2019. Still on a progress but such liquidity issue is
being well provided for given the decreasing value of both short term and long-term loans
ATH had to continually pays for.

The focus on the ATH solvency is another area. It mainly shows ATH sources of financing
for its operation in terms of its equity and total assets on the basis of its total liabilities. As the
calculations shows, there had been an increase of total liabilities funding for the company
operations. For the year 2018 it was ok but for the year 2019 there’s an increase of total
liability in terms of its equity while for total asset it increases by 9%. This implies that there
must be a major loan been granted or external financing to finance certain operation of the
company. Overall, the equity source of funding had been overly financed by external sources
while total assets had been financed in a balance manner by the company.

ATH efficiency ratios indicate another useful aspect of improvement for ATH operations. It
is shown that for account receivable turnover is of poor condition and its improvement can
improve the cash revenue. The fixed asset turnover had demonstrated the major area that is
responsible for the attainment of such net revenues as it comprises of 98% for the year 2018
and 81% for the year 2019. The working capital on the other hand shows that ATH had been
making external sources of financing to increase its total fixed assets. This move is a good
use of debt as the fixed asset had been a major contributor of ATH net revenue hence in
simple terms it had been expanding its PPE to further expand its revenue earning base.
The cash flow margin shows another area of improvement for ATH. It is shown that for the
earned net revenue only a 28% for the year 2018 and 27% for the year 2019 were attained
from cash from operation. This implies that here may be area of improvement needed in the
collection of debts. Once this is improved, these figures should had been improved to at least
60% for the following years of business.

Cash flow to current liabilities and to total liabilities are other leading sources of ATH
financial structure. As per the two cash flow ratios show, the business operating cash flow is
insufficient to meet both its short-term debt and long-term debt. This may indicate a red light
toward ATH operation and choice of financing for its current year. However, it’s should be
noted as well that proportion of such aggregates are to be accounted for every year hence it
should be good. Given the nature of loans that decreases each year hence these figures should
be favorable in the upcoming years given that such operation is maintained and improved.

The altman factor also shows a valid point in terms of company solvency. As per the
calculations, it is shown that for the year 2018 it had a very high solvency rate whereas for
the year 2019 it is within the range at which it unfavorable in terms of solvency. This mainly
occurs due to the high increase of its total liabilities while other factors change in a very little
portion. In an in-depth view, ATH shows a steady improvement of its operations and earnings
for the year 2017, 2018 and 2019. This increase of total liability may be a result of a loan that
is undertaken for financing a new property, plant and equipment at which it impacts it will
decrease over time given such level of operations are maintained and improved. Still then for
the year 2019 its solvency rate is good as well as per the context ATH operation and occupied
market.

Overall ATH is doing well. Its choices of financing, business takeover and mergers had been
strategically influencing it numbers in a good direction. ATH in a macro view within the
Pacific Telecommunication industry is steadily taking a lion share and continually improving
its fixed assets and operational management to further maximize it net earnings. The
decreases in the net profit had been a result of loans for the attainment and improvement of
its current total assets. All of such total assets relevant expenses, both cash and non-cash
expenses, had been accounted for while at the same time brings a favorable net operating
profit. ATH is company to invest in.

g) ATH Share Price Performance for Past Year, Current Year and Future
Operational Year Analysis

Share Price Performance 2018 2019

P/E ratio $24.14 $52.96
Book Value $2.07 $4.01
 Return Equity $0.20 $0.25
Share-price $2.28 $3.28

The Price Earning ratio shows a valid point in regard to the company performance and
current share pricing. As typically known within an economic field, a product with high
demand tends to have a higher price and vice versa. In terms of share price, its prices vary
according to current company performance. A high-performance company tends to have a
high demand on its shares while at the same time a low performance company have a low
demand on its shares.

The Price earning shows that the company had been doing pretty well. This is evident as the
P/E for the 2018 is $24.14 per share whereas there had been a major increase in the year 2019
of $52.96. This shows that ATHL had been doing pretty well in its business industry that is
the telecommunication.

This is further supported from the overall net sales and net profit that had been increased in a
significant manner as well for the year 2018 and 2019. The net revenue had been increased
by a notable number whereas the net profit after tax had decreased in a minor manner. This
may explain the management decision behind the increase of total liability but in actual facts
this decrease is a necessary factor in improving ATHL total asset base and its operation in an
overall view. Given that total assets percentage in terms of net revenue had been dominant,
this move is an appropriate move to implement.

The book value on the other hand shows the net value of shareholders equity. This value is
the result of Net assets with net liability. The net assets being greater than the net liability
shows that the financing of the company operation had been mainly internal in nature instead
of external. This shows that the company had been utilizing external sources of funding to its
own favor instead of to its detriments. This can be clearly substantiated with the company
increase of total asset form the year 2018 to 2019, still the book value of ATHL is positive as
its total assets is greater than its total liability. The implication of such moves meant that
ATHL had been exploiting debt financing to its operational needs.

The return on equity shows how ATHL had been effectively managed the its contributed
owner’s equity to gain its current net profit after tax. As per the calculation, it is shown that
the invested or the available equity had been responsible for generating 20% of the net
income after tax for the year 2018 while for the year 2019 it had been accountable for
generating the percentage of 25% of the attained net profit after tax for the year 2019. As a
general rule, a percentage of 15% to 20% are deemed good thus ATH had been performing
on a very good term.
In terms of predicting the share price of ATHL for the next for year 2020, certain factors will
have to be considered. This factors specifically focuses on sales growth behavior, earning
behavior, return on equity behavior, the behavior of components of ROE and certain strategy
of the companies.

The sales growth behavior is evidently reliable when the analysis is basis on a operational
year 1 to year 5. As per the study it shows that the sales of major listed US companies tend to
be revert back to their average level of operation. The companies that had been making a
major sales tend to decline back to a normal level of operation while business with negative
sales are able to climb up to the normal level of operational sales. This occurs as mainly these
companies of a certain industry tend to mature and attain the same level of operational
strategies and technologies. However given that ATHL is the main player in the
telecommunication business, this increasing trend will increase indefinitely until it worth
while competitors enters the market.

The return on equity behavior also represents the same manner as in the sales growth
behavior. This is particularly true due to the fact that ROE unusual levels are hardly
maintained while at the same time firms with high ROEs tend to expand their investment
assets bases and that the high return on these invested ROEs are hardly maintained as well.
Thus the return on equity behavior is mean – reverting as well as the sales growth behavior.

The behavior of the component so ROE tends to further shows information regarding the
components of ROE. These components include operating asset turnover, net financial
leverage and NOPAT. As far as the study as demonstrated, both the operating asset turnover
with net financial leverage tends to be stable because of the utilized technology of the
industry and the management policies on the capital structures. The NOPAT is a variable
component of ROE. What this implies that the changes of NOPAT variables will also results
in the changes of the profit margin as in terms of competitive drive, the ROEs tend to move
toward normal levels and vice versa. This occurs due to the fact that the cost of borrowing is
likely to be stable as the leverage tend to be stable as well.

Since ATH is attaining a lion share in the telecommunication business within Pacific region,
the studies facts about financial figures to revert back will not applicable this case. The case
study with common commodity industry unlike in our analyzed study for ATH. At such, it is
predicted that ATH will continue to increase its net profit until it had reached most of the
market consumers.

The increases in share then will be mainly driven by ATH business strategy, marketing and
financing. With the subtle move of attracting telecommunication users with price incentives,
offers and further improving its operational efficiency, ATH will experience a very high
return in terms of its net earnings. Especially during the pandemic era, ATH will need to
adjust its operation to fully exploit its market

h) Investment Advice

As per the analysis, it is shown that ATH is one of a good company to invest in. In terms of
risk, the only risk that ATH will have to properly handle is it operational and fixed asset risk.
Given that fixed asset is its major source of its revenue, the proper management and
monitoring is crucial to minimize the occurrence of pre identified risks.

The business had been operating for more than a decade now with the Pacific Region and it
had been steadily making progress. There had been no notable operational accident reported
in ATH operation. There had been minor issues in terms of unexpected broke downs, but
these were properly addressed for in a prompt manner.

The managerial of human resources and ATH governance is also another issue which ATH
had been competently handling. Given the growing scope of ATH business, human resource
management is crucial in properly training and recruiting qualified employees for key
positions and administrative roles. The Governance then will have to be adjusted in order to
fully improve employee’s morale within ATH businesses.

The financial risk is not of substantial concern. ATH had been exploiting the debt financing
to its own advantage. Given that it almost have a monopoly presence within the Pacific
Region, the choice of debt financing is one strategical input ATH had contemplated well. The
debt financing is interest tax deductible and it is much cheaper in comparison to that of equity
financing as they are not tax deductible. Given that ATH faces little business risk in terms of
competition and technological change, ATH choice of debt financing is further substantiated
for.

Given the current covid-19 pandemic, ATH governance and human resource decisions is
another key factor for ATH business. This is a major business obstacle currently faced
worldwide. Given that the telecommunication business is mainly virtual in nature, the
business moves to fully integrated the virtual business with online banking will be a perfect
solution for ATH hence continuing it business operation without any major adjustments.

However, given that the market faces this pandemic ATH will have to face a major decrease
in its net earnings as the market capability to earn income is also greatly impaired. As
currently known, major businesses had been implementing employees downsizing hence thus
ATH will have to earning will greatly correlated with this unfortunate event.

Overall ATH business risk is not of substantial concern.

In terms of ATH business performance, it is evident that ATH continue to dominant in the
telecommunication industry. Each year it had greatly and persistently increases it fixed asset
bases via the properly planned usage of both short term and long-term debt. As per the given
analysis, it is shown that most of the business earning are generated from its fixed assets
hence this move further improves ATH earning capacity. The limited of such earning will be
reached if ATH had reached all Pacific Region telecommunication market.

Another main area worth analyzing is ATH Net Profit Margin. The rationale behind this
margin is that the higher it is the better. As it can be assessed, for the year 2018 it percentage
is 20% while for the year 2019 its percentage decreases to 16%. It is noted that there is a
decrease, but this decrease is justified by the major external financing it had implemented for
the current year. This increase of total liability is offset with the significant increase of fixed
asset by the same time. Given that the majority of ATH earning had been generated from its
fixed asset, this move is outstanding to further exploit the debt financing. Overall, ATH is
doing pretty well in its operated industry.

Return on Equity is also another main focus to be assessed in assessing listed companies’
operation capabilities. This ratio shows how effectively and efficiently business operation had
been utilizing invested funding. This as the business shows, for the year 2018 its percentage
is 20% while for the year its percentage is 25%. This shows that there had been an increase in
the efficient use of investors financing at ATH companies’ operations. The implication of
such figures is that with an increase or constant number of shareholders investment, there had
been an increase of net earning hence operation with marketing strategies had been improved.

Overall if the total assets with net revenue are compared, it shows that these figures correlate
each other. An increase of total assets also responds in an increase of net sales. Also, with the
calculation of return on assets further substantiate this fact.

The Altman Z Factor had served another crucial viewpoint on ATH business performance.
For the year 2018 had been very favorable that it reached 2.56 which shows it high solvency
state of ATH while for the year 2019 it had decreased to 1.83. As per the evaluation of Alman
Z Factor, the figure close to 1.8 is very unfavorable in terms of solvency but this is justified
with ATH 2019 increase of total liability. This may be carried out for the financing of a
newly acquired subsidiary at Samoa. Still overall ATH performance has been very
outstanding.

Another notable analysis is ATH Market reach and presence within the Pacific Region. ATH
had been making mergers and companies payments. Overall these subsidiaries performances
had been major in the contribution to the consolidated net profit of ATH as a whole. With
current report, it also stated that ATH is merging with one of Samoan existing
telecommunication firm. This in turn further expand it market share and reach within the
Pacific Region.

With all of these justifications with calculations outputs, I would recommend potential
investors to invest all of ATH available shares for a steady return of dividend payments and a
steady increase of share price over the years. If potential investors were there during the
initial phase of ATH company within the Pacific Region, I would recommend that investors
to invest by buying all available shares of ATH. But still with current market situation of
covid-19 pandemic, it is a good move to invest all of ATH remaining shares. It will be a good
source of passive income given that no newer technologies are introduced into the market to
disturb telecommunication industry.

**Investment Sample Analysis Ends Here**

Sustaining Project Operation

This sample analysis is mainly historical in nature. The investor then job is to
continually monitor the company performance within it market and industry.
Otherwise, an invested money within company shares will be worth less than its
originally valued. Hence a process of investment is a double edge sword to be
properly handled.
By the time worthy foreign investment vehicle are found, the institution or company
can then make a direct foreign investment through the help of an investment broker.
Through this investment broker the institution or company investment transactions are
handle by him or her via following institution or company preferred investment
action.

The gains from these investments are then used to pay off investor(s) dividend and
pay the wages of employees of the supposed established investment institution or
company.

Operation Summary Chart

6. Project risks: Describe what problems might occur during the project and how you
will manage them.

Project Risks and/or problems with their solutions:

 Fraud: This is an issue, especially in cases where the business operation is
mainly cash related. Investment deals with a significant amount of money
hence this further increases the likeliness for such act to occur.

Solution: A strong internal control with a preventive and monitoring process

and system to be inputted. Given that the overall process will be routine in
nature, these can be inputted to greatly minimized the occurrence of fraud

 Investment Loss: The road of investment is not for the weak of hearts. This
specialty requires a very diligent, social, proactive and aware personality. A
dozen of errors can lead to very unfavorable investment result. Given the
market is volatile in nature, such attributes are desirable.

Solution: The investment analysis can greatly pinpoint and forecast future
company performance and market valuation. With such information at hand,
investment loss can be greatly minimized to a minimum level.
  Blackhat hacking: This is another huge issue to properly account for. Given
that most of the transactions will be occurred online, blackhat hacking risk
increases especially with dealing big money.

Solution: The instalment of antiviruses from well reputation computing

antiviruses products is the first step. The second step the working environment
IT internal protocols to strengthen internal computing security measures.
Antiviruses with firewall protects from outside hacking attacks while the IT
internal protocols protect from the inside hacking tactics.

 Incomplete or bias investment analysis: The area of money is a very tricky

place that it could change people. The risk in running such operation is the
investment analyst being bribed by a company seeking capital. These are
categorized as bias and misleading analysis.

Solution: The predetermination factors plus other involved factors that

comprises of a thorough investment analysis is the point of reconciling and
validating investment analysis. Any missing factors or out of context
investment analysis is clear red flag for bias investment analysis.

 Misuse of Company or Institution assets: This is a most common issues in

every business. Employees or people of high authority uses company or
institution assets for their own uses.

Solution: A clear line of roles and responsibility is to be established that

ensures no jobs overlap plus a clear routine plan to be used throughout the
project life. Exceptions given should be justifiable and for the best interest of
the Investment institution or company.

 Underperforming subordinate: A common issue in unmotivated employees.

This causes many issues within the working environment and even can impact
the overall performance of a team.

Solution: A clear routine works with set outputs are to be established. A clear
role of responsibility with accountability are crystal clear in a way that an
issue in team could be easily pinpointed and improved.

7. Project Budget:

Budget  
Establishment Budget  
Building Construction $75,000
Office Equipment $40,000
Transport $50,000
  $165,000
   
Operation Budget  
Per
Wages
Annum
 Investment Chief Officer $55,550
1 Financial Data input $15,000
1 Communication Officers $15,000
1 IT Specialist $15,000
1 Cleaners $8,500
1 Driver $8,500
  $122,550
 
Investment Startup Budget Fund $750,000
Contingency Budget $100,000
$1,132,55
Total Proposed Budget
0

Operation Budget Forecast

Assuming that this investment business was undertaken for the year 2017 with all the
invested fund of $750,000 is focused on listed company ATH on South Pacific Stock
Exchange. The following transactions will occurred.

Financial Forecast on Profit and Loss Statement

  2017-2018 2018-2019  
Cumulativ
Expenses Year End Year End e
Employment Cost      
Investment Chief Officer $55,550 $55,550 $111,100
Financial Data input $15,000 $15,000 $30,000
Communication Officer $15,000 $15,000 $30,000
IT Specialist $15,000 $15,000 $30,000
Cleaners $8,500 $8,500 $17,000
Drivers $8,500 $8,500 $17,000
Total Employment Cost $117,550 $117,550 $235,100
       
Transport Cost      
Toyota Mini Bus $50,000.00    
Fuel $3,000.00 $3,000 $6,000
Repair & Maintenance $4,200.00 $4,200 $8,400
Total Transport Cost $57,200.00 $7,200.00 $64,400
       
Building and Equipment Cost      
Building $75,000.00    
Office Equipement $40,000.00    
Total Building & Equipment
Cost $115,000    
       
Investment Cost      
Fee      
Stockbroker Commission $7,500   $7,500
Equity Payment $750,000   $750,000
Fix Interest equity payments      
Investment Loss      
 Total Investment Cost $757,500 $0 $757,500
Total Expense $1,047,250 $124,750 $1,172,000
Revenue      
Investment Revenue      
Dividend $176,136 $193,182 $369,318
Shares Sell out   $1,863,636 $1,863,636
Total Revenue $176,136 $2,056,818 $2,232,955
-
Net Profit (Loss) $871,113.64 $1,932,068.18 $1,060,955

As per the given financial profit and loss statement for the year 2017 to 2019, it is shown that
for the year 2017 to 2018 the operation will have a net loss of $871,113.64. This occurs as for
the initial year of operation there is a significant payment for ATH shares that total $750,000
hence the loss. For the year 2018 to 2019, there is a net profit of $1,932,068.18. This occurs
as the capital of $750,000 with a share of 568,128 were sold out with a earning of
$1,863,636; initially the share value when this equity was first bought was $1.32 and for the
year 2018 to 2019 the per share values $3.28 hence the major earning. It may be argued that
these bought shares should be maintained within ATH however it is sold for the business year
of 2018 to 2019 valuation. But this is to show the result of such business decision within the
period of 2 years only. Surely there is a global pandemic of covid 19 that which sure will also
impact the overall earning of ATH. However, Telecommunication industry is among the
industry that is striving during this pandemic as surely it helps with the achievement of covid
19 resolution and prevention methods. Hence its profit will continue to raise due to the
increase of its services demand. It is stated that during the 2019 to 2020 business operation,
ATH further issue shares of 25,807,044 at which another $750,000 of 2018 to 2019 business
operation profit could be further reinvested into ATH to further expand dividend earning.
As it concluded with the taken financial strategy, this business will be closing with a major
income of $1,225,955 for the operation year of 2017 to 2019. This money then can be further
utilized to make further increases the investment earning and the company or institution will
be running on its own financing making an independent financed company or institution
which act a major financing entity contributor toward the economy of Kiribati.