Finance valuation Research Paper Example | Topics and Well Written Essays - 1500 words

Finance valuation - Research Paper Example In 2006, the company had a high amount of equity shareholders of 2618000. However this figure has reduced until the year 2013 when it is at a negative figure which is (1414500). This shows that over time, the company is reducing the rate at which it relies on external sources of funding. This shows that the company might have found other sources of cash or it is slowly building up its assets and therefore does not need external monies to fund its growth. The company has a high capital surplus and an increase in the amount of retained earnings. The amount of retained earnings in 2006 was 2904000 and in 2013, this figure had increased to 3793000. This shows that in the next 10 years, the company will have very limited requirements for external funding. This is a good sign for any investor as it shows that in future the business will be able to meet its financial obligations. The retained capital can further be used to to expand the business and grow its operations and this shows that in the long run it is the shareholders who will benefit from such a move. The key assumptions that are made in this regard is that the business environment of the business will remain the same as it is. It is assumed all the stakeholders involved in the business will not have any major policy changes that will impact the rate of growth in the business operations. It is further assumed that the management will always have in place policies that ensure that the company is on a growth phase for the next 10 years, it is only in this way that the profits that the business is earning can be maintained over the long term. The recruitment policy should also ensure that only the best and most qualified people are hired in the company so as to ensure continuity in a certain level of success. A major factor that affects all businesses is government policy it is assumed that the regulations in regards to the business will remain the same. This is