Barking Wellfare Organisation Essay Example | Topics and Well Written Essays - 1500 words

Barking Wellfare Organisation - Essay Example Hence, it may not find ready applicability in all cases. Therefore, it has become necessary to consider the net present value (NPV) of projects using DCF method, known as discounted cash flow method. The main advantages of the DCF, is that a positive NPV, would indicate the fact that the project generates more cash inflows rather than resource outflows, used up for servicing of the project. It is, therefore, the discretion of the management to decide whether the project may be accepted and implemented after taking cognisance of all the related facts and figures. Financial analysis is important because they form the bedrock of strategic corporate decision making and creating value additions for shareholders and others who are having financial interests in the Company and its operations. Step 3: If the NPV results in a positive figure, the project may be accepted and if negative, it should be rejected. (Brigham, Eugene F. and Ehrhardt, Michael C. (2004): Financial Management Theory and Practice: Capital Budgeting: Capital Budgeting Decision Rules: 509) â€Å"The net present value method is a modern method of evaluating investment proposals .This method taken into consideration the time value of money and attempts to calculate the return on investment by introducing the factor of time element.† (Gupta & Sharma). In this case study, the NPV has been considered the best option available, since it recognises the time value of funds that are being injected into the project, and is best suitable since in this case, both the cash inflows from the sale of plants, are controlled by market forces, and also the outflows depend upon the use of assets at different points of time in the period of determination. In the first place, this Welfare Organisation has rehabilitated and made employable, the physically disabled people, to lead socially useful lives for themselves and their community settings.