Capital Investment Analysis
In making the capital investment analysis of the company, an individual should take into considerations all factors that positively or negatively affect the effectiveness and well-being of the organization (Costantini, 2016). The present value can produce both positive and adverse effects on the investment and therefore is a key element or factor that Mara should consider in capital investment analysis. I think the other factors apart from the net present value should be included in the report. Shapiro (2010) argues that factors such as product quality, employee morale flexibility in manufacturing, customer satisfaction among others influence capital investment analysis and therefore should be incorporated into the system. The factors are essential in the capital investment analysis because they play a fundamental role in strategic investments that affect the profitability of the organization in the long-run (Marcus, 2013).
By factoring in customer satisfaction, the profitability of the organization would improve in the long-run because of having strong customer loyalty thereby motivating additional buyers to consume the firm’s products. The crap reduction should be included because they help in minimizing the cost of operation that comes through wastage. Including inventory reduction need in the analysis would be essential in improving the efficiency of the utilization of the available resources, therefore, reducing expenses and maintaining the appropriate level of production. Bruggen (2013) postulates that quality reputation would encourage investment by attracting a large pool of customers who can purchase the products or services at a considerably high price because of the attributes. Therefore, Mara should include these factors in the company’s investment analysis.
Bruggen, A. (2013). Capital Rationing for Capital Budgeting. Financial Analysis for Today’s Investment Projects, 95-109. doi:10.1002/9781118258422.ch6
Costantini, P. (2016). Cash return on capital invested: Ten years of investment analysis with the CROCI economic profit model. Amsterdam: Butterworth-Heinemann.
Marcus, B. W. (2013). Competing for capital: Investor relations in a dynamic world. Hoboken, NJ: John Wiley & Sons.
Shapiro, A. C. (2010). Capital budgeting and investment analysis. Upper Saddle River, NJ: Pearson/Prentice Hall.