Financial report Essay Example | Topics and Well Written Essays - 1000 words

Financial report - Essay Example Notwithstanding the fact that both options were promising, there was a need to engage in complete evaluation of the viability of the options, based on the future predictions of the benefits obtainable from such options. The process of determining the viable option entailed the application of mathematical techniques and models such as the regression analysis, the LM test and the decision rule to arrive at the most promising and viable investment option. Therefore, variables such as the GDP per capita, the inflation rates, and the consumer price index were used to modify the mathematical models and reach at a conclusive decision on the most promising option that could be adopted. After the application of the mathematical models and the modification of these models with the above mentioned variable, a decision was reached that the option to receive the sure sum offered by the bank was not plausible, and so the decision was to reject the offer Introduction Financial decisions are among t he most difficult decisions to reach. This because, while making a financial decision, varied considerations should d be made, which call for a greater level of accuracy and precise estimations (Ingersoll, 1987 p47). Additionally, financial decisions are not hundred percent dependable, owing to the large number of factors that affect financial investments and savings. Most significant is the fact that the complexity of making financial decisions is added to, by the nature of the risks involved in the financial sector, where a slight mistake either in prediction or estimation could mean the success or failure of the investments made (Batyrshin, 2007 p23). Therefore, it is extremely important to ensure that financial decisions are reached with the highest degree of precision possible, while at the same time putting into consideration all the factors that determine the viability of the decisions. This financial report presents the considerations that were made to determine whether CORV ETTE Company should accept a sure sum of sum of $2,150,000 which is risk-averse, granted by a bank, at the expense of continuing with its business of selling cars to its customers worldwide, using a local currency, or it should reject the offer. Therefore, all the considerations that were made, courtesy of the mathematical models applied will be discussed, and the final decision that was made presented. Discussion The task required that we carry out a research on whether CORVETTE Company should accept a sure sum of sum of $2,150,000 granted by a bank, at the expense of continuing with its business of selling cars to its customers worldwide, using a local currency. The need to reach this decision was based on the fact that CORVETTE Company could receive the sure sum that was risk-averse, or reject the amount and continue taking the risks associated with selling cars to customers worldwide using a local currency. Both options presented financial benefits to the company. However, the b enefits obtainable needed to be quantified, to come up with a final decision regarding the most promising and viable option. When banks advance credits to customers, they do so with an intention of making profits (Narayanan & Nanda, 2004 p65). Therefore, while granting CORVETTE Company a sure sum of