Midas Touch Technologies已经假定，来自风险投资家的资金将在2016年1月收到。推迟收到这1 000万美元可能对现金流量预测产生重大影响，以致可能不得不从一开始就加以修订。
然而，在这个粗略的估计中没有考虑金钱的时间价值，如果现金流(而不是税后利润)贴现5%，那么1000万美元投资的回收期可能超过5年。但是，在计算净现金流量时，会剔除折旧等所有与现金无关的非现金项目，所以整体效果可能是一样的。2016年至2020年的经营净现金流为12149万美元(- 554.4万美元- 20万美元+ 1994.6万美元+ 463.9万美元+ 1130.8万美元)，这意味着这1000万美元的投资可以在2020年底释放。
为了评估财务信息的准确性，建议对公司进行尽职调查，然后才可以信赖结果。风险投资公司在投资一家公司之前，首先要进行彻底的分析，即尽职调查。尽职调查是风险投资家研究并告知自己潜在投资的过程。它帮助公司做出合理的投资并改善他们的投资组合(Tedesco, 2014)。风险投资家进行他们自己的市场评估，但他们也考虑使用独立的市场和会计师的报告(Alireza Tourani-Rad, 2003)。
The complete financial position of MTT cannot be assessed from the given information as the statement of financial position (or balance sheet) is absent and without it, the relative size of the investment against the company’s total assets is unknown. The statement of financial position lists the assets, liabilities, and equity of an organization as of the report date. The information on the statement of financial position can be used for a number of financial analyses, such as comparing debt to equity or comparing current assets to current liabilities. (accountingtools.com, n.d.) According to the cash flow forecasts, the $10 million investment proposal seems to be the highest finance raised as compared to other sources of crowd funding, bank loan and the equity of the owners’ themselves.
Timing of cash flows:
Midas Touch Technologies has assumed that the cash from the venture capitalist will be received in January 2016. A delay in receiving of the $10 million may have a drastic effect on the cash flow projections to the extent that they may have to be revised from the very start again.
By looking at the profit after tax for the income statements for the year up to 2020, the project could pay back in the next five years. The first two years show a loss, but the major gain is seen in the last year of more than $10 million. This means that the venture capitalist firm can see its investment in the form of profits after 5 years.
However, the time value of money is not being considered in this rough estimate, and if the cash flows (instead of profit after tax) are discounted 5%, the payback period of the $10 million investment may exceed 5 years. However, while considering cash, depreciation and all such irrelevant non-cash items will be excluded while calculating net cash flows, so the overall effect may remain the same. The net operating cash flow from 2016 to 2020 is $12.149 million (-$5,544,000 – $200,000 + $1,946,000 + $4,639,000 + $11,308,000), which means the $10 million investment can be released at the end of 2020.
To assess the accuracy of the financial information, it is recommended to have a due diligence performed on the company and then the results may be relied upon. Venture capital firms will not invest in a company without first conducting a thorough analysis, known as due diligence. Due diligence is the process wherein venture capitalists research and inform themselves about a potential investment. It helps firms make sound investments and improve their portfolios (Tedesco, 2014). Venture capitalists carry out their own market evaluations, but they also consider the use of an independent market and accountants’ reports (Alireza Tourani-Rad, 2003).
The non-financial factors may discourage the investment, but there is still an existing market to sale the product in and the global sales of smart watches are expected to grow many times from 2015 to 2020, which support the assumption that like all high-tech gadgets, smart watches will also be demanded on a global basis in a matter of a few years. Therefore, after taking into consideration all financial and non-financial factors, it is worthwhile to carry on the investment of $10 million.