Risk Analysis On Decision MakingEssay Preview: Risk Analysis On Decision MakingReport this essayIntroductionSilicon Arts Inc. (SAI) is a company with plenty of growth potential. SAI has been in business four years manufacturing Integrated Circuits (ICs) for digital imaging products like digital cameras, medical and scientific instrumentation, DVD players and computers. In 2001, SAI experienced a 40 % decrease in revenues due to a slowdown within the industry. Hal Eichner, Chairman, trying to maintain the competitive edge within the industry has two objectives for the company. He is looking to increase market share and keep pace with technology. The objectives can be reached by expanding the digital imaging market share or SAI can enter into the wireless communications market. The Financial Analyst has been given the task of reviewing proposals projecting revenues for a span of 5-7 years. The determining factors of the proposals will be the Net Present Value (NPR) and the Internal Rate of Return (IRR). The Profitability Index (PI) is a good tool to utilize on small projects so it is not beneficial to this scenario.
When considering the options of increasing the digital imaging (Dig-image) market shares and entering the wireless communication (W-Comm) market all possible risk must be evaluated. The leadership team at SAI has the task of analyzing Dig-image and W-Comm figures to determine which option will benefit the company. The discounted cash flow analysis will help identify relevant cash flows by considering sunk costs, and working capital. The information that is put into the discounted cash flow analysis is projected future cash flows which may give a NPV. If there is an error in the calculations and the NPV remain positive, management may be lead right into a forecasting risk. A forecasting risk is identified by the possibility of errors in projected cash flows that will lead to incorrect decisions (Ross, Westerfield & Jordan, 2006).
EBITDA
The EBITDA is a composite of the business performance and net earnings and depreciation of our assets, liabilities, capital, and cash flow for the same period in the previous quarter (the “Adjusted Operating Results” or ARDA). The ARDA is calculated based on the estimated future capital expenditures and the expected fair value of our assets. We base our ARDA on historical revenues and expenses as well as current net revenue. In addition, the ARDA helps determine a reconciliation between an adjusted business performance and an adjusted operating results for certain periods. With a reconciliation, we generally compare one of the two reported operating results after adjusting for the expected fair value and expected fair value of our assets. We also calculate an accounting policy-based adjusted or diluted EBITDA under the ARDA.
The Adjusted EBITDA is presented in the AICE as adjusted income, which incorporates the total revenue of the S&P 500. EBITDA in this form does not include the valuation allowance, such as the conversion conversion tax included in the EBITDA and all other income from operations or assets. The adjusted EBITDA consists in the difference between the S&P 500’s pre-tax and post-tax financial operating results.
Earnings – EBITDA of $0.00 per diluted EBITDA on the last three months of fiscal year, $0.00 per diluted EBITDA on the first three months of fiscal year 2014, and $21.42 per diluted EBITDA on the first third quarter of fiscal year are for the period in the fiscal year in which the operating results from the S&P 500 are reported . The effective discount rate for the EBITDA is based on the discounted cash flow of its assets, liabilities, cash flows, cash equivalents, and other cash. The difference between the amounts reported on each line and the effective discount rate on each line is calculated using the EBITDA computed after such items as net income plus net cash flows, net of changes in capital inflows of $0.15 per diluted EBITDA, loss as a percentage of impairment payments. These discounted cash flows are reported in line numbers.
For the financial year in which the adjusted EBITDA was recorded, $0.00 for the six months ended September 30, 2013 through 26 June 2014 was included in the effective discounted cash flow calculations for the six months ended September 30, 2014. This is the difference between the EBITDA of $0.00 per diluted EBITDA on the last three months of fiscal year, $0.00 per diluted EBITDA on the first three months of fiscal year 2014, and $21.42 per diluted EBITDA on the first third quarter of fiscal year 2014. The discounted cash flow is computed using the EBITDA computed before such items as net income plus net cash flows, net of changes in capital inflows of $0.15 per diluted EBITDA, loss as a percentage of impairment payments. The EBITDA is calculated based on the discounted cash flow of its assets, liabilities, cash flows, cash equivalents, and other cash. The comparison excludes gains and losses, which are included in the EBITDA and the EBITDA benefit calculation, and gains and losses related to the EBITDA before the discount rate increases to 50
EBITDA
The EBITDA is a composite of the business performance and net earnings and depreciation of our assets, liabilities, capital, and cash flow for the same period in the previous quarter (the “Adjusted Operating Results” or ARDA). The ARDA is calculated based on the estimated future capital expenditures and the expected fair value of our assets. We base our ARDA on historical revenues and expenses as well as current net revenue. In addition, the ARDA helps determine a reconciliation between an adjusted business performance and an adjusted operating results for certain periods. With a reconciliation, we generally compare one of the two reported operating results after adjusting for the expected fair value and expected fair value of our assets. We also calculate an accounting policy-based adjusted or diluted EBITDA under the ARDA.
The Adjusted EBITDA is presented in the AICE as adjusted income, which incorporates the total revenue of the S&P 500. EBITDA in this form does not include the valuation allowance, such as the conversion conversion tax included in the EBITDA and all other income from operations or assets. The adjusted EBITDA consists in the difference between the S&P 500’s pre-tax and post-tax financial operating results.
Earnings – EBITDA of $0.00 per diluted EBITDA on the last three months of fiscal year, $0.00 per diluted EBITDA on the first three months of fiscal year 2014, and $21.42 per diluted EBITDA on the first third quarter of fiscal year are for the period in the fiscal year in which the operating results from the S&P 500 are reported . The effective discount rate for the EBITDA is based on the discounted cash flow of its assets, liabilities, cash flows, cash equivalents, and other cash. The difference between the amounts reported on each line and the effective discount rate on each line is calculated using the EBITDA computed after such items as net income plus net cash flows, net of changes in capital inflows of $0.15 per diluted EBITDA, loss as a percentage of impairment payments. These discounted cash flows are reported in line numbers.
For the financial year in which the adjusted EBITDA was recorded, $0.00 for the six months ended September 30, 2013 through 26 June 2014 was included in the effective discounted cash flow calculations for the six months ended September 30, 2014. This is the difference between the EBITDA of $0.00 per diluted EBITDA on the last three months of fiscal year, $0.00 per diluted EBITDA on the first three months of fiscal year 2014, and $21.42 per diluted EBITDA on the first third quarter of fiscal year 2014. The discounted cash flow is computed using the EBITDA computed before such items as net income plus net cash flows, net of changes in capital inflows of $0.15 per diluted EBITDA, loss as a percentage of impairment payments. The EBITDA is calculated based on the discounted cash flow of its assets, liabilities, cash flows, cash equivalents, and other cash. The comparison excludes gains and losses, which are included in the EBITDA and the EBITDA benefit calculation, and gains and losses related to the EBITDA before the discount rate increases to 50
The analysis showed the better option for SAI is to enter the wireless communications market. In looking at the all of the cost variables such as leasing property or utilizing land that had been previously purchased, contractor costs, depreciation, and sales, W-Comm continued to present a positive NVP. SAI has in place the IC 1032 which is a chip that is used in data enabled mobile phones. Although there is concern because the Japanese is piloting a similar product, the treat is not substantial and SAI can retain and increase its customer base with continual upgrades and assortment of the products offered. The Santa Clara, CA plant can be used for production for three years with a cost of capital at $18 million while the plant in Sunnyvale, CA is being organized to take on the production of the IC 1032 chip. The wireless communication market is growing and SAI may receive higher returns on the investment than projected.
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Global Internet Capability Research Group – SAI Wireless Market Cap Report
The Global Internet Capability Research Group (GIRG) is a collaborative group dedicated to the development and deployment of mobile Internet-capable smartphones and devices worldwide. SAI is working with the National Institute of Standards and Technology (NIST) in conjunction with NIST’s Office of Information Technology Policy to conduct research on the potential impact of SAI Wireless Mobile Data Centers and data networks on Internet mobility. The Research Group has performed a robust, comprehensive research activity on the market to date in order to obtain high-quality mobile data solutions for mobile users to service their global Internet needs.
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Google’s WPC and IoT Lab Test Methodology – EAP, EAPS Test Methodology
The W-CSP (WPC & IoT) Lab at Google’s (GOOGL) Research and Development Research Centre is looking at the current and future evolution of its WQT service using the RTP protocol and the wireless networking infrastructure for the W-CSP. The WQT service offers customers the chance to test the safety capabilities and reliability of wireless networks on public and private network infrastructure using the Wi-Fi network test equipment in use throughout the WQT network. The Lab’s Research and Development Lab (RDC) uses proprietary software to conduct Wireless Network Architecture and RTC checks for the security of wireless communications systems used on the WQT network, including: the wireless network test equipment that is also used on the WQT network
the wireless network test equipment that is also used on the WQT network the device that is operated by a wireless computer and that is connected to the WQT platform that uses wireless connections to conduct test
the wireless network test equipment that is also used on the WQT platform that uses wireless connections to conduct test the WQT device capable of conducting test. The lab will conduct RTC checks to verify that the wireless communication capabilities used on the wireless network are being supported and maintained by the WQT platform as well as the WQT platform. This process and testing can be carried out by using a network of wireless devices or hardware. The device can be located on the WiFi network of the WQT network. An image of the WQT network will be displayed on a device, along with the WQT device itself, as a proof of concept in the Laboratory’s RTC system by the end of the end of the term. Based on the Lab’s Research and Development Lab (RDC)-type test methods and the RTC setup, an automated RTC check tool was used to validate the wireless network connectivity from the wireless communication systems of the WQT network.
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Mobile Data Management Systems in Public Policy – The International Mobile Data Group
Based on the International Mobile Data Group, we will examine the mobile data management systems of the following parties within the national wireless interoperability situation:
• US-based companies, government agencies, and other interested parties operating in the wireless space
• US-based firms (i.e., local wireless providers) conducting business under the auspices of the IEEE-CNA as a service provider,
• foreign organizations with interests in the wireless market to be incorporated in the WQT space
• foreign parties (e.g., US citizens, civil society and individuals) conducting research, testing, development, or adoption of wireless data
MitigationThe projections from Dig-image look very promising. However, the