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Pages:
3 pages/≈825 words
Sources:
3 Sources
Style:
APA
Subject:
Business & Marketing
Type:
Essay
Language:
English (U.S.)
Document:
MS Word
Date:
Total cost:
$ 12.96
Topic:

Forecasting of NVIDIA and Intel's Cash Flows

Essay Instructions:

follow the template. please
In the first two assignments, you looked at: (1) how NVIDIA (NASDAQ: NVDA) and Intel (NASDAQ: INTC) are positioned to take advantage of opportunities and manage risks, and (2) how well each is currently managing their performance. As part of this analysis, you identified potential areas for improvement and considered whether a merger or acquisition could strengthen their financial performance. Based on your insights and recommendations, Buffett is now asking for an assessment of what the future holds for these businesses. In order to deliver this, you must be able to accurately forecast cash flows (the money that comes in and the money that goes out). Like any predictions about the future, these forecasts require the collection and analysis of reliable data, including leading indicators in the broader economy as well as the market forces that impact competitive dynamics. This analysis will enable you to make smarter decisions about how to plan for the future in order to maximize returns, minimize risks, and beat the competition.
Summarize your Analysis and Recommendations by addressing the following questions:
i. Which metrics/trends are most critical for forecasting future performance and for budgeting?
To answer this, you must include an analysis of both past trend performance AND the applicability and reliability of key forecast indicators. In your response, consider:
a. Which company has the stronger income statement? Explain.
b. Which company has the stronger cash flows? Explain.
c. Which company has the stronger operating performance? Explain.
ii. Why are the metrics/trends in the data sets above so critical? How reliable are they as predictors of future performance?
iii. Based on the data you have analyzed, which metrics would you focus on to improve the performance of the weaker company against the stronger one? Why?
a. How would you do this? What specific financial tools would you apply? Why?
b. What would “realistic” improvement look like?
c. How would you measure success?
iv. If you were given the opportunity to join either of these two companies as the new CFO, which one would you pick, and why? In considering your answer to this question, the majority of your compensation plan will be tied to the improvements you can help to drive. Therefore, you should not base your decision on which company is currently performing better, but on which company’s performance – and valuation – has the greatest potential for growth.
Format your written responses for Analysis and Recommendation as follows:
• Typed, double-spaced, professional font (size 10-12), including headings and subheadings (to identify main topics and subtopics), with one-inch margins on all sides.
• References must be included and provide appropriate information that enables the reader to locate the original source.
o Application and analysis of course materials and resources is expected.
o At least one additional source beyond the course materials must be cited to support your analysis and recommendations.
• Include a cover page containing the title of the assignment, your name, the professor’s name, the course title, and the date.
• The maximum length is 3 pages, excluding your cover page, completed worksheets, and reference list.

Essay Sample Content Preview:
JWI 531 Finance II Assignment 3Template
Assignment 3: Forecasting
Author’s Name
____________
Professor’s Name
JWI 531
Date
Introduction
Forecasting is essential to planning an organization’s future and even improving its revenues, competitiveness, and overall financial health. However, forecasting the future of any company requires the business analyst to gather and analyze all reliable data. This essay will gather and analyze the financial records of two tech companies (NVIDIA and Intel) to facilitate accurate forecasting of their cash flows. The essay theorizes that NVIDIA has a stronger income statement, cash flows, and operating performance.
Analysis and Recommendations
Which metrics/trends are most critical for forecasting future performance and for budgeting?
The metrics/trends that are most critical for forecasting future performance and budgeting are: operating cash flow, current ratio, quick ratio, net profit margin, gross profit margin, and inventory turnover. NVIDIA’s annual free cash flow for 2022 grew by 73.24% to $8.132 billion from the $4.694 billion it recorded the previous year. Its current ratio for the previous financial year (calculated by dividing the tech company’s total current assets by its total current liabilities) was 3.39. On the other hand, its quick ratio for the previous financial year (calculated by the tech company’s total current assets less its total inventories divided by its current liabilities) was 2.74. NVIDIA’s net profit margin for the previous financial year was 16.19%. The tech company’s gross profit margin for the previous financial year was 64.9%.
On the other hand, its median inventory turnover for the fiscal years between 2018 and 2022 was 4.3 (Macrotrends LLC, 2023a). In comparison, Intel’s annual cash flow for 2022 declined by 47.61% to $15.43 billion from the $29.456 billion it recorded the previous year. The tech company’s current ratio for the previous financial year was 1.57. On the other hand, its quick ratio for the previous year was 1.16. Intel’s net profit margin for the previous financial year was 12.71%. Its gross profit margin for 2022 was 39.17%. Its median inventory turnover for the four fiscal years between 2018 and 2022 was 3.6 (Macrotrends LLC, 2023b). Overall, NVIDIA has stronger financial ratios than Intel.
To answer this, you must include an analysis of both past trend performance AND the applicability and reliability of key forecast indicators. In your response, consider:
Which company has the stronger income statement? Explain.
The company with the stronger income statement is NVIDIA. NVIDIA is a better income generator than Intel because it has a higher annual cash flow, current ratio, quick ratio, net profit margin, and gross profit margin. NVIDIA outperforms Intel in all financial ratios, indicating a stronger income statement to support business operations, pay debts, and support expansion activities.
Which company has the stronger cash flows? Explain.
The company with the more vital cash flow is NVIDIA because it has a higher operating cash flow. The higher annual cash flow indicates that NVIDIA generates more capital than Intel from its daily intern...
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