Should The Scuba Business Dive Into The Expansion Harvard Case Solution & Analysis

Should The Scuba Business Dive Into The Expansion Case Study Solution

Financial Analysis

The Pro-forma income statement, balance sheet and cash flow statement is developed to evaluate the feasibility and viability of the project. To estimate the income statement for two consecutive years 1997 and 1998. The description of the values of the comparable company’s revenues are used to formulate the regression equation for profit form operation and sales revenue to project the revenues for the year 1997 and 1998. Since, the income statement shows net loss that has been generated for the year 1996 amounted $67281, the company can utilize the excess capacity in efficient manner and opens the new dive shop to regenerate the revenues for the company in future.

In addition to this, the balance sheet is projected for the years 1997 and 1998. Also, there are some assumptions which are used in preparing projected balance sheet. Apart from the value of the short term bank loan, all the current liabilities are same. Also, it is to notify that except the additional investment in the company’s fixed assets, it is assumed that all the assets are kept the same.


After taking into consideration the qualitative and quantitative analysis, it is analyzed that the company should invest in the dive shop,because it would reap strong returns for the company due to the fact that the company would fully utilize the underutilized excess resources and generate profit revenue in future ahead.

In addition to this, on the basis of the evaluation of the projected numerical values and the reasonable assumption, it is suggested to Don Foster Dive to make an investment in the project. Also it is to stipulate that the place that has been proposed by Mr. Andy is quite reasonable because it would attract the wider range of the younger customers who would love to enjoy such kind of activities near to them..........


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