Contents

REPORT ON TIME SERIES ANALYSIS ............................................................................. 2

Task 4 ....................................................................................................................................... 11

4.1 Use Appropriate Information Processing Tools ............................................................ 11

4.2 Prepare A Project Plan for An Activity and Determine the Critical Path .................. 13

4.3 Use Financial Tools for Decision Making ....................................................................... 18

Bibliography ................................................................................................................................ 25

1|Bruce
 REPORT ON TIME SERIES ANALYSIS
To : The Executive Committee
From : Bruce
Subject:
Date :

I/ Introduction:

In the previous analysis, we analyzed small- and medium-sized firms on what the government
needed to know in order to manage a large number of SMEs. The purpose of this report is to
analyze data to determine whether there is a seasonal pattern present. Once this is done, there will
be a suitable forecasting model to predict the figures for Year 2018 using the moving average
method.

II/ Key Findings from the Survey Conducted:

The following is a summary of what we found in the previous report:

 For customers:

Money Milk Tea has succeeded in capturing the market with the popularity of milk tea among
young people today. At cheap prices, Money has attracted a large number of customers to their
shop. However, their products are not really good.

 For employees:

For employees, the work at Money Milk Tea is not too stressful, the owner treats them quite well.
However, there are some opposing opinions.

 For Neighbors:

Money's garage is on the sidewalk, so parking lots here makes the sidewalk cramped so there is
no place for pedestrians to make traffic here very messy. Moreover, parking on the other side of
the road will make customers here have to go back and forth often make the traffic situation even
worse.

Also, the noise from the shop and the waste water as well as garbage bothered the people around.

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III/ Analysis on the Bank Loans of SMEs:

Year Micro - size Small – size Medium – size

2012
Jan – June 52 66 77
July – Dec 40 58 69

2013
Jan – June 38 53 58
July – Dec 29 37 45

2014
Jan – June 26 36 44
July – Dec 22 33 37

2015
Jan – June 24 35 46
July – Dec 19 24 32

2016
Jan – June 38 51 60
July – Dec 34 43 51

2017
Jan – June 40 55 66

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A time series is a sequence of numerical data points in successive order. In investing, a time series
tracks the movement of the chosen data points, such as a security’s price, over a specified period
of time with data points recorded at regular intervals. Time series analysis is a tool that helps us to
predict market trends by analyzing old data over a period of time. Time series includes the
following methods:

Moving average: A moving average (MA) is Seasonal Variation: In a year there will be
a widely used indicator in technical analysis seasonal factors, such as weather, enrollment,
that helps smooth out price action by filtering or a sports season. These factors can make the
out the “noise” from random price data change dramatically. Seasonal Variation
fluctuations. It is a trend-following, or is used to identify change rules in economic
lagging, indicator because it is based on past data.
prices (Investopedia, 2017).

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The following is time series of micro-size enterprises.

Year Semester % of Bank Moving Moving Moving Seasonal

loan Total of 2 Total of 4 Average of 4 Variation
Semester Semester Semester

2012 Jan – June 52

July – Dec 40 92 170 42.5 -2.5

2013 Jan – June 38 78 145 36.25 1.75

July – Dec 29 67 122 30.5 -1.5

2014 Jan – June 26 55 103 25.75 0.25

July – Dec 22 48 94 23.5 -1.5

2015 Jan – June 24 46 89 22.25 1.75

July – Dec 19 43 100 25 -6

2016 Jan – June 38 57 129 32.25 5.75

July – Dec 34 72 146 36.5 -2.5

2017 Jan - June 40 74

Micro - size SMEs

60 8
50 6
4
40 2
30 0
20 -2
-4
10 -6
0 -8
Jan – July – Jan – July – Jan – July – Jan – July – Jan – July – Jan -
June Dec June Dec June Dec June Dec June Dec June
2012 2013 2014 2015 2016 2017

% of Bank Loan Moving Average 4 semesters) Seasonal Variation

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 Semesters

Year January – June July – December Year Semester Trendline

2012 -2.5 2016 July – December 36.5 36.5

2013 1.75 -1.5 2017 January - June 35.75

2014 0.25 -1.5 July – December 35

2015 1.75 -6
2018 January - June 34.25
2016 5.75 -2.5
July – December 33.5
2017

Average 2.375 -2.8

Trendline indicate = (36.5 – 42.5) / 8 = - 0.75

Semester Trendline Average Seasonal Variation Final Forecast

2017
July – December 35 -2.8 32.2
2018
January – June 34.25 2.375 36.625
July – December 33.5 -2.8 30.7

Time series of Micro - size SMEs include 2018

60 8
50 6
4
40 2
30 0
20 -2
-4
10 -6
0 -8
Jan – July – Jan – July – Jan – July – Jan – July – Jan – July – Jan - July – Jan - July –
June Dec June Dec June Dec June Dec June Dec June Dec June Dec
2012 2013 2014 2015 2016 2017 2018

% of Bank Loan Moving Average 4 semesters) Seasonal Variation

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The following is time series of Small-size enterprises.

Year Semester % of Bank Moving Moving Moving Seasonal

loan Total of 2 Total of 4 Average of 4 Variation
Semester Semester Semester

2012 Jan – June 66

July – Dec 58 124 235 58.75 -0.75

2013 Jan – June 53 111 201 50.25 2.75

July – Dec 37 90 163 40.75 -3.75

2014 Jan – June 36 73 142 35.5 0.5

July – Dec 33 69 137 34.25 -1.25

2015 Jan – June 35 68 127 31.75 3.25

July – Dec 24 59 134 33.5 -9.5

2016 Jan – June 51 75 169 42.25 8.75

July – Dec 43 94 192 48 -5

2017 Jan - June 55 98

Small - size SMEs

70 10
60
5
50
40 0
30 -5
20
-10
10
0 -15
Jan – July – Jan – July – Jan – July – Jan – July – Jan – July – Jan -
June Dec June Dec June Dec June Dec June Dec June
2012 2013 2014 2015 2016 2017

% of Bank Loan Moving Average 4 semesters) Seasonal Variation

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 Year Semester Trendline
Semesters
Year January – June July – December 2016 July – December 48 48
2012 - 0.75
2017 January - June 46.66
2013 2.75 - 3.75
2014 0.5 - 1.25 July – December 45.32
2015 3.25 - 9.5 2018 January - June 43.98
2016 8.75 -5
July – December 42.64
2017
Average 3.8125 - 4.05

Trend line indicate: (48 – 58.75) / 8 = - 1.34

Semester Trendline Average Seasonal Variation Final Forecast

2017
July – December 45.32 -4.05 41.27
2018
January – June 43.98 3.8125 47.7925
July – December 42.64 -4.05 38.59

Time series of Small - size SMEs include 2018

70 10
60
5
50
40 0
30 -5
20
-10
10
0 -15
Jan – July – Jan – July – Jan – July – Jan – July – Jan – July – Jan - July – Jan - July –
June Dec June Dec June Dec June Dec June Dec June Dec June Dec
2012 2013 2014 2015 2016 2017 2018

% of Bank Loan Moving Average 4 semesters) Seasonal Variation

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The following is time series of Medium-size enterprises

Year Semester % of Bank Moving Moving Moving Seasonal

loan Total of 2 Total of 4 Average of 4 Variation
Semester Semester Semester

2012 Jan – June 77

July – Dec 69 146 273 68.25 0.75
2013 Jan – June 58 127 230 57.5 0.5
July – Dec 45 103 192 48 -3
2014 Jan – June 44 89 170 42.5 1.5
July – Dec 37 81 196 49 -12
2015 Jan – June 46 115 147 36.75 9.25
July – Dec 32 32 124 31 1
2016 Jan – June 60 92 203 50.75 9.25
July – Dec 51 111 228 57 -6
2017 Jan - June
66 117

Medium - size SMEs

90 15
80
10
70
60 5
50
0
40
30 -5
20
-10
10
0 -15
Jan – July – Jan – July – Jan – July – Jan – July – Jan – July – Jan -
June Dec June Dec June Dec June Dec June Dec June
2012 2013 2014 2015 2016 2017

% of Bank Loan Moving Average 4 semesters) Seasonal Variation

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 Year Semester Trendline
Semesters
Year January – June July – December 2016 July – December 57 57
2012 0.75
2017 January - June 55.6
2013 0.5 -3
2014 1.5 -12 July – December 54.2
2015 9.25 1 2018 January - June 52.8
2016 9.25 -6
July – December 51.4
2017
Average 5.125 -3.85

Trend line indicate: (57 – 68.25) / 8 = - 1.40

Semester Trendline Average Seasonal Variation Final Forecast

2017
July – December 54.2 -3.85 50.35
2018
January – June 52.8 5.125 57.925
July – December 51.4 -3.85 47.55

Time series of Medium - size SMEs

90 15
80
10
70
60 5
50
0
40
30 -5
20
-10
10
0 -15
Jan – July – Jan – July – Jan – July – Jan – July – Jan – July – Jan - July – Jan – July –
June Dec June Dec June Dec June Dec June Dec June Dec June Dec
2012 2013 2014 2015 2016 2017 2018

% of Bank Loan Moving Average 4 semesters) Seasonal Variation

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In general, from January to June, all 3 sizes has more bank loan than from July to December, this
indicate that from January to June is dry season, people are looking for drinks, so the demands are
high, which leads to SMEs have to borrow more to serve their needs.

For seasonal variation: Micro and Small Sized companies will peak in the dry season of 2016 and
lowest in the wet season of 2015, with Medium sized reaching its peak in early 2015 and 2016 and
at the lowest level by the end of 2014. In general, the seasonal variation in the 1st semester is
higher than in the 2nd semester. This proves that the demand of people at different times of the
year are different, so that it is essential to attract customers on summer.

Task 4
4.1 Use Appropriate Information Processing Tools
Transaction processing system (TPS)

It is an information processing system for business transactions involving the collection,

modification and retrieval of all transaction data. Characteristics of a TPS include performance,
reliability and consistency. TPS is also known as transaction processing or real-time processing
(Techopedia, 2017).

With TPS, Money Milk Tea saves time and effort while increasing efficiency by implementing
and supervising daily operations, and it can automatically handle repetitive information.

Management Information Systems (MIS)

Management Information Systems (MIS) is the study of people, technology, and organizations. It
is a set of systems and procedures that gather information from a range of sources, compile it and
present it in a readable format (Ingram, 2017).

MIS will be a useful tool for the strategic and operational level of Money Milk Tea, because it will
store all the information of the day and then report back to Money management.

Executive Support System (ESS)

An Executive Support System (ESS) is a kind of software that allows users to transform enterprise
data into quickly accessible and executive-level reports, such as those used by billing, accounting

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and staffing departments. An ESS enhances decision making for executives. ESS is also known as
Executive Information System (EIS) (Techopedia, 2017).

ESS is a tool for senior management of enterprises, which provides information through tables,
charts or text on business and non-corporate information. It helps the CEO know the information
needed to align the company.

Decision Support Systems (DSS)

Decision Support Systems (DSS) are a specific class of computerized information system that
supports business and organizational decision-making activities. A properly designed Decision
Support System is an interactive software-based system intended to help decision makers compile
useful information from raw data, documents, personal knowledge, and/or business models to
identify and solve problems and make decisions (Information Builders, 2017).

With DSS, Money can help Money's managers make better and more effective decisions.

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4.2 Prepare A Project Plan for An Activity and Determine the Critical Path

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 Gantt Chart
Assessment
Determine requirements
Location 1 Inspection
Location 2 Inspection
Vendor prospects
Request proposals
Receive and review proposals
Select vendor
Planning
Contract review
Review with management
Approval from stakeholder 1
Approval from stakeholder 2
Deployment schedule
Training plan
Training
Location 1 Simulation
Location 2 Simulation
Deployment
Location 1
Location 2

1 21 41 61 81 101

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1 – 2 – 3 – dummy – 6 – 7 – 8 – 9 – 10 – 11 – 14 – dummy

 18 + 2 + 2 + 0 + 1 + 10 + 5 + 20 + 13 + 10 + 10 + 0 = 91

1 – 2 – 3 – dummy – 6 – 7 – 8 – 9 – 10 – 11 – 12 – 13 – 16 – dummy

 18 + 2 + 2 + 0 + 1 + 10 + 5 + 20 + 13 + 10 + 2 + 1 + 10 + 0 = 94

1 – 2 – 3 – dummy – 6 – 7 – 8 – 9 – 10 – 11 – 15 – dummy – 16 – dummy

 18 + 2 + 2 + 0 + 1 + 10 + 5 + 20 + 13 + 10 + 10 + 0 + 10 + 0 = 101

1 – 2 – 3 – dummy – 6 – 7 – 8 – 9 – 10 – 11 – 15 – 20

 18 + 2 + 2 + 0 + 1 + 10 + 5 + 20 + 13 + 10 + 10 + 2 = 93

1 – 2 – 3 – dummy – 6 – 7 – 8 – 9 – 10 – 11 – 15 – 17 – 21

 18 + 2 + 2 + 0 + 1 + 10 + 5 + 20 + 13 + 10 + 10 + 8 + 2 = 101

1 – 2 – 3 – dummy – 6 – 7 – 8 – 9 – 10 – 11 – 15 – 17 – 18 – 19 – dummy

 18 + 2 + 2 + 0 + 1 + 10 + 5 + 20 + 13 + 10 + 10 + 8 + 5 + 7 + 0 = 111

1 – 2 – 3 – dummy – 6 – 7 – 8 – 9 – 10 – 11 – dummy – 19 – dummy

 18 + 2 + 2 + 0 + 1 + 10 + 5 + 20 + 13 + 10 + 0 + 7 + 0 = 88

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1 – 2 – 5 – dummy – 6 – 7 – 8 – 9 – 10 – 11 – 14 – dummy

 18 + 2 + 10 + 0 + 1 + 10 + 5 + 20 + 13 + 10 + 10 + 0 = 99

1 – 2 – 5 – dummy – 6 – 7 – 8 – 9 – 10 – 11 – 12 – 13 – 16 – dummy

 18 + 2 + 10 + 0 + 1 + 10 + 5 + 20 + 13 + 10 + 2 + 1 + 10 + 0 = 102

1 – 2 – 5 – dummy – 6 – 7 – 8 – 9 – 10 – 11 – 15 – dummy – 16 – dummy

 18 + 2 + 10 + 0 + 1 + 10 + 5 + 20 + 13 + 10 + 10 + 0 + 10 + 0 = 109

1 – 2 – 5 – dummy – 6 – 7 – 8 – 9 – 10 – 11 – 15 – 20

 18 + 2 + 10 + 0 + 1 + 10 + 5 + 20 + 13 + 10 + 10 + 2 = 101

1 – 2 – 5 – dummy – 6 – 7 – 8 – 9 – 10 – 11 – 15 – 17 – 21

 18 + 2 + 10 + 0 + 1 + 10 + 5 + 20 + 13 + 10 + 10 + 8 + 2 = 109

1 – 2 – 5 – dummy – 6 – 7 – 8 – 9 – 10 – 11 – 15 – 17 – 18 – 19 – dummy

 18 + 2 + 10 + 0 + 1 + 10 + 5 + 20 + 13 + 10 + 10 + 8 + 5 + 7 + 0 = 119 (Critical Path)

1 – 2 – 5 – dummy – 6 – 7 – 8 – 9 – 10 – 11 – dummy – 19 – dummy

 18 + 2 + 10 + 0 + 1 + 10 + 5 + 20 + 13 + 10 + 0 + 7 + 0 = 96

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1 – 2 – 4 – dummy – 6 – 7 – 8 – 9 – 10 – 11 – 14 – dummy

 18 + 2 + 2 + 0 + 1 + 10 + 5 + 20 + 13 + 10 + 10 + 0 = 91

1 – 2 – 4 – dummy – 6 – 7 – 8 – 9 – 10 – 11 – 12 – 13 – 16 – dummy

 18 + 2 + 2 + 0 + 1 + 10 + 5 + 20 + 13 + 10 + 2 + 1 + 10 + 0 = 94

1 – 2 – 4 – dummy – 6 – 7 – 8 – 9 – 10 – 11 – 15 – dummy – 16 – dummy

 18 + 2 + 2 + 0 + 1 + 10 + 5 + 20 + 13 + 10 + 10 + 0 + 10 + 0 = 101

1 – 2 – 4 – dummy – 6 – 7 – 8 – 9 – 10 – 11 – 15 – 20

 18 + 2 + 2 + 0 + 1 + 10 + 5 + 20 + 13 + 10 + 10 + 2 = 93

1 – 2 – 4 – dummy – 6 – 7 – 8 – 9 – 10 – 11 – 15 – 17 – 21

 18 + 2 + 2 + 0 + 1 + 10 + 5 + 20 + 13 + 10 + 10 + 8 + 2 = 101

1 – 2 – 4 – dummy – 6 – 7 – 8 – 9 – 10 – 11 – 15 – 17 – 18 – 19 – dummy

 18 + 2 + 2 + 0 + 1 + 10 + 5 + 20 + 13 + 10 + 10 + 8 + 5 + 7 + 0 = 111

1 – 2 – 4 – dummy – 6 – 7 – 8 – 9 – 10 – 11 – dummy – 19 – dummy

 18 + 2 + 2 + 0 + 1 + 10 + 5 + 20 + 13 + 10 + 0 + 7 + 0 = 88

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4.3 Use Financial Tools for Decision Making
1. Payback period

It is the period of time (year, month) that investors can compensate for the present value of the
capital that the investor has spent.

To calculate Payback Period, we use this formula:

Payback Period = Initial Investment / Cash Inflow per Period

Or we use:

Payback Period = Number of years prior to full recovery of investment + Unrecovered cost at start
of year/Cash flow during full recovery year

(Source: Peavler, 2016)

Discounted Payback Period is used to determine the profitability of a project. Discounted Payback
Period takes into account the time value of money by discounting each cash flow before the
cumulative cash flow is calculated, and determines the time at which the net present value becomes
positive

Investment Opportunity A

Year Cumulative cashflows

Initial Investment $15,000 ($15,000)
1 0 ($15,000)
2 0 ($15,000)
3 0 ($15,000)
4 0 ($15,000)
5 $21,000 $6,000
6 0 $6,000
7 0 $6,000
8 $21,000 $27,000

Payback Period of IO A = year 4 + [(15,000)/21,000] = 4.7 years

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Investment Opportunity B

Year Cumulative cashflow

Initial Investment $11,000 ($11,000)
1 $3,000 ($8,000)
2 $3,000 ($5,000)
3 $3,000 ($2,000)
4 $3,000 $1,000

Payback Period of IO B = year 3 + [(2,000)/3,000] = 3.6 years

Investment Opportunity C

Year Initial Investment Cash flow

0 $21,000
1 $11,000
2 $11,000
3 $5,000 $11,000
4 $26,000

Net cashflow = 11,000 – 5,000 = $6,000

Payback Period of IO C = 21,000/6,000 = 3.5 years

The result shows that the Investment Opportunity that has the shortest payback period is C with
3.5 years. Investment Opportunity C is accepted.

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 2. Accounting Rate of Return

Accounting rate of return (also known as simple rate of return) is the ratio of estimated accounting
profit of a project to the average investment made in the project (Accounting Explained, 2017).

Formula: ARR = Average Accounting Profit / Average Investment

Investment Opportunity A

ARR = Average Accounting Profit / Average Investment = 5,000 / 15,000 = 33.3%

Investment Opportunity B

ARR = Average Accounting Profit / Average Investment = 6,000 / 11,000 = 54.5%

Investment Opportunity C

ARR = Average Accounting Profit / Average Investment = 10,000 / 21,000 = 47.6%

 Investment Opportunity B is accepted because It have 54.4% of profit

3. Net Present Value

Net present value is a calculation that compares the amount invested today to the present value of
the future cash receipts from the investment. In other words, the amount invested is compared to
the future cash amounts after they are discounted by a specified rate of return ( Accounting Coach,
2017).

Formula: NVP = [Sn / (1+r) n] – Initial Investment

n is number of time periods.

Sn is net cash inflow during the period n.

r is discount rate

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Investment Opportunity A

Year Cash Flow Factors Disc CFs

0 (15,000) 1000 (15,000)
1 0,000 0.893 0,000
2 0,000 0.797 0,000
3 0,000 0.712 0,000
4 0,000 0.636 0,000
5 21,000 0.567 11,907
6 0,000 0.507 0,000
7 0,000 0.452 0,000
8 21,000 0.404 8,484
NPV = 5,391

Investment Opportunity B

Year Cash Flow Factors Disc CFs

0 (11,000) 1000 (11,000)
1 3,000 0.893 2,679
2 3,000 0.797 2,391
3 3,000 0.712 2,136
4 3,000 0.636 1,908
5 24,000 0.567 13,608
NPV = 11,722

Investment Opportunity C

Year Cash Flow Factors Disc CFs

0 (21,000) 1000 (21,000)
1 11,000 0.893 9,823
2 11,000 0.797 8,767
3 6,000 0.712 4,272
4 26,000 0.636 16,536
NPV = 18,398

Based on the result, Investment Opportunity that bring more profit is C with NPV = 18,398

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 4. Internal Rate of return

Internal rate of return (IRR) is the interest rate at which the net present value of all the cash flows
(both positive and negative) from a project or investment equal zero. Internal rate of return is used
to evaluate the attractiveness of a project or investment. If the IRR of a new project exceeds a
company’s required rate of return, that project is desirable. If IRR falls below the required rate of
return, the project should be rejected (Investing Answers, 2017).

By calculating on Excel, the IRR of three Investment Opportunities will be showed below:

Investment Opportunity A

Year Cash Flow

0 (15,000)
1 0
2 0
3 0
4 0
5 21,000
6 0
7 0
8 21,000
IRR = 18%

Investment Opportunity B

Year Cash Flow

0 (11,000)
1 3,000
2 3,000
3 3,000
4 3,000
5 24,000
IRR = 36%

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Investment Opportunity C

Year Cash Flow

0 (21,000)
1 11,000
2 11,000
3 6,000
4 26,000
IRR = 44%

Investment Opportunity C has the highest IRR which is 44%, as well as, combine with the result
of NPV, Payback Period and ARR above, Investment Opportunity C will be accepted.

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 SOLUTION FOR MINI PART
Year Cashflow
0 $300,000
1 $150,000 2 160,000
𝑥 = 0.35 = 35%
2 $150,000 3 300,000
3 $150,000
4 $10,000

Trial of 35%

Year Cash Flow Factors Disc CFs

0 (300,000) 1000 (300,000)
1 150,000 0.741 111,111
2 150,000 0.549 82,305
3 150,000 0.406 60,966
4 10,000 0.301 3,011
NPV = (42,607)
NPV is negative number => IRR must less than 35%

Trial of 20%

Year Cash Flow Factors Disc CFs

0 (300,000) 1000 (300,000)
1 150,000 0.833 124,950
2 150,000 0.694 104,100
3 150,000 0.579 86,850
4 10,000 0.482 4,820
NPV = 20,720
NPV is positive number => IRR must less than 35% and more
than 20%

20,720
IRR = 20% + [20,720−(42,607) 𝑥 (35 − 20)%]

IRR= 20% + 4.9% = 24.9 % approximate

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Bibliography
Accounting Coach. (2017). What is NPV? Retrieved from Accounting Coach:
https://www.accountingcoach.com/blog/npv-net-present-value

Accounting Explained. (2017). Accounting Rate of Return (ARR). Retrieved from Accounting
Explained: http://accountingexplained.com/managerial/capital-budgeting/arr

Information Builders. (2017). Decision Support Systems. Retrieved from Information Builders:
https://www.informationbuilders.com/decision-support-systems-dss

Ingram, D. (2017). What Is a Management Information System? Retrieved from Chrone:

http://smallbusiness.chron.com/management-information-system-2104.html

Investing Answers. (2017). Internal Rate of Return (IRR). Retrieved from Investing Answers:
http://www.investinganswers.com/financial-dictionary/investing/internal-rate-return-irr-
2130

Investopedia. (2017). Moving Average - MA. Retrieved from Investopedia:

https://www.investopedia.com/terms/m/movingaverage.asp

Techopedia. (2017). Executive Support System (ESS). Retrieved from Techopedia:

https://www.techopedia.com/definition/543/executive-support-system-ess

Techopedia. (2017). Transaction Process System (TPS). Retrieved from Techopedia:

https://www.techopedia.com/definition/707/transaction-process-system-tps

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