Given the Current Financial Position of Rolls Royce, Asses the Sustainability of Its Plans for Expansion

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The sustainability for Rolls Royces plans for expansion can be assesed by wether or not their expansion will be able to assist the companies economic standing in the long run and wether or not the businesses expensees in the expansion will result in a financial gain for the business as oposed to a loss. Several segments of the businesses accounts such as the balance sheet illustrate wether or not the business will be able to cope with its plans for expansion in the long term. One of the most prodominant factors influencing Rolls Royces decision to expand the business would be due to the increased demand and growth for their product range in international markets which is illustrated by their increase of sales growth in these regions with China increasing by 11% and with the Middle East increasing by 17% , as well as reaching an all time sales high of 3,630 cars in 2013. This indicates that their is a growing global market and want for cars produced by Rolls Royce and in the high end car market , therefore Rolls Royce will want to try and expand their business and their production in order to try and cater towards this market as this will further result in increased revenues and will also assist the competitivness of the business. The gearing of Rolls Royce can give us an insight into how well they well be able to financially cope with the expansion and wether or not it will be capable of doing so. Gearing shows where the source of a businesses captial derives from , wether from long term loans (debt) or wether from share capital or reserves. It is calculated by dividing the businesses long term loans by the total sum of its total equity and its non current liabilities which is then multiplied by 100. Between the years 2012 and 2013 Rolls Royces gearing has increased from 11.28% in 2012 to 16.24% in 2013. Although their gearing has slightly increased the

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