3. Prepare financial statements within excel; statement of profit or loss and other comprehensive income, statement of financial position, cashflow statement and forecast budgets.

In this paper, you are required to prepare a business report via canvas carrying the core theme of finance and accounting skills. In the report, you have to include the following essential aspects:

• Organise financial statements, statements of profit/loss, statement of financial position, cashflow statement, forecast budgets.
• Create excel financial models to analyse performance.
• Recommend suitable action with the reference to market and economic condition.
• Formulate a business plan.
• Give importance to supporting venture capital request.
• Present Ratio Analysis of your Projected Performance

• Break Even Points; Margins of Safety
• Find out the possible decisions

Instructions 

Finance and Accounting Skills 4104LBSBW

Coursework: Weighting 70%

Learning Outcomes

3. Prepare financial statements within excel; statement of profit or loss and other comprehensive income, statement of financial position, cashflow statement and forecast budgets.

4. Develop excel financial models to evaluate performance, recommend appropriate action with reference to market and economic condition, produce a business plan, to support a venture capital request.

5. Create, manage and control budgets to aid cashflow / liquidity, improve profitability, reduce risk and make informed strategic decision using financial models

Sportslux

Company Background:

Sportslux has been trading for three years and now enjoy a lucrative market position, supplying a range of sports goods, to a growing market.

Mission Statement:

To provide a reasonably priced product range to enable younger people to develop sports skills

Vision:

To provide a reasonably priced product range to enable younger people to develop sports skills as part of a healthy balanced lifestyle, continuing throughout their lifetime.

Goals

• To retained existing customers and gain a 30% increase in new customers year on year
• To provide a price competitive product and not to compromise on `reasonable customer expectations in terms of quality; delivery and customer service;
• To work with customers developing the product range resulting in `new` products being developed in five years’ time

Sportslux Statement of Financial Position as at 30th November 2018

				£	£
Non-current Assets (Fixed Assets)
Property					37,500
Current Assets
Inventory				192,425
Accounts Receivable				58,230
Cash				481,752
				732,407
Current Liabilities
Accounts Payable				232,625
Net Current Assets					499,782
Long-Term Liabilities
Bank Loan					0
					537,282
Financed By:
Retained Earnings					537,282

Forecast Monthly Demand & Price per unit

Products		Expected  Demand	Selling Price £	Maximum Demand
Football		1100	225	1400
Tennis		1000	200	1300
Skiing		600	205	750
Running		850	200	1100

Your factory is currently running at full capacity, which enables you to meet the Expected Demand. However, IF you wish to satisfy the Maximum Demand you would need to acquire additional machinery at a cost of £750,000.

The purchase of additional machinery could be financed by means of a 10 year loan at:

• Base + 7% p.a. (Floating Rate Loan), or
• 5 year Fixed Rate Loan at 8.25% p.a. reverting to Base + 7% at the end of the 5 years. This type of finance also has a one-off Fee of £10,000.

Alternatively, you could Lease the machine on one of the following terms:

• Flat Monthly Fee (regardless of output): £ 25,000 per month

Products	£
Football	4.00
Tennis	6.00
Skiing	12.00
Running	6.00

• Per unit basis:

 

 

 

Manufacturing Costs per unit

Products		Raw Materials £	Labour Costs £		Trade, Tariff & Taxes £
Football		52.00		22.00	37.50
Tennis		20.00		24.50	38.25
Skiing		85.00		65.00	36.50
Running		65.00		25.00	38.00

In addition the following manufacturing costs are incurred per unit:

Products		Additional Business Insurance £	Warehouse Costs £	Distribution Costs £
Football		2.00	1.65	4.00
Tennis		2.00	1.65	4.30
Skiing		2.00	1.65	7.00
Running		2.00	1.65	6.60

Fixed Costs per month

		Based on Expected Sales £		Based on Maximum Sales       £
Selling and Marketing		5000		8000
Administration		6000		9000

Going forward, you need to decide whether to:

• continue to Manufacture or simply …
• Buy & Sell Finished Goods

You have identified 3 suppliers who have quoted the following prices per unit, based on today’s exchange rates. Kansas Inc have a particularly good reputation.

Products		Hong Kong Ltd.	Kansas Inc.	Henderson (UK) Ltd.
		£	£	£
Football		93.00	113.00	123.00
Tennis		102.00	112.00	121.50
Skiing		82.00	102.00	125.00
Running		108.00	115.00	124.50

Overseas supplies would also currently incur the following Trade Tariffs and Taxes per product:

Products		£
Football		22.50
Tennis		21.20
Skiing		21.00
Running		21.30

Required:

Your task is to Prepare a 2500 Business Report via Canvas

• Justifying your Company’s Decisions for the coming year, supported with …
• Forecast Financial Statements to reflect your decisions
• Ratio Analysis of your Projected Performance
• Break Even Points; Margins of Safety

Task 1: Identify the Decisions you need to make at this stage.