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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.


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