FMA-Financial Management Assignment Sample
Executive Summary
The project has been mainly into detrimenting the various implications of the chocolate business industries, which can be taken into consideration. The definite methods were implemented to develop the financial plan of the business in the short run as well as in the long run scenario. This can be analyzed with implications of the business scenario. This has formed a contemporary assessment in the case of determining the major parameter of the business in the short run as well as in the long run scenario of the organization. On the other hand, the definite ambiguities dealt with in this study have been relatable with that of the break-even analysis, cash flow analysis, and discounted cash flow analysis. Lastly, the break-even analysis and discounted cash flow policy have been dealt with in dealing with the financial parameters of the business. The business analysis of the cash flow statement has been quite evident in this respect of study.
Introduction
The project report mainly analyzes the various implications that are presented in the case scenario. Moreover, the case that is dealt with in this part of the study has clearly emphasized the different implications of fundamental analysis of the company. The financial analysis of the company shall deal with the major parameters of the profit and loss statement, break-even analysis, and cash flow analysis. The financial plan that would be developed must be considered keeping into account the economic viability and the new venture. Moreover, the investment plan of Zachary has been widely assessed in this particular content of the study. Thus, the profitability implication of the company has been analyzed in this particular aspect of report analysis. Zachary plans to expand its business operations of chocolates in the European region of Belgium. This will be supported with the help of financial statement analysis and will prepare the financial and investment decisions accordingly.
Critical Analysis
Assumptions, Estimates, and Sensitivity Analysis
Assumptions and Estimates
The business plan of Zachary can be ascertained with the help of determining the various implications of the sensitivity analysis. On the other hand, the sensitivity analysis should be formulated in a manner that can help him to fully set up his business. The sensitivity analysis can play a detrimental role in determining the bottom-line effect on the net income procedure of the company. In other words, the total revenue of the business plan can be assessed in this particular scenario of study. It can be dealt with in a manner to determine the cash flow operations of the business. A forecasted sensitivity analysis can help ascertain the gross profit, marketing expenses, expenses related to administration, and annual cash flow structure of the company. This will take into consideration the analysis for discounted cash flow analysis and the cash flow system of the company.
Along with that, the critical analysis of the financial details of the company determines the balance sheet and break-even point of the company. This can be demonstrated with the help of the profit and loss statement.
Thus, the various aspects of sensitivity analysis can be confined mainly to the various aspects of operations expenses that may be associated with the business implications that are dealt with in this study. The chocolate business that is planned in Belgium has grown on an exponential basis. Generally, the growth of Belgian chocolates has been implemented rapidly. Moreover, the chocolates that are determined as one of the major components of profitability has gained enormous success in the global market scenario. Zachary was quite aware of this fact regarding the global prospects of the chocolate industry. Nonetheless, the chocolate market of the US has also grown rapidly concentrating on the various implications of the business scenario.
The sensitivity analysis for the global financial implications concerning the chocolate industry can help determine the prospects of the chocolate industry concerning the EuroChoc that may be considered in this case. One of the major aspects that can be analyzed in this particular point of study is the various uncertainties of price sensitivity analysis. This can be determined with the help of the economic prospects of the economy. The prices of the chocolates may be subjected to market growth conditions. The seasonal fluctuations can also cause widespread implications on the price sensitivity analysis. This has led to lucrative growth opportunities concerning the growth factors of the chocolate industry. The various steps to assess the sensitivity analysis of the concerned chocolate business operations are analyzed and ass as below:
- Development of the income statement for the new venture business in a forecasted manner
- The percentage of sales factor can be variable at time for instance, it may be 10%, 20%, and 30%. On the other hand, the expenses and sales factors are assessed in this particular point of study. Based on this, the different implications of fixed and variable costs are ascertained.
This could be undertaken with the help of the following steps which are determined as follows:
- The sales which will be recorded in dollars can be increased as well as decreased keeping into consideration the different factors of sales prospects.
- The variable costs can undergo fluctuations which implies that they can be decreased or increased taking the various percentages of sales factors into well-being.
- Along with that, the different sets of fixed costs that are determined will remain the same irrespective of the increase and decrease of the sales factor.
It is quite essential to make a distinguishing feature of the sensitivity analysis process concerning determining the variable and fixed cost expenses. On the other hand, there may be an increase and decrease in the cost analysis. On the other hand, the variable costs and fixed costs of the particular businesses are likely to be determined in a manner that can evaluate the net income process after taxation. The trend of the chocolate industry offers a wider range of applications that can help determine the major implications of the businesses. Thus trend of the chocolate industry has been fully into ascertaining the quality implications of the business prospects. This can be possible by the help of the process of continuous growth and innovation that may be introduced in this study. On the other hand, the process of sensitivity analysis that is determined in this prospect of study has widely evaluated the accuracy of the forecasted net income analysis. Hence, to put it into a nutshell, the various implications of sensitivity analysis can interpret the increase or decrease in the net income prospects of the businesses.
Hence, the various parameters that are set for sensitivity analysis concerning the business operations of Zachary have led to a greater degree of usefulness. This has created newer horizons in the field of business. The risk management scenario can be interpreted in this particular analysis of the study. Moreover, the ethical changes that are determined can be effective in initiating the different causes of the business. Furthermore, the changes in the sensitivity analysis can help ascertain the effect of risk management in the long-term scenario. The real changes that are determined in this particular case of study have been widely analyzed in this case scenario.
- The percentages for EuroChoc can be weakened or strengthened by a proportion of 10%. This can help assess the profit implications for businesses in the larger picture of the study.
- The rate of interest can be determined as per the various implications of the business scenarios in the context of determining the various analyses of the business aspects.
The drivers for the chocolate market can help determine the market growth rate which can lead to greater implications for business prospects in the greater scenario. The definite trends that are set for assessing the scenario for price sensitivity for the company have led to various trends as far as the global market scenario of the chocolate market is concerned. The market segment analysis that can be assessed from the different implications of the environmental factor scenario can be assessed in this manner. Moreover, the different cases of sensitivity analysis for business that have been discussed in this particular sphere of study have focused mainly on the original sales forecasting system. The fixed costs systems have been determined with consideration of the professional services that are conducted by Zachary in this prospect. This can be determined with the help of the total variable cost processes of the company.
The sensitivity analysis for Zachary can be implemented in a manner that can help in the different implications for break-even Analysis.
Thus, the break-even analysis and sensitivity analysis at its initial stages mainly take into consideration, the forecasted statement of income. It helps to determine the differences between the forecasted fixed and variable cost analysis. This can easily fluctuate with the increase and decrease in the sales analysis that can be dealt with for this purpose. The sensitivity analysis for the forecasted years has been determined at the rate of 20% and the required analysis has been made as under.
- The business sizes for the chocolate industry have been determined in this aspect
- The seasonal factors and vulnerability analysis have been analyzed in this prospect.
- On the other hand, the technical factors have been taken into analysis by the manufacturers for the distribution analysis. However, the anticipated changes that are determined can be assessed to determine the competitive aspects of the chocolate company. The different aspects of chocolate companies have grown significantly in the long run implications of the businesses.
The sensitivity analysis that has been determined in this prospect of study has been quite competent when it comes to promoting the definite implications of businesses. The degree of competitiveness can be determined in this purpose of study. The growth and globalization scenario has been determined which can be related to the various long-term implications of businesses. On the other hand, the market share of the company has been to the different scenarios of the chocolate businesses. The industry changes have been introduced with the different cases of growth that are determined in this case scenario. The final changes that are determined in the sensitivity analysis
The average rate of interest can be determined in this various aspect of the study can be related to a chocolate retail store that is opened in Belgium. The cost of delivery for the chocolate retail store EuroChoc SA has been widely interpreted in this particular aspect of the study.
Sensitivity Analysis
As per the different ascertainments that are determined, the appropriate utilization of price sensitivity can cause detainment in the penetration of the chocolate market. The EuroChoc market has been provided exclusive fees for its set up. There has been a series of trends and opportunities in the global market scenario which can help in the process of shaping up the business of Zachary (Davies, 2016). Various methods have been implemented to enhance the profitability in the long run implications of the business. For this, a profit and loss statement along with the balance sheet has been updated in this case of study. The country Belgium in where Zachary plans to establish and expand its business operations. He plans to make investments in his business through the Internet and sells its chocolates throughout the regions of the USA. Along with that, Zachary plans to do shipping and packaging in the United States. Other than that, a lump sum amount was spent on the market research study. Zachary hired people and involved them in its business on a part-time basis. This was mainly done to gain a favorable rate of return on its investment.
Cash Flow
The cash flow scenario of the business has been quite stable in the long run implications of maintaining a greater amount of implications in the long run scenario. This can cause a definite assessment in the longer implications of the business. This has been quite evident in the major studies that are assessed in the longer-term scenario of the businesses. Moreover, a definite relationship between the cash flow analysis and the chocolate business has been assessing the major implications of the business scenario. This can be quite evident in the various fluctuations of the business in case of dealing with the major cash flow situations of business in the long run scenario. The business program for the chocolate business that has been dealt with in this study can play a major role in performing the business and management plan in the long run scenario of the business. This can help in structuring the business in a legal scenario which can help in the business model. On the other hand, the sales channel and operational plan of the business can help analyze the business scenario process (Eades & Weaver, 2017).
The financial plan and obligations that are dealt with in this case study can help in determining the income and profit level. Based on the break-even analysis, the different factors of contribution analysis can help deal with the major implications of the businesses. Thus, the cash flow analysis of the company showed a stable cash flow turnover over a particular period in the long-run implications of the business. This can be incremental to the various business analyses with the different cases that are evident in the business scenario. On the other hand, the business scenario has been quite evident when it comes to evaluating the different implications of the business proceedings in the long-run scenario of the chocolate confectionary industry. This can be detrimental to the market scenario which can play a greater role in analyzing the break-even point and cash flow analysis of the business (Stowell & Kawar, 2017).
| Statement of Cash flow | ||||
| Year 1 ($) | Year 2 ($) | Year 3 ($) | Year 4 ($) | |
| Net cash flow from operating activities | ||||
| Net earnings | 144000 | 256125 | 74569 | 25874 |
| Add: Depreciation and amortization | 1200 | 1200 | 1200 | 1200 |
| Cash from operations | 145200 | 257325 | 75769 | 27074 |
| Cash from Investing Activities | ||||
| Investment in property and equipment | 8500 | 8600 | 8600 | 8400 |
| Investment in businesses | 9600 | 6900 | 2300 | 9500 |
| Cash from Investments | 18100 | 15500 | 10900 | 17900 |
| Cash from Financing activities | ||||
| Insurance/repayment of debt | 9874 | 9874 | 9874 | 9874 |
| Payment of dividend | 5247 | 5247 | 5247 | 5247 |
| Cash from Financing | 15121 | 15121 | 15121 | 15121 |
| Net Increase/decrease in cash | 148179 | 257704 | 71548 | 29853 |
| Opening Cash balance | 3500 | 3500 | 3500 | 3500 |
| Closing Cash balance | 151679 | 261204 | 75048 | 33353 |
Figure 1: Calculation of the Cash Flow Statement of the Chocolate Business
(Source: as created by the author)
Break-Even Analysis
Thus, the program objectives of the cash flow analysis and break-even point projections on the long run scenario of the business. This can help deal with the actual level of income and expenditures that a business may incur in the long-term implications of the business. The chocolate company by using the break-even point of analysis can help calculate the definite costs of doing the business in the long run scenario organizational system of functioning.
Concerning the different information that is derived from the case scenario, it is evident of the fact, a minimum level of volume of sales can be needed when it comes to avoiding the different profits and losses. In this manner, the chocolate business of Zachary can be compatible when it comes to generating a greater set of revenue to pay its expenses in the long run scenario of the business. The business entrepreneur can play a greater role in the process of initiating the different sets of changes that are determined in this process of study. The level or the degree of profitability scenario of the company has been detrimental in producing the target companies when it comes to evaluating the definite profitability of the businesses. Thus, the fixed cost analysis of the business can help deal with the major costs of businesses. On the other hand, the various sets of implications are ascertained. The pricing cost analysis can be dealt with in this scenario which can be helpful or detrimental in evaluating the cash flow analysis of the businesses. The sales and the profitability of the businesses can help analyze the definite amount of revenue that is earned by the company in the long run scenario. This mainly assessed the definite level of implications which can be indicative of the detrimental results that are critically evaluated in the long run scenario. The break-even analysis forms a substantial part of the business plan (Rai, 2017). The target market for the chocolate business has been forming a greater stay in the chocolate market for businesses. There can be methods where there can be methods for initiating the growth potential components for a particular business scenario. To gain success in the business, a greater marketing background and production distribution methods can be initiated in this method of study. The product distribution network can be assessed in the way of assessing the production network in the long-run scenario (Krantz & Johnson, 2014). The protection of the privacy plans and intellectual plans that are determined for the study has been instrumental in dealing with the research implications. On the other hand, the costs that are involved can be assessed in determining the chocolate businesses. The trend of the chocolate industry offers a wider range of applications which can help determine the major implications of the businesses (Nguyen, 2016). The break-even analysis that has been determined in this particular point of study has critically evaluated the most conductive prospects when it comes to assessing the fixed cost analysis, and variable costs per sales unit along with analyzing the revenue that is ascertained in its prospect. Thus, the various implications of break-even analysis for the business that is chosen in this scenario have assumed the average per-unit sales price that is determined based on per-unit revenue (Nunoo & Owusu, 2017). Along with that, the average per unit cost or the variable or incremental costs that are assessed in this point of study can be analyzed concerning the average per unit cost basis. On the other hand, the average per-unit sales price has been detrimental to considering the sales forecasting procedure of the company (Ehrhardt & Brigham, 2016). The monthly sales forecasting table of the business has been quite evident in incorporating the different sales and profit forecasting systems. The break-even analysis of the business that is determined in this scenario is:
| Break-even analysis | |
| Monthly units Break-even | 1500 |
| Monthly Sales break-even | $397,262 |
| Assumptions | |
| Average per unit revenue | $324 |
| Average per unit variable cost | $248.07 |
| Estimated monthly fixed cost | $95,035 |
Table 1: Break Even Analysis of the Chocolate Business
(Source: as created by the author)
Discounted Cash Flow
The usage of the discounted cash flow model that will be analyzed in this particular aspect of the study involves the future cash flow of the chocolate business of Zachary. A discount rate is used that reflects the riskiness of the capital implication.
| Calculation of Discounted cash flow analysis | ||||
| Particulars | Year 1 ($) | Year 2 ($) | Year 3 ($) | Year 4 ($) |
| Total revenue | 103000 | 102000 | 100000 | 150000 |
| Cost of goods sold | 500 | 600 | 700 | 900 |
| Gross profit | 102500 | 101400 | 99300 | 149100 |
| Expenses | ||||
| Cost of refrigerator | 12250 | 12250 | 12250 | 12250 |
| Rent | 11400 | 11400 | 11400 | 11400 |
| Market research | 7500 | 7500 | 7500 | 7500 |
| Social charges to employer | 5500 | 5500 | 5500 | 5500 |
| Cost of packaging | 60475 | 60475 | 60475 | 60475 |
| EBITDA | 5375 | 4275 | 2175 | 51975 |
| Less: Depreciation and amortization | 456 | 456 | 456 | 456 |
| EBIT | 4919 | 3819 | 1719 | 51519 |
| Less: Income taxes | 1475.7 | 1475.7 | 1475.7 | 1475.7 |
| NOPAT | 3443.3 | 2343.3 | 243.3 | 50043.3 |
| Add: Depreciation and Amortisation | 456 | 456 | 456 | 456 |
| Less: Capital expenditure | Nil | Nil | Nil | Nil |
| Less: Net working capital | Nil | Nil | Nil | Nil |
| CFAT | 3899.3 | 2799.3 | 699.3 | 50499.3 |
Table 2: Discounted Cash Flow System of the Chocolate Business
(Source: as created by the author)
It was presumed the fact that market return and equity risk rate free of return are detrimental to the various implications of cash flow tax for businesses. This can help in dealing with the operational segments that are analyzed. Thus, the valuation of the business operations is dependent upon the future potential of investment for the various set of business procedures (Krantz & Johnson, 2014).
However, the different financial details that can be included in this portion of the study have been instrumental in evaluating the different parameters that could be financial. The discounted risk-free factor has been quite detrimental to the interest rate of 5%. This can be analyzed concerning the different implications of the target market for businesses (Rahmawati, 2017).
Profit and Loss Account and Balance Sheet
The profit and loss account and the balance sheet majorly present the net revenue for the indirect taxes in the statement of profit and loss account. In simpler terms, the application of the profit and loss statements can be beneficial when it comes to the estimation of the financial position of the business. On a general basis, the financial statements that are produced on a monthly or annual basis are analyzed. The balance sheet that is determined in this particular point of study has been playing a major role when it comes to analyzing the net profit earned or the net loss suffered by the chocolate business in the long-run implications of the business (Jakobsen, 2017). The balance sheet of the company that is to be set up determines the various implications of the components that are dealt with in case determining the financial position of the business over a particular period. Moreover, the different implications are assessed for the net profit analysis. The key performance indicators that are determined have been forming a greater benchmark to determine the profitability of the company in the long run scenario.
| Statement of Financial Position | |||
| Liabilities | Amount ($) | Assets | Amount ($) |
| Capital | 15478 | Purchase of refrigerator | 12250 |
| Loans | 11295 | Inventory | 14523 |
| 26773 | 26773 |
Table 3: Table showing Statement of Financial Position
(Source: as created by the author)
|
Profit & Loss Statement |
||
| Particulars | Amount ($) | |
| Operating Revenue | ||
| Sales of product | 14000 | |
| Service sales | 3000 | |
| Total Operating Revenue | 17000 | |
| Cost of goods sold | 5000 | |
| Gross Profit | 22000 | |
| Overhead | ||
| Rent | 1400 | |
| Insurance | 200 | |
| Office Supplies | 150 | |
| Utilities | 100 | |
| Total Overhead | 1850 | |
| Operating Income | 20150 | |
| Other Income(Expenses) | ||
| Interest for loan | 400 | |
| Earnings before Interest and Tax | 19750 | |
| Less: Income tax | 500 | |
| Net earnings | 19250 | |
Table 4: Table showing the Profit and Loss Statement
(Source: as created by the author)
The profit and loss statement that is determined can be beneficial in assessing the net profit earned or the net loss that is incurred over a particular period. This will be relevant in case of assessing the particular aspect concerning the case scenario (Nunoo & Owusu, 2017).
Critical Reflection
From the different financial statements that are analyzed, I have underlined various strengths and weaknesses that can play a detrimental role in analyzing the financial statements. The chocolate purchases for every year can be determined by the application of cash flow, and profit and loss analysis. The sales and packaging components can be analysed in this particular case prospect. This can be evident in the monthly revenue plan that is analysed in the particular aspect of the study. The growth potential that is determined for the chocolate plan has been inculcated in a manner that has been quite evident in the case of distribution to more outlets in the USA. I have to gain knowledge regarding the various kinds of opportunities that are put forward by Internet users to enhance business processes. This will create a successful platform for the chocolate industry to prosper in the long run implications of the business. Nonetheless, the marketing functions can be aligned with that of the different sets of market research plans that are implemented in the case of the chocolate industry. This has been quite evident in the larger picture of the chocolate industry that has been analyzed in this method of study. Thus, the success of the chocolate business industry has been gaining basic accounting procedures and the personal knowledge that can be determined. The various chocolate businesses must have a greater background in marketing in case to ascertain the various studies that were related to cases of starting up a newer industry.
Alongside, I have gained a greater knowledge regarding the packaging system which would be eventful in determining the marketing perspectives of the business in the long run scenario. On the other hand, the chocolate product and network of distribution have been quite evident in the qualitative aspirations that are determined in this particular case of study. I have also understood the costs that have been evident in the case of earning $20000. On the other hand, the legal entity for businesses and accounting has been quite impulsive in determining the widespread parameters of the businesses. I have to attract more and more customers to expand my business operations across the business scenario. On the other hand, the funding implications of the businesses need to be widened to attract media marketing initiatives. The start-up costs that will be determined for my business will be detrimental to the sources and the practitioners of the financial statements. On the other hand, the working capital funds that are determined have been playing a major role in determining the requirements of working capital.
Conclusion and Recommendations
The project report has been quite instrumental in analyzing the different structures, which can help in dealing with the major implications of the chocolate businesses. Moreover, the financial projections of the business have been determined by considering the long-term legal obligations of the business. This has played a major role when it comes to the implementation of the costs of the businesses in the long run as well as in the business scenario. Moreover, the various sets of information have been playing definite trends of the businesses. It also paved the way to create a competitive system of pricing analysis. This can strive to meet the long-term goals of the business in the long term businesses. On the other hand, the different price competitive aspects have been determined in the case of assessing the price competitive analysis of the businesses. Moreover, the price competitive process has created sustainability in the business relationship issues. This has been quite evident in the different sets of businesses and their operations that are highlighted in the chocolate industry. The cost of penetration of the company has been determined in this particular aspect of the study.
It is advisable for the concerned business operations which is talked of for this purpose to concentrate more on the marketing operations of the business. The market share of the company can be enhanced by the process of application of the different sets of strategies that are analysed in this performance of the study. Visit 'Assignment Help' for more.
Reference List
Davies, R. H. (2016). Value management: Translating aspirations into performance. Routledge.
Eades, K. M., & Weaver, S. (2017). Chocolate Confections Corporation. Darden Business Publishing Cases, 1-14.
Ehrhardt, M. C., & Brigham, E. F. (2016). Corporate finance: A focused approach. Cengage learning.
Jakobsen, M. (2017). 12VA Comparison of Pragmatic Constructivism and Actor-Network Theory. A Philosophy of Management Accounting: A Pragmatic Constructivist Approach, 47.
Krantz, M., & Johnson, R. R. (2014). Investment Banking for Dummies. John Wiley & Sons.
Nguyen, T. (2016). The valuation of kinh do corporation using discounted cash flow method.
Nunoo, I., & Owusu, V. (2017). Comparative analysis on financial viability of cocoa agroforestry systems in Ghana. Environment, Development and Sustainability, 19(1), 83-98.
Rahmawati, S. (2017). Feasibility of Chocolate Food Entrepreneurship in Centre Sulawesi, Indonesia.
Rai, S. (2017). VALUATION AND PREPARATION OF CORPORATE PRESENTATION OF COMPANIES FOR PRIVATE EQUITY/MERGERS & ACQUISITION.
Stowell, D. P., & Kawar, N. (2017). HJ Heinz M&A. Kellogg School of Management Cases, -1
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