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Financial Analysis


SCENARIO: You have developed a footwear product, which you believe could revolutionise the footwear market. Following on from the Dragon’s Den success of Levi Root’s Reggae Reggae Sauce – (search the internet if you are unfamiliar with this story), you have decided to make a pitch to a small group of potential investors. You know that any potential investor will expect you to have a good knowledge of how much your product will cost to produce and also of the expected level of sales and profit your product is predicted to make. REQUIRED: 1. Provide a list of the assumptions upon which you are basing your revenue and cost figures. 5 marks 2. Prepare a marginal costing cost statement for your product on a ‘per unit’ and 12 months sales/production basis. 10 marks 3. Produce a break-even analysis (table and graph) for your product based on 12 months activity 15 marks 4. Produce the following financial documents for the first 12 months of trading: a. Cash Budget 20 marks b. Forecast Income Statement 10 marks c. Forecast Balance Sheet 10 marks 5. Write a 1,000 word ‘pitch’ explaining the costing and financial data from tasks 1-4 above, to your potential investors. 30 marks Total 100 marks Expectations and Assessment Criteria Task Expectations / Marking Criteria 1. Provide a list of the assumptions upon which you are basing your revenue and cost figures. Students must provide a list of assumptions and sources of information used to arrive at the total cost and selling price of your product. (5 marks) 2. Prepare a marginal cost statement for your product. The marginal cost statement should be presented in marginal costing format. (10 marks) 3. Produce a break-even analysis for your product. Students will need to produce a break-even table (5 marks) and a break-even graph, which should be accurately constructed and appropriately labelled, showing break-even point and margin of safety. (10 marks) 4. Produce the following financial documents: a. Cash Budget b. Forecast Income Statement c. Forecast Balance Sheet Students need to demonstrate understanding of the mechanics of the three documents, by producing three, appropriately formatted financial documents which all link together. The balance sheet should balance. Mark allocation: – Cash Budget (20 marks) – Forecast Income Statement (10 marks) – Forecast Balance Sheet (10 marks) 5. Write a 1,000 word ‘pitch’ explaining the costing and financial data from tasks 1-3 above, to your potential investors. This document should be in a basic report format. Students must write the report in line with the assignment scenario, ie: the report is to be written TO your potential investors, FROM you (a potential entrepreneur). Essential components of the report: • Title Page • Introduction • Main Section • Conclusion Main Section: ‘The Pitch’ The purpose of the main section is to sell the idea of your new product to your potential investors, to persuade them to invest in your new business. As this is an accounting and finance module, the emphasis of the pitch must be financial. Your potential investors will want to know what return they can expect on their investment. As a minimum they will expect you to provide details of the following: – forecast turnover – forecast profit margin (%) – forecast value of the business – forecast cash flow You should refer to the 3 financial documents from task 4 and include then in the form of appendices to your report. Financial Accounting Assignment Help, Financial Accounting Homework help, Financial Accounting Study Help, Financial Accounting Course Help


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