+61480015851
ACC9703M - Financial Analysis, Appraisal and Decision Making Assignment
Download Solution
Order New Solution
Assignment Task
Background information
You are a member of the management executive of The Green Suit Company Ltd.
The company was started five years ago and makes clothes aimed at 20-30 year olds, focussing on sustainable and fashionable office wear.
The growth of the company has been good, and the company is frequently noted as ‘One to watch’ in the financial press.
The company sells its clothes online in the UK and Europe. It has no shops selling its products.
The company believes that The Green Suit Company Ltd. is set to experience significant growth in the next five years and wants to consolidate its position as a market leader in this time.
In order to achieve this, the company is looking to grow, and you have been asked to consider the best ways to achieve this growth.
The financial statements for The Green Suit Company Ltd for the year ended 31 December 2022 are below:
|
INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER |
|||
|
2022 |
2021 |
||
|
£'000 |
£'000 |
||
|
Revenue |
82,882 |
73,217 |
|
|
Cost of sales |
-31,705 |
-28,221 |
|
|
Gross profit |
51,177 |
44,996 |
|
|
Expenses |
-37,020 |
-37,235 |
|
|
Operating profit |
14,157 |
7,761 |
|
|
Interest costs |
-2,695 |
-2,574 |
|
|
Profit before tax |
11,462 |
5,187 |
|
|
Taxation |
-2,671 |
-1,714 |
|
|
8,791 |
3,473 |
||
|
STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER |
||||
|
2022 |
2021 |
|
||
|
£'000 |
£'000 |
|
||
|
Non-current assets |
||||
|
Intangibles |
63,427 |
42,750 |
|
|
|
Property, plant & Equipment |
28,923 |
28,754 |
|
|
|
92,350 |
71,504 |
|
||
|
|
||||
|
Current assets |
|
|||
|
Inventories |
8,159 |
7,181 |
|
|
|
Trade receivables |
3,021 |
2,515 |
|
|
|
Cash & cash equivalents |
609 |
8,924 |
|
|
|
11,789 |
18,620 |
|
||
|
Total assets |
104,139 |
90,124 |
|
|
|
Equity and Liabilities |
|
|||
|
Equity |
|
|||
|
Share capital (Ordinary £1) |
20,000 |
20,000 |
|
|
|
Share premium |
15,000 |
15,000 |
|
|
|
Retained earnings |
14,455 |
8,586 |
|
|
|
49,455 |
43,586 |
|
||
|
Non-current liabilities |
|
|||
|
Loans |
50,208 |
42,166 |
|
|
|
Current liabilities |
|
|||
|
Trade payables |
4,476 |
4,372 |
||
|
Total liabilities |
54,684 |
46,538 |
||
|
Total equity and liabilities |
104,139 |
90,124 |
||
Option 2- Expand the range of clothes sold
Eli Xu, the Sales Manager believes that the company should offer a broader range of clothes to their customers.
The proposal here is to launch a range of casual trousers, sweaters and hoodies made from organic cottons, linens and cashmere imported from around the world.
This would appeal to their existing clientele and enable the company to increase
sales providing clothes for weekend and working from home.
A forecast of cash generated by this plan has been prepared, however the uncertainty means that the figures vary depend on how the economy performs. Alternatively the company could launch a similar range but using recycled fabrics sourced closer to home.
The estimated net cash inflow for each outcome is as follows:
|
Economic Conditions |
Probability |
Launch the New Organic Range |
Launch the New Recycled Range |
|
Boom |
35% |
£5,000,000 |
£4,000,000 |
|
Average performance |
40% |
£3,500,000 |
£1,000,000 |
|
Recession |
25% |
(£2,500,000) |
£250,000 |
This ACC9703M - Financial Analysis has been solved by our PhD Experts at My Uni Paper.