Introduction to Accounting and Finance Essay Example | Topics and Well Written Essays - 3000 words

Introduction to Accounting and finance - Essay ExampleBased on the forecasted data assessed with ratios and capital calculateing techniques, the project has been found highly feasible with attractive returns. For details view of the financials forecasting sheets pose also been provided. Moreover, there are some assumptions make while forecasting the financials of the project and these assumptions have also been discussed. ASSUMPTIONS ABC DRINK Following set of assumptions have been followed to prepare the by-line financials for the data 1. External environment has been analysed and the market has been found conducive of conducting the energy inebriation business. 2. ABC drink has been evaluated for the offering size of 250 ml. 3. Costing of the material has been used the cost of item listed. 4. tot uply the expenses are based in fictional figures. 5. Price of the product has been set according to competitive prices on tap(predicate) on the Amazon grocery offering 6. It is ass umed the changing season would not affect the demand. 7. doing and will follow the given pattern. 8. The closing stock of each month is utilised in following month. 9. Frequent receipts do not affect the payments as even in the months when the cash home is running negative. 10. For business valuation, the forecasting for the net income has been done for 5 years with NI increasing with 2.5% with prototypical two years, 5% in third-year, 8% in fourth-year and 10% in fifth-year. 11. Required roll of return for business valuation has been taken as 15%. It has been selected so high to incorporate every effect of unlikely event that negatively affects business operations mainly cost and revenues. MARGINAL cost COST STATEMENT TOTAL EXP. CATEGORY FIXED AMT VAR AMT (Monthly) (PROD OR SELLING) (%) In (%) LABOR pulverization Manager ? 7,083 end product cytosine% ? 7,083 0% ? - Accountant ? 4,500 Selling 100% ? 4,500 0% ? - supervisor ? 2,500 Production 50% ? 1,250 50% ? 1,250 M arketing team of 3 people ? 3,600 Selling 35% ? 1,260 65% ? 2,340 SCM team ? 5,000 Selling 25% ? 1,250 75% ? 3,750 Sales Force (10 people) ? 8,000 Selling 20% ? 1,600 80% ? 6,400 Technician (2) ? 6,400 Production 50% ? 3,200 50% ? 3,200 On Floor Labor ? 14,000 Production 10% ? 1,400 90% ? 12,600 watchman (Prod dept) ? 980 Production 100% ? 980 0% ? - watchman warehouse ? 980 Selling 100% ? 980 0% ? - Transporter ? 1,300 Production 65% ? 845 35% ? 455 Transporter ? 1,800 Selling 40% ? 720 60% ? 1,080 BREAK-EVEN ANALYSIS Break even abstract is the point where the total cost of the company is equal to the total revenues (Levy, & Brooks, 1986) and at this point the profit of the company is 0 (Anand, 2004). Breakeven analysis is used to determine the minimum quantity that should be produced in do to achieve no dismission (Arnold, 2008 Besley, & Brigham, 2007). Breakeven point for the discussed project has been identified and it is 42,304 units. This means that the company needs to se ll 42,034 units of drink in order to achieve zero profitability. BREAK EVEN ANALYSIS T. FIXED COST ? 38,954.33 VC ? 1.18 SALES PRICE ? 2.10 part MARGIN ? 0.92 BREAK EVEN ANALYSIS 42,304.70 Break even has also been calculated using graph. The following graph shows break even and it is almost the same point as calculated above. Cash budget Cash budget shows