Assignment

For

Financial Management Analysis

School Business and Law

Submitted by: Abdul Waheed Ahmad

Student ID: 0024KDSA1109

Submitted to: Mr. S A Palan

Background:

Drinks and Snacks are within daily need of people. Many people like to grab a bottle of cold drink and crisps in their lunch break or when they go to attend an event. Especially in summer demand of cold drink increases to double. With the upcoming event of London Olympics 2012 there are huge opportunities to start and establish a new business within this sector. Olympics will start in summer and due to high temperature people require quick snacks and drinks. Following business proposal has been written after research of local market and taste of local people.

1.1 General Survey:

A general survey was done for 5 different super stores and following out comes were noted for the products chosen:

Above table shows that different super markets have different prices for same products, but the difference is not huge due to competition in place.

Drunk Bee

English: A Cadbury Dairy Milk chocolate bar, fille...

Figure 1

Following table shows Low and High prices for the different products.

2.0 Street Survey:

A short questionnaire** was distributed among 100 different people at several places. A short analysis is shown below:

Q1. Which of the following Cold Drinks / Crisps / Chocolate you like the most?

Q2. What size of drink / Crisps / Chocolate you normally buy?

Q4. What Price you like to pay for your selected drink?

I got many funny answers for this question, Most of the times answers were near to zero mean people don't want to pay anything or very less. I managed to get few reasonable answers. Below table shows the average price*** that people wants to pay for the product.

*** Prices stated less than 20p were neglected while calculating average price for the products

After evaluating whole data following products were selected for the business plan in three different categories:

Coke Cola Small Pack (Cold Drinks)

Walkers Large Pack (Crisps)

Sneakers Large ( Chocolate)

3.0 Sales Budget:

A Sales Budget is comprehensive plan that shows expected sales for the budgeted period. Sales Budget is shown in terms of No. of units and the unit value.

After the analysis of street survey and detailed study of compotators, following prices were selected. And volumes of sales were estimated according to the local market.

Sales Budget

4.0 Purchases Budget:

A Purchases Budget is a budget to purchase direct material for the production of goods.

In this case we will buy goods from Major cash and carries. A visit to two major cash and carries in London revealed the following purchase prices.

Purchases Budget

5.0: Labour Budget

A Labour Budget is a labour cost for the production of goods. It's normally expressed in No of hours involved to produce one unit and hourly rate.

In this case we assume that shop is opened for 12 hours daily. We require 12 hours of labour every day plus 4 hours of extra labour after every two weeks to purchase goods from Cash and Carry to the shop.

Labour Budget

6.0 Expenses Budget

A Expenses Budget is administrative cost to sell the product. Often expressed in per unit and also includes fixed cost to run the business.

Expenses Budget

*Includes utility and business rates

**Deprecation for Fridge and cash Register total value of £1000.00

7.0: Initial Investment:

A total Initial Investment of £ 10600.00 is required. Initial Investment will be made from the following sources:

Personal Saving = 3000.00

Family and Friend = 2000.00

Trade Credit (with Cash and Carry) = 600.00

Bank Loan Required = 5000.00

Total Investment Required = 10600.00

8.0 Investment Appraisal

7 Year Investment Appraisal

Following Assumptions are made while doing calculations

9.0 Recommendations:

Extra Stock should be managed during busy periods like Events, Summer Time etc.

Sales Units should be revised according to period i.e. For Olympics 2012 extra stocks and cash flow needed.

Extra Labour required for busy periods like weekends.

10.0 Information about Suppliers

Please see 4.0 Purchase Budget and 11.0 Learning Experience.

11.0 Learning Experience:

First of all I want to thanks my respected teacher Mr. S A Palan, who gave me opportunity to work on such project. During this project I learnt many new things and got opportunity to work with different people.

Overall it was a good experience to work on this report. When I started this report I was bit confused about the starting point but with the help of co fellows I cleared my few doubts and proceed with the report.

It was wonderful experience to go to local super market and get data from there. During my visit I introduced myself as student and explained the purpose of my visit to the manager. Most of the time they welcomed with smile and helped to get required data but on couple of times I was turned down due to busy time of the store.

Next step was to conduct the street survey, which I completed in 4 days. I have been to Underground stations, High streets and Bus stops to conduct this survey. I enjoyed this part the most, while talking to different people of different language. I explained the purpose of my survey and tried to get people's opinion. The response was not too bad, but many teenagers refused to fill the form.

After I visited two Cash and Carries in Park Royal and Wembley Park. I knew the managers of both cash and carries with the references of my friends who work there. It was not too difficult to collect data there. It took half a day to collect the data.

After collecting all relevant data I proceeded with report and completed in 2 days. I consulted few books, lecture notes and websites to help within the report.

Appendices

12.1 Street Survey used to gather data.

Drink and Snacks (Street Survey)

Instructions

Thanks for participating in the short survey. Please read through the questions and select more appropriate option of your choice.

Part I: Cold Drink

Part II: Chirps

Part III: Chocolate

Data Collection from Supermarket

Drink and Snacks (Supermarket)

Data Collection from Cash and Carry

Drink and Snacks (Cash and Carry)

13.0 Bibliography:

Sales Budget. Accounting For Management .Defination and Explaination. [Online] (© 2009) Available at: http://www.accountingformanagement.com/sales_budget.htm /[Accessed 17th June 2010].