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 budgeting techniques, the project has been found highly feasible with engaging returns. For details view of the financials forecasting sheets have also been provided. Moreover, there are some assumptions made while forecasting the financials of the project and these assumptions have also been discussed. ASSUMPTIONS first rudiment DRINK Following set of assumptions have been followed to prepare the following financials for the data 1. External environment has been analysed and the market has been found conducive of conducting the energy drink business. 2. first principle 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. All the expenses are based in fictional figures. 5. Price of the crossway has been set according to competitive prices available on the Amazon grocery offering 6. It is assume d the changing season would not affect the demand. 7. Production and leave follow the given pattern. 8. The closing stock of each month is utilised in next month. 9. Frequent receipts do not affect the payments as even in the months when the cash position 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 first devil years, 5% in third-year, 8% in fourth-year and 10% in fifth-year. 11. Required rate of return for business valuation has been taken as 15%. It has been selected so high to incorporate any effect of unlikely event that negatively affects business operations mainly cost and revenues. MARGINAL saluteING COST STATEMENT TOTAL EXP. CATEGORY wintry AMT VAR AMT (Monthly) (PROD OR SELLING) (%) In (%) LABOR Factory Manager ? 7,083 Production 100% ? 7,083 0% ? - Accountant ? 4,500 interchange 100% ? 4,500 0% ? - supervisor ? 2,500 Production 50% ? 1,250 50% ? 1,250 Marketing t eam of 3 people ? 3,600 change 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% ? - conveyer ? 1,300 Production 65% ? 845 35% ? 455 Transporter ? 1,800 Selling 40% ? 720 60% ? 1,080 BREAK-EVEN ANALYSIS Break even analysis is the organize where the total cost of the company is equal to the total revenues (Levy, & Brooks, 1986) and at this exhibit the profit of the company is 0 (Anand, 2004). Breakeven analysis is used to determine the minimum quantity that should be produced in order to achieve no loss (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 sell 42,034 u nits of drink in order to achieve zero profitability. BREAK EVEN ANALYSIS T. FIXED COST ? 38,954.33 VC ? 1.18 SALES PRICE ? 2.10 CONTRIBUTION MARGIN ? 0.92 BREAK EVEN ANALYSIS 42,304.70 Break even has also been calculated using chart. The following graph shows break even and it is almost the same point as calculated above. Cash budget Cash budget shows