...Case Three CHEF’S TOOLKIT INC. Cash Budgeting 企业现金需求分析和预算 1 Case Explanation: cash budgeting History: Jefferys, invention of Pasta server Production: data Marketing: data Financial Implication: data Data: Composition of Canadian Households; Balance sheet(July 15, 1994) Jefferys Personal balance sheet (July 15, 1994) Production Schedule in Unit 2 Study Questions Q1：What is the Case? (1)event?(2)Companies?(3)Persons?(4)Time? What is the problem?(5)Why is the problem?(6)Possible Solutions? Q2：Analyses (1) Background of Chef’s Toolkit Inc. ? (2) CV of managers? (3)What is the invention? (4)Company Size-up: production, marketing, and financial status? Q3：Budgeting(monthly sales : 10,000; 5,000; 30,000): production schedule, cash budget, Pro-forma income statement, Pro-forma balance sheet Q4：How can the firm avoid loss? Break –even calculation? Q5: How much money do the firm need for financing? Should Dale Raid invest? What are his risks? 3 Case Summary（案例） M r. P eter Jeffery President of Chef’s Toolkit Inc. M r. Dale Reid Private Investor 风险投资家 Obtain funds to start manufacturing and marketing a new pasta server. 4 Case Summary（案例） Produce Sell Chef’s Toolkit Inc. Pasta Server 意大利通心粉 Chef or Housewife 5 Objectives（目标） Produce projected income statements, balance sheets, and cash flow statement up to July 31, 1995. 预计财务报告 Obtain fund from Dale Reid. 6 Why Budget? 预算 If you know where you are going...
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...Case Three CHEF’S TOOLKIT INC. Cash Budgeting 企业现金需求分析和预算 1 Case Explanation: cash budgeting History: Jefferys, invention of Pasta server Production: data Marketing: data Financial Implication: data Data: Composition of Canadian Households; Balance sheet(July 15, 1994) Jefferys Personal balance sheet (July 15, 1994) Production Schedule in Unit 2 Study Questions Q1：What is the Case? (1)event?(2)Companies?(3)Persons?(4)Time? What is the problem?(5)Why is the problem?(6)Possible Solutions? Q2：Analyses (1) Background of Chef’s Toolkit Inc. ? (2) CV of managers? (3)What is the invention? (4)Company Size-up: production, marketing, and financial status? Q3：Budgeting(monthly sales : 10,000; 5,000; 30,000): production schedule, cash budget, Pro-forma income statement, Pro-forma balance sheet Q4：How can the firm avoid loss? Break –even calculation? Q5: How much money do the firm need for financing? Should Dale Raid invest? What are his risks? 3 Case Summary（案例） M r. P eter Jeffery M r. Dale Reid Private Investor President of 风险投资家 Chef’s Toolkit Inc. Obtain funds to start manufacturing and marketing a new pasta server. 4 Case Summary（案例） Sell Produce Chef’s Toolkit Inc. Pasta Server Chef or Housewife 意大利通心粉 5 Objectives（目标） Produce projected income statements, balance sheets, and cash flow statement up to July 31, 1995. 预计财务报告 Obtain fund from Dale Reid. 6 Why Budget? 预算 If you know...
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...Chapter 4 Cash Flow and Financial Planning ( Instructor’s Resources Overview This chapter introduces the student to the financial planning process, with the emphasis on short-term (operating) financial planning and its two key components: cash planning and profit planning. Cash planning requires preparation of the cash budget, while profit planning involves preparation of a pro forma income statement and balance sheet. The text illustrates through example how these budgets and statements are developed. The weaknesses of the simplified approaches (judgmental and percent-of-sales methods) of pro forma statement preparation are outlined. The distinction between operating cash flow and free cash flow is presented and discussed. Current tax law regarding the depreciation of assets and the effect on cash flow are also described. The firm’s cash flow is analyzed through classification of sources and uses of cash. The student is guided in a step-by-step preparation of the statement of cash flows and the interpretation of this statement. This chapter ties in every person’s need to set goals, estimate income, and budget expenditures to the firm’s need to effectively engage in these activities. ( Answers to Review Questions 1. The first four classes of property specified by the MACRS system categorized by the length of the depreciation (recovery) period are called 3-, 5-, 7-, and 10-years property: |Recovery Period |Definition ...
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...A Case Study on O.M Scott & Sons Co. Table of Contents Objective……………………………………………………….…………1 Company Background……………………………………………………1 Ratio Analysis…………………………………………………………….1 Pro Forma Analysis……………………………………………………….3 Sensitivity Analysis……………………………………………………….3 Recommendations for Management………………………………………4 Summary of Case Study…………………………………………………..4 Appendix………………………………………………………………….5 Objective This paper will seek to analyze the financial statements of the O.M Scott & Sons Company during the years 1957-1961, in order to provide readers with a thorough understanding of the various factors that may influence the future success of this business. Additionally, recommendations based on an analysis of their financial statements will be offered for the management of O.M Scott & Sons to implement in the following years. Company Background Headquartered in Ohio, the O.M Scott & Sons Company has operated in the lawn care industry since 1868 and has grown into a successful business with a positive outlook. In fact, management within the company set an ambitious goal of increasing annual growth rate in sales and profits to 25% in the year 1959. According to management, one of the main factors limiting O.M Scott & Sons companies’ growth was the inability for their dealers to carry a sufficient amount of stock for customers. However, company officials feel that their use of a trust receipt program and other decisions will benefit the company’s current financial...
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...Case Study Jackson Automotive Systems Executive Summary Jackson Automotive Systems is an Original Equipment Manufacturer (OEM) that supplies parts for the automobile industry. Jackson Automotive Systems is currently operated by the president, Larry Edwards, and was founded in 1961 by Larry Edward’s father. Jackson Automotive Systems has been operated largely as a cash only business with very little if any debt outstanding typically. The 2008 financial crisis was a difficult time for all participants of the automobile industry. Jackson Automotive System’s reluctance to carry debt coupled with a strong working capital position and a conservative financial policy helped bring the company through the financial crisis. After the financial crisis a group of unhappy stockholders arose and Mr. Edwards chose to repurchase their stock in 2012. To finance the stock repurchase Mr. Edwards used $5 million of cash on hand and secured a $5 short-term loan from a local bank. It is now June of 2013 and the balance of the loan is due at the end of the month. Wanting to purchase new equipment with a cost of $2.4 million Mr. Edwards has approached the bank for an extension on the original $5 million loan as well as the additional $2.4 million equipment loan with a new maturity date on the total of $7.4 million of September 30, 2013. Introduction Mr. Edwards has exhausted his cash reserves and gone in debt following the 2008 financial crisis in order to repurchase stock from an unhappy...
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...Case 1: Merrimack Tractors and Mowers, Inc: LIFO or FIFO? 1. Study the financial information for reel mower units that James Colburn prepared for Rick Martino. (Assume that reel mower units are typical of all classes of inventory at Merrimack.) Prepare a pro-forma income statement assuming no changes in accounting policy for 2008 assuming that the company sells 10,000 units each quarter at a price of $2,000 per unit with Sales General and Administration costs the same as for 2007. The cost of goods sold (COGS) is depends on the beginning inventory, purchases in the quarter and the ending inventory. Cost of Goods Sold = Beginning Inventory + Purchases – Ending Inventory In this case, assuming Merrimack Tractors has generated a total revenue of $80 million by selling 40,000 units at $2,000 each. By employing the LIFO method to calculate their inventory, the most recent costs are matched with the revenue first. The table below illustrates the total cost of purchase at each quarter. The total cost of goods sold ($62 million) was derived from recording the most recent cost of purchases by adding $14 million, $15 million, $16 million and $17 million. Table 1a: Inventory record for year 2007 and 2008 with even sales pattern in LIFO | |2007 (LIFO) |2008 (LIFO) | | |(with even sales pattern) |(with even sales pattern)...
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...in the industry that will avoid some of the negative attributes of the industry as a whole? It is useful for a new venture to think about its position at both the company level and the product or service level. At the company level, a firm’s position determines how the entire company is situated relative to its competitors. \\Industry vs. Firm Level Factors To illustrate the importance of the industry a firm chooses to enter, research has shown that both firm- and industry-specific factors contribute to a firm’s profitability. In various studies, researchers have found that from 8 to 30 percent of the variation in firm profitability is directly attributable to the industry in which a firm competes. \\Studying Industry Trends a. Environmental Trends Economic trends, social trends, technological advances, and political and regulatory changes are the most important environmental trends for entrepreneurs to study. b. Business Trends Other trends impact industries that aren’t environmental trends per se but are...
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...FEASIBILITY STUDIES: WHY AND WHAT SHOULD THEY ENTAIL? P. Ries Asset Resource Management LLC I have been asked to present a paper addressing feasibility studies, as they relate to consideration of a digester project for large dairies. I am hoping to answer the following questions, so that you, as a dairy producer, can properly address whether or not a digester project fits within your overall business model, that is, successfully managing and operating a large scale dairy operation. As I said, the questions I hope to answer for you are as follows: 1. 2. 3. 4. 5. What is a feasibility study? Why is a feasibility study important? What should be included? Who should do a feasibility study? How much should they cost? 1. What is a feasibility study? A feasibility study is an analysis and evaluation of a proposed project to determine if it is a. technically feasible; b. is feasible within the estimated cost; and c. will be profitable. I am focusing my presentation on feasibility studies of digester projects, because that is why I’ve been asked to make this presentation. However, one should be able to use these same concepts when considering any opportunity your farm might consider, especially where large sums of money are at stake. With respect to digester projects, the technical concepts of collecting the cow manure, pumping it into a digester, producing methane gas, and using this methane gas to power turbines, which in turn produce electricity, is a proven technology, and no further...
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...You Are an Entrepreneur! ACC 557 Abstract Being a full time working mom with a house, husband and grad school to attend to, it does not give me a great deal of free time to pursue my lifetime goal of opening up my own day care center. Today, I have decided to turn that goal into a business finally with the support of my friends and family. However, I do need to obtain start-up capital from a lender or from an investor. My goal is to properly convince the lender or investor that opening up my own daycare center is more than just a dream and that I am very passionate about opening up this business and making it a very profitable one. I feel that I have a firm grasp of how to properly run a daycare center, the accounting practices that impact a daycare center as well as the controls needed to safeguard assets to ensure that we stay in compliance and adhere to all regulations set forth. My plan is to start this business inside my home with the name of “Babies & Beyond” located in Somerset, New Jersey, see how well I do, and then perhaps look to expand and build a complete center one day. You are an Entrepreneur! 1. Describe the type of business you have created including: A daycare center is a place for parents to drop their children off with ease and comfort knowing that their money is going to good use to keep their children safe while also providing the children with a curriculum for learning. Daycare programs provide...
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...Revere Street Project Valuation October 11, 2013 Table of Content 1 Summary - Project Revere Street 3 2 The Residential Property Overview 3 2.1 Location 3 2.2 Economic Environment 4 3 Financial Valuation 4 3.1 Case Preview 4 3.2 Case Summary 5 3.3 Valuation Summary 6 4 Pro Forma - Revere Street 7 4.1 Balance Sheet (Estimated) 7 4.2 Income Statement (Estimated) 7 4.3 Statement of Cash Flow (Estimated) 8 5 Future Prospects and Concerns 8 1. Summary - Project Revere Street a. Estimated project Net Present Value -- $24,736 b. Estimated project Internal Rate of Return -- 19.10% c. Major concern -- Source of funds d. Suggested action toward project Revere Street -- GO 2. The Residential Property Overview 2.1 Location In the world of real estate, location sometimes determines the future of a property, residential or non-residential. Revere Street, a residential property located in the heart of downtown Boston, Massachusetts, provides a wonderful location for residents who also like to enjoy the convenience and diversity the city could offer. Revere Street shares Boston's unique New England historical city view and modernized financial district landscape. The pin point with the letter A on the map below shows a geographic center of Revere Street inside the City of Boston. Revere Street is located within less than one mile walk to the beautiful Charles River bank, the popular Newbury Street, the relaxing Boston Common...
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...Cow’s London Case Study Analysis James and Serena Udderlie are interested in opening a Cow’s London franchise in London, Ontario. In order to do so, the Udderlie’s must prepare a loan application to the Confederation Bank of Canada. The Udderlie’s are both well educated and employable. James completed his MBA in 1983 and Serena has received her Bachelor of Arts, Bachelor of Education and a Master of Education. In addition to these degrees, they both claim to have an entrepreneurial spirit, but they would also like flexibility in their investment. They would like to continue with their current employment and would like to maintain a good family routine. They view the idea to franchise as an investment rather than a business venture. The bank is requesting for concrete information before deciding on whether or not a loan is a good idea. They need to be assured that they can invest in the Udderlie’s idea and that the Udderlie’s will be able to pay them back. They have asked for pro forma income statements and balance sheets so that they are able to make an informed decision. The Udderlie’s need help preparing for a meeting so that they may receive financing from Confederation Bank. These needs include an evaluation of the overall idea, the preparation of the pro forma statements, what collateral options were available and to identify any potential issues that the bank may have. The Udderlie’s have also already done some widespread market research. James has a background...
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...shown as follows: The first term on the right-hand side (RHS) of equation (1) is the increase in assets required to support the change in sales. The second term subtracts the increase in spontaneous liabilities associated with the sales increase. The third term deducts additions to retained earnings. As useful as practitioners and academicians find the AFN equation, it is subject to considerable estimation error when financing costs change substantially. The financing costs associated with additional funds needed create "feedback," requiring a firm to borrow more than the original additional funds needed in order to meet the interest and dividend obligations of the amount borrowed. Original additional funds needed is calculated from a pro forma statement as a firm's total asset projections minus initially projected liabilities and...
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...Study Case: Hampton Machine Tool Background. Hampton Machine Tool Company, a machine tool manufacturer, was founded in 1915. Hampton's customers are military aircraft and automobile manufacturers in the St. Louis area. Machine Tool Company felt the boom in the 1960`s with record setting profits in the mid- to late- 1960`s. The company slowed down in the 1970`s economic recession caused by Vietnam War and the oil embargo. Hampton stabilized by the late 1970`s and now has a “strong working capital position”. The company also didn`t have a debt during 10 years until December 1978. 1. Why can`t a profitable company like Hampton repay its Bank Loan on time and why does it need more bank financing? The excising $1 million loan was due September 30, 1979, but Mr. Cowins requested to renew it until the end of 1979. The main cause why Hampton can`t repay its Bank Loan on time is that the company made a stock repurchase, for which loan was taken. That was major cash expenditure for the company of $3 million ($1million of loan+ $2 million of excess cash) in December 1978; this was a main reason why company had a delay in repaying of the loan. The president of the company, Mr. Cowins wishes to borrow an additional $350,000 “for planned equipment purchases in October”, they didn`t buy or renew an equipment since the economic recession. He also mentioned this loan in total $1,350,000 will be repaid at the end of December 1979. 2. What...
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...Company Overview Square Pharmaceuticals is a renowned Pharmaceutical Company of our country. It is currently the leading corporation in its field of expertise. Square Pharmaceuticals began its operations in the year 1958 as a Partnership Firm. It converted into a Private Limited Company in 1964. The company became Public & became listed in the DSE in the year 1991, since then there was no looking back. The supremacy of Square is such that the closest competitor Beximco Pharmaceuticals is not even close in comparison to the market share; the latter has only about half the market share.Square Pharmaceuticals Limited has extended its range of services towards the highway of global market. The company pioneered exports of medicines from Bangladesh in the year 1987 and has been exporting antibiotics and other pharmaceutical products since then. This extension in business and services has increased the credibility of Square Pharmaceuticals Limited ten folds. Introduction Capital Asset Pricing model concentrates on the analysis of risk in relation to investment return which has long been the problems of classical economic approaches to investment decisions. The market model, which is a complement of the CAPM is considered as a useful theoretical tool to analyze the systematic relationship between the return from a particular security and the overall market return. Such an information provides a general idea on the average fluctuation of return from a security relative to the overall...
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...The Institute of Chartered Accountants in Australia GAAP-based financial reporting: measurement of business performance charteredaccountants.com.au Professor Stephen Taylor, The University of New South Wales, Sydney, Australia The Institute of Chartered Accountants in Australia The Institute of Chartered Accountants in Australia (the Institute) is the professional body representing Chartered Accountants in Australia. Our reach extends to more than 53,000 of today and tomorrow’s business leaders, representing some 43,000 Chartered Accountants and 10,000 of Australia’s best accounting graduates who are currently enrolled in our world-class post-graduate program. Our members work in diverse roles across commerce and industry, academia, government, and public practice throughout Australia and in 107 countries around the world. We aim to lead the profession by delivering visionary thought leadership projects, setting the benchmark for the highest ethical, professional and educational standards and enhancing and promoting the Chartered Accountant brand. We also represent the interests of members to government, industry, academia and the general public by actively engaging our membership and local and international bodies on public policy, government legislation and regulatory issues. The Institute can leverage advantages for its members as a founding member of the Global Accounting Alliance (GAA), an international accounting coalition formed by the world’s premier accounting...
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