Project #29465 - Accounting+Finance

 

  QUESTION #1                          
                               
    Assumptions                         
    M. Sunshine                         
    the business you all are dreaming to build !                    
                               
  Initial Funds requirement assessment                        
  March You have decided to set up a company called M. Sunshine , dedicated to men's wear  - You own 100% of the 10000 shares of 20€ each - You put the corresponding amount at the bank as a first deposit 
  April  You register the trade mark worldwide: M. Sunshine TM that costs 50 K€ -you have a decided a start date the 1st of january N+1        
  April  You have identified that there is a market for well design outdoor men's wear  - around 1 000 000 pieces a year - we expect to reach 10% market share the first year   
    Your experience have also taught you that there is a the following seasonnality for such clothes            
                  You are expecting to sell T-shirts, shirts and pants      
    Jan 15%   Jul 10%     T shirts are accounting for 60% for the sales except in May, June ,Nov, Dec,  when it goes down to 20%
    Feb 5%   Aug 0%     shirts are accounting for 20 % of sales except in May. June when it reaches 60%
    Mar 5%   Sep 5%     Pants are accounting for 20%, except in Nov and Dec when it reaches 60%  
    Apr 10%   Oct 5%     T shirts are bought on the shelves        
    May 15%   Nov 5%     Shirts are bought half finished and are finalized in your own workshop (customized garnments)
    Jun 15%   Dec 10%     Pants are entirely sewed in your workshop      
                               
                               
  May you order and implement a state of the art e-commerce web site - 50 K€ paid in 2 installments , upfront and at 90 days after delivery - the project is to be completed by december, amortized over 3 years
  May You look for a warehouse (1050m2), a workshop (100m2) and a head office (100m2) building and find it - 1250 m2 - 400€ per year per m2. you have to pay a deposit of 6 month. you move into the building 1st of june
  June you hire a sourcing specialist 120 K€/year-                    
  June You have identified three different suppliers for each product. Considering that you have a lead time of 4 month, how many product of each kind do you need to order at first  
    HK Ltd is supplying the T shirts - the cost price is 5€ per T shirt - FOB - 15% down payment - the rest 60 days after delivery        
    China look is supplying the shirts half finished at 10€ per dress - FOB - 30% downpayment - the rest 90 days after delivery        
    Italian Fabric Sarl is supplying the pants fabric at 10€/sqm - FOB-  50% downpayment - Rest is paid at 90 days upon delivery - each pant is requiring 1.5sqm    
                               
    customs and transport cost are up to 10% of the order - paid upon delivery                
    When do you place the order ?                      
                               
                               
  July We are now in the process of setting up the warehouse, the workshop and ready to buy the logistic equipment           
    we can have all the shelves, picking places and trolleys for 35K€, and 5 sewing machines for 50K€ -Assume they will have to be replaced after 5 years    
    but one of the supplier is offering us to lease the equipement rather than to buy it - he offers a leasing for 5 years of 20K€/year, assuming an interest of 5% .    
    what would you do ??                         
  September we are hiring the rest of the team - 2 warehouse persons (25K€ per year yearly salary each) , one webmaster (76K€/year), 3 workers (30K€/year each)    
                               
    Set up the financial statements for this business at the end of the year (december), before the launch …. Balance sheet and Profit & Loss Statement     
    Do you have enough money to finance this beginning of activity ? How much do you need  ? what would be the installment table for a loan of 500 K€ , at 3% for 10 years   
    What would be your financial positions and cash requirement iif the penetration rate would be 5%, 15% ?             
                               
                               
  Full costing You need to assess the full cost of your products in order to assess each product margin considering the prices the market can accept       
                               
    You have gathered the following informations                    
    the T shirt requires 0.5 sqm storage for 100 t shirts                    
    The Shirt requires 1 minutes man hour and 5 minutes sewing machine and 1 sqm strorage for 100 Shirts            
    The Pant requires 12 minutes man hour and 15 minutes machines sewing machine and 2 sqm storage for 100 pants          
    The workshop is working 8 hours a day 47 weeks a year                   
                               
    the 500 m2 of building are divided in 100 m2 workshops, 100 m2 offices and 300 m2 warehouse            
    if she was asked, the webmaster would tell you that she is spending 25% of her time on the T shirts, 25% on the shirts and 50% for the pants      
    Finally there are some other G&A expenses (accounting,HR, order process, direction)    € 50 000          
                               
                               
                               
    What is the full cost using the traditionnal approach ?                  
    What is the full cost using the ABC approach ?                    
                               
  Total Profit and margin % , the 2nd year end balance sheets in the three instances of penetration rate 5%, 10% and 15% penetration rate ?        
                               
                               
    Based on a competition and market analysis you are setting the following selling prices               
        Price                      
      T shirt  € 8,00                      
      Shirts  € 20,00                      
      Pants  € 45,00                      
                               
                               
    What is the profit for next year and the margin% with both calculation Traditional and ABC full costing             
    what is the balance sheet at the end of this first year in the three instances 5%, 10% and 15% penetration rate           
    your comments ?                         
                               
  Five year plan .                          
                               
    Finally the market assumptions are the following                     
    Outdoor men's wear :  1000000 pieces year #1                  
    the product portfolio mix have proven to be accurate                   
    market size projected yearly growth  3%                    
        Penetration rate assumptions  Marketing cost % of revenue                
      year #1 5% 10%                    
      year #2 7% 10%                    
      year #3 9% 9%                    
      year #4 11% 9%                    
      year #5 10% 8%                    
                               
    Build the P&L statements for the next 5 years                    
                               
                               
  QUESTION #2                          
                               
    In 1000 words, can you analyse the latest financial statements (except cash flow) of GAP and Fast Retailing           
    build the appropriate ratio,  comment and  compare GAP and Fast retailing  respective financial strategy.             
    GAP financial reports will only be available for the year 2012. 2013 has not yet been released              
    http://www.gapinc.com/content/gapinc/html/investors/fin_news_events.html              
    http://www.fastretailing.com/eng/ir/library/annual.html                  
    financial analysis focused mostly on finance position ratios (blance sheet ratios) ,               
    profitability ratio taken out of the Profit & loss statement analysis (margins )                
    and efficiency ratios that bridges resources (balance sheet) and outcomes (P&L) to measure               
    how efficient the business is in the use of the resoucres available (return on equity, return on assers, DSO account receivable, inventory turnover …)    

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Due By (Pacific Time) 05/02/2014 12:00 am
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