York University Marriott Pizza Business Simulation Report

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Student Name: Student ID: Introduction Net Profit Margin Ratio 2019 Ratio: 2020 COVID Ratio: Discussion/Analysis Gross Profit Margin Ratio 2019 Ratio: Discussion/Analysis 2020 COVID Ratio: Return on Assets Ratio 2019 Ratio: 2020 COVID Ratio: Discussion/Analysis Return on Equity Ratio 2019 Ratio: 2020 COVID Ratio: Discussion/Analysis Total Asset Turnover Ratio 2019 Ratio: Discussion/Analysis 2020 COVID Ratio: Current Ratio 2019 Ratio: Discussion/Analysis 2020 COVID Ratio: Working Capital Ratio 2019 Ratio: 2020 COVID Ratio: Discussion/Analysis Cash Ratio 2019 Ratio: 2020 COVID Ratio: Discussion/Analysis Acid Test Ratio 2019 Ratio: Discussion/Analysis 2020 COVID Ratio: Accounts Receivable Turnover Ratio 2019 Ratio: 2020 COVID Ratio: Discussion/Analysis Inventory Turnover Ratio 2019 Ratio: 2020 COVID Ratio: Discussion/Analysis Debt Ratio 2019 Ratio: Discussion/Analysis 2020 COVID Ratio: Debt/Equity Ratio 2019 Ratio: 2020 COVID Ratio: Discussion/Analysis Equity Ratio 2019 Ratio: 2020 COVID Ratio: Discussion/Analysis Degree of Financial Leverage Ratio 2019 Ratio: Discussion/Analysis 2020 COVID Ratio: Conclusion and Recommendation FDM 1002: Business Simulation Instruction Document As you will be completing this exercise as part of an assessment, please note that you will be awarded marks at three distinct milestones: 1. This Simulation is used as an assessment, and full mark will be awarded for playing the simulation (i.e. making all decisions, without leaving any decisions incomplete). Your profit/loss will have no impact on your marks. 2. Additional marks will be awarded for the correct calculations of all ratios (for both “Ratio Analysis” tabs). Please note that there is a total of 30 ratios that you will need to complete (15 from each “Ration Analysis” tabs). Please ensure to calculate all, using the formula provided next to each ratio. 3. The final component of this assessment (once you have played the simulation game and calculated all ratios) will be to write a report to compare the movement of each ratio. You will also be required to write a short paragraph analysing the movement of each ratio from 2019 to 2020 and providing a potential explanation. Please use template provided on Moodle under “Assessment > Assessment 3: Business Simulation & Report (40%) > Business Simulation: Spreadsheet Template, Business Report Template & Marking Guide” When doing so, please structure your answer as such: Example: Profitability Ratios – Net Profit Margin As seen from our ratio analysis, the 2019 net profit margin was 0.5 (222,222/444,444) and the 2020 net profit margin was calculated as 0.38 (150,000/400,000). This demonstrates a drop of 24%. This movement can be explained by a decline in both the Net Profit (from $222,222 in 2019 to $150,000 in 2020) and decline in Net Sales (from $444,444 in 2019 to $400,000 in 2020). However, the reduction in Net Profit was proportionately higher than the reduction in Net Sales. This decline can be explained by the reduction in sales volume and selling price for pizzas (as a result of offering combo deals) due to COVID 19. {Numbers used in this example are assumed figures). The % movement is calculated as (2020 figure-2019 figure)/2019 figure (i.e. [(0.38 – 0.5)/0.5}. Once you have completed all three milestones described above, you will be required to upload both the excel spreadsheet simulation and your word document report as follows: a. Business Simulation Excel Spreadsheet (20%): This is where you will be able to find the Business Simulation Spreadsheet for you to play the simulation game: “Assessment > Assessment 3 - Business Simulation and Report > Business Simulation > Materials and Instructions > Business Simulation Spreadsheet and Report Template”; as below: Welcome to a short instruction document on the business simulation excel file. This file will briefly explain what you will see in the simulation and give you a short set of instructions on things you may be unsure of. PLEASE NOTE: THERE ARE A LOT OF TABS IN THIS SPREADSHEET. TO NAVIGATE TO THE NEXT SET OF TABS, THE NAGIVATION BUTTONS ARE ON THE BOTTOM LEFT The first two tabs are for your Student Details and some background information. Please fill these in fully with all the requested details. These will be kept confidential and will not be shared with 3rd parties. In the next few tabs, you will be asked to make some decisions about your business itself such as the type of business you will run, business decisions (including food pricing, advertising & staff wages) and extra capital investments. Each choice you make will have an impact on the success of the business. Effects are explained briefly within the text in each section. DON’T FORGET TO INCLUDE A BUSINESS NAME! In the financing tab, it will let you know how much financing you will need based on Cash Budget projections to ensure your business does not go into a Cash Deficit in the first 6 months. You will then be presented with your preliminary Cash Budget for the first 6 months. Pie charts are provided to help you visualise the proportions of Cash Receipts and Payments. If you failed to raise enough capital, an alert will pop-up to remind you There will then be a diversification decision for you to make to sell a second product as a side dish. Each of the three choices has different pros and cons. The price you set will also affect your sales quantity. You will then be presented with the full year Financial Statements. Depending on your choices made, you can always go back and make changes. Please remember, the aim of this exercise is not to maximize profits, although you are free to do so. The aim of this exercise is for you to experiment, using a real-life scenario, the impact of all decisions that you are making. If you like, feel free to play around with the options to get a solution you are happy with. Then you will be asked to do a Ratio Analysis based on your Financial Statements. PLEASE FOLLOW ALL INSTRUCTIONS GIVEN. ALSO, ROUND TO 4 DECIMAL PLACES. An alert will be displayed if you do not. CONGRATULATIONS! YOU ARE HALFWAY THROUGH!! You will then be presented with a projected 6-month Cash Budget for the first 6 months of 2020. However due to the rise of an unexpected development (i.e. a pandemic impacting your business), you will be asked to make some decisions which will affect the operation of your business during those times. You will then be presented with a final set of Financial Statements. And finally, to complete this simulation, you will be required to calculate the Ratios one more time. Again, PLEASE FOLLOW ALL INSTRUCTIONS GIVEN You are now done. Well Done! Please remember to now complete your report (refer to the instructions listed on page 1 of this document). FDM1002 Instructions on How to Submit the Business Simulation Spreadsheet and Business Report Once you have completed all three milestones described in the “FDM1002BusinessSimulationsInstructions.pdf” document (Moodle > FDM1002 > Assessments > Assessment 3 - Business Simulation & Report > Business Simulation Instructions pdf), you will be required to upload both the Excel Spreadsheet Simulation and your Business Simulation Report as follows: a) Business Simulation Excel Spreadsheet (20% = (Simulation Game (5%) & Ratio (15%): This is where you will be able to find the Business Simulation Spreadsheet for you to play the simulation game: “Assessment > Assessment 3 - Business Simulation and Report > Business Simulation: Spreadsheet Template, Business Report Template & Marking Guide”; as below: Once you have completed the simulation game and answered all the ratio calculations, please label the file as follows: “studentno. lastname.campus. xlsx” (Eg: “12345678. Smith. Bentley. xlsx”) and upload to Moodle under “Assessment > Assessment 3 > Business Simulation and Report > Business Simulation Submission”; as illustrated below: b) Business Simulation Report (20%): You will be able to download the template as shown below: Once you have completed the report using the above mentioned template, (ensuring that you follow the structure as provided in the example in the unit outline above) in word version, please label the file as“studentno.lastname.campus.doc”(i.e.“12345678.Smith.Bentley.docx” ) and upload to Moodle as instructed below: C) Marking Guide is provided on the Moodle. ACCT1002: BUSINESS SIMULATION First Name: Last Name: Student ID: As part of your Business Simulation and report assessment, you will required to play this simulation game where you will be setting up your business. In the initial few tabs, you will need to make certain key decisi do with the business setup and operations. You can then assess th performance of your business based on your inputs in the various repor follows. Please note that maximizing profit is not the goal of this simula although you are free to do so if you wish Please use Excel to access this program to ensure it functions properly curtin students have free access to Office 365 provided by the universit https://students.curtin.edu.au/essentials/it/software/ for more deta Unless otherwise stated, images were taken from ht © Curtin University, 2020. Please contact Wahseem 040101270000 Faculty of Business and Law report assessment, you will be re you will be setting up your own ed to make certain key decisions to tions. You can then assess the ur inputs in the various reports that t is not the goal of this simulation, do so if you wish o ensure it functions properly. All 65 provided by the university. See ls/it/software/ for more details Unless otherwise stated, images were taken from https://www.freepik.com/ University, 2020. Please contact Wahseem Soobratty for distribution. STUDENT DETAILS Age Group Country City Have you ever worked in the hospitality / food & beverage industry? Yes No Rather not say If YES: In what capacity? How many years experience? Faculty of Business and Law 1 2 3 4 5 1 2 3 4 5 Age Group selections Country Years experience Below 17 1 Australia 0 to 1 year 17-21 Malaysia 1 to 3 years 22-26 3 Mauritius 4 to 6 years 27-31 4 Singapore 6 years and above Above 31 5 United Arab Emirates 6 Other BUSINESS SETUP Please enter your business name: What is the primary product will you sell? What type of business will you operate? Where will this business be located? ESS SETUP Faculty of Business and Law Burgers Kebabs Pizza Start a new Sole Trader Startup Costs $120,000. No existing customer base, but flexibility allows potential faster growth in customers in future months. Base monthly sales of 1300 Burgers Buy an existing company Startup Costs $340,000. Comes with an established customer base but you need to pay for this goodwill. Base monthly sales of 4200 Burgers Go with an existing fast food franchise Startup Costs $500,000 . Widely recognised brand but also requires a monthly fee of $4,500 AND some prices are fixed. Base monthly sales of 8000 Burgers City CBD Area Rent = $28,000 per month. Good foot traffic. Can result in a moderate boost in sales. Sales generally consistant from week to week. Some local competition. Foodcourt in a large shopping centre Rent = $52,000 per month. High foot traffic. Can result in a good boost in sales. Sales can vary b time of the year. Higher nearby competition Suburban retail area Rent = $7,000 per month. Customers are predominantly those living in the local area exibility allows potential faster growth in urgers mer base but you need to pay for this goodwill. o requires a monthly fee of $4,500 AND some sult in a moderate boost in sales. Sales competition. ult in a good boost in sales. Sales can vary by antly those living in the local area BUSINESS DECISIONS How much will you charge for your Burgers? A lower price may result in a boost to sales volume (Pick a value between $4.00 - $20.00) $11.00 How much will you spend on ingredients per Burgers? If there is too much of a discrepancy between quality and Burger with quality ingredients will boost sales volume (Pick a value between $2.00 - $8.00) $4.00 How much will you spend on monthly advertising & marketing? This will boost both initial sales and sales growth. There spent (Only include positive whole numbers) $ +0% boost to base sales (Additive with other factors) Staff will automatically be hired as a proportion to sales. How much will you pay staff per hour? Wages will impact emp training and efficiency, influencing initial sales and sales growth (The average wage for food and beverage staff is $20) $20/hr 0% boost to base sales (Additive with other factors) You will need equipment for your kitchens. After approaching several suppliers, you have received four suitable bids. Th installation of Grills, Hot and Cold Storage, HVAC and Sinks. (Please choose one of the following package you would like to purchase) The number of required packages will be automatically calculated based on sales Kitchens R Us Pty Ltd Aussie Cooktops & Catering Purchase Cost $21,000 $17,000 Lifespan 15 years 10 years 6000 Burgers 5500 Burgers $1200 per month $1000 per month Monthly Production Monthly Running Costs Faculty of Business and Law in a boost to sales volume much of a discrepancy between quality and Burgers cost, sales will be impacted, however well priced Burgers will boost both initial sales and sales growth. There is rapidly increasing diminishing returns on the amount dditive with other factors) will you pay staff per hour? Wages will impact employee turnover, which will have an impact on their level of se sales (Additive with other factors) l suppliers, you have received four suitable bids. These are complete packages. Costs include purchase and hase) sed on sales Aussie Cooktops & Catering Industrial Scale LLC Dapur Komersial Sdn Bhd $17,000 $32,000 $13,000 10 years 17 years 8 years 5500 Burgers 7500 Burgers 4000 Burgers $1000 per month $1100 per month $800 per month Breakdown based on Price $4.00 Variable Costs Contribution Margin $7.00 CAPITAL INVESTMENTS Please now decide on further Capital Investments you would like to make. Each is optional Walk-in Cold Storage/Freezer A large walk-in cool room will keep produce fresh for longer, reducing product waste. It will also allow you to store larg allowing you to bulk-buy product at a discount Invest in a Cool Room Initial Cost = $100,000. Running Cost = $1,000 per month. -3% reduction in food purchase cost Don’t invest No Changes Food Display Cabinets Your choice of food display cabinets will entice customers. A larger cabinet will allow you to display more product. The allow faster food service Small Display Cabinets $2,500 per 5000 Burgers sales. No other effects Medium Display Cabinets $8,000 per 5000 Burgers sales. +500 Initial Sales. +3% increase to sales growth Large Display Cabinets $18,000 per 5000 Burgers sales. +1000 Initial Sales. +5% increase to sales growth Delivery Services No Delivery Service Lower Sales and Sales growth as some potential customers want deliveries In-house Delivery Service - Company Car Vehicle Cost = $10,000 for every 3000 delivery sales per month. Delivery costs covered by a delivery fee. 10% of sales will be delivery Exposure & convienience improves sales growth over time. In-house Delivery Service - Driver's Private Car $1.50 increase in food costs for 'Delivery Sales' to reimburse drivers 10% of sales will be delivery Exposure & convienience improves sales growth over time. Contract to a Delivery Service Greatly increases exposure which will increase sales growth over time 20% of sales will be delivery 25% of revenue from 'Delivery sales' will be paid in fees to delivery service Faculty of Business and Law oduct waste. It will also allow you to store larger amounts of produce, 0 per month. -3% reduction in food purchase cost et will allow you to display more product. The extra space will also ales. +3% increase to sales growth l Sales. +5% increase to sales growth th as some potential customers want deliveries every 3000 delivery sales per month. delivery fee. 10% of sales will be delivery mproves sales growth over time. s for 'Delivery Sales' to reimburse drivers y mproves sales growth over time. which will increase sales growth over time y ery sales' will be paid in fees to delivery service Source: https://glamox.com/gsx/solutions/industry-cold-storage-and-freezing-rooms FINANCING Now that you have made all necessary decisions in regards to setting up and equipping your business, the total capital, $370,619. As a MINIMUM, this is the estimated amount required to ensure you do not go into deficit in the Preliminary financing from the options below Personal Savings MAXIMUM $150,000 (This will be your opening Cash Balance) $150,000 Bank Loan Amount (MAXIMUM = $500,000) $0 Yearly Interest will be $0 Term of the loan. Interest rate will be 6% p.a. 10 years Private Investment $0 Monthly Repayments will be $. Total Repayments will be $0 Profits will be shared in proportion with your and their investment 0% of profits will go to investors 100% of profits will go to you Additional Information * Your company will keep approximately 7 days of inventory on hand at all times * Utilities expenses will be paid for in the month after they fall due. All other expenses will be paid for imm * From experience, approximately 70% of Sales are in Cash and 30% of Sales are on Credit. All Credit sales Faculty of Business and Law p and equipping your business, the total capital, which you will need to raise is sure you do not go into deficit in the Preliminary Cash Budget. Please organise your Still required Personal Capital Bank Loan Investor Capital $- $50,000 $100,000 $150,000 $200,000 You still need to raise $220,619 hly Repayments will be $. Repayments will be $0 and their investment profits will go to investors of profits will go to you ory on hand at all times y fall due. All other expenses will be paid for immediately h and 30% of Sales are on Credit. All Credit sales are received in the month following the purchase $250,000 $250,000 UNNAMED Monthly cash budget For the 6 months ended 30th June 2019 Cash Receipts Bank Loan Private Investment Cash Sales Credit Sales January February $ $ 17,971.80 - 29,829.80 7,702.20 17,971.80 37,532.00 120,000.00 12,813.70 103.00 28,000.00 300.00 6,800.00 9,600.00 132,000.00 15,371.59 170.00 28,000.00 2,100.00 300.00 6,800.00 12,800.00 - Total Cash Payments 309,616.70 65,541.59 Deficit / Surplus (291,644.90) (28,009.59) Opening Balance 150,000.00 (141,644.90) Closing Balance Owner Investment (141,644.90) (169,654.49) Total Cash Receipts Cash Payments Startup Costs Food Purchases Returns and Refunds Rent Expense Utilities Expense Insurance Expense Marketing Expense Salaries Expense: Shop manager (Fixed cost) Wages Expense: Loan Repayment (Interest and Principle) Equipment Purchase Franchising Cost YOU HAVE NOT YET RAISED ENOUGH CAPITAL. YO UNNAMED Monthly cash budget e 6 months ended 30th June 2019 March April May June $ $ $ $ 32,532.50 12,784.20 48,163.50 13,942.50 56,956.90 20,641.50 47,331.90 24,410.10 Sub-Totals $ 232,786.40 79,480.50 45,316.70 62,106.00 77,598.40 71,742.00 312,266.90 18,362.10 186.00 28,000.00 2,100.00 300.00 6,800.00 12,800.00 - 25,377.14 275.00 28,000.00 2,100.00 300.00 6,800.00 16,000.00 - 27,487.86 325.00 28,000.00 2,100.00 300.00 6,800.00 16,000.00 - 25,843.71 270.00 28,000.00 2,100.00 300.00 6,800.00 16,000.00 - 68,548.10 78,852.14 81,012.86 79,313.71 (23,231.40) (16,746.14) (3,414.46) (7,571.71) (169,654.49) (192,885.89) (209,632.03) (213,046.49) (192,885.89) (209,632.03) (213,046.49) (220,618.20) D ENOUGH CAPITAL. YOU STILL NEED $220,619 120,000.00 125,256.10 1,329.00 168,000.00 10,500.00 1,800.00 40,800.00 83,200.00 132,000.00 - 682,885.10 (370,618.20) 150,000.00 $ (220,618.20) 150,000.00 Cash Receipts Breakdown Bank Loan Private Investment Cash Sales Credit Sales Owner Investment Cash Payment Breakdown Startup Costs Food Purchases Returns and Refunds Rent Expense Utilities Expense Insurance Expense Marketing Expense Salaries Expense: Shop manager (Fixed cost) Wages Expense: Loan Repayment (Interest and Principle) Equipment Purchase Franchising Cost DIVERSIFICATION It is now the 1st of July, and you have been operating UNNAMED for 6 months. You are now looking at diversifying your and boost sales. To diversify products and boost sales growth, UNNAMED will start selling side dishes Please select a side dish Hot Chips Almost a staple for some. Many orders may want to have a side of chips. Cost per serve (including preparation and packaging)= $1.50 Cost per deep fryer = $4,000. Deep fryers have a useful life of 10 years Monthly production capacity per deep fryer = 10,000 per month Deep fryers will automatically be purchased depending on predicted sales Fresh Salad Less popular and for the more health conscious. Has a shorter shelf life, resulting in cost per unit to ensure freshness. However does not require investment in any new items Cost per serve (including preparation and packaging)= $2.00 Garlic Bread A long time favourite. Should sell in moderate numbers. Has a good profit per unit investment in new conveyer ovens. Cost per serve (including preparation and packaging)= $1.20 Cost per conveyer oven = $600. Conveyor Ovens have a useful life of 10 years Monthly production capacity per conveyer oven = 4,000 per month Conveyer ovens will automatically be purchased depending on predicted sales How much will you charge for each serve of Hot Chips? A cheaper price will result in higher sales (Choose a value betwe $5.00 It is estimated that 43.13% of customers will buy Hot Chips Extra employees will be automatically hired as necessary and will be paid at the earlier set hourly rate of $20/hr Faculty of Business and Law onths. You are now looking at diversifying your products D will start selling side dishes ers may want to have a side of chips. n and packaging)= $1.50 ryers have a useful life of 10 years ep fryer = 10,000 per month rchased depending on predicted sales h conscious. Has a shorter shelf life, resulting in a higher owever does not require investment in any new special n and packaging)= $2.00 moderate numbers. Has a good profit per unit. Requires n and packaging)= $1.20 veyor Ovens have a useful life of 10 years nveyer oven = 4,000 per month e purchased depending on predicted sales will result in higher sales (Choose a value between $3.00 - $8.00) d that 43.13% of customers will buy Hot Chips at the earlier set hourly rate of $20/hr Source: https://www.foodnetwork.com/recipes/food-network-kitchen/the-best w.foodnetwork.com/recipes/food-network-kitchen/the-best-garlic-bread-7194218 Owner Investment Cash Receipts Borrowing Private Investment Cash Sales (Burgers) Credit Sales (Burgers) Cash Sales (Hot Chips) Credit Sales (Hot Chips) January $ February $ 17,971.80 - 29,829.80 7,702.20 - 17,971.80 37,532.00 120,000.00 12,813.70 15,371.59 103.00 28,000.00 300.00 6,800.00 9,600.00 132,000.00 170.00 28,000.00 2,100.00 300.00 6,800.00 12,800.00 - Total Cash Payments 309,616.70 65,541.59 Deficit / Surplus (291,644.90) (28,009.59) Opening Balance 150,000.00 (141,644.90) Closing Balance (141,644.90) (169,654.49) Total Cash Receipts Cash Payments Startup Costs Food Purchases (Burgers) Food Purchases (Hot Chips) Returns and Refunds Rent Expense Utilities Expense Insurance Expense Marketing Expense Salaries Expense: Shop manager (fixed cost) Wages Expense: Loan Repayment (Interest and Principle) Equipment Purchase Franchising Cost YOU HAVE NOT YET RAIS UNNAMED Monthly cash budget For the year ended 31st December 2019 March $ April $ May $ June $ 32,532.50 12,784.20 - 48,163.50 13,942.50 - 56,956.90 20,641.50 - 47,331.90 24,410.10 - 45,316.70 62,106.00 77,598.40 71,742.00 18,362.10 25,377.14 27,487.86 25,843.71 186.00 28,000.00 2,100.00 300.00 6,800.00 12,800.00 - 275.00 28,000.00 2,100.00 300.00 6,800.00 16,000.00 - 325.00 28,000.00 2,100.00 300.00 6,800.00 16,000.00 - 270.00 28,000.00 2,100.00 300.00 6,800.00 16,000.00 - 68,548.10 78,852.14 81,012.86 79,313.71 (23,231.40) (16,746.14) (3,414.46) (7,571.71) (169,654.49) (192,885.89) (209,632.03) (213,046.49) (192,885.89) (209,632.03) (213,046.49) (220,618.20) OU HAVE NOT YET RAISED ENOUGH CAPITAL. YOU STILL NEED $220,619 NNAMED y cash budget ed 31st December 2019 July $ August $ September $ October $ 63,155.40 20,285.10 12,383.00 - 66,381.70 27,066.60 13,016.50 5,307.00 55,201.30 28,449.30 10,822.00 5,578.50 71,117.20 23,657.70 13,944.00 4,638.00 95,823.50 111,771.80 100,051.10 113,356.90 32,230.19 6,701.63 375.00 28,000.00 2,100.00 300.00 6,800.00 22,400.00 36,000.00 32,041.04 5,343.38 394.00 28,000.00 3,200.00 300.00 6,800.00 22,400.00 - 29,820.71 4,972.50 328.00 28,000.00 3,200.00 300.00 6,800.00 22,400.00 - 36,051.99 6,012.00 422.00 28,000.00 3,200.00 300.00 6,800.00 25,600.00 - 134,906.82 98,478.42 95,821.21 106,385.99 (39,083.32) 13,293.39 4,229.89 6,970.91 (220,618.20) (259,701.52) (246,408.13) (242,178.24) (259,701.52) (246,408.13) (242,178.24) (235,207.33) LL NEED $220,619 $ 72,834.30 30,478.80 14,280.00 5,976.00 103,911.50 31,214.70 20,373.50 6,120.00 150,000.00 Total $ 665,387.80 240,632.70 84,819.00 27,619.50 123,569.10 161,619.70 1,018,459.00 40,615.84 6,772.88 433.00 28,000.00 3,200.00 300.00 6,800.00 25,600.00 - 47,800.63 7,971.00 617.00 28,000.00 3,200.00 300.00 6,800.00 28,800.00 - 111,721.72 123,488.63 11,847.39 38,131.07 (335,228.88) (235,207.33) (223,359.95) 150,000.00 (223,359.95) (185,228.88) (185,228.88) November $ December $ 120,000.00 343,816.50 37,773.38 3,898.00 336,000.00 28,600.00 3,600.00 81,600.00 230,400.00 168,000.00 - 1,353,687.88 Cash Payment Breakd Cash Receipts Breakdown Owner Investment Borrowing Private Investment Cash Sales (Burgers) Credit Sales (Burgers) Cash Sales (Hot Chips) Credit Sales (Hot Chips) Cash Payment Breakdown Startup Costs Food Purchases (Burgers) Food Purchases (Hot Chips) Returns and Refunds Rent Expense Utilities Expense Insurance Expense Marketing Expense Salaries Expense: Shop manager (fixed cost) Wages Expense: Loan Repayment (Interest and Principle) Equipment Purchase Franchising Cost Jan $ Opening Inventory Purchases Cost of Sales End of Month Closing Inventory 12,813.70 9,055.92 3,757.78 Feb $ 3,757.78 15,371.59 15,031.12 4,098.25 Mar $ 4,098.25 18,362.10 16,393.00 6,067.35 UNNAMED Hot Chips Monthly Inventory Report For the year ended 31st December 2019 Jul $ Opening Inventory Purchases Cost of Sales End of Month Closing Inventory 6,701.63 5,307.00 1,394.63 Jan $ Opening Inventory Purchases Cost of Sales End of Month Closing Inventory 12,813.70 9,055.92 3,757.78 Aug $ 1,394.63 5,343.38 5,578.50 1,159.50 Sep $ 1,159.50 4,972.50 4,638.00 1,494.00 Feb $ 3,757.78 15,371.59 15,031.12 4,098.25 Mar $ 4,098.25 18,362.10 16,393.00 6,067.35 80,000.00 60,000.00 40,000.00 20,000.00 Jan UNNAMED Burgers Monthly Inventory Report For the year ended 31st December 2019 Apr $ 6,067.35 25,377.14 24,269.40 7,175.09 May $ 7,175.09 27,487.86 28,700.36 5,962.59 Jun $ 5,962.59 25,843.71 23,850.36 7,955.94 Nov $ 1,530.00 6,772.88 6,120.00 2,182.88 Dec $ 2,182.88 7,971.00 8,731.50 1,422.38 Jul $ 7,955.94 32,230.19 31,823.76 8,362.37 Aug $ 8,362.37 32,041.04 33,449.48 6,953.93 UNNAMED Monthly Inventory Report nded 31st December 2019 Oct $ 1,494.00 6,012.00 5,976.00 1,530.00 TOTALS $ 37,773.38 36,351.00 1,422.38 Average Hot Chips Inventory $ 1,530.56 UNNAMED Combined Monthly Inventory Report For the year ended 31st December 2019 Apr $ 6,067.35 25,377.14 24,269.40 7,175.09 May $ 7,175.09 27,487.86 28,700.36 5,962.59 Jun $ 5,962.59 25,843.71 23,850.36 7,955.94 Jul $ 7,955.94 38,931.82 37,130.76 9,757.00 Aug $ 9,757.00 37,384.42 39,027.98 8,113.43 Monthly Inventory Movements Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Sep $ 6,953.93 29,820.71 27,815.72 8,958.92 Oct $ 8,958.92 36,051.99 35,835.68 9,175.23 Nov $ 9,175.23 40,615.84 36,700.92 13,090.15 Dec $ 13,090.15 47,800.63 52,360.60 8,530.18 Average Burgers Inventory $ TOTALS $ 343,816.50 335,286.32 8,530.18 7,507.32 YOU HAVE NOT YET RAISED ENOUGH CAPITAL. YOU STILL NEED $220,619 Sep $ 8,113.43 34,793.21 32,453.72 10,452.92 Oct $ 10,452.92 42,063.99 41,811.68 10,705.23 Nov $ 10,705.23 47,388.72 42,820.92 15,273.03 Dec $ 15,273.03 55,771.63 61,092.10 9,952.56 Average Combined Inventory $ Purchases Cost of Sales Dec TOTALS $ 381,589.88 371,637.32 9,952.56 8,272.60 UNNAMED Income Statement For the year ended 31st December 2019 $ Revenue Gross Sales Revenue Less: Returns and Refunds 1,071,724.00 3,898.00 Net Sales Less: Cost of Sales 371,637.32 Gross Profit Less: Expenses Startup Expenses Rent Expense Utilities Expense Insurance Expense Marketing Expense Salaries Expense Wages Expense Interest Expense Depreciation Expense Franchising Expense Total Expenses Net Profit Investors share of profits Owners share of profits 120,000.00 336,000.00 31,800.00 3,600.00 81,600.00 230,400.00 11,423.53 - Gross Profits vs Total Expenses t ember 2019 $ Gross Profit Total Expenses, 814,823.53 Gross Profit, 696,188.68 Total Expenses 1,067,826.00 696,188.68 Expenses Breakdown Startup Expenses Rent Expense Utilities Expense Insurance Expense 814,823.53 (118,634.85) Marketing Expense Salaries Expense Wages Expense (118,634.85) Interest Expense Depreciation Expense al Expenses Gross Profit Total Expenses Startup Expenses Rent Expense Utilities Expense Insurance Expense Marketing Expense Salaries Expense Wages Expense Interest Expense Depreciation Expense UNNAMED Balance Sheet For the year ended 31st December 2019 Assets Current Assets Cash Accounts Receivable Inventories Total Current Assets Non-Current Assets Equipment Less: Accumulated Depreciation $ (185,228.88) 53,265.00 9,952.56 168,000.00 (11,423.53) Total Non-Current Assets Total Assets Liabilities Current Liabilities Accounts Payable Total Current Liabilities Non-Current Liabilities Loan Payable Total Non-Current Liabilities 3,200.00 - Total Liabilities Net Assets Equity Capital - Owner Capital - Investors Retained Earnings - Owner Retained Earnings - Investors Total Equity 150,000.00 (118,634.85) - Current Assets vs Non-Current Assets mber 2019 Total Current Assets, (122,011.32) $ Total Non-Current Assets, 156,576.47 (122,011.32) 156,576.47 YOU HAVE NOT YET RAISED ENOUGH CAPITAL. YOU STILL NEED $220,619 34,565.15 Total Non-Current Liabilities, - 3,200.00 Current Liabilities vs Non-Current Liabilities - 3,200.00 31,365.15 31,365.15 Total Current Liabilities, 3,200.00 Total Current Assets Total Non-Current Assets ED ENOUGH ED $220,619 Total Current Liabilities Total Non-Current Liabilities Part 2 2019 Full Year Ratio Analysis Profitability Ratios -0.1111 0.6520 Net Profit Margin Ratio Gross Profit Margin Ratio -3.4322 Return on Assets Ratio -3.7824 Return on Equity Ratio 30.8931 Total Asset Turnover Ratio Liquidity Ratios -38.1285 -125211.3200 Current Ratio Working Capital -57.8840 Cash Ratio -41.2387 Acid Test Ratio Accounts Receivable Turnover Ratio 20.6813 44.9239 As this is the first year of business, please use an assumed amount of $50,000 for the 2018 Account Receivable amount. Average account receivable = ([2018 Account Receivable + 2019 Account Receivable] / 2) Inventory Turnover Ratio (Combined Products) NOTE: Please use the combined inventory values from Tab “2019 Inventory Reports” Financial Stability Ratios 0.0926 Debt Ratio 0.1020 Debt/Equity Ratio 0.9074 Equity Ratio 1.0000 Degree of Financial Leverage Ratio PLEASE USE THE INFORMATION FROM THE '2019 FULL YEAR CASH BUDGET', '2 INCOME STATEMENT' AND '2019 BALANCE SHEET' T EXPRESS ALL ANSWERS AS A DECIMAL (NOT FRACTION OR PLEASE ROUND ALL ANSWERS TO 4 DECIMAL PLA ONLY INCLUDE YOUR FINAL ANSWER. DO NOT INCLUDE AN 0 0 0 0 0 0 𝑊𝑜𝑟𝑘𝑖𝑛𝑔 0 0 𝑄𝑢𝑖𝑐𝑘 𝑅𝑎𝑡𝑖𝑜 0 𝐴𝑐𝑐𝑜𝑢𝑛𝑡𝑠 𝑅𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒 0 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 0 0 0 0 𝐷𝑒𝑔𝑟𝑒𝑒 𝑜𝑓 0 0 19 FULL YEAR CASH BUDGET', '2019 INVENTORY REPORTS', '2019 NT' AND '2019 BALANCE SHEET' TABS A DECIMAL (NOT FRACTION OR PERCENTAGE) LL ANSWERS TO 4 DECIMAL PLACES L ANSWER. DO NOT INCLUDE ANY WORKINGS 𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡 𝑀𝑎𝑟𝑔𝑖𝑛 𝑅𝑎𝑡𝑖𝑜 = 𝐺𝑟𝑜𝑠𝑠 𝑃𝑟𝑜𝑓𝑖𝑡 𝑀𝑎𝑟𝑔𝑖𝑛 = 𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡 𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠 𝐺𝑟𝑜𝑠𝑠 𝑃𝑟𝑜𝑓𝑖𝑡 𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠 𝑅𝑒𝑡𝑢𝑟𝑛 𝑜𝑛 𝐴𝑠𝑠𝑒𝑡𝑠 𝑅𝑎𝑡𝑖𝑜 = 𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠 𝑅𝑒𝑡𝑢𝑟𝑛 𝑜𝑛 𝐸𝑞𝑢𝑖𝑡𝑦 𝑅𝑎𝑡𝑖𝑜 = 𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡 𝑇𝑜𝑡𝑎𝑙 𝐸𝑞𝑢𝑖𝑡𝑦 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑅𝑎𝑡𝑖𝑜 = 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑅𝑎𝑡𝑖𝑜 = 𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 𝑊𝑜𝑟𝑘𝑖𝑛𝑔 𝐶𝑎𝑝𝑖𝑡𝑎𝑙 = 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠 − 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 𝐶𝑎𝑠ℎ 𝑅𝑎𝑡𝑖𝑜 = 𝐶𝑎𝑠ℎ 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 𝑅𝑎𝑡𝑖𝑜 𝑂𝑅 𝐴𝑐𝑖𝑑 𝑇𝑒𝑠𝑡 𝑅𝑎𝑡𝑖𝑜 = 𝐶𝑎𝑠ℎ + 𝐴𝑐𝑐𝑜𝑢𝑛𝑡𝑠 𝑅𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 𝑅𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑅𝑎𝑡𝑖𝑜 = 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑅𝑎𝑡𝑖𝑜 = 𝐷𝑒𝑏𝑡 𝑅𝑎𝑡𝑖𝑜 = 𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝐴𝑐𝑐𝑜𝑢𝑛𝑡𝑠 𝑅𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒 𝐶𝑜𝑠𝑡 𝑜𝑓 𝑆𝑎𝑙𝑒𝑠 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝐵𝑎𝑙𝑎𝑛𝑐𝑒 𝑇𝑜𝑡𝑎𝑙 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠 𝐷𝑒𝑏𝑡 𝑡𝑜 𝐸𝑞𝑢𝑖𝑡𝑦 𝑅𝑎𝑡𝑖𝑜 = 𝐸𝑞𝑢𝑖𝑡𝑦 𝑅𝑎𝑡𝑖𝑜 = 𝑜𝑓 𝐹𝑖𝑛𝑎𝑛𝑐𝑖𝑎𝑙 𝐿𝑒𝑣𝑒𝑟𝑎𝑔𝑒 = 𝑇𝑜𝑡𝑎𝑙 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 𝑇𝑜𝑡𝑎𝑙 𝐸𝑞𝑢𝑖𝑡𝑦 𝑇𝑜𝑡𝑎𝑙 𝐸𝑞𝑢𝑖𝑡𝑦 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠 𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡 (𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡 − 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝐸𝑥𝑝𝑒𝑛𝑠𝑒) UNNAMED Monthly cash budget For the 6 months ended 30th J January $ 67,713.80 44,533.50 13,275.50 8,731.50 February $ 72,341.50 29,020.20 14,182.00 5,689.50 134,254.30 121,233.20 34,703.69 5,689.50 402.00 28,000.00 3,200.00 300.00 6,800.00 22,400.00 - 35,096.54 6,078.00 430.00 28,000.00 3,200.00 300.00 6,800.00 25,600.00 - 101,495.19 105,504.54 Deficit / Surplus 32,759.11 15,728.66 Opening Balance (185,228.88) (152,469.77) Closing Balance (152,469.77) (136,741.11) Cash Receipts Cash Sales (Burgers) Credit Sales (Burgers) Cash Sales (Hot Chips) Credit Sales (Hot Chips) Total Cash Receipts Cash Payments Food Purchases (Burgers) Food Purchases (Hot Chips) Returns and Refunds Rent Expense Utilities Expense Insurance Expense Marketing Expense Salaries Expense: Shop manager (fixed cost) Wages Expense: Loan Repayment (Interest and Principle) Equipment Purchase Franchising Cost Total Cash Payments YOU HAVE NOT YET RAISED ENOUGH CAPITA UNNAMED Monthly cash budget For the 6 months ended 30th June 2020 March $ 61,576.90 31,003.50 12,071.50 6,078.00 April $ 77,708.40 26,390.10 15,235.50 5,173.50 May $ 82,289.90 33,303.60 16,135.00 6,529.50 June $ 63,178.50 35,267.10 12,386.50 6,915.00 110,729.90 124,507.50 138,258.00 117,747.10 33,060.51 5,173.50 366.00 28,000.00 3,200.00 300.00 6,800.00 22,400.00 - 39,734.11 6,529.50 461.00 28,000.00 3,200.00 300.00 6,800.00 25,600.00 - 39,058.02 6,915.00 489.00 28,000.00 3,200.00 300.00 6,800.00 25,600.00 - 35,602.88 5,308.50 375.00 28,000.00 3,200.00 300.00 6,800.00 22,400.00 - 99,300.01 110,624.61 110,362.02 101,986.38 11,429.89 13,882.89 27,895.98 15,760.72 (136,741.11) (125,311.22) (111,428.33) (83,532.35) (125,311.22) (111,428.33) (83,532.35) (67,771.63) AISED ENOUGH CAPITAL. YOU STILL NEED $220,619 Cash Receipts Breakdown Total $ 424,809.00 199,518.00 83,286.00 39,117.00 746,730.00 217,255.75 35,694.00 2,523.00 168,000.00 19,200.00 1,800.00 40,800.00 144,000.00 - 629,272.75 117,457.25 (185,228.88) (67,771.63) Cash Payment Breakdown Food Purchases (Burgers) Food Purchases (Hot Chips) Returns and Refunds Rent Expense Utilities Expense Insurance Expense Marketing Expense Salaries Expense: Shop manager (fixed cost) Wages Expense: Loan Repayment (Interest and Principle) Equipment Purchase Franchising Cost Cash Sales (Burgers) Credit Sales (Burgers) Cash Sales (Hot Chips) Credit Sales (Hot Chips) Food Purchases (Burgers) Food Purchases (Hot Chips) Returns and Refunds Rent Expense Utilities Expense Insurance Expense Marketing Expense Salaries Expense: Shop manager (fixed Wages Expense: Loan Repayment (Interest and Principle) Equipment Purchase Franchising Cost j;lk Source: https://www.health.gov.au/news/launch-of-the-coronavirus-co It is the beginning of March. A new virus has been spreading rapidly around the w designation (SARS-Cov-2) or (COVID-19). The government has declared it a pande and social distancing. The restrictions will affect UNNA You will no longer be able to sell Burgers face-to-face and will need to make som how you will operate during these times. These decisions will affect not only yo employees and their livelihoods too. As you make your decisions in the next few it will affect your bottom line. Feel free to go between tabs to mix an rce: https://www.health.gov.au/news/launch-of-the-coronavirus-covid-19-campaign en spreading rapidly around the world. Scientists have given it the overnment has declared it a pandemic and has imposed lockdowns g. The restrictions will affect UNNAMED. to-face and will need to make some tough decisions in regards to ese decisions will affect not only you and your business, but your ake your decisions in the next few tabs you will be able to see how ree to go between tabs to mix and match your choices COVID-19 DELIVERIES DECISION Due to the pandemic and government restrictions in place UNNAMED must now decide how they will contin UNNAMED had decided to not deliver. You will be given a chance to change it now. You have the following o No delivery service There will be no sales or food purchas You will need to continue to pay rent, Utilities expenses will be reduced by 9 Marketing costs will be suspended Operate with an in-house delivery service using company cars Vehicle Cost = $15,000 for every 3000 (If you had vehicles earlier they will be Delivery costs will be covered by a del Sales will be equal to 10% of pre-COVI You will need to continue to pay rent, Utilities expenses will be reduced by 4 Operate with an in-house delivery service using employee private cars $1.50 increase in food costs for 'Delive Sales will be equal to 10% of pre-COVI You will need to continue to pay rent, Utilities expenses will be reduced by 4 Operate while contracting deliveries to an external delivery service Sales will be equal to 15% of pre-COVI 25% of revenue from 'Delivery sales' w You will need to continue to pay rent, Utilities expenses will be reduced by 4 Faculty of Business and Law D must now decide how they will continue to operate through these restrictive times. Previously, change it now. You have the following options to choose from: There will be no sales or food purchases You will need to continue to pay rent, insurance & interest expenses Utilities expenses will be reduced by 90% Marketing costs will be suspended Vehicle Cost = $15,000 for every 3000 delivery sales per month (If you had vehicles earlier they will be taken into account) Delivery costs will be covered by a delivery fee. Sales will be equal to 10% of pre-COVID sales You will need to continue to pay rent, insurance, interest & marketing expenses Utilities expenses will be reduced by 40% $1.50 increase in food costs for 'Delivery Sales' to reimburse drivers Sales will be equal to 10% of pre-COVID sales You will need to continue to pay rent, insurance, interest & marketing expenses Utilities expenses will be reduced by 40% Sales will be equal to 15% of pre-COVID sales 25% of revenue from 'Delivery sales' will be paid in fees to delivery service You will need to continue to pay rent, insurance, interest & marketing expenses Utilities expenses will be reduced by 40% COVID-19 OPERATIONS Due to the lockdown laws, customers will not be able to dine-in. However, UNNAMED may also be able to offer takeaw Offer Take Away Takeaway Sales will be 10% of Pre-COVID in house sales Utilities expenses will be at Pre-COVID levels (Even if no deliveries You will need to continue to pay rent, insurance, interest & marke No Take Away No changes compared to "Deliveries" decision To attract more business, an idea that has been suggested is to REPLACE the current menu with a 'COVID combo deal' w and two servings of Hot Chips at a discount of 20% of normal prices for Burgers and a fixed price of $3 for Hot Chips Sell at normal prices No changes to activities Offer Combo Deals Sales will be replaced with Combo Sales Combo Deals will increase Burgers sales by 3% of pre-COVID sales for both Takea Sales numbers of Hot Chips will match Burgers Combo Selling Price $23.60 Combo food costs $10.76 AS YOU ARE SHUTDOWN THIS CHOICE WILL HAVE NO EFFECTS Faculty of Business and Law NAMED may also be able to offer takeaway options. 0% of Pre-COVID in house sales at Pre-COVID levels (Even if no deliveries have been chosen) e to pay rent, insurance, interest & marketing expenses TAKEAWAY "Deliveries" decision urrent menu with a 'COVID combo deal' which includes two servings of Burgers s and a fixed price of $3 for Hot Chips s by 3% of pre-COVID sales for both Takeaway and/or Deliveries TAKEAWAY COVID-19 EMPLOYMENT POLICY Now you need to consider how many employees you want to continue to operate with Before the lockdowns, UNNAMED had 7 employees The government has announced a new Wage Subsidy initiative to try keep people employed, whereby they will pay workpla UNNAMED is a new business and most of the employees are on a casual basis so not all employees qualify. Currently 3 Emp Based on your current choices for COVID Delivery and Take-away options, 0 Employees are required to run UNNAMED You may hire more than required, however this will not increase business efficiency or give you any extra sales If you hire LESS than the recommended number however, efficiency will decrease, resulting in lower sales Current number of employees Number eligible for Government Wage Subsidy Number of employees required for effective operations Monthly Casual Worker Wages 7 3 0 $3,200 The Sales Manager will keep his job Please decide how many other employees you would like to keep. 10 Employees YOU HAVE CHOSEN TO SHUTDOWN BUT MAY DECIDE TO CONTINUE TO HIRE EMPLOYEES TO HELP THEM THRO DIFFICULT TIMES POLICY Faculty of Business and Law keep people employed, whereby they will pay workplaces $1,500 per employee per fortnight but payments must go to employees sual basis so not all employees qualify. Currently 3 Employees are eligible, including the Sales Manager tions, 0 Employees are required to run UNNAMED iness efficiency or give you any extra sales will decrease, resulting in lower sales Monthly Wage Subsidy payments Business Efficiency $9,000.00 0% Number of redundant employees 0 NTINUE TO HIRE EMPLOYEES TO HELP THEM THROUGH IMES yments must go to employees Source: https://www.ato.gov.au/general/jobkeeper-payment/ Source: https://www.usatoday.com/story/money/2020/04/08/coronavirus-wage-subsidy-stimulus-checks-loans-unemployment/2966589001/ Source: https://www.gov.uk/government/news/coronavirus-job-retention-scheme-up-and-running us-checks-loans-unemployment/2966589001/ UNNAMED Monthly cash budg For the 6 months ended 30t January $ 67,713.80 44,533.50 13,275.50 8,731.50 Cash Receipts Cash Sales (Burgers) Credit Sales (Burgers) Cash Sales (Hot Chips) Credit Sales (Hot Chips) Government Wage Subsidy Total Cash Receipts 134,254.30 Cash Payments Food Purchases (Burgers) Food Purchases (Hot Chips) Returns and Refunds Rent Expense Utilities Expense Insurance Expense Marketing Expense Salaries Expense: Shop manager (fixed cost) Wages Expense: Loan Repayment (Interest and Principle) Equipment Purchase Franchising Cost Total Cash Payments 34,703.69 5,786.63 402.00 28,000.00 3,200.00 300.00 6,800.00 22,400.00 - 101,592.32 Deficit / Surplus 32,661.99 Opening Balance (185,228.88) Closing Balance (152,566.89) YOU HAVE NOT YET RAISED ENOUGH CAPI UNNAMED Monthly cash budget For the 6 months ended 30th June 2020 February $ 72,341.50 29,020.20 14,182.00 5,689.50 March $ April $ May $ 9,000.00 9,000.00 9,000.00 121,233.20 9,000.00 9,000.00 9,000.00 27,339.45 4,558.50 430.00 28,000.00 3,200.00 300.00 6,800.00 25,600.00 - 28,000.00 3,200.00 300.00 6,800.00 32,000.00 - 28,000.00 320.00 300.00 6,800.00 32,000.00 - 28,000.00 320.00 300.00 6,800.00 32,000.00 - 96,227.95 70,300.00 67,420.00 67,420.00 25,005.25 (61,300.00) (58,420.00) (58,420.00) (152,566.89) (127,561.64) (188,861.64) (247,281.64) (127,561.64) (188,861.64) (247,281.64) (305,701.64) VE NOT YET RAISED ENOUGH CAPITAL. YOU STILL NEED $220,619 D $220,619 Cash Receipts Breakdown June $ 9,000.00 Total $ 140,055.30 73,553.70 27,457.50 14,421.00 36,000.00 9,000.00 291,487.50 28,000.00 320.00 300.00 6,800.00 32,000.00 - 62,043.14 10,345.13 832.00 168,000.00 10,560.00 1,800.00 40,800.00 176,000.00 - 67,420.00 470,380.27 (58,420.00) (178,892.77) (305,701.64) (185,228.88) (364,121.64) (364,121.64) Cash Payment Breakdown reakdown Cash Sales (Burgers) Credit Sales (Burgers) Cash Sales (Hot Chips) Credit Sales (Hot Chips) Government Wage Subsidy Food Purchases (Burgers) Food Purchases (Hot Chips) Returns and Refunds Rent Expense Utilities Expense Insurance Expense Marketing Expense Salaries Expense: Shop manager (fixed cost) Wages Expense: Loan Repayment (Interest and Principle) Equipment Purchase Franchising Cost UNNAMED Burgers Monthly Inventory Report For the 6 months ended 30th June 2020 Opening Inventory Purchases Cost of Sales End of Month Closing Inventory Jan $ 8,530.18 34,703.69 34,120.72 9,113.15 Feb $ 9,113.15 27,339.45 36,452.60 - Mar $ - UNNAMED Hot Chips Monthly Inventory Report For the 6 months ended 30th June 2020 Opening Inventory Purchases Cost of Sales End of Month Closing Inventory Jan $ 1,422.38 5,786.63 5,689.50 1,519.50 Feb $ 1,519.50 4,558.50 6,078.00 - Mar $ - UNNAMED Combined Monthly Inventory Report For the 6 months ended 30th June 2020 Opening Inventory Purchases Cost of Sales End of Month Closing Inventory Jan $ 9,952.56 40,490.32 39,810.22 10,632.65 Feb $ 10,632.65 31,897.95 42,530.60 - Mar $ - UNNAMED rs Monthly Inventory Report 6 months ended 30th June 2020 Apr $ May $ - Jun $ - - Average Burgers Inventory $ TOTALS $ 8,530.18 62,043.14 70,573.32 - 1,518.86 UNNAMED ips Monthly Inventory Report 6 months ended 30th June 2020 Apr $ May $ - Jun $ - - Average Hot Chips Inventory $ TOTALS $ 1,422.38 10,345.13 11,767.50 - 253.25 UNNAMED ned Monthly Inventory Report 6 months ended 30th June 2020 50,000.00 Apr $ May $ - Jun $ - - Average Combined Inventory $ TOTALS $ 9,952.56 72,388.27 82,340.82 - 1,772.11 40,000.00 30,000.00 20,000.00 10,000.00 - YOU HAVE NOT YET RAISED ENOUGH CAPITAL. YOU STILL NEED $220,619 Monthly Inventory Movements 50,000.00 40,000.00 30,000.00 Purchases 20,000.00 Cost of Sales 10,000.00 Jan Feb Mar Apr May Jun Purchases Cost of Sales EASING OF RESTRICTIONS DISCLAIMER: Due to the wildly different levels of COVID infections not o State within countries, the following is an oversimplifi As lockdown have been effective in lowering the rates of COVID transmi relax restrictions and allow some dine-on customers including in shopp restrictions will continue to relax. As restrictions relax, the level of take-aw more people start to go out to ea As UNNAMED is situated in the CBD the starting foot traffic in July will be per month. It will be up to you to decide when to open up your business automatically be adjusted as re Source: https://www.biospace.com/article/flattening-the-curve-covid-19/ With improving conditions, the government has also decided to reduce th Wage subsidy will also halve to $750 Re-open in July Dine-in sales will be 10% of pre-covid levels Take-away and delivery sales will be 90% of June levels Re-open in August Dine-in sales will be 18% of pre-covid levels Take-away and delivery sales will be 80% of June levels Re-open in September Dine-in sales will be 26% of pre-covid levels Take-away and delivery sales will be 70% of June levels From September the wage Subsidy will decrease to $750/fortnight per worker Re-open in October Dine-in sales will be 34% of pre-covid levels Take-away and delivery sales will be 60% of June levels Re-open in November Dine-in sales will be 42% of pre-covid levels Take-away and delivery sales will be 50% of June levels Re-open in December Dine-in sales will be 50% of pre-covid levels Take-away and delivery sales will be 40% of June levels Stay closed to Dine-in Customers You will continue to offer ONLY your chosen take-away and delivery services from ear Take-away and delivery sales will still decrease by the above amounts Faculty of Business and Law e wildly different levels of COVID infections not only from Country-to-Country but also State-towithin countries, the following is an oversimplification of the actual situation. n effective in lowering the rates of COVID transmissions, from July, the government has begun to allow some dine-on customers including in shopping centres and foodcourts. Each month, the to relax. As restrictions relax, the level of take-away and delivery orders will decrease monthly as more people start to go out to eat again. d in the CBD the starting foot traffic in July will be 10% of pre-covid levels and will increase by 8% p to you to decide when to open up your business up to dine-in customers again. Staff levels will automatically be adjusted as required ns, the government has also decided to reduce their emergency measures. From September, the Wage subsidy will also halve to $750 per fortnight se to $750/fortnight per worker chosen take-away and delivery services from earlier l decrease by the above amounts Cash Receipts Cash Sales (Burgers) Credit Sales (Burgers) Cash Sales (Hot Chips) Credit Sales (Hot Chips) Government Wage Subsidy Total Cash Receipts January $ 67,713.80 44,533.50 13,275.50 8,731.50 134,254.30 Cash Payments Food Purchases (Burgers) Food Purchases (Hot Chips) Returns and Refunds Rent Expense Utilities Expense Insurance Expense Marketing Expense Salaries Expense: Shop manager (fixed cost) Wages Expense: Loan Repayment (Interest and Principle) Equipment Purchase Franchising Cost Total Cash Payments 34,703.69 5,786.63 402.00 28,000.00 3,200.00 300.00 6,800.00 22,400.00 - 101,592.32 Deficit / Surplus 32,661.99 Opening Balance (185,228.88) Closing Balance (152,566.89) YO UNNAMED Monthly cash budget For the 12 months ended 31st December 2 February $ 72,341.50 29,020.20 14,182.00 5,689.50 March $ April $ May $ 9,000.00 9,000.00 9,000.00 121,233.20 9,000.00 9,000.00 9,000.00 27,339.45 4,558.50 430.00 28,000.00 3,200.00 300.00 6,800.00 25,600.00 - 28,000.00 3,200.00 300.00 6,800.00 32,000.00 - 28,000.00 320.00 300.00 6,800.00 32,000.00 - 28,000.00 320.00 300.00 6,800.00 32,000.00 - 96,227.95 70,300.00 67,420.00 67,420.00 25,005.25 (61,300.00) (58,420.00) (58,420.00) (152,566.89) (127,561.64) (188,861.64) (247,281.64) (127,561.64) (188,861.64) (247,281.64) (305,701.64) YOU HAVE NOT YET RAISED ENOUGH CAPITAL. YO UNNAMED Monthly cash budget the 12 months ended 31st December 2020 June $ July $ August $ September $ 9,000.00 31,003.50 6,078.00 9,000.00 9,000.00 4,500.00 9,000.00 46,081.50 9,000.00 4,500.00 28,000.00 320.00 300.00 6,800.00 32,000.00 - 28,000.00 320.00 300.00 6,800.00 32,000.00 - 28,000.00 320.00 300.00 6,800.00 32,000.00 - 28,000.00 320.00 300.00 6,800.00 32,000.00 - 67,420.00 67,420.00 67,420.00 67,420.00 (58,420.00) (21,338.50) (58,420.00) (62,920.00) (305,701.64) (364,121.64) (385,460.14) (443,880.14) (364,121.64) (385,460.14) (443,880.14) (506,800.14) AISED ENOUGH CAPITAL. YOU STILL NEED $220,619 October $ November $ December $ 4,500.00 4,500.00 4,500.00 Total $ 140,055.30 104,557.20 27,457.50 20,499.00 72,000.00 4,500.00 4,500.00 4,500.00 364,569.00 28,000.00 320.00 300.00 6,800.00 32,000.00 - 28,000.00 320.00 300.00 6,800.00 32,000.00 - 28,000.00 320.00 300.00 6,800.00 32,000.00 - 62,043.14 10,345.13 832.00 336,000.00 12,480.00 3,600.00 81,600.00 368,000.00 - 67,420.00 67,420.00 67,420.00 874,900.27 (62,920.00) (62,920.00) (62,920.00) (510,331.27) (506,800.14) (569,720.14) (632,640.14) (185,228.88) (569,720.14) (632,640.14) (695,560.14) (695,560.14) Cash Receipts Breakdown Cash Sales (Burgers) Credit Sales (Burgers) Cash Sales (Hot Chips) Credit Sales (Hot Chips) Government Wage Subsidy Cash Payment Breakdown Cash Sales (Burgers) Credit Sales (Burgers) Cash Sales (Hot Chips) Credit Sales (Hot Chips) Government Wage Subsidy Food Purchases (Burgers) Food Purchases (Hot Chips) Returns and Refunds Rent Expense Utilities Expense Insurance Expense Marketing Expense Salaries Expense: Shop manager (fixed cost) Wages Expense: Loan Repayment (Interest and Principle) Equipment Purchase Franchising Cost Feb $ 9,113.15 27,339.45 36,452.60 - Mar $ Opening Inventory Purchases Cost of Sales End of Month Closing Inventory Jan $ 8,530.18 34,703.69 34,120.72 9,113.15 Feb $ 1,519.50 4,558.50 6,078.00 - Mar $ Opening Inventory Purchases Cost of Sales End of Month Closing Inventory Jan $ 1,422.38 5,786.63 5,689.50 1,519.50 Feb $ 10,632.65 31,897.95 42,530.60 - Mar $ Opening Inventory Purchases Cost of Sales End of Month Closing Inventory Jan $ 9,952.56 40,490.32 39,810.22 10,632.65 - - - YOU HAVE NOT YET RAISED ENOUGH CAPITAL. YOU STILL NEED $2 UNNAMED Burgers Monthly Inventory Report For the 12 months ended 31st December 2020 Apr $ May $ - Jun $ Jul - - Aug - - UNNAMED Hot Chips Monthly Inventory Report For the 12 months ended 31st December 2020 Apr $ May $ - Jun $ Jul - - Aug - - UNNAMED Combined Monthly Inventory Report For the 12 months ended 31st December 2020 Apr $ May $ - Jun $ Jul - PITAL. YOU STILL NEED $220,619 - Aug - - Monthly Invent 50,000.00 40,000.00 30,000.00 20,000.00 10,000.00 Jan Feb Mar Apr Sep Oct - Nov - Dec - - Average Burgers Inventory $ Sep Oct - Nov - Dec - - Average Hot Chips Inventory $ Sep Oct - Nov - Dec - - Average Combined Inventory $ TOTALS $ 8,530.18 62,043.14 70,573.32 - 759.43 TOTALS $ 1,422.38 10,345.13 11,767.50 - 126.63 TOTALS $ 9,952.56 72,388.27 82,340.82 - 886.05 Monthly Inventory Movements Purchases Cost of Sales May Jun Jul Aug Sep Oct Nov Dec UNNAMED Income Statement For the 12 months ended 31st December 2020 $ $ Revenue Gross Sales Revenue Less: Returns and Refunds 239,304.00 832.00 Net Sales Less: Cost of Sales 238,472.00 82,340.82 Gross Profit 156,131.18 Other Revenue 72,000.00 Government Wage Subsidy Less: Expenses Rent Expense Utilities Expense Insurance Expense Marketing Expense Salaries Expense Wages Expense Interest Expense Depreciation Expense Franchising Expense Total Expenses Net Profit Investors share of profits Owners share of profits 336,000.00 9,600.00 3,600.00 81,600.00 368,000.00 6,564.71 - 805,364.71 (577,233.53) (577,233.53) Profit, Gross Profits vs TotalGross Expenses 156,131.18 Gross Profit Total Expenses Total Expenses, 805,364.71 YOU HAVE NOT YET RAISED ENOUGH CAPITAL. YOU STILL NEED $220,619 Expenses Breakdown Rent Expense Utilities Expense Insurance Expense Marketing Expense Salaries Expense Wages Expense Interest Expense Depreciation Expense Franchising Expense UNNAMED Balance Sheet For the 12 months ended 31st December 2020 Assets Current Assets Cash Accounts Receivable Inventories Total Current Assets Non-Current Assets Equipment Less: Accumulated Depreciation $ (695,560.14) - 168,000.00 (17,988.24) - Total Non-Current Assets Total Assets Liabilities Current Liabilities Accounts Payable Total Current Liabilities Non-Current Liabilities Loan Payable Total Non-Current Liabilities 320.00 - Total Liabilities Net Assets Equity Capital - Owner Capital - Investors Retained Earnings 2019 - Owner Retained Earnings 2019 - Investors Retained Earnings 2020 - Owner Retained Earnings 2020 - Investors Total Equity 150,000.00 (118,634.85) (577,233.53) - Current Assets vs Non-Current Assets December 2020 Total NonCurrent Assets, 150,011.76 $ Total Current Assets, (695,560.14) (695,560.14) YOU HAVE NOT YET RAISED ENOUGH CAPITAL. YOU STILL NEED $220,619 150,011.76 (545,548.38) Total Non-Current 320.00 Current Liabilities Liabilities, vs Non-Current Liabilities - 320.00 (545,868.38) (545,868.38) Total Current Liabilities, 320.00 - Total Current Assets Total Non-Current Assets OUGH CAPITAL. 0,619 Total Current Liabilities Total Non-Current Liabilities Part 3 2020 COVID Ratio Analysis Profitability Ratios -2.4206 Net Profit Margin Ratio 0.6547 Gross Profit Margin Ratio 1.0581 Return on Assets Ratio 1.0575 Return on Equity Ratio -0.4371 Total Asset Turnover Ratio Liquidity Ratios -2173.6254 -695880.1400 Current Ratio Working Capital -2173.6254 Cash Ratio -2173.6254 Acid Test Ratio Accounts Receivable Turnover Ratio 8.9542 Average account receivable = ([2019 Account Receivable + 2020 Account Receivable] / 2) Inventory Turnover (Combined Products) Ratio 92.9302 NOTE: Please use the combined inventory values from Tab “2020 COVID Inventory Reports” Financial Stability Ratios -0.0006 Debt Ratio -0.0006 Debt/Equity Ratio 1.0006 Equity Ratio 1.0000 Degree of Financial Leverage Ratio PLEASE USE THE INFORMATION FROM THE '2020 COVID CASH BUDGET', '2020 CO COVID INCOME STATEMENT' AND '2020 COVID BALANCE SH EXPRESS ALL ANSWERS AS A DECIMAL (NOT FRACTION OR P PLEASE ROUND ALL ANSWERS TO 4 DECIMAL PLAC ONLY INCLUDE YOUR FINAL ANSWER. DO NOT INCLUDE ANY 𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡 0 𝐺𝑟𝑜𝑠𝑠 0 𝑅𝑒𝑡𝑢𝑟𝑛 0 𝑅𝑒𝑡𝑢𝑟𝑛 0 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡 0 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 0 𝑊𝑜𝑟𝑘𝑖𝑛𝑔 𝐶𝑎𝑝𝑖𝑡𝑎𝑙 0 𝐶𝑎𝑠ℎ 0 𝑄𝑢𝑖𝑐𝑘 𝑅𝑎𝑡𝑖𝑜 𝑂𝑅 𝐴𝑐𝑖𝑑 0 𝐴𝑐𝑐𝑜𝑢𝑛𝑡𝑠 𝑅𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒 0 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟 0 𝐷𝑒𝑏𝑡 0 𝐷𝑒𝑏𝑡 0 0 𝐷𝑒𝑔𝑟𝑒𝑒 𝑜𝑓 𝐹𝑖𝑛𝑎𝑛𝑐𝑖𝑎𝑙 0 0 D CASH BUDGET', '2020 COVID INVENTORY REPORTS', '2020 D '2020 COVID BALANCE SHEET' TABS MAL (NOT FRACTION OR PERCENTAGE) WERS TO 4 DECIMAL PLACES WER. DO NOT INCLUDE ANY WORKINGS 𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡 𝑀𝑎𝑟𝑔𝑖𝑛 𝑅𝑎𝑡𝑖𝑜 = 𝐺𝑟𝑜𝑠𝑠 𝑃𝑟𝑜𝑓𝑖𝑡 𝑀𝑎𝑟𝑔𝑖𝑛 = 𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡 𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠 𝐺𝑟𝑜𝑠𝑠 𝑃𝑟𝑜𝑓𝑖𝑡 𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠 𝑅𝑒𝑡𝑢𝑟𝑛 𝑜𝑛 𝐴𝑠𝑠𝑒𝑡𝑠 𝑅𝑎𝑡𝑖𝑜 = 𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠 𝑅𝑒𝑡𝑢𝑟𝑛 𝑜𝑛 𝐸𝑞𝑢𝑖𝑡𝑦 𝑅𝑎𝑡𝑖𝑜 = 𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡 𝑇𝑜𝑡𝑎𝑙 𝐸𝑞𝑢𝑖𝑡𝑦 𝐴𝑠𝑠𝑒𝑡 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑅𝑎𝑡𝑖𝑜 = 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑅𝑎𝑡𝑖𝑜 = 𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 𝐶𝑎𝑝𝑖𝑡𝑎𝑙 = 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠 − 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 𝐶𝑎𝑠ℎ 𝑅𝑎𝑡𝑖𝑜 = 𝐶𝑎𝑠ℎ 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 𝑂𝑅 𝐴𝑐𝑖𝑑 𝑇𝑒𝑠𝑡 𝑅𝑎𝑡𝑖𝑜 = 𝐶𝑎𝑠ℎ + 𝐴𝑐𝑐𝑜𝑢𝑛𝑡𝑠 𝑅𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 𝑅𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑅𝑎𝑡𝑖𝑜 = 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑅𝑎𝑡𝑖𝑜 = 𝐷𝑒𝑏𝑡 𝑅𝑎𝑡𝑖𝑜 = 𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝐴𝑐𝑐𝑜𝑢𝑛𝑡𝑠 𝑅𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒 𝐶𝑜𝑠𝑡 𝑜𝑓 𝑆𝑎𝑙𝑒𝑠 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝐵𝑎𝑙𝑎𝑛𝑐𝑒 𝑇𝑜𝑡𝑎𝑙 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠 𝐷𝑒𝑏𝑡 𝑡𝑜 𝐸𝑞𝑢𝑖𝑡𝑦 𝑅𝑎𝑡𝑖𝑜 = 𝐸𝑞𝑢𝑖𝑡𝑦 𝑅𝑎𝑡𝑖𝑜 = 𝐹𝑖𝑛𝑎𝑛𝑐𝑖𝑎𝑙 𝐿𝑒𝑣𝑒𝑟𝑎𝑔𝑒 = 𝑇𝑜𝑡𝑎𝑙 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 𝑇𝑜𝑡𝑎𝑙 𝐸𝑞𝑢𝑖𝑡𝑦 𝑇𝑜𝑡𝑎𝑙 𝐸𝑞𝑢𝑖𝑡𝑦 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠 𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡 (𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡 − 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝐸𝑥𝑝𝑒𝑛𝑠𝑒) FDM1002: Business Simulation and Report (40%) No. 1. Details Allocated Awarded Mark Mark Business Simulation (5%) Completion of the simulation game (i.e., making all decisions, without leaving any decisions incomplete). 5 Profit/loss will have no impact on marks.  Your spreadsheet must to be completed and submitted in Microsoft Excel (.xls or .xlsx format only). Submitting your spreadsheet in any other format (such as pdf or screenshot) will result in a mark of zero (0) for both the Business Simulation (5%) and Ratio Calculation (15%) as we will not be able to mark your submission;  Your submission must be made on Moodle under “Assessment > Assessment 3: Business Simulation and report > Business Simulation > Business Simulation Submission” (scroll all the way to the bottom to see the submission link). 2. Ratio Calculation (15%)  Correct calculations of all ratios from both tabs of the business simulation spreadsheet (i.e., 2019 Ratio Analysis 15 and 2020 Ratio Analysis)  Please also show your final answer (Do not show workings) • Please use a calculator to calculate your ratios (do not type in excel formula as will show as working as will be marked incorrect)  Ratios are to be rounded to 4 decimal places  Please use the formula provided next to each ratio in the spreadsheet  Each ratio calculation carries 0.5 marks (30 ratios in total to calculate) 3. Report (20%) – Please use template provided on Moodle under “Assessment > Assessment 3 > Business Simulation > Business Simulation Report Template”. Your submission must be made in Microsoft word and uploaded to Moodle under “Assessment > Assessment 3: Business Simulation and report > Business Simulation > 1 Business Simulation Submission” (scroll all the way to the bottom to see the submission link) – Same submission point as for the Excel Spreadsheet. Introduction:  1 Please provide a brief introduction outlining the purpose of this report. Your introduction must contain: o A brief overview of your company; o Strategies implemented; o Introduce the purpose of this report; o Summarize key performance figure and trend from the analysis. Body: 15  Write a report to compare the movement of each ratio;  You will be required to write a short paragraph analyzing the ratio from 2019 to 2020;  You will also need to provide potential (logical and feasible) explanations to explain the movement;  Please see exemplar below: Profitability Ratios – Net Profit Margin As seen from our ratio analysis, the 2019 net profit margin was 0.5 (222,222/444,444) and the 2020 net profit margin was calculated as 0.38 (150,000/400,000). This demonstrates a drop of 24%. This movement can be explained by a decline in both the Net Profit (from $222,222 in 2019 to $150,000 in 2020) and decline in Net Sales (from $444,444 in 2019 to $400,000 in 2020). However, the reduction in Net Profit was proportionately higher than the reduction in Net Sales. This decline can be explained by the reduction in sales volume and selling price for pizzas (as a result of offering combo deals) due to COVID 19. {Numbers used in this example are assumed figures). The % movement is calculated as (2020 figure-2019 figure)/2019 figure (i.e. [(0.38 – 0.5)/0.5}. Please note that the above is a very brief example only – Do Not Copy and Paste from the above (your analysis needs to have significantly more detail in explaining the movements. When doing so, you may consider the following:  Describe the overall trend and evaluate (positive or 2 negative change) - include the figures generated from the simulation and percentage that you calculated;  Describe the changes in each of the variables used to calculate the respective ratio (i.e., the numerator and denominator);  Comment of the relative changes in the numerator and denominator (provide percentage change, which change was more significant, which change had the highest impact on the ratio etc);  Provide qualitative comments to explain the movements (both in nominator and denominator and overall ratio) – Simply stating “COVID-19 is insufficient; your explanations need to relate to your decision(s) made. Conclusion: 3 In your conclusion, please provide the following (please remember that this part is worth the most marks; therefore, this part needs to be quite significant in quantity as compared to other parts):  The overall performance of your company from the simulation (i.e., profit or loss). Then, please break your analysis further into the three ratio categories (profitability, liquidity, and financial stability). Please state the profit / loss amount along with other key figures that you deem important;  Possible explanation explaining the movements in your profit / loss and other key ratios;  Possible recommendations • If you had a loss, what do you think is the major decision that caused the loss? • What could you have done to result to a profit instead? • If you had a profit, what major decisions made caused the profit? • What could you have done to improve the profit? • What is the future direction of your business? Grammar and Structure of the Report / Rounding Marks 1 Additional Comments: Once you have completed all three milestones described above, you will be required to upload both your completed Business Simulation spreadsheet and word document report as follows: 3 a) Your completed Simulation (the full spreadsheet) – Please label the file as “studentno.lastname.campus.xlsx” (i.e., “12345678.Smith.Bentley.xlsx”) and upload to “Business Simulation Submission” which you will find on Moodle “Assessment > Assessment 3: Business Simulation and report > Business Simulation > Business Simulation Submission”; and b) Your report (ensuring that you follow the structure as outlined in section 3 above) in word version – Please label the file as “studentno.lastname.campus.doc” (i.e., “12345678.Smith.Bentley.docx”) and upload to Moodle using the “Business Simulation Submission” which you will find on “Assessment > Assessment 3: Business Simulation and report > Business Simulation > Business Simulation Submission” 40 STUDENT GRADE - TOTAL OUT OF 40 Comments 4
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Introduction
The company assumed for this assignment is Marriott pizza that produces and sells pizzas. The
company is a start-up business as a sole proprietorship. The company has a start-up cost of
$120,000 with no existing customer base. The company has a base monthly sales of 1300 pizzas.
The company will be located in a suburban retail area with a monthly rent of $7,000, serving the
customers living in the local area.
The selling price of $14 per pizza has been selected to attract customers and boost sales. Ingredients
used will cost $5 per pizza. Monthly advertising expenses of $500 will be spent to boost sales by
7.45% upward of bases sales. Staff will be paid $20 per hour of wages as per average wage for food
and beverage staff. The equipment selected for the business will be purchased from Kitchens R Us
Pty Ltd. It will cost $21,000 with 15 years of useful life. It will have a monthly production of 6000
pizzas with running costs of $1200 per month. The company has decided not to add walk-in cold
storage/freezer while medium display cabinets will be added to the location. For delivery services,
In-house delivery services using driver’s private cars will be used. After initial capital of personal
savings of $150,000, a bank loan of $155,000 will be used to finance the company with an interest
rate of 6% per annum for 10 years. Garlic bread will also be sold at a selling price of $5 per piece,
expected to attract 35.27% of the total customers.
The purpose of this report is to analyze the financial performance of the simulated company,
‘Marriott Pizza’ through ratio analysis. Various financial ratios related to the profitability, liquidity,
and financial stability of the company, that have been calculated in the Excel template will be
analyzed in this report to find out the change in the company’s performance over the year from
2019 to 2020 along with the meaning of the ratios for the company.
The company’s overall performance was weak in terms of profitability, but the company’s position
for liquidity, efficiency, and financial stability has increased over the year and the company is
expected to do better in the future regarding profitability when things will come back to normal
after Covid-19 slump.

Net Profit Margin Ratio
2019 Ratio:

0.0546

2020 COVID Ratio:

0.0354

Discussion/Analysis
The net profit margin is the percentage of net profit in relation to the company’s sales. It is
calculated as net profit divided by net sales. For 2019, it was (53020/971627) 0.0546, which got
decreased to (27625/779572) 0.0354. The main reason for the decrease was Covid-19, which
affected sales volume decreasing overall sales of the company and associated profits. While the
fixed costs like rent and interest expenses caused the overall net profit to drop by almost 48%,
causing a decrease in net profit.

Gross Profit Margin Ratio
2019 Ratio:

0.6499

2020 COVID Ratio:

0.5911

Discussion/Analysis
The gross profit margin is the proportion of gross profit with the company’s sales. It is calculated as
dividing the gross profit by the net sales of the company. For 2019, the gross profit margin of the
company was (631501/971627) 0.6499, which dropped down to (460811/779572) 0.5911, mainly
due to the decrease in sales volume for COVID-19 restrictions. It also means that the cost of sales
has increased by a higher percentage than the decrease in sales, causing a decrease in gross profit.
Although the decrease is not as the decrease in net profit above, because of consists of most of the
variable costs which move as per sales volume.

Return on Assets Ratio
2019 Ratio:

0.1519

2020 COVID Ratio:

0.0756

Discussion/Analysis
The company’s return on assets is an important ratio that talks about the return the company is
producing by investing in the company’s assets. It is calculated by dividing the company’s net profit
by the total assets of the company. The ratio for 2019 was (53020/349070) 0.1519, which moved
down to (27625/365346) 0.0756. The ratio has almost dropped down to 50%, as the net profit for
the slightly increased assets from 2019 has decreased by almost 48%. The company is providing
fewer returns for the invested assets in 2020, as compared to 2019.

Return on Equity Ratio
2019 Ratio:
Discussion/Analysis

0.2612

2020 COVID Ratio:

0.1198

The company’s return on equity is an important ratio specifically for the company’s owners in this
case the sole proprietor. The return on equity calculated by dividing the net profit by total equity
was (53020/203020) 0.2612 in 2019, as compared to the 2020s (27625/230646). The return has
decreased significantly primarily due to a decrease in net profit and secondly due to an increase in
equity. The company is providing significantly low returns to the owner in 2020 for the invested
equity as compared to 2019.

Total Asset Turnover Ratio
2019 Ratio:

2.7835

2020 COVID Ratio:

2.1338

Discussion/Analysis
The assets turnover ratio provides an overview of the company’s ability to use its assets for the
generation of sales, calculated as net sales divided by total assets. The 2019 total asset turnover
was (971,627/349070) 2.7835, which has dropped down to (779,572/365346) 2.1338. The main
reasons include the drop in sales and a slight increase in total assets from 2019 to 2020. The
company’s ability to generate sales by using the total assets has decreased from the last year of
2019.

Current Ratio
2019 Ratio:

129.2767

2020 COVID Ratio:

137.5207

Discussion/Analysis
The current ratio is the primary liquidity ratio, which talks about the availability of current assets
for the settlement of current liabilities. A company having a current ratio of more than one 1 means
that it has more current assets available than current liabilities. Marriott Pizza has a current ratio of
(310264/2400) 129.2767 in 2019 and the ratio increased to (330049/2400) 137.5207 in 2020. The
ratios show that more of the company’s business with its suppliers is on cash leaving very few in
current liabilities. The company has a strong liquidity position in both years.

Working Capital Ratio
2019 Ratio:

307,864.0399

2020 COVID Ratio:

327,649.7215

Discussion/Analysis
The working capital is the value of net current assets invested by the company for the routine
operations of the company. Marriott Pizza had a working capital of (310264 – 2400) 307,864 in 2019
and the working capital increased to (330049 – 2400) 327,649 only due to an increase in current
assets because there was no change in current liabilities. The increased working capital is evidence
of an increase in the company’s operations, which means the company is doing well.

Cash Ratio
2019 Ratio:

108.8323

2020 COVID Ratio:

121.6559

Discussion/Analysis
The cash ratio is another liquidity ratio, which talks about the availability of cash for the company’s
current liabilities. It is calculated by dividing the cash balance by the current liabilities. The
company’s cash ratio was (261197/2400) 108.8323 in 2019, the ratio moved upward in 2020 to
(291974/2400) 121.6559. It shows that the company’s liquidity was strong in 2019, and has become
stronger in 2020.

Acid Test Ratio
2019 Ratio:

124.6748

2020 COVID Ratio:

133.0283

Discussion/Analysis
An acid test ratio is a conservative form of the current ratio. It reduces the current assets by the
number of the company’s inventories. In this way, it evaluates the company’s liquidity by
incorporating a more liquid form of assets. The company acid test ratio was [(261197+38022)/2400]
124.6748 in 2019, which moved up to [(291974+27293)/2400] 133.0283 in 2020. The company’s
liquidity has become better over the year. It will be seen as a good sign by the company’s lenders,
suppliers, and other stakeholders.

Accounts Receivable Turnover Ratio
2019 Ratio:

22.0769

2020 COVID Ratio:

23.8708

Discussion/Analysis
This ratio talks about the number of times the company collected its average receivables during a
year. It is calculated by dividing the net sales by the average receivables of the company for 2 years.
The ratio talks that the company has collected its receivables (971627/38022) 22 times during 2019
and the company’s efficiency has increased over the year as the company was able to collect its
receivables to almost (779572/27293) 24 times during 2020. It shows an increase in the company’s
ability to collect its receivables.

Inventory Turnover Ratio
2019 Ratio:

44.1275

2020 COVID Ratio:

48.1587

Discussion/Analysis
The inventory turnover ratio talks about the company’s efficiency to sell its inventory during a year.
The ratio is calculated by dividing the company’s cost of sales by the company’s average inventory.
The company has sold its inventory (340125/11044) 44 times during 2019, while the company has
done better in 2020 by selling its inventory (318760/10781) 48 times. It shows that the company’s
marketing strategies are paying off as the company has been able to sell more of its inventory in
2020 than in 2019.

Debt Ratio
2019 Ratio:

0.4184

2020 COVID Ratio:

0.3687

Discussion/Analysis
The debt ratio shows the percentage of assets financed by debt or liabilities. A company whose
assets are financed more than 50% by debt, is deemed to be working at high financial leverage with
increased solvency risk. The ratios show that in 2019, (146050/349070) 41.84% of the company’s
assets were financed by debt, while in 2020 (134700/365346) 36.87% of the company’s assets were
financed by debt. It shows that the company’s solvency risk and reliance on debt finance have
decreased over the year showing a decrease in financial leverage. The main reason for the decrease
in debt was the repayment of bank loans over the year. It shows an increase in the financial stability
of the company over the year.

Debt/Equity Ratio
2019 Ratio:

0.7194

2020 COVID Ratio:

0.5840

Discussion/Analysis
The debt/equity ratio of the company talks about the proportion of debt as compared to its equity.
It is calculated by dividing total liabilities by the total equity of the company. For Marriott Pizza, the
ratio was (146050/203020) 0.7194 in 2019, which moved further down to (134700/230646) 0.5840
in 2020. It again shows that the company’s reliance on financing is more on equity as compared to
the debt finance, making the company a low financial leverage company. It again shows an increase
in the financial stability of the company over the year.

Equity Ratio
2019 Ratio:

0.5816

2020 COVID Ratio:

0.6313

Discussion/Analysis
The equity ratio of the company talks about the percentage of assets financed by the owner’s
equity. It is calculated by dividing the total equity by the total assets. The company had an equity
ratio of (203020/349070) 0.5816 in 2019, which moved up to (230646/365346) 0.6313 in 2020. So,
the company’s reliance on internal funds has increased over the year, which is a good sign for the
company as the company has been able to self-finance. It again shows an increase in the financial
stability of the company over the year.

Degree of Financial Leverage Ratio
2019 Ratio:

1.2127

2020 COVID Ratio:

1.5075

Discussion/Analysis
The degree of the financial leverage ratio is calculated by diving the net profit of the company to
the difference of net profit and interest expense. It talks about the degree of financial leverage or
solvency risk faced by the company. If the ratio increases the company will be deemed to move
towards a high degree of financial leverage and solvency risk. The company’s ratio was
[(53020/(53020-9300)] 1.2127 in 2019, which got increased to [(27625/(27625-9300)] 1.5075. So,
the increase is evidently due to the decrease in net profit over the year due to the Covid-19 slump.

Conclusion and Recommendation
The company’s performance can be divided into three categories. 1. Profitability, 2. liquidity, and
3. financial stability. The company’s profitability has decreased over the year. The primary reason
is the decrease in sales volume of the company due to Covid-19, which caused the decrease in
profits due to the incurrence of fixed costs. The company’s liquidity and efficiency have increased
over the year. It means a decreased liquidity risk and the company has now been able to settle its
liabilities more efficiently in 2020 than in 2019. Similarly, the company’s inventory selling and
receivable collection efficiency have also increased over the year showing better performances in
terms of marketing and receivables collection. Lastly, in terms of financial stability, the company’s
financial stability has increased over the year as the company has become less reliant on external
debt and the company has been able to self-finance using internal equity funds. Although the
degree of financial leverage has increased the reason for the increase was the decrease in net profit
instead of an increase in interest expense. So, the company’s performance has been weak in terms
of profitability and returns but the company’s liquidity, efficiency, and financial stability have
increased. The company can increase its profitability by further decreasing the fixed costs elements
related to wages and rent, providing the decrease does not affect the efficiency of the company.
But the main reason for the decrease was Covid-19. Concerning Covid-19, the situation is expected
to get better in the future and the company will be able to operate without any restrictions in full
capacity of its supply chain, and the company’s future profitability is expected to get better based
on the enhanced efficiency of the company.


ACCT1002: BUSINESS SIMULATION
First Name:
Last Name:
Student ID:

As part of your Business Simulation and report assessment, you will
required to play this simulation game where you will be setting up your
business. In the initial few tabs, you will need to make certain key decisi
do with the business setup and operations. You can then assess th
performance of your business based on your inputs in the various repor
follows. Please note that maximizing profit is not the goal of this simula
although you are free to do so if you wish

Please use Excel to access this program to ensure it functions properly
curtin students have free access to Office 365 provided by the universit
https://students.curtin.edu.au/essentials/it/software/ for more deta

Unless otherwise stated, images were taken from ht

© Curtin University, 2020. Please contact Wahseem
156310370190

Faculty of Business and Law

report assessment, you will be
re you will be setting up your own
ed to make certain key decisions to
tions. You can then assess the
ur inputs in the various reports that
t is not the goal of this simulation,
do so if you wish

o ensure it functions properly. All
65 provided by the university. See
ls/it/software/ for more details

Unless otherwise stated, images were taken from https://www.freepik.com/

University, 2020. Please contact Wahseem Soobratty for distribution.

STUDENT DETAILS
Age Group
Country
City
Have you ever worked in the hospitality / food & beverage industry?
Yes
No
Rather not say

If YES:
In what capacity?
How many years experience?

Faculty of Business and Law

1
2
3
4
5

1
2
3
4
5

Age Group selections
Country
Years experience
Below 17
1 Australia
0 to 1 year
17-21
Malaysia
1 to 3 years
22-26
3 Mauritius
4 to 6 years
27-31
4 Singapore
6 years and above
...


Anonymous
I was having a hard time with this subject, and this was a great help.

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