Mgmt 640 Group Project Scenario: Your Team Has Been H 590378

Mgmt 640group Projectscenarioyour Team Has Been Hired To Provide Fina

Your team has been hired to provide financial analysis for a start-up company, Bobble in Style, which produces customized bobble heads. The bobble heads are made out of less rigid materials and are more true to life than those of competitors. The company inventors, Mr. and Mrs. Lee, are going to pitch their idea to Shark Tank in a few months, but first they need to understand the business’s financials better. They are currently creating and selling their product from their home-based office and work area.

They know their costs involved in making the bobble heads on a small scale but lack detailed financial figures beyond basic costs. They need you to analyze various financial figures. Your tasks include developing financial statements, calculating ratios, classifying costs, preparing budgets, assessing investment projects, and conducting break-even and contribution margin analyses. You will produce a PowerPoint presentation summarizing your findings, an executive summary, and an Excel file with calculations.

Paper For Above instruction

This comprehensive financial analysis begins with constructing key financial statements — the Income Statement, Cash Flow Statement, and Balance Sheet — based on data provided for the year 20XX. The purpose of each statement is to offer a different perspective on the company's financial health: the Income Statement records profitability, the Cash Flow Statement details liquidity, and the Balance Sheet provides a snapshot of assets, liabilities, and equity at a specific point in time.

For 20XX, the Income Statement calculations show total sales of $33,600 derived from selling 420 units at $80 each. Cost of Goods Sold (COGS), based on variable costs of $30 per unit, totals $12,600. Expenses include advertising ($2,000), bank fees ($150), phone/internet ($1,200), shipping ($1,260), utilities ($900), office supplies ($800), interest expense ($350), and depreciation ($800). The net profit is calculated after deducting taxes at a rate of 26%. The Cash Flow Statement considers proceeds from equipment sales ($3,000), purchases, and repayments affecting cash position, while the Balance Sheet lists the company's financial position at the beginning of 20XX with assets, liabilities, and equity.

Next, key financial ratios such as Net Profit Margin (indicating profitability relative to sales), Quick Ratio (assessing short-term liquidity), and Debt-to-Equity Ratio (measuring financial leverage) are computed to analyze financial stability and operational efficiency.

The project then classifies various costs as variable or fixed, emphasizing the importance of cost behavior in budgeting and decision-making. Based on this classification, a budgeted income statement is prepared for 600 units, including per-unit selling prices and estimated expenses, adjusting for additional costs such as labor for packaging and shipping, advertising, and other operating expenses. Also, a net present value (NPV) analysis evaluates a proposed equipment investment costing $42,000, with projected cash flows over three years discounted at 12%, providing insight into the investment's profitability.

Anticipating growth, the company plans for increased sales in the following year (20XZ), and accordingly, a revised budgeted income statement doubling the volume is developed. This forecasts higher revenues and expenses, aiding strategic planning.

The analysis continues with an incremental analysis comparing two potential rental spaces for increased production: Option 1, a spacious warehouse with monthly rent of $1,200 plus utilities, and Option 2, a smaller storefront at $1,350 rent plus lower utilities. The comparison over a year provides clarity on cost differences and decision-making.

Further, a break-even analysis determines the sales volume needed to cover all fixed and variable costs, excluding taxes, establishing critical sales targets. The contribution margin per unit and total contribution margin are then calculated based on the break-even point to understand the profit contribution of each sale.

This entire exercise equips the Lee family with crucial financial insights, supporting their pitch to investors and aiding in strategic planning. The final deliverables include a well-structured PowerPoint presentation, an executive summary, and an Excel file encapsulating all calculations and analyses.

References

• Brigham, E. F., & Ehrhardt, M. C. (2016). Financial Management: Theory & Practice. Cengage Learning.
• Garrison, R. H., Noreen, E. W., & Brewer, P. C. (2018). Managerial Accounting. McGraw-Hill Education.
• Horngren, C. T., Sundem, G. L., & Elliott, J. A. (2015). Introduction to Financial Accounting. Pearson.
• Ross, S. A., Westerfield, R. W., & Jordan, B. D. (2019). Fundamentals of Corporate Finance. McGraw-Hill Education.
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