Topic: A Financial management for decision making and control project report preparing a company business plan and business report about the company business

Preparation :
Students should individually work on their project report. The project text comprises two tasks with related sub-questions and both tasks require an answer. Students should devote a minimum of 20 hours to this assignment. This project is open booked. Students can use a calculator or an excel spreadsheet for doing the calculations.
Words limits:
The word limits for this assignment is 1,500 The word count includes everything in the body of the text such as comments, quotations, citations, footnotes and subheadings. It does not include: title, table of content, bibliography, financial statement tables with numbers and appendices, as they do not form part of the text. There is a +/-10% deviation tolerance in the total words count. Examiners will mark only up to that limit.
Format :
All pages of the report are to be numbered.
The report should be written in Arial 12. In particular, financial statements tables with numbers can be made in Excel and they should be written in a font not smaller than Arial

  1. If the font used in the tables is smaller, markers will only mark what they can read.
    The total word count must be declared at the end of the report and on the cover sheet.

Assignment Text
There are two tasks in this coursework assignment. The assessment has quantitative and qualitative content. As a guide, students should expect task one of the assignment to take maximum four A4 pages and task two to take a maximum of other four A4 pages.
CASE STUDY: Prime & Vans
Rick Prime and Joanne Vans are two graduates in Bioscience at University of Kent. They have decided to open a small business specialized in door-to-door delivery of unperishable products in Ashford (Kent). Mrs Murple, an acquaintance of Rick and Joanne, owns a building near Ashford International train station and she is interested in renting it out to Rick and Joanne. An accountant friend has recommended to Rick and Joanne to prepare a business plan for their new business. The two graduates have limited business knowledge so they have contacted you for help with estimating the profitability, liquidity and sustainability of the business in the first year. Their business will start on the 1st January 2022. On that day, Rick and Joanne will deposit savings for £10,000 in the company bank account.
The business will be located in the building owned by Mrs Murple. The building includes a reception room, an office, a depot and a garage for the vehicles. Rick and Joanne expect that the reception will be open five days per week, from Monday to Friday from 10 a.m. to 6 p.m. The reception will take orders from customers for deliveries of parcels within Kent. Next, each order will be passed to one of the drivers who will be assigned the job to collect the parcel from the sender address and deliver the parcel to the receiver address. Rick and Joanne plan to have four drivers, using a van each. Each driver will work five eight-hour shifts per week (assume Monday to Friday from 10 a.m. to 6 p.m.) for 52 weeks per year. No overtime will be paid. Rick and Joanne have done some market research and they assume that each driver will be able to collect and deliver door-to-door within Kent a maximum of 120 parcels per working day. However, given the current economic situation, they prudently estimate to obtain 60% of that amount from each driver for the first three months and 80% for the rest of the year. The average price per average size parcel collected and delivered door-to-door is estimated at £4 for the first three months, rising to £5 thereafter. It is envisaged that 40% of sales will be paid by credit card, (these payments will be received the following month), 20% of sales will be done with account customers who will pay two months later. The remaining sales will be done with customers that will pay immediately by debit card or cash.
Rick and Joanne plan to rent the four vans. The rental contract will require a £200 monthly payment per van (this includes maintenance costs and road tax), in addition to an initial payment of £3,200 per van. Rick and Joanne expect to pay the initial payment for the four vans by bank transfer at the beginning of the first month of trading and the monthly payments by direct debit, starting from the end of January. They estimate that the fuel cost will be 25% of revenue and it will be paid in the month after the one in which it will be purchased. The rent of the building with all the facilities installed and the local property tax charges will be £21,600 and £9,000 per year respectively, both of which are payable at the beginning of each quarter.
Rick will manage the office while Joanne will manage the reception taking customers’ orders and directing drivers. Rick and Joanne salary will be £20,000 each per year. Each driver salary will be £26,000 per year. Social security costs will add 12% to all salaries cost. All labour costs will be paid in the third week of each month. Utilities (water, electricity and phone costs) are expected to be £3,500 per quarter, payable by direct debit in the first week of the following quarter.

To bring the business to the attention of the public, Rick and Joanne plan to spend £6,000 on advertising, including printing out business cards and leaflets. They will make two equal payments in the first two weeks of trading to pay this cost. These payments will cover the first six months’ worth of promotion. Rick and Joanne then plan to pay £1,000 per quarter thereafter.

At the beginning of the second year of trading, Rick and Joanne anticipate to expand the business by buying two new vans. They estimate the cash outflow for this investment to be equal to £22,000.
Task 1: Company business plan.
(1.a) Prepare a budgeted income statement (contribution margin format) for Prime & Vans for the year ending 31st December 2022.
(1.b) Prepare a monthly cash budget for Prime & Vans for the first six months of operation and a quarterly cash budget for the other 6 months up to 31st December 2022. Indicate also the total for the year column.
(1.c) Prepare a budgeted balance sheet (net assets equal equity format) for Prime & Vans at 31st December 2022.
(1.d) Do a cost-volume profit analysis: calculate the break-even point in sales revenues and the margin of safety in sales revenues for the business. Briefly comment on your results explaining to Rick and Joanne the meaning of these two concepts.
Maximum 200 words. Task 1: Total 40 marks.

Your report addressed to Rick and Joanne should include the following:
(2.a) Critical analysis of the business plan assumptions. Use your results of task 1 to evaluate critically the assumptions made by Rick and Joanne in the business plan. You need to include evidence of competition analysis, demographic analysis and characteristics of the location to evaluate the owners’ assumptions (you need to do a data search for this type of information).
Analysis of the impact of the business plan on the company profitability, liquidity and sustainability. Use your results of task 1 to answer these questions: does the company generate contribution margin and profit? In terms of liquidity, how the net cash flow and the closing balance are evolving during the year and how much cash is necessary to fund the first year of business? Can the company survive in the short-term? Can it be solvent and grow in the long-term? Discuss pros and cons of multiple sources of finance that Rick and Joanne could use to obtain the necessary funds.
Your recommendations and advices to Rick and Joanne for establishing a successful business. Provide them with your own advices. Consider strategic, marketing and financial aspects. Will Rick and Joanne be able to expand the business and buy the two new vans in January 2023?
Maximum 1,300 words. Task 2: Total 60 marks. Overall Assignment: Word count: 1500 words. Total marks: 100.

Type of assignment: Academic paper writing
Type of assignment: Coursework
Subject: Management
Pages/words: 3/825
Number of sources: 5
Academic level: Bachelor
Paper format: MLA
Line spacing: Double
Language style: UK English

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