Business Report For Comparative Financial Analysis of Energy Hub Ltd and Fresh Farms Ltd

QUESTION  1
1:1 CALCULATE THE RATIOS IN TABLE FORM.

1.2 BUSINESS REPORT: COMPARATIVE FINANCIAL ANALYSIS OF ENERGY HUB LTD ANS FRESH FARMS LTD 

TO                MyShop Plc’s Strategic business committee 
From           Financial analyst 
Subject       Business report 
(FORMAT =INTRODUCTION, PROFITABILITY: ANALYSE THE EVIDENCE , LIQUIDITY, MARINAL EFFICIENCY, GEARING AND CONCLUSION / RECOMMENDATION) WORDS = 900 words,
(NEED TO COMPLETE)

1:3 WORKING CAPITAL MANAGEMENT 

(Critically evaluate the working capital management (WCM) of both companies and draw conclusions on which is stronger. In conjunction with quantitative measures, provide some qualitative aspects (for example: Industry related characteristics) for a more comprehensive understanding of working capital management of the companies.)
(NEED TO COMPLETE) WORDS = 300 words,

QUESTION 2.

2.1.1 MARGINAL COSTING INCOME STATEMENT

2.1.2 ADJUSTED MARGINAL COSTING INCOME STATEMENT (LESS BOZON)

• If the company stops making Bozon, it will make more money, as shown by the adjusted statement, which shows a smaller loss of £60m instead of £240m (Author, Year). But Bozon made £1,080 for the company (Author, Year). So, before stopping Bozon, the company must find ways to make up for losing that money. If the company were to cease manufacturing Bozon, it would indeed result in a significant improvement in the profit/loss scenario, as indicated by the adjusted marginal income costing statement, which demonstrates a notable decrease in loss from £240m to £60m (Author, Year). 
• However, it's imperative to consider the contribution Bozon was making to the company's overall revenue and profitability. Bozon's contribution margin of £1,080 underscores its significance in generating revenue (Author, Year). Therefore, before discontinuing Bozon production, the company must carefully assess and devise strategies to compensate for the potential loss of this significant revenue stream.

2.1.3 ADJUSTED MARGINAL COSTING INCOME STATEMENT (LESS CARBON)

• For Galaxy Holding Plc, not making Carbon items anymore is a good business move. The profit numbers show that stopping Carbon production might make the company £1,440m more money. Also, the costs to make Carbon are higher than the money earned from selling it. This means Carbon is not adding value to the company. So, not making Carbon items anymore aligns with the company's money goals and will likely make the overall money situation better.

Question 2b. 300 words/equivalent.

2.2.1 Net Present Value (NPV)

The data suggests that the payback period must be less than 3 years i.e. 2years.
Months:   50,261           12 = 4.79 approx. 4.8 months (2 years and 4.8 months)  125,847

2.2.2 PAY PERIOD & DISCOUNT PAYBACK PERIOD

THE DATA SUGGESTS THAT THE PAYBACK PERIOD MUST BE LESS THAN 3 YEARS i.e. 2 YEARS.

MONTHS    88,249.66    12 =11.89 MONTHS (2 YEARS AND 11.9 MONTHS)   89,603.06

2.2.3 INTERNAL RATE OF RETURN 

The internal rate of return in this case is 12.26%.

2.2.4 Recommendation 

What practical actions can Galaxy Holdings take to improve the profitability of products Bozon and Carbon?    

2.2.5 Critically discuss the limitations of the above project appraisal techniques used and any other recommendations to the board. Using academic references.  

QUESTION 3 (600 words/equivalent:)

• GOLD 

Variable cost per unit: 6,000 = £8.22
                                    730      
At high level; variable costs: 9,420 * £8.22= £77,432.4

Fixed costs: 760,000 - £77,432.4 =£682,567.6

• Silver

Variable cost per unit:8,000 = £6.67
                                    1,200
At high level; variable costs:6,840* £6.67= £45,622.8

Fixed costs: £190,000 - £45,622.8= £144,377.2

• BRONZE

Variable cost per unit:8,000 = £11,94
                                    670
At high level; variable costs:3,900*£11.94=£48,566

Fixed costs: £120,000-£46,566=£73,434

BUDGETED PRODUCTION SCHEDULE

BUDGETED PRODUNCTION SCHEDULE /MARGINAL COSTING INCOME STATEMENT NEED ANY HELP 

Considering quantitative and qualitative issues, critically evaluate then advise Elegancy Jewellers Ltd’s Directors whether to satisfy (honour) or breach (dishonour) the Smart2050 Wedding Supplies’ Silver Rings Contract.

Budgeting serves various purposes including planning, control, motivation, and communication. Explain to Elegancy Jewellers Ltd directors the importance of budgeting considering the purposes above.                                

Critically examine the assumptions and limitations of the Cost-Volume-Profit Analysis technique in relation to Elegancy Jewellers Ltd.