Business Management and Strategic Management

This assignment analyzes the business and strategic management of Frank's All-American BarBeQue, including financial analysis, cost of venture capital, current financial position, and options for capitalizing the business.

Running Head: BUSINESS MANAGEMENT AND STRATEGIC MANAGEMENT
BUSINESS MANAGEMENT AND STRATEGIC MANAGEMENT
Name of the Student
Name of the University
Author Note

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Table of Contents
Introduction................................................................................................................................2
Financial Analysis of the business.............................................................................................2
Analysis of cost of Venture capital and its sources....................................................................4
Business Current Financial position and Project’s future estimates..........................................5
Options for capitalizing the business.........................................................................................5
Conclusion..................................................................................................................................5
References..................................................................................................................................7

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Introduction
The aim of this assignment is the analysis of the business and strategic management
of the entrepreneurial business of the Frank’s All-American BarBeQue. It has operated for
the years in the region of the Southern Connecticut with the tradition of providing traditional
food at the reasonable and fair prices in the atmosphere of friendly family. The company
plans for opening second restaurant in Darien, Connecticut and revamping the production of
sauces and increases the sales in future (Frank 2017). Hence, for this, analysis will be to
understand the costs of maintaining business from the star-up expenses to operating capital
with the analysis of the ways of determining costs of venture capital and its sources. In
addition, current and future financial projection will be done. Moreover, the options for
investors and partners for capitalizing the business will be discussed.
Financial Analysis of the business
The Profitability ratio of the company is calculated in terms of operating profit margin
ratio. Operating profit margin ratio is calculated by dividing operating profit (Gross profit
plus Operating Expenses) by revenue. It measures the percentage of a company’s profit that it
has produced from its operations. The operating profit margin ratio during the year 2008-
2010 shows that it is consistency profitability of the company (Satryo, Rokhmania and
Diptyana 2017).
Operating Profit Margin 2008 2009 2010
Gross Margin 851,557.00$ 909,358.00$ 943,259.00$
Operating Expenses 542,080.00$ 577,315.00$ 600,408.00$
Revenue 1,637,610.00$ 1,696,564.00$ 1,793,268.00$
Formula 19% 20% 19%
Profitability Ratio
The efficiency ratio of the company is calculated by the assets turnover ratio. This
ratio is helpful in measuring the value of the company in terms of its sales relative to the

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asset’s value. The trend between 2008-2010 shows that turnover of the assets is not sufficient
in generating in enhancing efficiency of the company (Ehiedu 2014).
Assets Turnover 2008 2009 2010
Revenue 1,637,610.00$ 1,696,564.00$ 1,793,268.00$
Total Assets 1,095,999.00$ 939,372.00$ 1,004,625.00$
Formula 1.49 1.81 1.79
Efficiency Ratio
Liquidity ratio of the company is calculated by the current ratio. The current ratio of
the company denotes the growing capability of the company in meeting the short-term
liabilities. Hence, it shows that the profitability of the company in terms of its liquidity is
high at the benchmark set by the industry.
Current Ratio 2008 2009 2010
Current Assets 772,275.00$ 686,291.00$ 726,715.00$
Current Liabilities 407,422.00$ 346,178.00$ 354,650.00$
Formula 1.90 1.98 2.05
Liquidity Ratio
The debt-equity ratio is calculated which denotes the leverage position of the
company. It is calculated by dividing long-term debt by shareholders fund for the analyzing
the proportion of the shareholders equity and debt which is used by the company. The debt
equity ratio of all the three years shows that the company has better debt ratio (Khadafi,
Heikal and Ummah 2014).
Debt Equity Ratio 2008 2009 2010
Long Term Debt 220,000.00$ 190,000.00$ 175,000.00$
Shareholders' Funds 468,577.00$ 403,194.00$ 474,975.00$
Formula 47% 47% 37%
Financial Leverage Ratio
Earning per ratio of the company is calculated for analyzing the market value of the
company. It is for measuring the income available with the common stockholders. Hence,

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EPS ratio of the company shows that the EPS of the company is good but it is not increasing
(Islam et al. 2014).
Earning Per Share Ratio 2008 2009 2010
Profit Attributable to Ordinary Sharesholders 111.73$ 93.00$ 112.86$
Number of Ordinary Shares 75.00$ 75.00$ 75.00$
Formula 1.49$ 1.24$ 1.50$
Market Value Ratio
The industry of restaurant industry has faced the difficulty in the year 2008 and 2010
because of recession, but the performance of the Frank’s All-American has showed
consistency in the financial performance. However, the year 2010 has brought new
opportunity for the industry, which will be helpful in expanding the business (Lee, Kim and
Moon 2016).
Analysis of cost of Venture capital and its sources
Before starting, the launch of the new business or expanding the current business
requires finance for the start up. The first approach to finance is to star with small investment
in the beginning followed by bigger investment. The second approach to this estimating the
cost of establishing the business or expanding its which requires whether the company have
sufficient cost, whether the company will be able to meet the expenses. Frank All-American
has good cash position but the expenses of the company are growing, that needs to be
considered (Manigart and Sapienza 2017).
Venture capital can be raised by savings, friends & family, micro-financers,
government support, barter, bank loans, networking, online network & memberships as well
as Angel Investors and venture capitalists (Mason and Harrison 2017).

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Business Current Financial position and Project’s future estimates
The current financial position of the company in terms of profitability, liquidity and
solvency ratio is performing well and it will be good for expanding the business. In terms of
future estimation of the project, the assets of the company will increase over the years, with
the efficient performance of it will increase the sales of the company. It has been estimated
that the long-term liabilities of the company will also decrease over the years. Moreover, with
the year 2011-2015, the net worth of the company will also increase triple as compare to
current position, as it will be able to cover its expenses over revenue.
Options for capitalizing the business
This decision is very critical for the business. Most of the companies use both the
combination of equity financing and debt financing. However, there are certain advantages
for equity financing, which is based on the principle that there is no obligation of repayment
and it provides excess working capital, which can be used for growing the business. In
contrast with that debt financing have some restrictions on the activities of the company and
preventing it from the available opportunities (Coleman, Cotei and Farhat 2016).
Hence, the financial statement of Frank’s All-American BarBeQue shows that the
company’s position in terms of equity can be helpful for capitalizing the business. They can
use the equity of the company, which will be helpful in the expansion of the business as well
as scope for further growth in the industry of restaurant in America (De Rassenfosse and
Fischer 2016).
Conclusion
Hence, it is concluded that Frank’s All-American BarBeQue financial position in
terms of liquidity, profitability and solvency is good and it has strong base, which will be
helpful in expanding the business operations. It is analyzed that if the company will increase

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the sales from the operations, it will be able to cover its expenses. The decisions regarding the
sources of venture capital will have to be carefully decided so that it will increase the revenue
and profits of the company. Further, it has been analyzed that equity financing will be good
for the company due to strong hold of it which in turn saves the excess profit of the company
that will be helpful in improving the productivity and shareholders value. Hence, the
expansion of the business will lead to success in financial aspect in the growth sector of
restaurants.

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References
Coleman, S., Cotei, C. and Farhat, J., 2016. The debt-equity financing decisions of US startup
firms. Journal of Economics and Finance, 40(1), pp.105-126.
De Rassenfosse, G. and Fischer, T., 2016. Venture debt financing: Determinants of the
lending decision. Strategic Entrepreneurship Journal, 10(3), pp.235-256.
Ehiedu, V.C., 2014. The impact of liquidity on profitability of some selected companies: the
financial statement analysis (FSA) approach. Research Journal of Finance and
Accounting, 5(5), pp.81-90.
Frank, E.J., 2017. Teaching International Business as an Opportunity to Develop Cultural
Sensitivity. Journal of Teaching in International Business, 28(3-4), pp.197-211.
Islam, M., Khan, T.R., Choudhury, T.T. and Adnan, A.M., 2014. How earning per share
(EPS) affects on share price and firm value. European Journal of Business and
Management, 6(17), pp.97-108.
Khadafi, M., Heikal, M. and Ummah, A., 2014. Influence analysis of return on assets (ROA),
return on equity (ROE), net profit margin (NPM), debt to equity ratio (DER), and current
ratio (CR), against corporate profit growth in automotive in Indonesia Stock
Exchange. International Journal of Academic Research in Business and Social
Sciences, 4(12).
Lee, W.S., Kim, I. and Moon, J., 2016. Determinants of restaurant internationalization: an
upper echelons theory perspective. International Journal of Contemporary Hospitality
Management, 28(12), pp.2864-2887.
Manigart, S. and Sapienza, H., 2017. Venture capital and growth. The Blackwell handbook of
entrepreneurship, pp.240-258.

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Mason, C. and Harrison, R., 2017. Informal venture capital and the financing of emerging
growth businesses. The Blackwell handbook of entrepreneurship, pp.221-239.
Satryo, A.G., Rokhmania, N.A. and Diptyana, P., 2017. The influence of profitability ratio,
market ratio, and solvency ratio on the share prices of companies listed on LQ 45 Index. The
Indonesian Accounting Review, 6(1), pp.55-66.