Business Plan And Financial Statements

Running head: BUSINESS PLAN
BUSINESS PLAN
Name of the Student
Name of the University
Author Note

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Table of Contents
Executive summary....................................................................................................................2
Analysis of the current business.................................................................................................3
Advice on the key performance indicators.................................................................................7
Analysis of the new business opportunity..................................................................................8
Conclusion..................................................................................................................................9
References................................................................................................................................11
Appendix..................................................................................................................................14

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Executive summary
The aim of the report is to assess the business prospect of Fit-cook limited, which is a
private limited company located in the Hannah close region of Wembley. The organisation is
engaged in the delivery of diet plan meal boxes which are made with the intention to give
more focus on providing hygienic and healthy food to its clients. The company is formed with
the main objective to capture the growing demand of healthy and hygienic food in the United
Kingdom. In addition to its high quality food the organisation also launched a mobile
application from which the customers can easily place their order and can get their food at any
place wherever they want.
The demand of the retail food industry is in favourable condition since the last five
years, in the recent days people become more conscious about their health and become more
aware about their food habit. The operators of the food sector will also get the opportunity of
the recent scandals that occurred in this sector due some fraudulent activity of some
restaurants which includes supply of food of inferior quality. The consumers have to suffer
from various diseases that make them more aware about the food that they want to consume
and they started to give more importance to buy foods only from such outlets that can assure
them hygienic as well as healthy food at an affordable price. This creates a huge demand in
the retail food store industry and many entrepreneurs get interested to start a food store with
the mission to serve the best quality food staff to the customers. In addition to the supply of
high quality of foods the demand for food delivery through online applications has also
accelerated the growth rate of this industry. With the increase of then consumers priority on
hygienic and healthy food increased the growth rate of revenue has also increased rapidly
which creates a huge opportunity for the newly formed food outlets which are ready to
provide food that can meet the basic requirement of the consumers. It is expected that this

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industry will enable to generate a revenue growth of 3.40% in the current fiscal year with a
total value of 841.10 million.
The future growth prospect of the industry is also impressive and within next five
years this industry will provide huge profit earning opportunity to the locally operated food
outlets or restaurants. Fit cook is also formed with the mission to grab these opportunity and
become one of the leading supplier of best quality food in United Kingdom.
Analysis of the current business
The fit cook is a newly formed fast growing company that is engaged in the business
of supplying diet meal box for customers who are highly conscious about their health and
want to maintain a fit life style by consuming foods that are specially prepared for keeping
people fit and healthy (Muranko et al 2017).
The business is formed in the year 2012 by Louis and Rishi who were college friend
and both in nutrition and food science which encouraged them to open a food outlet with the
aim to supply highly nutritional as well as hygienic meal boxes to the health conscious
customers. At the initial stage they hire 3 buyers which assist them to source products and in
designing the menu. Later on Kayden a marketing and website designing specialist along with
a company secretary Sofia joined the business. Gradually the co mpany hire 16 more
employees for the sales and administration team and for the distribution centre it hire more 20
people. From 2016 the company launched a mobile application from which the customers will
be able to place order through their mobile and can get their orders at the address mentioned
in the order (McKeever 2016).
Operational activity

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The company used to source its products from different parts of the world, and create
customised eating plans and used to offer subscription packages of different rates which the
customers can select as per their budget, and can become a member of the organisation. The
company also concerned about the legal aspects of the business and for that reason they have
registered their business with the trademark act and make brand of their own so that no other
company can make wrong use of their name and provide inferior products to the customers.
The subscription box is only available in the united nations and the products are sourced
globally particularly from Italy (35%) ,US(10%) China (10%) and from India which provides
(10%) of the total value. the balance amount is sourced from the local market of United
Kingdom (Welch Swaffield and Evans 2018).
Financial review
Different ratios of the company are assessed to evaluate the actual financial condition
of the business and for that reason a five years financial data analysis has been done from the
financial statements provided by the business. The different ratios that are calculated to
measure the financial prospect and strength of fit cook limited are, profitability ratios,
liquidity ratios capital structure ratio and the efficiency ratio (Porter 2018).
Profitability ratios
From the profitability ratio it will be possible to evaluate the profit earning capacity of
fit cook and to estimate how much return it can provide to its shareholders. The ratios that are
assessed to evaluate the profit generating capacity are stated below
Net profit margin
It is the main indicator of the profit generating ability of their organisation from its
operational activities, the higher the net profit margin the better it is for the organisation. In

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the case of fit cook it has been observed that the NP margin of this organisation is 0.40 and
0.51 in the year 2016 and 2017 which indicates that the company fail to operate effectively in
these years as fit cook fail to generate profit due to lack of control in the costs of operation in
the initial stage but the organisation make significant improvement in the year 2018 and
achieve 49.88% and 38% of net profit margin this indicates that after the launch of the mobile
application the company able to increase its revenue and also able to control the cost of
operation (Ibidunni Peter and Ogbari 2017).
Return on equity
Then return on equity is the indicator of the ability of the company to return to its
shareholders on the wealth that they have invested in the company. it is expected that the
shareholders will expect that they will get some additional value on their invested amount and
if any organisation fail to provide good return on the invested amount then the shareholders
will lose their interest from such company, so higher the return on equity the better it is for the
organisation . in the present case of fit cook the return on equity in the initial stage is in
negative figures which indicates that the company performed very poorly in the years 2016
and 2017 but with the increase in its profit margin the return on equity also improved to 147%
which shows that fit cook has the potential to provide high return to its shareholders and in the
future with the increase in the demand of its product it can be expected that the company will
give high return to its equity shareholders (Leyman and Vanhoucke 2017) .
Liquidity ratios
The liquidity ratios are used to measure the liquidity position of the company from
which it can meet its short term obligations. The higher the liquidity ratio the better it is for
the company. In the food supply industry a high liquidity ratio is very essential as it has to
settle the short term obligations of the suppliers. The suppliers always like to check the

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liquidity condition of the company so that they can get ensured that they will get back their
money within time and this also keep the operation of the organisation in flow as they will get
raw materials from the suppliers on time. Fit cook Limited’s quick ratio in the year 2016 and
2017 is 0.05 and 0.08 which indicates that the liquidity condition is not good and the company
has to allocate more liquid assets but in the year the company is able to generate more revenue
and for that reason the quick assets like cash or bank increase3d and for that reason the quick
assets ratio also increased to 1.46 and 7.49 in the year 2019(Berbegal-Mirabent Gil-Doménech
and Alegre 2016).
Current assets ratio
The current assets ratio of the company in the year 2016 and 2017 is 0.50 and 0.70
which is below the average industry level which is 1. So in this regard it can be said that the
company’s current assets is less than its current liabilities and it may not be able to meet its
short term obligations in these two years, but the situation changes in the year 2018 and by
increasing the current ratio up to 2.65 and 9.90 in the year 2019 the company make huge
improvement and this imp0rovement can help the organisation to attract more suppliers (Noch
and Kusto 2018).
Capital structure ratios
This ratio is used to determine the proportion of debt to equity in the capital structure
of the co company. In general it is expected that a company with low percentage of debt in its
capital structure is more risky than a organisation which have high portion of equity in its
capital structure. to analyse the capital structure the debt to assets ratio is assessed and in case
of fit cook limited it has been observed that in the year 2016 and 2017 the debt to assets of the
company is high which is 1.44 and 1.35 this indicates that the company has to take more debt
to operate its activities while in the year 2018 the company is able to reduce its dependency on

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debt and reduce the debt to assets ratio to 0.66 and furher reduce to 0.25 in the year 2019
(Brinckmann, et al 2017).
Debt to equity ratio
As the company is mainly funded by Louis and rishi they kept the debt to equity ratio
at a fixed point of 3.00 in the last three years. This indicates the shareholders does not increase
their portion of equity neither they take further long-term debt from the market (Hopp and
Greene 2018).
Efficiency ratio
The efficiency ratio is used to measure the efficiency of the management in controlling
their affairs and how effectively they convert their receivables in to sales. In the restaurant
business as there is less scope of providing credit to customers so the receivable ratios in the
three years is 100% (Filimonau and Gherbin 2017).
Another efficiency ratio that has been calculated in this regard is the fixed assets to
turnover ratio, this ratio indicates the efficiency of the management in generating revenue
from its fixed assets (Davidson et al 2018).
Advice on the key performance indicators
The key performance indicator in the food industry are the following
 Revenue per client
 Client retention rate
 Profit margin
 Average daily attendance