Car Rental Business Plan Analysis

This assignment involves analyzing the financial prospects of a car rental business, Super Car Club, planning to launch in Liverpool. It requires examining profit margins, gross profit margins, and current ratios for the years 2018, 2019, and 2020. The analysis is based on projected financial statements and indicates a satisfactory outcome, with gross profit margins of approximately 99% and adequate current ratios ranging from 1.06 to 4.80.

BUSINESS PLAN

TABLE OF CONTENTS
BUSINESS PROPOSAL.................................................................................................................1
Background.............................................................................................................................1
Overview................................................................................................................................1
Vision and mission.................................................................................................................1
Strategic Objectives................................................................................................................2
Project scope...........................................................................................................................2
Market Assessment and Service Development......................................................................3
FINANCIAL PLAN.........................................................................................................................3
Projected income statement....................................................................................................3
Projected Balance sheet..........................................................................................................3
Projected Cash Flow...............................................................................................................4
Financial analysis...................................................................................................................6
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

EXECUTIVE SUMMARY
Super car club is planning to have a business initiation with a motive of facilitating the
rental facilities in UK. Therefore, the following business plan will be helpful for the
professionals in terms of analysing the current market requirements as well as better
services and facilities to be offered to the consumers. The head office of this business
will be in Liverpool and as the organisation has growth in operation, the numbers of
branches will be installed throughout UK. The professionals are planning to launch the
various categories of cars such as Hatchback, Sedan and Suv are the major priority.
There will be appointment of trained drivers, accountants, showroom manager and
employees for repairs and maintenance. However, to execute these industrial
operations, there will be need of having the appropriate planning and strategies.
Therefore, in relation with that, the professionals have presented projected financial
statements that will be beneficial in analysing the costs and operational requirement of
the entity.

BUSINESS PROPOSAL
Background
The initiation of car rent business in UK is the most challenging segmentation.
However, in the current scenario, the economic level of citizens are stable and having
the appropriate life style. People love to spend some money over travelling and
planning holidays. Therefore, Super car club is planning to launch a business for
facilitating various cars on rent to the consumers. The head office of this business will
be in Liverpool and as the organisation will have growth in the operation, the numbers of
branches which will be operated throughout UK. The professionals are planning to
launch the various categories of cars such as Hatchback, Sedan and Suv's are the
major priority (Gabler and et.al., 2017). The renting services will be provided to the
clients on the basis of days, weeks and months. There will be charges over such cars
and the period of possession.
Overview
The initiation of the business operations in UK is to help the individual to have the
best travelling experience and through the luxurious cars. It will be beneficial for those
individual do not afford to have a car and want to travel through cars. The renting
services will be cost efficient and alluring the best experienced moments to such clients
(Dupont and et.al., 2017). There will be appointment of trained drivers, accountants,
showroom manager and employees for repairs and maintenance. However, to execute
this industrial operations there will be need of having the appropriate planning and
strategies.
Vision and mission
To initiate an organisational operation it is necessary to have a leader or
supervisor who execute the work as well as motivate the staff to make the adequate
efforts in terms of attaining the targets. The mission or vision of Super car club is to
facilitate the most appropriate and luxurious experience to the consumers on each trip.
The main motive is to facilitate the adequate services to such buyers at very cost
efficient charges (Shields, 2017). The prices over renting a car will be adequate to the
clients as well as profitable for the business growth. The main motivation of entity is to
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become the market giant in UK and have the various branches. The expansion will be
successful as if the launching must be efficient.
Strategic Objectives
Super car club are planning to have the best operational practices throughout UK
as well as facilitate the adequate travelling services to the consumers. Therefore, there
are several plans and strategies which are being developed by the professionals such
as appointment of qualified, skilled and experienced staff. Collaborations with the
various travelling agencies who will be helpful to bring the satisfactory packages and
holiday plan for better travelling experience (Ahern, International Business Machines
Corp, 2017). In addition to this there is need to have the adequate advertisement or
promotional activities which will create brand identify in the market.
Project scope
The scope of this project is to facilitate a most suitable and well-structured
business plan to the professionals at Super car club. Therefore, it will be helpful to them
in context with setting the financial goals, marketing plans and overall industrial
development. There will be appointment of trained drivers with proper licensing as well
as training facilitated to them. On the other side it will be helpful as if the managerial
staff and the accounting professionals maintain the proper records of each of the
services (Anderson and et.al., 2017). The report also consists of the marketing analysis
which will help the organisation in determining the current trend consumer’s behaviour
and preferences. Therefore, it will be helpful for them to have the adequate promotions
of the business activities among the consumers and attract the large numbers of client
to take experiences of trips.
The financial disclosure of the company's accounts will be presented periodically
to the users with the motive of having the appropriate capital investments. There will be
the best dividend plans and insurance security awarded to the shareholders of the firm.
The motive is to retaining such shareholders for the better and continues investments
(Gabler and et.al., 2017).
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Market Assessment and Service Development
There will be appropriate development of the business plans which will be helpful
to the entity in terms of having the unique identity in the market. In the current scenario
there is requirement of a perfect holiday packages by consumers. There are mainly
giants are available in the market which are offering various packages and facilities to
the buyers (How to make money in the car rental business, 2018). Thus, it will be fruitful
for the entity in terms of developing the industrial objectives and organisational
operations as according to consumer satisfaction. However, in relation with that there is
need to have the appropriate market analysis such as preferences, seasonal
requirements as well as the preferable accommodation facilities for the clients. Thus,
the operational planning of the entity must be based on proper market research and the
analysis of the data which will lead them to the best outcome.
FINANCIAL PLAN
Projected income statement
Projected income statement of Super car club for the three years
Particulars 2018 2019 2020
Net Sales Revenue 362700 454576 670530
Less: Cost of goods sold 2450 5462 4580
GP 360250 449114 665950
Income from Operating activities 20000 25000 45000
Operating Exp. 5600 4900 8700
Op. Profit 374650 469214 702250
Less: Depreciation on machineries and
equipment 4200 5600 3650
EBITDA 370450 463614 698600
Less: Corporate Tax (30%) 111135 139084.2 209580
Net Profit 259315 324529.8 489020
Projected Balance sheet
Projected Balance-sheet of Super car club for the three year period
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Particulars 2018 2019 2020
Current assets
Cash balance 3478750 3069124 2453544
Debtors 260000 180000 22000
Inventories 560000 550000 60000
Total current assets 4298750 3799124 2535544
Cars 200000 300000 400000
Equipment 5600 5900 7800
Building 150000 220000 280000
Total Assets 4654350 4325024 3223344
Liabilities
Current Liabilities
Creditors 493535 3123524 1092824
Interest of loans 1500 1500 1500
Long term liabilities 400000 450000 520000
Total current liabilities 895035 3575024 1614324
Owner's Equity
Capital 3000000 350000 420000
Net income 259315 0 489020
Equity shares 500000 400000 700000
Total liabilities 4654350 4325024 3223344
Projected Cash Flow
Projected cash flow statement Super car club for three year of period
Particulars
Initial
investment 2018 2019 2020
% of total rented car per month 2.98% 2.98% 2.98%
Total numbers of consumers 2000 2500 4500
car services on Rent Hatchbac Hatchbac Hatchbac
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k k k
Average Rental price 33.6 33.6 33.6
Total revenue 67200 84000 151200
% of total rented car per month 2.02% 2.02% 2.02%
Total numbers of consumers 2600 3600 5100
car services on Rent Sedan Sedan Sedan
Average Rental price 49.5 49.5 49.5
Total revenue 128700 178200 252450
% of total rented car per month 1.80% 1.80% 1.80%
Total numbers of consumers 3000 3460 4800
car services on Rent SUV SUV SUV
Average Rental price 55.6 55.6 55.6
Total revenue 166800 192376 266880
Total cash inflows 362700 454576 670530
CASH OUTFLOWS
Servicing charges 4500 5000 5500
Purchases of new cars 200000
Repair and Maintenance 2000 0 4500
Advertising 5000 5000 5000
Salary to employees 20000 25000 30000
workshop rent 6000 6000 6000
Telephone [phone]
Interest on loan 1500 1500 1500
Total cash outflows 41450 44950 54950
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Net cash flow 200000 321250 409626 615580
Beginning cash balance 4000000 3800000 3478750 3069124
ENDING CASH BALANCE 3800000 3478750 3069124 2453544
Financial analysis
Ratio analysis for Super car club on the basis of three years
Particulars Formulas 2018
Rati
o 2019
Rati
o 2020
Rati
o
Cost of Goods Sold
ratio COGS *100 2450
0.68
% 5462
1.20
% 4580
0.68
%
Net sales
revenue
3627
00
4545
76
6705
30
Net profit ratio Net profit *100
2593
15
71.5
0%
3245
29.8
71.3
9%
4890
20
72.9
3%
Net sales
revenue
3627
00
4545
76
6705
30
Gross profit ratio Gross profit *100
3602
50
99.3
2%
4491
14
98.8
0%
6659
50
99.3
2%
Net sales
revenue
3627
00
4545
76
6705
30
Stock turnover ratio COGS 2450 0 5462
0.00
7 4580
0.00
8
Average
Inventories 0
8350
00
5800
00
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Current Ratio Current Assets
4298
750
4.80
3
3799
124
1.06
3
2535
544
1.57
1
Current
Liability
8950
35
3575
024
1614
324
Quick ratio
Current assets-
Inventory
3738
750
4.17
7
3249
124
0.90
9
2475
544
1.53
3
Current
Liability
8950
35
3575
024
1614
324
ROCE
Earnings
Before interest
and tax
3704
50
0.09
9
4636
14
0.61
8
6986
00
0.43
4
Capital
Employed
3759
315
7500
00
1609
020
Capital gearing ratio
Long-term
liabilities
4000
00
0.10
6
4500
00
0.60
0
5200
00
0.32
3
Capital
Employed
3759
315
7500
00
1609
020
Return on net assets Net Income
2593
15
0.05
6
3245
29.8
0.07
5
4890
20
0.15
2
Total Assets
4654
350
4325
024
3223
344
Interpretation: On the basis of above listed projected financial statements of
Super car club for the 3 years of period, it can be assumed that the business will have
favourable growth in the market. There will be adequate plans for the operations of
entity and which will be beneficial for them to have the most effective operations
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throughout the years. In relation with the cost of goods sold ratio over the net sales of
the period it can be said that in the year 2018 it will 0.68%, in 2019 it will be 1.20% and
in 2020 it will be 0.68%. The net profit margin of the entity for the period will be analysed
as in the year 2018 it will be 71.50%, in 2019 it will be 71.39% and in 2020 it will be
72.93%. It indicates that the business is having appropriate profits over the amount of
sales made by them.
The Gross profit margin for the period 2018 will be 99.32% in 2019 it will be
98.80% and in 2020 it will be 99.32%. This is the most satisfactory outcome of the GP
margin which indicates that the costs of facilitate the services are appropriate and
profitable for the entity in terms of having the most appropriate outcomes. Further, on
the basis of Current ratio it has been estimated that the current assets and current
liabilities of the firm will be in the respective years are to be adequate and efficient as to
meet the favourable ratio. Thus, in the year 2018, it will be 4.803 and in 2019, it will be
1.063 while in 2020, it will be 1.571.
CONCLUSION
On the basis of above business plan, it can be said that Super car club is
planning to have a launch of business unit in Liverpool with a motive of facilitating cars
on rent. Therefore, the vision and mission of the entity has been analysed as well as the
plans were made to have the effective establishment of the entity. Therefore, in relation
with that, the professionals have presented projected financial statements that will be
beneficial in analysing the costs and operational requirement of the entity.
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