Financial Analysis for Cockatoo Real Estate Pty Ltd

This report analyses the financial viability and profitability of Cockatoo Real Estate Pty Ltd. It includes a review of the financial projection, break-even point, and cash flow analysis. The report also covers competitor and SWOT analysis, marketing plan, and sensitivity analysis.

FINANCIAL ANALYSIS
Profitability and liquidity analysis
Financial analysis
PC-AS0197

1
Table of Contents
Part-1................................................................................................................................................2
Part-2................................................................................................................................................3
Introduction......................................................................................................................................3
Review the financial viability of the project undertaken by Cockatoo Real Estate Private Limited
.........................................................................................................................................................3
Financial projection for the cash flow of the Cockatoo Real Estate Pty Ltd...................................6
Sensitivity analysis of the cash flow projection of Cockatoo Real Estate Pty Ltd..........................7
Competitor analysis.......................................................................................................................10
Competitors analysis......................................................................................................................10
SWOT analysis of the proposal.....................................................................................................10
Marketing plan to acquire a pipeline of properties to be marketed...............................................11
Conclusion.....................................................................................................................................12
References......................................................................................................................................13

2
Part-1
To
The Chairman of Cockatoo Real Estate Pty Ltd
This business mail has been framed to the Chairman of Cockatoo Real Estate Pty Ltd for
the consultancy for viability of opening branches in Sydney. After analysing the profitability,
break-even point, financial viability return on capital employed available on the invested capital,
it is found that company should accept the project of opening up its 10 pilot branch Camper
down in Sydney as it will give good amount of return on capital employed to investors.
However, in order to assess the viability of the project, we need to take the access to an empty
retail premises for a pilot investigation. The main reason for getting access to the empty retail
premises for the pilot investigation is based on the mock up a simulation branch and analysing
the available business factors which may positively and negatively impact the project. It will also
help in analysing whether the undertaken office equipment and infrastructure would be
complying with the international WHS legislation laws and regulation. Action required by the
board of directors- all the directors needs to pass special resolution in the board meeting for
giving their consents on the particular events and matter. There will be other points as the
research would be made on the internal and external factors for analysing the viability for the
project proposal. The estimated time for the report to be submitted would be 6 months which will
required to analysis the all the feasible factors associated with the project.
Thanks for considering the mail and looking forward to the positive reply.

3
Letter of transmittal
Dear
The Chairman of Cockatoo Real Estate Pty Ltd
I submit herewith a proposal in support of the research program entitled to opening up its 10
pilot branch Camper down in Sydney. This project is beneficial one and in orders to analysis the
feasible factors; we need access to the empty retail premises for the pilot investigation.
I am requesting to allow us to get the access to the empty retail premises for the pilot
investigation.

4
Part-2
Executive summary
This report will analysis the review the financial viability and possible benefits which
company would have after opening up other inner suburban branches in Sydney over the next 12
months. It will be used to identify the feasible factors which might impact the acceptance of the
project.
Introduction
This report is accompanied with potential issue, challenges, financial viability and related
financial returns and opportunities for opening up of pilot branch in Camper down and if
successful will open 10 other inner suburban branches in Sydney over the next 12 months. The
acceptance of this project would be based on the break-even point, financial viability return on
capital employed available on the invested capital.
Review the financial viability of the project undertaken by Cockatoo Real Estate Private
Limited
The financial projection and estimation of the profit and loss associated with the particular
project reflects how company could be benefited after undertaking the proposed project. The
estimated listing sales per year have been decided on the basis competitors offering and market
external factors. The estimated fees from sales of apartment would be $ 15000000 which may
also increase with the increase in its services (Hartmann, and Driessen. (2017, 259-470).
The estimated projection for the profit and loss of Cockatoo Real Estate Private Limited has been
computed as below (Lin,et al. (2015, 459-470)
CRE Limited
Budgeted
Profit and
Forecasted Income statement

5
Loss Account
for Camper
down branch
Year ended
31 December
2019 2020 2021 2022 2023 2024
$ $
INCOME
Fees from Sale of Apartments
1500
000
1650
000
18150
00
18150
00
19965
00
19965
00
Commissions from Financial
services sales (assume 1/3 on sales
x 1000)
2500
0
TOTAL
INCOME
152500
0
1677
500
1845
250
2029
775
22327
53
24560
28
27016
31
29717
94
EXPENDITU
RE
Fixed Costs

6
1 x Manager;
2 x Sales
negotiators; 1
x secretary
(410,00
0)
-
4510
00
-
4961
00
-
5457
10
-
60028
1
-
66030
9
-
72634
0
-
79897
4
Rent/Rates/
Insurance of
Commercial
Business
premises
(460,00
0)
-
5060
00
-
5566
00
-
6122
60
-
67348
6
-
74083
5
-
81491
8
-
89641
0
Vehicle costs
(30,000
)
-
3300
0
-
3630
0
-
3993
0
-
43923
-
48315
.3
-
53146
.8
-
58461
.5
Lease of
Business
Equipment
(P.copier etc)
(30,000
)
-
3300
0
-
3630
0
-
3993
0
-
43923
-
48315
.3
-
53146
.8
-
58461
.5
Selling and
Corporate
Marketing
Costs
(50,000
)
-
5500
0
-
6050
0
-
6655
0
-
73205
-
80525
.5
-
88578
.1
-
97435
.9
Depreciation
of Plant and
equipment
(30,000
)
-
3300
0
-
3630
0
-
3993
0
-
43923
-
48315
.3
-
53146
.8
-
58461
.5

7
Head Office
Costs
(100,00
0)
-
1100
00
-
1210
00
-
1331
00
-
14641
0
-
16105
1
-
17715
6
-
19487
2
Total Fixed
Costs
(1,110,
000)
-
1221
000
-
1343
100
-
1477
410
-
16251
51
-
17876
66
-
19664
33
-
21630
76
Variable Costs
Detailing,
stationery and
marketing 0
$500 per
listing per
year
Total Variable
Costs 0 0 0 0 0 0 1 2
TOTAL
COSTS
(1,110,
000)
-
1221
-
1343
-
1477
-
16251
-
17876
-
19664
-
21630

8
000 100 410 51 66 32 74
PROFIT/
(LOSS) FOR
YEAR 415,000
4565
00
5021
50
5523
65
60760
1.5
66836
1.7
73519
8.8
80871
9.6
GROSS
MARGIN 27.21%
27.2
%
27.2
%
27.2
% 27.2% 27.2% 27.2% 27.2%
(Please see the attached profit and loss account)
Break-even point analysis- It is the point at which company would have any profit and loss
form its business functioning. This could be computed by using the formula i.e. contribution/ per
unit sales (Hartmann, and Spit. 2016, 361-367).
Particular 2018 2019 2020 2021 2022
Sales (in units)
$
800,000.00
$
880,000.00
$
968,000.00
$
1,064,800.00
$
1,171,280.00
Unit costing
$
1.88
$
2.27
$
2.75
$
3.32
$
4.02
Total sales
$
1,500,000.00
$
1,996,500.00
$
2,657,341.50
$
3,536,921.54
$
4,707,642.57

9
(-) Variable
Costs
$
37,500.00
$
41,250.00
$
45,375.00
$
49,912.50
$
54,903.75
Contribution
$
1,462,500.00
$
1,955,250.00
$
2,611,966.50
$
3,487,009.04
$
4,652,738.82
(-) Fixed Cost
-$
1,110,000.00
-$
1,221,000.00
-$
1,343,100.00
-$
1,477,410.00
-$
1,625,151.00
Net Profit
$
2,572,500.00
$
3,176,250.00
$
3,955,066.50
$
4,964,419.04
$
6,277,889.82
Break-even
point
$
780,000.00
$
861,818.18
$
951,471.07
$
1,049,773.70
$
1,157,619.73
These above are the points of listing sales which company needs to make in order to run its
business operations at no profit and no loss point (Chapman, and Ward, 2018.).

10
Financial projection for the cash flow of the Cockatoo Real Estate Pty Ltd
Year
Particular 2018 2019 2020 2021 2022
Sales (in units)
$
800,000.00
$
880,000.00
$
968,000.00
$
1,064,800.00
$
1,171,280.00
Unit costing
$
1.88
$
2.27
$
2.75
$
3.32
$
4.02
Total sales
$
1,500,000.00
$
1,996,500.0
0
$
2,657,341.50
$
3,536,921.54
$
4,707,642.57
(-) Variable
Costs
$
37,500.00
$
41,250.00
$
45,375.00
$
49,912.50
$
54,903.75
Contribution
$
1,462,500.00
$
1,955,250.0
0
$
2,611,966.50
$
3,487,009.04
$
4,652,738.82
(-) Fixed Cost
-$
1,110,000.00
-$
1,221,000.0
0
-$
1,343,100.00
-$
1,477,410.00
-$
1,625,151.00
Net Profit $
2,572,500.00
$
3,176,250.0
$ $ $

11
0 3,955,066.50 4,964,419.04 6,277,889.82
Breakeven point
$
780,000.00
$
861,818.18
$
951,471.07
$
1,049,773.70
$
1,157,619.73
(-)Depreciation
$
-
$
-
$
-
$
-
$
-
Net Profit before
Tax
$
2,572,500.00
$
3,176,250.0
0
$
3,955,066.50
$
4,964,419.04
$
6,277,889.82
(-) Tax @28%
$
720,300.00
$
952,875.00
$
1,186,519.95
$
1,489,325.71
$
1,883,366.94
Net Profit after
tax
$
1,852,200.00
$
2,223,375.0
0
$
2,768,546.55
$
3,475,093.33
$
4,394,522.87
(+) Depreciation
$
-
$
-
$
-
$
-
$
-
Cash Inflows
$
1,852,200.00
$
2,223,375.0
0
$
2,768,546.55
$
3,475,093.33
$
4,394,522.87
(+) Salvage
Value
$
9,500,000.00

12
Cash Inflows
$
1,852,200.00
$
2,223,375.0
0
$
2,768,546.55
$
3,475,093.33
$
13,894,522.87
*Present value
factor @12%
$
0.89
$
0.80
$
0.71
$
0.64
$
0.57
Present Value
$
1,653,750.00
$
1,772,460.9
4
$
1,970,596.75
$
2,208,484.63
$
7,884,125.42
Total Present
values(A)
$
15,489,417.74
(-)Cash
Outflows
Fixed cost
investment
-$
1,110,000.00
-$
1,221,000.0
0
-$
1,343,100.00
-$
1,477,410.00
-$
1,625,151.00
(+)Marketing
expenses
$
-
(+)Cost Of
equipment
$
-
Total(B) $

13
15,489,417.74
Net Present
Value(A-B)
$
15,489,417.74
After assessing the cash flow projecting of Cockatoo Real Estate Pty Ltd, It is analyzed
that net present value of company would be $ 15,489,417.74 which may increase the overall
outcomes and business efficiency in long run (Uechi, et al. (2015, 488-589)
Sensitivity analysis of the cash flow projection of Cockatoo Real Estate Pty Ltd
The sensitivity analysis is used to evaluate the changing factors and other related factors which
might positively and negatively impact the cash inflow an outflow from the business. In this
case, the sensitivity analysis is done by changing the % of the fees units.
Year
Particular 2018 2019 2020 2021 2022
Sales (in units)
$
800,000.00
$
840,000.00
$
882,000.00
$
926,100.00
$
972,405.00
Unit costing
$
1.88
$
2.27
$
2.75
$
3.32
$
4.02
Total sales $
1,500,000.00
$
1,905,750.0
$
2,421,255.38
$
3,076,204.95
$
3,908,318.39

14
0
(-) Variable
Costs
$
37,500.00
$
41,250.00
$
45,375.00
$
49,912.50
$
54,903.75
Contribution
$
1,462,500.00
$
1,864,500.0
0
$
2,375,880.38
$
3,026,292.45
$
3,853,414.64
(-) Fixed Cost
-$
1,110,000.00
-$
1,221,000.0
0
-$
1,343,100.00
-$
1,477,410.00
-$
1,625,151.00
Net Profit
$
2,572,500.00
$
3,085,500.0
0
$
3,718,980.38
$
4,503,702.45
$
5,478,565.64
(-)Depreciation
$
-
$
-
$
-
$
-
$
-
Net Profit before
Tax
$
2,572,500.00
$
3,085,500.0
0
$
3,718,980.38
$
4,503,702.45
$
5,478,565.64
(-) Tax @28%
$
720,300.00
$
925,650.00
$
1,115,694.11
$
1,351,110.74
$
1,643,569.69
Net Profit after
tax
$
1,852,200.00
$
2,159,850.0
$ $ $

15
0 2,603,286.26 3,152,591.72 3,834,995.95
(+) Depreciation
$
-
$
-
$
-
$
-
$
-
Cash Inflows
$
1,852,200.00
$
2,159,850.0
0
$
2,603,286.26
$
3,152,591.72
$
3,834,995.95
(+) Salvage
Value
$
9,500,000.00
Cash Inflows
$
1,852,200.00
$
2,159,850.0
0
$
2,603,286.26
$
3,152,591.72
$
13,334,995.95
*Present value
factor @12%
$
0.89
$
0.80
$
0.71
$
0.64
$
0.57
Present Value
$
1,653,750.00
$
1,721,819.2
0
$
1,852,967.74
$
2,003,529.03
$
7,566,634.82
Total Present
values(A)
$
14,798,700.79
(-)Cash
Outflows

16
Fixed cost
investment
-$
1,110,000.00
-$
1,221,000.0
0
-$
1,343,100.00
-$
1,477,410.00
-$
1,625,151.00
(+)Marketing
expenses
$
-
(+)Cost Of
equipment
$
-
Total(B)
$
14,798,700.79
Net Present
Value(A-B)
$
14,798,700.79
After changing in the units prices, Cockatoo Real Estate Pty Ltd would be having$
14,798,700.79 net present value if the project of opening up other units is selected.

17
Competitor analysis
Competitors analysis
Factor
Cockatoo
Real Estate
Pty Ltd
Strength Weakness
Stockdale
and Lego
Emeralnd
Fletcher
and
building
Importance
of Customer
Products
Clients
oriented
customized
services
Unique and
quality real
estate
services
High fixed
cost
investment
Stockdale
and Leggo
Emeralnd
Fletcher
and
building
Client based
real estate
services and
low price
charges
Price
Based on
the demand
and varied
according to
the market
factors
Customer
negotiation
Higher
costing
and less
experts
$ 4- $ 5 $ 4- $ 5 Use of online
system
process
SWOT analysis of the proposal
The SWOT analysis has shown the strength, weakness, opportunity and threats of accepting the
project.
Strength- It is analyzed that Cockatoo Real Estate Private Limited open up its pilot branch
Camper down in 9 other inner suburban branches when opening up 9 other suburban branches in
Sydney, it will have to make high initial investment on yearly basis. However, the net present

18
value of accepting the project in normal and sensitive cases, both are positive. In addition to this,
it will allow company to deploy its capital in effective manner which will eventually increase the
return on capital employed. In addition to this, due to its advance technology, strong brand image
and experts experienced employees it will be easy for Cockatoo Real Estate Private Limited to
win over the international market.
Weakness- The main Weakness of Cockatoo Real Estate Private Limited would be complying
with the applicable rules and laws which might negatively impact the business outcomes if it is
not complied by the organization. In addition to this, company may also fails to achieve the set
targets if the proper work process system is not adopted in the process (Vogel, 2014).
Opportunity- With the increasing growth of the GDP rate and national income of Australia, there
is positive economic environment for Cockatoo Real Estate Private Limited expand its business.
However, company would have to focus on offering the effective services if it wants to
strengthen its business in long run irrespective of the price constraints. Use of its advance
dashboard mechanism and expert’s employees will strengthen the business functioning in
effective manner (Damodaran., 2016).
Threats- The main threat for Cockatoo Real Estate Private Limited would be from its rivals
offering. Due to the increased business profitability of this industry, it might be easy for the other
new entrants to enter into this new business. It is analyzed that it might be hard for Cockatoo
Real Estate Private Limited to cover its interest payment from the available cash inflow by
setting up new open up its pilot branch Camper down in 9 other inner suburban branches when
opening up 9 other suburban branches in Sydney.
Marketing plan to acquire a pipeline of properties.
The main marketing plan to acquire a pipeline of the properties to be marketed would be to
become official pipeline marketers. It would allow company to use attributable model which will
be used to revenue back up line through all the activities that involved in creating the lead’s
journey through the marketing funnel,
The lead, prospects and customers would be three key themes for the marketing plan to acquire a
pipeline of the properties to be marketed

19
Source: https://www.google.co.in/url?
sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=2ahUKEwjYg9asz8bdAh
UF5o8KHe9qD6oQjRx6BAgBEAU&url=https%3A%2F%2Fopen.lib.umn.edu
%2Fprinciplesmarketing%2Fchapter%2F13-3-sales-metrics-measures
%2F&psig=AOvVaw3SNXGklDI5NzvJEMrmRMgK&ust=1537431105509802
Tope of funnel- Generate leads
It would be one by reaching as many clients as Cockatoo Real Estate Private Limited could. It
would be done by using the strategic alliance, using online marketing and joint ventures in
Sydney.
Middle of funnel- Nurturing prospects
Focus on business to business so that that existing business organization who is already working
in this industry could outsource their work to Cockatoo Real Estate Private Limited.
Bottom of funnel- Converting leads to clients
After finding the potential clients from the undertaken sources, Cockatoo Real Estate Private
Limited should focus on converting the leads into clients.
This marketing plan focuses on keeping every concerned person of team vigilant about the steps
taken marketing initiatives. The markeing measures which could be used by management would
be competitor’s sales, available opportunity and potential clients.

20
After that, management could use the possible marketing channels to communicate with the
clients in market. This could be use of online marketing, cyber computing system and loyalty
card approach to spread the information about the offered service to clients.
Another marketing plan to acquire the pipeline of properties to be marketed would be entering
into the strategic alliance such as joint venture, merger and amalgamation. It would allow
Cockatoo Real Estate Private Limited to easily grab the potential market in effective manner.
Risk Management Plan
The risk management plan for setting up new 10 branches in Sydney would be as below.
Identify the risk- The management of Cockatoo Real Estate Private Limited would need to
identify the risk of the particular project such as arrangement of the finance, marketing risk,
operation risk and other related risk which may be found due to the internal and external busienss
factors.
Assess the risk- In this case; Cockatoo Real Estate Private Limited might face risk of setting up
coordination in the process and arranging the proper capital for financing the new project. These
risk falls under high probability of the risk case (Ibn-Homaid, and. Tijani. 2015, 80-86).
Formulate the risk management plan- In order to mitigate these risks, Cockatoo Real Estate
Private Limited could either transfer this risk by taking the insurance cover or reduce the risk by
lower down the financial leverage of project.
Source: https://www.pmis-consulting.com/example-project-risks-good-and-bad-practice/

21
Implementing the risk management strategies- Cockatoo Real Estate Private Limited needs to
lower down the debt portion and also needs to take the insurance cover to eliminate the
uncertainty.
Follow up- This is the end step which helps Cockatoo Real Estate Private Limited to
consistently check-up the undertaken programs and strategies
Conclusion
After analysing all the required details and information of the marketing plan and forecasted
future cash flow projections, it could be inferred that Cockatoo Real Estate Private Limited
should expand its business in Sydney. As per the projection, it would be beneficial for company
to strengthen its business outcomes if it accept the proposal to set up opening up of pilot branch
in Camper down and if successful will open 9 other inner suburban branches in Sydney over the
next 12 months.

22
References
Chapman, Chris, and Stephen Ward. 2013. Project risk management: processes, techniques, and
insights. Wiley,
Damodaran, Aswath. Damodaran., 2016. security analysis for investment and corporate finance.
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Hartmann, Thomas, and Tejo Spit. 2016 "Legitimizing differentiated flood protection levels–
Consequences of the European flood risk management plan." Environmental Science &
Policy 55 : 361-367.
Ibn-Homaid, Norra-Tome., and I. A. Tijani. 2015 "Financial analysis of a construction company
in Saudi Arabia." International Journal of Construction Engineering and Management 4, no. 3:
80-86.
Lin, Chi-Chen, An-An Chiu, Shaio Yan Huang, and David C. Yen. 2015: "Detecting the
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experts’ judgments." Knowledge-Based Systems 89 (1) 459-470.
Uechi, Lisa, Tatsuya Akutsu, H. Eugene Stanley, Alan J. Marcus, and Dror Y. Kenett. 2015
"Sector dominance ratio analysis of financial markets." Physica A: Statistical Mechanics and its
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Vogel, Harold L., 2014.. Entertainment industry economics: A guide for financial analysis.
Australia: Cambridge University Press,

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