Financial Decision Making

FINANCIAL
DECISION MAKING

Table of Contents
EXECUTIVE SUMMARY ............................................................................................................3
MAIN BODY...................................................................................................................................3
Part 1. Industry review:...............................................................................................................3
Part 2. Business performance analysis:.......................................................................................3
Part 3. Investment appraisals:...................................................................................................10
REFERENCES..............................................................................................................................14

EXECUTIVE SUMMARY
The project report outlines the financial decision-making process for the term. Due to the
financial company's performance, different kinds of financial reports are analysed during the first
part of the project report. As well as investment appraisal is performed in the second part of the
project document using various types of strategies such as payback period, return rate of
accounting and net present value. So overall discussion, it can be recommend to Starbucks
company that they should acquire the Roasted limited company. This is so because their most of
the statements are presenting positive results.
MAIN BODY
Part 1. Industry review:
In the aspect of United Kingdom, analysis of coffee industry house is as follows
 During year 2018, market of coffee shops has been grew up by 7.9% turnover.
 In the United Kingdom, companies who have largest market share are Costa limited, Pret
A Manger, Caffe Nero Group holdings limited and many more.
 The key opportunity for this industry is to expand their business into new markets such as
China, India in which population is larger (Porter and Norton, 2012).
 This industry is facing some challenges too like availability of more drinks alternative is
leading to reduction of attraction of public towards coffee.
Part 2. Business performance analysis:
2.1 Analysis of profit and loss account statement.
The profit and loss account statement is some kind of document contain information on
overall profit and loss over a specified period of time (Huston, Finke and Smith, 2012). In fact,
the primary objective of this claim is to evaluate the financial situation of corporations with the
assistance of total profits and losses. On the basis of given profit and loss account of Roast
limited company, it can be find out that the value of sales revenues is higher in year 2018 as
compare to year 2017. It was of 2022000 in year 2017 which raised by 25.32% and became of
2534000. As a result their cost of revenue was also higher in year 2018. Their gross profit was of
517000 in year 2017 which raised in next year till 544000. Their operating income was nil in

year 2017 and in year 2018, it was of 60000. They gained operating profit in both of years. In
year 2017, it was of 51000 which increased in next year by 149% and became of 127000 in year
2018. The amount of profit before tax was of 45000 in financial year 2017 that increased in next
year and became of 101000 in year 2018. In the end they earned net revenue of 36000 in year
2017 and 81000 in year 2018. Herein below some ratios are calculated in order to make proper
analysis of profit and loss account of Roast world plc:
2017 2018
Gross profit 517 544
Net sales 2022 2534
Calculation 517/2022*100 544/2534*100
Gross profit ratio 25.57% 21.47%
2017 2018
Net profit 36 81
Net sales 2022 2534
Calculation 36/2022*100 81/2534*100
Net profit ratio 1.78% 3.20%
2017 2018
Operating profit 51 127
Net sales 2022 2534
Calculation 51/2022*100 127/2534*100
Operating profit ratio 2.52% 5.01%
The above calculated ratios are indicating that company's current position of this company is
better as compare to previous year. Such as their net profit ratio in year 2017 was of 1.78% but
in year 2018, it was of 3.20%. It is so because of higher value of net profit in year 2018. In the