Financial Decision Making

Financial Decision Making

Contents
EXECUTIVE SUMMARY.............................................................................................................1
PART 1: Industry Review...............................................................................................................1
Top line review of current UK coffee house industry.................................................................1
PART 2: Business Performance Analysis.......................................................................................1
2.1 Statement of profit and loss...................................................................................................1
2.2 Statement of financial position..............................................................................................3
2.3 Cash Flow Statement.............................................................................................................5
Part 3: Sources of Finance and Investment Appraisal.....................................................................8
3.1 Investment appraisal..............................................................................................................8
3.2 Sources of Finance...............................................................................................................10
REFERENCES..............................................................................................................................13

EXECUTIVE SUMMARY
The concept of this paper details the financial decision-making process for the project.
The first such segment of the topic report examines various forms of financial reports, depending
on the finance firm's performance. In comparison to both the expense estimate, the second
portion of the relevant article includes various forms of methods involving accounting profit
cost, net present value, and payback date. The main discussion may be introduced to Starbucks
collective where they purchase from the limited company Roasted. Since the majority of their
statements have seen positive effects which states the good image of company.
PART 1: Industry Review
Top line review of current UK coffee house industry
It has already been established at current time that coffee sector in the UK is growing year to
year. The main explanation for market development is that consumers are growing increasingly
attached to beverages and snacks. UK's coffee shop sector is wide enough yet to add to the
growth of the country benefit of the entire. The following criteria should be listed in order to
evaluate the market analysis of it:
 As per study, the coffee industry's gross GDP output for 2017 contributed to about 3.7
billion pounds (Current coffee house industry of United Kingdom, 2019).
 This has been projected that the sector's sales would grow by 4.8 per cent over the
coming years and that the overall volume will be about 6.6 billion pounds.
 The big resource opens to companies working in this field is to promote these coffee or
other drinks that are better tailored to fitness-friendly persons because they neglect milk
coffee.
 There are many companies working in this sector. These would be Roast Ltd, Coffee
Republic. Starbucks, Costa Coffee, 2U Cafe, Muffin Split, Ritazza Caffee, Puccino's,
Nero Caffe etc.
PART 2: Business Performance Analysis
2.1 Statement of profit and loss
For the benefit of both reporting in the context primary, secondary, operational and non-
operating costs along with revenue, both corporate companies produce a report on an annual
1

basis such that productivity may be calculated. In order to draw significant amounts of creditors,
it is extremely necessary for a business to insure that even the cash flow statement is consistently
established such that interested stakeholders can predict the expected profits that they will
produce in the possibility (Almenberg and Dreber, 2015). In the Roast Ltd.’s declaration of
income and losses showing that the business's sales were 2022 in 2017, this is raised to 2534, this
implies that it would enable the firm boost its productivity. Total operating earnings are now up
from 517 to 544 for the year ended 2018. As a result of this net income is also raised from 51 to
127 for 2017. The sales analysis also indicates a rise in net income. This was 36 in 2017, which
is raised to 81 in 2018. The preceding factors are determined for the aim of assessing financial
output of the business:
1. Gross profit ratio: This proportion is determined for the purpose of deciding the relation
among gross margin and profits. The key goal of utilizing it is to assess a company's
operating efficiency. This ratio may be measured in order to determine whether Roast Ltd
is capable of producing reasonable income or not.
2. Operating profit ratio: This figure is estimated to assess an entity's capacity to earn
income by covering all of the operating expenses. The executives must also calculate the
ability of Roast Ltd to produce income for the upcoming cycle (Barth, Papageorge, &
Thom, 2017).
3. Net income ratio: this measure is measured as it is determined after covering all costs,
bonuses, taxes and fees in order to analyse the total amount of earnings produced for the
year. It may be used to assess whether or not Roast Ltd would meet the aim of earning
income.
Name of ratio Particulars Formula 2018 2017
Gross profit ratio
Gross profit Gross profit /
Revenues *
544 517
Revenues 2534 2022
Results 21.47% 25.57%
Operating profit ratio
Operating
profit
Operating profit /
Revenues *
127 51
2