Financial Decision Making

FINANCIAL
DECISION MAKING

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................3
MAIN BODY...................................................................................................................................3
Part1: Industry review:...........................................................................................................3
Part 2: Business performance analysis:..................................................................................3
2.1 Assessment of statement of P&L.................................................................................3
2.2 Examination of financial position statement...............................................................5
2.3 Analysis of Statement of cash flows:...........................................................................8
Part 3: Investment appraisals:...............................................................................................11
3.1. a Managerial forecast................................................................................................11
3.1 b Investment appraisal technique...............................................................................11
3.2 Source of finance.......................................................................................................12
REFERENCES..............................................................................................................................14

EXECUTIVE SUMMARY
The document of the feasibility study explains the phase of financial decision making for
the concept. According to the output of the financial firm, the very first section of the
subject report analyzes various types of financial results. In addition to both the expenditure
calculation, different kind of techniques including accounting return rate, net present value and
payback period are used in the second section of the subject report. So it can be proposed to
Starbucks group original conversation which they buy the limited company Roasted. Because the
bulk of their comments had favourable outcomes.
MAIN BODY
Part1: Industry review:
In the present time, it has been determined that coffee industry is increasing year by year
in UK (Nilsson, Nordvall and Isberg, 2016). The main reason for growth in industry is because
of customer getting more attached towards drinks and beverages. There are some specific
analyses of coffee industry in UK that are discussed below:
 In year 2018, the overall market share of coffee shops increased by a good percentage i.e.
7.9% which is marked the highest increase for all time.
 In UK there are number of coffee shops or even bigger companies which provide
favourable services and product as per the customer requirement. Some of the biggest
companies are Costa limited, Caffe Nero Group etc.
 Countries like China and India are considered to be the most suitable nation for these
companies for expansion as people of these nations are not too much attached with
beverages and drinks.
In recent time, it has been also determined that there various issues which are faced by this
industry such as customer are more interested in drinking healthy drinks, alternative available at
lower cost etc.
Part 2: Business performance analysis:
2.1 Assessment of statement of P&L
The report on profit and loss report is a kind of report that includes information on total
profits and losses over a given duration of time. Based on Roast limited business's specified

detailed financial consideration, this can be found that perhaps the price of revenues in 2018 is
greater than in 2017. In contrast, the main goal of such an assertion is to assess the financial
position of companies with both the help of complete assets and liabilities (Brusca, Gómez‐
villegas and Montesinos, 2016). It became 2022000 in 2017 that increased by 25.32 percent and
had been 2534000. The operating profit in 2017 was zero and that was 60,000 throughout 2018.
For both cases, they earned net profit As just a consequence, overall sales loss in 2018 was also
larger. A gross profit in 2017 was 517,000, which rose to 544,000 in the next year. This was
51000 in 2017, but grew about 149 percent in the coming year and becoming 127000 in 2018.
They eventually reported net income of 36,000 throughout 2017 as well as 81,000 during 2018.
The level of profitability before tax in the economic year 2017 were 45000, which enhanced
throughout the following year in 2018 were 101000. Overall incremented trend in organisational
context is recorded for the year 2018. Here are some equations measured to better evaluate Roast
world plc's detailed financial account:
2018 £'000 2017 £'000
Net sales 2534 2022
Gross profit 544 517
Gross profit ratio 21.47% 25.57%
Calculation 544/2534*100 517/2022*100
2018 £'000 2017 £'000
Net sales 2534 2022
Net profit 81 36
Net profit ratio 3.20% 1.78%
Calculation 81/2534*100 36/2022*100
2018 £'000 2017 £'000
Operating profit 127 51
Net sales 2534 2022