Financial Decision Making

Financial Decision
Making

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................3
MAIN BODY...................................................................................................................................3
PART 1 – Industry Overview..........................................................................................................3
PART 2 – Business Performance Analysis......................................................................................5
2.1 Statement of Profits & Loss...................................................................................................5
2.2 Statement of Financial Position.............................................................................................7
2.3 Statement of Cash Flows ......................................................................................................9
PART 3 – Investment Appraisal ...................................................................................................10
3.1.a Management Forecast.......................................................................................................10
3.1.b Investment Appraisal Techniques.....................................................................................10
3.2 Sources of Finance...............................................................................................................11
......................................................................................................................................................13
REFERENCES .............................................................................................................................14
APPENDIX ...................................................................................................................................16

EXECUTIVE SUMMARY
This report summarised that Coffee industry of UK perform well or contribute in the
economy through generating revenue. Main purpose of this study is to evaluate the financial
performance of Roast Ltd. On the basis of the results, it has been recommend that Starbucks of
UK should acquisition Roast Ltd. All the financial statements such as Profit & Loss, Balance
sheet and cash flows critically analysed or evaluate the overall performance of the company. In
addition, with the help of various appraisal techniques for the investment helps in evaluating and
making effective decision regarding acquisition of Roast Ltd by Starbucks.
MAIN BODY
PART 1 – Industry Overview
In the Coffee industry, coffee is the second most traded product around $ 20 billion
revenue this industry generate as well as they produce 210,325 jobs in the UK. This sector
achieve the 20 years continuous sustainable growth where it grow around 7.9% for the period of
2018. Almost £ 10.1 billion coffee shop open in the UK and market size around 25,483 and
average price of regular coffee is £ 2.66. There are some leading coffee operators such as Costa,
Nero and Starbucks (UK's Coffee Industry, 2019). One of the favourite coffee products are
LATTE which is on top and second most demanded is CAPPUCCINO and third one is
AMARICANO.

Illustration 1: UK's Coffee Industry, 2019.
(Source: UK's Coffee Industry. 2019)
Branded coffee shops secure the around 8.7% of growth in 2018 where it reached around
8149 stores. It is the highly revenue generated sector which helps the economy to grow as well as
satisfy the consumers needs through offering quality products as well as services. Coffee
industry face the various challenges as well as opportunities which required to analyse by the
organizations in order to make their future strategies for the growth. Brexit negatively impact the
UK coffee industry because of change in the nature of UK from the European Union which
affect the role of Britain (Baker, 2018). There are some challenges such as legislation & free
trade, continuation of free movement of labour, trade tariff in the UK government etc. Because
of Allegra indicated Brexit, 49% of industry leaders survived which further impact their business
and revenue as well. 46% are neutral and 5% reported the positive impact. It has been reported
that consumer confidence affected by 69% and 87% industry leaders agreed that Brexit impact
the UK's economy. There are some opportunities in the Coffee industry where these three brand
of this sector such as Costa Coffee, Caffè Nero and Starbucks. They has 2655 outlets, 683 and
992 stores in the UK respectively. According to Allegra forecasting method, by 2023 coffee
stores will exceed 10000 outlets in the UK market and get the 5% annual growth.