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 summarise about role of financial analysis techniques in the aspect of
measuring monetary position. The report is categorised into tasks which are different from each
other. Such as part one abstracts information about coffee industry of United Kingdom. As well
as part second summarise about monetary performance of Roast plc and their performance is
better in year 2018. Such as their net profit was of 36000 pounds in year 2017 while in year
2018, this was of 81000 pounds. Similar as their total assets also higher in year 2018 as compare
to year 2017. In 2017, it was of 1017000 and in 2018, it was of 1443000 pounds. Along with
cash conversion cycle of company was better in year 2017. In the end part of report, different
investment appraisal techniques are summarised and two source of finance also covered in a
detailed manner.
MAIN BODY
Part 1. Industry review:
In accordance of research, herein below review of current UK coffee house industry is done in
such manner:
 The main opportunity for UK coffee industry is to spread out their services across the
nations such as in market of china and Asian countries in which consumption of coffee is
higher.
 Along with this industry has some challenges also. For example, in current market
scenario there are more options of drink products. Due to which attraction of public is
diverting.
 The gross value added generated by coffee industry in United Kingdom has been
increasing year by year. Such as in year 2016, it was of 3298 million pound while in year
2018, this raised till 3707 million (Cafe Industry: UK, 2019.).
 In the aspect of market of United Kingdom major companies who are leading in coffee
market share as costa limited, Preta manager etc.
Part 2. Business performance analysis:
2.1 Analysis of profit and loss account statement.

The profit and loss statement shows, amount of net profit and loss that company has
made in an accounting cycle after subtracting all expenses from revenue. If the total spending is
less than the sales revenue then there will be net profit (Agarwal and Mazumder, 2013). The
statement of profit and loss is regarded one of the most important document to keep a close eye
on an overall financial health. Based on Roast limited company's given profits and losses
account, this can be found that the sales revenue in 2018 is greater than in 2017. It was
£2022000 in 2017, that enhanced by 25.32 percent and became of £2534000. As a consequence,
their income expense in 2018 was also greater. Their gross profit amounted to £517000 in 2017,
which increased to £544000 in the next year. The value of operating income was nil in 2017 and
£60000 in 2018. In both years, they earned operating profit. This was £51000 in 2017, but grew
by 149 percent in the coming year and became £127000 in 2018. In the fiscal year 2017, the
amount of revenue before tax was 45000, which raised over the next year till £101000. Roast
limited company finally earned a net income of £36,000 in 2017 and £81,000 in 2018. Here are
some ratios measured to better evaluate Roast world company's profit and loss account:
All data in £'000 except GP
ratio
2017 2018
Gross profit 517 544
Net sales 2022 2534
Calculation 517/2022*100 544/2534*100
Gross profit ratio 25.57% 21.47%
All data in £'000 except net
profit ratio
2017 2018
Net profit 36 81
Net sales 2022 2534
Calculation 36/2022*100 81/2534*100
Net profit ratio 1.78% 3.20%