Finical Management Assessment 2022

FINANCIAL MANAGEMENT
0
Financial Management
Name of the Student:
Name of the University:
Author’s Note

FINANCIAL MANAGEMENT
1
Executive Summary
The main purpose of the assessment is to formulate a business plan which would be
incorporating a plan to meet the financial needs for the business which is to be established. The
plan of Aunt Hattie is to start a business which would be importing geodes in order for the
business to generate appropriate revenue from conducting the activities of the business. The
business would be creating place utility and selling the product in the market of London. The
analysis would be including income statement and balance sheet showing the financial aspects of
the business. The analysis also includes breakeven and situational analysis so that the viability of
the business can be established.

FINANCIAL MANAGEMENT
2
Table of Contents
Introduction......................................................................................................................................3
Discussion........................................................................................................................................4
Intimal Investment for the Business............................................................................................4
Assumption and Sensitivity Analysis..........................................................................................5
Breakeven Analysis\....................................................................................................................9
Income Statement......................................................................................................................10
Balance Sheet.............................................................................................................................13
Cash Flow Statement for the Business (Monthly).....................................................................15
Conclusion and Recommendation.................................................................................................18
Reflection.......................................................................................................................................20
Reference.......................................................................................................................................21

FINANCIAL MANAGEMENT
3
Introduction
The focus of the assessment is to undertake an analysis on viability of a business plan
which is provided in a case study. The case shows that Aunt Hattie has decided to open a venture
which would be supplying geodes in the country and therefore requires appropriate financial plan
so that the viability of the plan can be realized. The idea of the business is to sell geodes which
would be attracting appropriate income from the activities of the business. Aunt Hattie wants to
set up a business which would be based on importing geodes from Uruguay so that the same can
be sold in Europe. It is the plan of aunt to set up a tie up agreement with one of her colleagues
who has an established business in Uruguay of supply geodes. For establishing the business,
Aunt Hattie would be requiring permit for operating and importing products which can be sold in
the market (McKeever 2016). The main supplier of the business would be Colada Geodes which
is an established business operating in Uruguay. The analysis for viability of the business
undertaking would be including breakeven analysis which would be estimating the minimum
amount for sales which the business must reach so as to continue its operations. The financial
implication of the project is important as it provides indication whether the project would be
lucrative for Aunt Hattie or not. The owner of the business is also of the opinion that if products
are imported in bulk quantities than it would also be attracting discounts which would help the
business to enhance the income which is generated by the firm. In addition to this, it would also
minimize the costs of operations and thereby help in promoting efficiency in the operations of
the business.
The financial plan for the project would be incorporating a forecasted income statement,
balance sheet and statement of cash flow for assessing the revenue and expenses in context of the
project. The business plan would be including assumptions and notes to accounts so that

FINANCIAL MANAGEMENT
4
different numerical figures which is shown can be justified. The analysis also includes
Sensitivity analysis which would allow Aunt Hattie to make comparison between different
scenarios. In addition to this, time value of the estimated profitability of the business will be
evaluated with the help of Discounted Cash Flow Model (Burns and Dewhurst 2016). In addition
to this, the viability of the project would also be determined with the help of breakeven analysis
showing the level of sales which the business is required to achieve so that it can cover its costs
and thereby proceed towards making profits for the business.
Discussion
Intimal Investment for the Business
In order to establish the new business, the owner would be in need of an amount of initial
capital so that the start-up expenses of the business are met in an effective manner. The plan of
Aunt Hattie is to procure geodes from Colada Geodes which is a dealer operating in Uruguay.
The geodes would be imported and therefore for such a purpose as well, the senior officials of
the company needs to have appropriate cash in hand for assisting the whole set up for the
business. It is also to be noted that the business would be required to handle numerous expenses
and also purchase necessary assets for the smooth operations of the business process
(Brinckmann and Kim 2015). The financial plan which will be formulated for the project would
be including detailed disclosures regarding the different expenses which the owner is required to
bear so that efficiency is preserved in the operations of the entity.
It is to be noted that there are several sources available to the business for raising capital
such as internal sources as well as external sources. In this case, Aunt Hattie had taken an early
retirement from work for which she received an amount of $ 450,000 as compensation for early
retirement. Aunt Hattie wants to invest all of the amount in the new business undertaking of

FINANCIAL MANAGEMENT
5
geodes. In addition to the capital fund which is provided by the owner, the business would also
be taking a loan of $ 40,000 so that an appropriate capital structure can be formed. One of the
reasons for taking a loan is to take advantage of leverage situations which would also help the
business in reducing the costs. Another major advantage of using debt capital in the capital mix
of the business is that interest payments related to the same are tax deductible. In other words, it
provides tax advantage to a business and therefore considered to be a major source for businesses
to draw finances (Hiduke and Ryan 2013). The determination of capital structure for the entity is
considered to be important as the same is considered to be an important component of financial
plan of a business. The initial capital requirements would be met from the lumpsum amount
which Aunt Hattie would be receiving. There is certain assumption which are taken for
formulating the financial plan of the business which is mainly associated with the preparation of
financial plan of the business (Bridge and Hegarty 2013). The business would be operating on
the idea that it would be supplying geodes which are imported from Uruguay so that the business
is able to create a place utility in the operational process of the business. In accordance with the
financial plan of business, Aunt Hattie needs to undertake certain initial expenses for making the
business operational and also for meeting the initial expenses which is related to the business.
The initial investments in assets for the business would be for refrigerator, development of
websites. In addition to this, the business would also be requiring working capital which is
estimated to be at £ 95,300.58. The capital structure of the business would be enhanced from the
next year as the management of the company is expecting an hike in demand of the products of
the business.