Financial Report Analysis

This paper analyzes the financial report of Mess Busters, a home organizing company in Vancouver, Langley, and Richmond. It focuses on the company's budget, competition, financial ratios, and profitability.

Running Head: FINANCIAL REPORT ANALYSIS 1
Mess Busters Financial Report Analysis
Name
Institution

Financial Report Analysis 2
Executive summary
Generally the primary focus of this paper will be aimed at analysing the Mess Busters
Company considering its venture in Vancouver, Langley and Richmond. Thus the project is
based in establishing a home organizing company that will specifically deliver home related
services such as providing privilege in home organizing and space utilization for individuals
who do not have time for organizing their homes after work every day. Therefore
considering the present competition in home organizing service provision globally, mess
busters is facing stiff competition from potential rivals who are Harmony organizers and
Declutter organizers based in Vancouver. Entirely, the budgetary costs of this project are
prospected to be about 1 lakh to 50. The stated financial budget plan is projected to meet the
needs of the business largely (Khasanov, 2016). Conclusively, since the company aspires in
being the best home organizers in Vancouver, Langley, and Richmond strategic financial data
will be outlined strategically so that every business demand is fully attained.

Financial Report Analysis 3
Introduction
Over the years, most people and families have been demanding services from experts who
can effectively assist them in shaping their homes. Therefore, home organizers have emerged
in taking the role in helping families and individuals in performing the task effectively. There
should be much understanding when providing the service as each customer will need proper
organization of their houses in accordance to their needs and preferences which will augment
their living standards at large. Due to this reason, the starting up capital significantly varies
based on the type of service a client may desire. Other organizers may provide redesigning
service by completely redesigning and adjusting the client’s home spaces. Therefore, the
major focus of this paper will aim at analysing the financial statements of mess busters as it
plans to expand its business in the three states (McCrea, 2013). Additionally, essential
financial ratios such as the NPV, IRR, and cash flows will be used in order to reflect how the
business will be performing in the upcoming future. Finally, the company’s competitive
advantage will be critically analysed so as competition from Harmony organizers and
Declutter organizers can be reduced which will enhance the company’s sales and revenue.
Financial Analysis of the Home Organizing Business Establishment
The Declutter Mother, Goodbye Clutter and Free from Clutter are the major
organizing companies in Surrey, Burnaby and Vancouver area. These companies specifically
specialize in decluttering and home organizing through concise comprehension and being
patient at all times. Thus their major objective is aiding in alleviation of stress and fear
stimulated by disorganized spaces within. Through the creation of flow and function within
people’s homes they provide improved accessibility and utilization of one’s personal
possessions (Khasanov, 2016). Their vision is to make sure that one’s home is comfortable,
peaceful, and serene. Due to their effective services in organizing homes they have a good
reputation in Surrey, Burnaby and Vancouver area.

Financial Report Analysis 4
The Mess Busters Company has established itself in consolidating and improving its financial
position in the Vancouver market, specifically relating to the sales volume and its customer
satisfaction. Thus the home organizing company is initiating various processes so that it can
attain its prospective goals and objectives. Considering the project establishment of the
company, the business to be started is prospected to increase value which will in the end
enhance the firm’s portfolio.
The Mess Busters business model is specifically cantered on the idea of effectively managing
and planning homes. Thus according to the financial report, the projection of the first years
(2014) will forestall the volume of sales in an average manner. Additionally the financial
analysis will aid the company in planning thus ramping up the business, hence success is
revealed thus ensuring the company is not under-capitalized on a daily basis. Therefore, with
the establishment of a new home organizing company in covering Vancouver, Langley, and
Richmond regions, about 1 lakh 50 is the prospected budget that will entirely fund the
project. Thus the entire amount provided by the enterprise will be substantial for the company
to venture in Vancouver, Langley, and Richmond cities (Kessler, 2015).
Thus with the company’s financial determination the business aims at gaining back the
capital invested within a period of 5 years (2019-2024) considering a 20% interest rate. Thus
focusing on the company’s planning, the business is expected to have a break-even in the 5th
year which will highly reflect on the organizational sales due to the increasing sales foreseen
by the company. Hence, the level of profitability for the companies for the present period in
year one to year five is anticipated to increase within the years. Considering these results the
business is prospected not to have much high cash flow implications.
Moreover, a bank loan of 20% interest rate will be effective for the business to cater all the
needs of the business. Some essential assets and human labour will be required for the

Financial Report Analysis 5
business to establish itself in the Vancouver and the other markets as stated in the rest of the
paper.
Net Present Value (NPV)
The NPV is significant as it helps in stating the need of a project focusing specifically the
amount required to be spent in the home organizing project. The most important factor that
makes NPV very useful is that is takes into account the cash being spent and the time period
that one is required to get it back. For example, considering our project since 1 lakh 50 will
be spent then it is prospected that it will be retrieved with time being a basic factor (Esswein,
2011).
Considering the investment of the business to be 1 lakh 50, and time to be 5 years, and rate of
return to be 10%, then NPV will be computed as follows:
Particulars Value
Initial
investment
988.38
Cash flow 1200
Time 5
Rate of return 10%
NPV 1043.831
Figure 2: NPV computation
Considering the results shown in figure 2 above, the net present value (NPV) is positive
which is conducive for the project prospected.
Mess Buster’s IRR (2019-2023)
The IRR is often utilized by firms in assessing the profits of a company and stating various
project capitals. Although with the use of budgetary metrics various financial scenarios can
easily be assessed such as investments and mortgages for the company. The IRR aids in
stating the cash flows to whether they are positive or negative to the NPV (Phillips, 2012). In

Financial Report Analysis 6
our case a discounted cash flow was used so as to acquire the net present value (NPV).
Considering Mess Busters business the initial investment being 1 lakh 50 then its profits will
substantially increase due time as exhibited in figure 3.
Period 2019 2020 2021 2022 2023
Cash inflow -688.38 500 450 300 520
IRR 54%
Figure 3: IRR calculations
Cash Flow
Years cash
inflows
cash outflows Net cash flows
Initial investment $988.38 -$988.38
2019 $688.38 $80 #VALUE!
2020 $500 $75 #VALUE!
2021 $450 $42 #VALUE!
2022 $300 $31 #VALUE!
2023 $520 $60 #VALUE!
2024 $400 $41 #VALUE!
Discount rate =
20%
Figure 4: Net Cash Flows for 2019 to 2024
Break-even Analysis

Financial Report Analysis 7
Considering the Mess Busters home organizers, the prospected cash flows show that there are
sufficient funds that can cater for the business expenses and also help in boosting the business
performance processes (Lee, 2017).
Profitability Analysis
Considering the Mess Busters home organizing business profitability of the business is
effectively assessed using the enterprise profitability ratios as shown in the section below.
The profit and loss ratios are effective as they assist the company in augmenting its
performance and boosting its operations in Vancouver, Langley and Richmond regions. The
major objective of the Mess Busters business is increasing profit which is complements the
stated ratio as it helps evaluate how the company effectively meets its targeted goals and
objectives. Therefore, in this section some ratios to be used in helping the company establish
itself in Vancouver, Langley and Richmond regions are the gross profit ratios, the net profit
ratios, return on assets, Asset turnover, and return on equity and so on.
PARTICULARS 2019 2020 2021 2022
GROSS PROFIT 12090.5 14785.7 17,049.85 19,644.89
NET SALES 41818.97 52476.5
7
71681.76 77291.23
PAT 2714.1 3273.2 4412.86 4693.1
AVG. TOTAL ASSETS 19776.61 35253.6 40743.05 50016.41

Financial Report Analysis 8
6
AVG. EQUITY SHARE HOLDER'S
FUND
11098.31 22515.9
4
25079.82 20217.75
Considering the above graph, if the investment capital is poorly used by the company it will
lead to a downward trend of the company’s gross profits. This will imply that the company
will be losing its market value and its production rate thus maintaining profitable gross
margin is effective for the business. Additionally, considering a starting capital of 1 lakh 50,
the business should not utilize much of its capital in focusing on the expenses initiated capital
will be entirely used up.
Using profitability ratios of a company it enables in assessing the company’s asset turnover
ratios if they declining of increased. Consequently, the after the budget of the company has
been established it should meet the required standards focusing on the ROE of the business.
The ROE of the company must be even considering the trading on equity of the business in
the Vancouver, Langley, and Richmond markets.
This job is a big business, started in 1984, the National Association of Professional
Organizers (NAPO) having more than 4000 employees in 22 countries at present. It is a kind
of luxury service and clientele is increasing continuously in this profession. Although this
business is still at smaller level. The TV shows like Mission: it increases the demand of
organizers because these shows informed the population that how the professional organizers
do for living (Phillips, 2012).
Financial Market Analysis
The market analysis shows that the organizers’ industry will be growing in Canada.
As people is spending their money to the purchase the goods and different kind of stuff
whether clothes, shoes or home accessories. The purchase power of people will continue to

Financial Report Analysis 9
grow in the future also. Therefore, the organizers are required to set the stuff at home as
people are very busy with work. Considering much involvement in office duties currently,
people have no time in organizing their homes. According to scientific research it is projected
that the need for home organization services and products will augment by about 3.4% per
annum in 2024. This is different from the 2019’s deceleration in the market sales. Thus
improvement in the business will be much effective within the forecast period as the recovery
session would have been completed. Additional growth in coupled by consumer spending
with also improves the sales. Considering all this the nature of the home organization
industry will significantly rise as shown in the graph below.
Figure 1: The value of home organization industry from 2019 to 2024
(Source: Statista)
According to the above graph, statistics is shown that the value of home organization market
globally from 2019 to 2024 was valued at $8.55 Billion which exhibited significant rise in the
market.
Market Segment
According to Statista, 2018, there are almost 11000 apartments and other and
approximately 17000 total starts in Vancouver. As population is growing day by day, the
small apartments are increasing, and the space gets so small to live in. Small families live in

Financial Report Analysis 10
2-bedroom apartments and small houses (Lane, 2015). Therefore, the service provided by our
company is to plan and organize in a way to free the space and organize the home, so the
people living in the house can be stress free and enjoy their time in the house.
Figure: 1 Number of Dwelling starts in Vancouver [Source: (Statista, 2018)]
Sales and Marketing Plan
Swot Analysis
Considering the tough competition in the today’s market, a SWOT framework is helpful in
assisting companies in improving their market shares and sales internationally. Focusing on
Mess Busters Company, its SWOT framework will be helpful for the business to expand its
markets (Kiefer, 2009, December). Thus with the SWOT analysis comprehensive outline will
be laid out focusing specifically on the strengths, weaknesses, opportunities, and threats that
the business will encounter are expands or develops its business activities.
Strengths Weaknesses
● Increased barrier of entry ● Offering of similar services and products
by rivals

Financial Report Analysis 11
● Restricted start-up risk
● Increased gross margin
● Experienced owner operations
● Limited rivalry in areas of Vancouver,
Langley, and Richmond
● Limited start-up costs
● Restricted flexibility in the pricing
process
Opportunities Threats
● Capability of establishing other stores
in different cities
● Establishment of proprietor products
● Affiliate relation with linked business
vendors
● Establishment of the business wholesale
distribution systems
● Augmentation of insurance costs
● Services already provided by major
rivals
● Price of inputs led by upward pricing
policies
● Government regulations may impart the
business
Conclusion
Conclusively, the expansion of Mess Busters home organizer is centred on a starting capital
of about 1 lakh 50 and the prospected 1 lakh 50. Have such amount of capital the business

Financial Report Analysis 12
owners aspire in entering the market having unique and quality home organizing equipment
in order to outfit their competitors (Harmony organizers and Declutter organizers). Thus the
profitability of the business considering the high levels of competition will be assessed
through mitigation of prospective risks involved.

Financial Report Analysis 13
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