Surf N Sea 2020 Budget Report

The Surf N Sea 2020 Budget Report provides insights on the expected results, product analysis, position of cash, market conditions and recommendations. The report indicates that the business is profitable with a net profit margin of 17.50% and gross margins of 20.94%. The product analysis shows that beach umbrellas have the highest contribution margin. The cash flow statement shows that there is enough cash in hand with the company. The report recommends curbing admin expenses to earn more profit against the business.

Surf N Sea
2020 Budget Report
Date of Board Meeting
Name of Report
Author(s)

Approved by:
Surf N Sea: 2020 Budget
Board Report
Page 2

Contents
1. Expected Results........................................................................................................................... 4
2. Product Analysis........................................................................................................................... 5
Table 1: Contribution Margin by Product................................................................................ 5
3. Position of Cash............................................................................................................................. 6
4. Analysis of Market Conditions................................................................................................. 8
5. Summary of Recommendations.............................................................................................. 9
References......................................................................................................................................... 11
Surf N Sea: 2020 Budget
Board Report
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1. Expected Results
Sea surf Limited is a company which is involved in providing the business of
swimwear and beach accessories. The company is currently opting for the place at
rent in Kirra and majorly is engaged in manufacturing of four major products such as
swim suits, board’s shorts for men, beach towels and beach umbrellas. The company’s
current scenario indicates the performance of the business and it can be observed that
the business of the company is going on the profitable front as the net profit margin
maintained by the business is 17.50% whereas the gross margins that are maintained
by the company is 20.94% (Trugman, 2016).
Further, the operating expenses are the expenses that are the daily basis expenses. The
admin expenses should be curbed by the firm in order to earn more profit against the
business. Further the position in terms of the sales, the sales is $2363800 and the cost
of goods sold is $1868817, the gross profit is $494983 and this is made sure by the
company that the surf sea is purely engaged in revitalising its performance. Further
the collection of the sales was done on the basis of the rule of 80%, 60% and 40%.
The cash collection is made on the monthly basis and so is with the cash payments.
The production budgets are made on the basis of the machine hours which are helpful
in calculating the cost of the direct materials and direct labours. From the position of
the cash it can be analysed that there is enough cash in hand with the company and the
liabilities can be paid off completely without any hassle (de Oliveira and Zotes, 2018).
The finished goods inventory is at $699782 and the same is calculated by taking into
consideration the rule of the 75% and the same is taken as the base for the calculation
in the every month to ensure that the goods are held in inventory (Wang, Cheng and
Chou, 2016).
Surf N Sea: 2020 Budget
Board Report
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2. Product Analysis
The product analysis is the analysis that is required to be undertaken in order to
understand the potentiality of the product and decide which product is feasible
so that the funds can be invested in the right direction and in the right business
frame. The four products that the company is dealing with have been analysed
against the contribution margin so that it can be inferred that amongst the beach
umbrellas, towels board shorts and the one piece the beach umbrellas are most
significant. The highest fixed costs have been incurred against the one piece and
the lowest fixed costs have been incurred against the beach umbrellas as the
fixed costs have been distributed in the proportion. The product analysis can also
help the management in devising the new strategies to make sure the needs of
the customers are met fully. The different price per unit has been set by the
management to make sure all the categories of the customers are attracted and
each product is sold out at its best possible scenario (Lauriola, Polato and Aiolli,
2017).
Particulars One-piece Board Shorts Towels Beach Umbrellas
Sales 1250000 913600 130000 70200
Variable costs 3 2.25 1.2 6
Contribution 1249997 913597.75 129998.8 70194
Fixed costs 61788 56449 12852 7711
Contribution Margin 5% 6% 10% 11%
Table 1: Contribution Margin by Product
Contribution in general means giving something in return. From the table above it
tends to be investigated which item gives the higher commitment edges and which
territory is progressively potential and ideal for Surf and Sea organization. As per the
Surf N Sea: 2020 Budget
Board Report
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contribution margin ratio is the difference of the selling price and the variable costs.
In less complex terms it is the proportion which tells what number of the fixed
expenses can be paid and the amount left to be sued for the other purposes. The most
noteworthy proportion is of Beach umbrellas as this area can pay back the fixed
expenses in the quicker way. From there on, Towels areas are playing admirably and
finally one piece division is having the commitment edge at 10%. This is primarily
because of the less fixed expenses is required to be paid in the event of towels,
shoreline umbrellas and the case is turned out in such a manner that whether the one
piece and board shorts shall be continued or no. Further the variable expenses were
likewise high and this is due to the higher number of units produced. The net benefit
is a definitely an integral factor which helps in the assessment of the segment of
which sector is performing better and what potential future advantages can be profited
structure the specific segment (Williams and Dobelman, 2017).
3. Position of Cash
One can measure the performance of the company in terms of the cash flow statement
and such is the tool that helps in figuring out the inflows and the outflow of the cash.
The cash is the king of the business and it is very much necessary to understand the
fact that how the cash is working in the business and what all possibilities is that can
affect the position of the cash. The cash can be analyzed with the cash flow statement
prepared in the detailed manner containing all the sources of the cash collections and
the payments made against the cash received. The cash was $155627 and the same has
been the ending balance of January month and during the entire year after making the
payment of the fixed and variable costs, the major funds are acquired through the
sales of the products and accessories and the major expenses that have been incurred
are salary of the supervisor, administrative expenses and rent which is $1400 per
Surf N Sea: 2020 Budget
Board Report
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month. Though these expenses have not reached beyond the limit yet the scrutiny of
the expenses shall be on regular basis (de Souza, Floriani, Suter, & Reinert, 2019).
Particula
rs
Jan
uar
y
Feb
rua
ry
Mar
ch
Apr
il
Ma
y
Jun
e July
Aug
ust
Sep
tem
ber
Oct
obe
r
Nov
em
ber
Dec
em
ber
TOT
AL
Opening
Balance
$
32,
250
$
155
,62
7
$
255
,69
6
$
329
,28
9
$
416
,24
3
$
457
,18
1
$
464
,70
3
$
460
,01
3
$
412
,71
8
$
422
,57
6
$
468
,11
3
$
494
,64
8
$4,
369
,05
8
Cash
Receipts:
Sales
revenue
$
352
,81
0
$
278
,58
8
$
245
,59
2
$
208
,59
2
$
125
,96
4
$
87,
288
$
83,
800
$
93,
320
$
196
,53
6
$
234
,90
8
$
231
,10
0
$
260
,95
2
$2,
399
,45
0
Total
Cash
Availabl
e
$
385
,06
0
$
434
,21
5
$
501
,28
8
$
537
,88
1
$
542
,20
7
$
544
,46
9
$
548
,50
3
$
553
,33
3
$
609
,25
4
$
657
,48
4
$
699
,21
3
$
755
,60
0
$6,
768
,50
8
Cash
Payment
s:
$
-
Direct
Material
s
Purchase
s
$
114
,98
0
$
79,
039
$
81,
235
$
57,
048
$
38,
650
$
33,
920
$
41,
958
$
67,
378
$
88,
798
$
94,
371
$
102
,51
3
$
113
,95
5
$
913
,84
4
Direct
Labor
$
87,
710
$
74,
186
$
64,
960
$
42,
672
$
26,
222
$
24,
388
$
26,
362
$
50,
484
$
71,
386
$
70,
140
$
76,
510
$
87,
164
$
702
,18
4
Variable
Overhea
d Costs:
<
xxxx>
$
9,3
98
$
7,9
49
$
6,9
60
$
4,5
72
$
2,8
10
$
2,6
13
$
2,8
25
$
5,4
09
$
7,6
49
$
7,5
15
$
8,1
98
$
9,3
39
$1,
616
,02
8
Fixed
Overhea
d Costs:
F
actory
Supervis
or’s
Salary
$
5,0
00
$
5,0
00
$
5,0
00
$
5,0
00
$
5,0
00
$
5,0
00
$
5,0
00
$
5,0
00
$
5,0
00
$
5,0
00
$
5,0
00
$
5,0
00
$
60,
000
R
epair
$
1,5
$
1,5
$
1,5
$
1,5
$
6,0
Surf N Sea: 2020 Budget
Board Report
Page 7

and
mainten
ance 00 00 00 00 00
U
tilities
$
450
$
450
$
450
$
450
$
450
$
450
$
450
$
450
$
450
$
450
$
450
$
450
$
5,4
00
R
ent
$
4,6
00
$
4,6
00
$
4,6
00
$
4,6
00
$
4,6
00
$
4,6
00
$
4,6
00
$
4,6
00
$
4,6
00
$
4,6
00
$
4,6
00
$
4,6
00
$
55,
200
I
nsurance
$
183
$
183
$
183
$
183
$
183
$
183
$
183
$
183
$
183
$
183
$
183
$
183
$
2,2
00
Operatin
g Costs:
U
tilities
$
50
$
50
$
50
$
50
$
50
$
50
$
50
$
50
$
50
$
50
$
50
$
50
$
600
In
surance
$
500
$
500
$
500
$
500
$
500
$
500
$
500
$
500
$
500
$
500
$
500
$
500
$
6,0
00
A
dministr
ative
$
2,5
00
$
2,5
00
$
2,5
00
$
2,5
00
$
2,5
00
$
2,5
00
$
2,5
00
$
2,5
00
$
2,5
00
$
2,5
00
$
2,5
00
$
2,5
00
$
30,
000
G
eneral
office
expenses
$
1,5
00
$
1,5
00
$
1,5
00
$
1,5
00
$
1,5
00
$
1,5
00
$
1,5
00
$
1,5
00
$
1,5
00
$
1,5
00
$
1,5
00
$
1,5
00
$
18,
000
In
terest
$
1,1
62
$
1,1
62
$
1,1
62
$
1,1
62
$
1,1
62
$
1,1
62
$
1,1
62
$
1,1
62
$
1,1
62
$
1,1
62
$
1,1
62
$
1,1
62
$
13,
941
R
ent
$
1,4
00
$
1,4
00
$
1,4
00
$
1,4
00
$
1,4
00
$
1,4
00
$
1,4
00
$
1,4
00
$
1,4
00
$
1,4
00
$
1,4
00
$
1,4
00
$
16,
800
Total
Payment
s
$
229
,43
3
$
178
,51
9
$
172
,00
0
$
121
,63
7
$
85,
026
$
79,
766
$
88,
490
$
140
,61
6
$
186
,67
8
$
189
,37
1
$
204
,56
6
$
229
,30
3
$1,
830
,16
9
Cash on
Hand
$
155
,62
7
$
255
,69
6
$
329
,28
9
$
416
,24
3
$
457
,18
1
$
464
,70
3
$
460
,01
3
$
412
,71
8
$
422
,57
6
$
468
,11
3
$
494
,64
8
$
526
,29
7
$4,
938
,33
9
4. Analysis of Market Conditions
The market of the beach wears can be observed from the pie chart below which states
that the women swim wear are in demand more than the men’s wear whereas the
conditions that are faced by the Surf and Sea is that they are dealing more into
accessories and the market of the accessories is bit low. The company needs to shift
its focus from the accessories towards the clothes and the same shall be recognized as
Surf N Sea: 2020 Budget
Board Report
Page 8

soon as possible as the market is competitive and the season is also near. Further the
strategies that can be followed by the company are to create a reaserch and
development department who is constantly working and watching the movements of
the market in order to analyze the opportunities available for the company.
Graph 1: Mordor Inntelligence
5. Summary of Recommendations
From the general investigation it very well may be closed, that the organization is
performing better and can acquire more allure in its activities and organizations. The
money position of the organization is sound and the general benefit is being used by
the operation of the business. The current ratio of the company is beneficial at 3.96
and this indicates that the company has some good opportunities in term if the
investors as well.
Further the products can be sold on alternative basis so that there is a proper balance
between the demand and the supply of the company. Also, the organization can make
two items as essential items and the two items as auxiliary to keep a consistent
supervision of which region is increasingly potential and how well it will go about as
a doable item. The long term borrowings will be made accessible rather than
Surf N Sea: 2020 Budget
Board Report
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momentary liabilities to maintain a strategic distance from the weight of expanded
influence and obligation. The client driven strategies will be embraced by the
organization so as to get a handle on the more prominent pieces of the overall industry
and increment the current client base.
Surf N Sea: 2020 Budget
Board Report
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References
de Oliveira, F.B. and Zotes, L.P., (2018) Valuation methodologies for business
startups: a bibliographical study and survey. Brazilian Journal of Operations &
Production Management, 15(1), pp.96-111.
de Souza, K., Floriani, D., Suter, M., & Reinert, V. (2019). ATTRIBUTES OF THE
COUNTRY-OF-ORIGIN-IMAGE (COI) AS A PRODUCT DIFFERENTIAL IN
FOREIGN MARKETS: THE CASE OF BEACHWEAR. In 2019 Global Fashion
Management Conference at Paris (pp. 663-668).
Lauriola, I., Polato, M., and Aiolli, F. (2017) Radius-margin ratio optimization for
dot-product boolean kernel learning. In International conference on artificial neural
networks (pp. 183-191). Springer, Cham.
Trugman, (2016) Understanding business valuation: A practical guide to valuing
small to medium sized businesses. John Wiley & Sons.
Wang, M. C., Cheng, L. Y., and Chou, P. Y. (2016) Effects of individual margin
requirement and risk preference on individual margin trading. 交交交交交交, 36(1), pp.69-
96.
Williams, E.E. and Dobelman, J.A., 2017. Financial statement analysis. World
Scientific Book Chapters, pp.109-169.
Surf N Sea: 2020 Budget
Board Report
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