Financial Analysis of Beans Cafe's Budget and Financial Plan

This report analyzes the financial plan of Beans Cafe, a family-owned coffee shop in Australia planning international expansion. It examines projected income, revealing a turnover of $1.85 million in the previous year with a profit of $0.8 million. The analysis projects a steady increase in income and sales volume, with expected growth of 10-20% annually. The report also assesses projected expenses, which are expected to rise with business activities, along with an analysis of the company's assets, including current and fixed assets, and the cash flow. The report identifies challenges like cost control and low liabilities, and potential risks such as debt default and marketing costs. It recommends focusing on cost control and offers a conclusion that supports Beans Cafe's expansion, while also highlighting the need for careful financial management. The report is structured with an introduction, analysis of income, expenses, assets, and cash flow, challenges, risks, recommendations, and a conclusion, supported by references.

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Managing Budget and Financial Plan
8/16/2019
(Student Name)

Managing Budget and Financial Plan 1
Table of Contents
Introduction......................................................................................................................................2
Analysis of Projected Income..........................................................................................................2
Analysis of Projected Expenses.......................................................................................................2
Analysis of Company’s Assets position..........................................................................................3
Analysis of Cash Flow.....................................................................................................................3
Challenges faced by the company in Financial Position.................................................................3
Risk Involved with the financial decision.......................................................................................4
Recommendation.............................................................................................................................4
Conclusion.......................................................................................................................................4
References........................................................................................................................................5

Managing Budget and Financial Plan 2
Introduction
Beans Café is one of the small coffee shops that run its business in the market of Australia. The
company has achieved great success in the market. It does not only sell its product to the
consumers but also distribute its beans to other coffee shop as well. The café is planning to
expand its business in the international market. Therefore, it is required for them to analyze the
income and expanses that is involved in the market with the expansion and the level the company
earned whole expanding its business in the existing market.
In the following part projected financial analysis will be done in the report to analyze the income
that the company can earn from expanding its business and the expenses occur while expanding
its business in the market.
Analysis of Projected Income
In the previous year the company has maintained overall turnover of the company is 1.85 million
in which the company has earned 0.8 million as the profit. In the year 2018, the company has
earned sufficient profit which is $167170 which is expected to be increase to $183887 at the end
of 2019. Such increase is done by 10% due to the reason the sales volume is also expected to be
enhance by 10% which directly enhance the overall revenue of the company to the certain extent.
furthermore, the company is expected to grow more efficiently in the year 2020 by $200604 due
to the reason it is expected that with the increase in the expenses, the demand of the coffee will
be enhance among the population of Australia that will provide an opportunity to the café to
enhance its sales volume by 20% which directly enhance the overall revenue of the company in
an effective and efficient manner.
Therefore such variances are occurring due to the reason. It is estimated that the overall turnover
of the company enhance every year that affected overall revenue of the company in an effective
manner. The company will glow with time that will make them competitive in the market in an
effective and efficient manner. The overall income of the company is increased by 10% to 20%
in an effective and efficient manner (Karadag, 2015).

Managing Budget and Financial Plan 3
Analysis of Projected Expenses
Expenses play a vital role in the growth and development of the business. The expanses of the
company increase with the increase in the activities of the company. Therefore, the expenses of
Beans coffee is expanded to be enhance every year with the increase in the transaction of the
café. In the year 2018 the company occurs total expenditure of $1.83 million which is expected
to be enhancing by 10% in the next year that will be close with the value of $2.01 million.
Further, it will increase by 20% in the year 2020 due to the main reason of increase in the sales
of the café. The company is expected to be occur $22.03 million that affected overall revenue of
the company to the certain extent.
The expenses of the company enhances with w=time due to the reason, the overall ales of the
company is also increases that affected overall expenses of the company due to the main reason,
the café will require more fund to release huge amount for manufacturing that created direct
impact over the expenses of the café to the certain extent in an effective and efficient manner
(Cornwall, Vang and Hartman, 2016).
Analysis of Company’s Assets position
In order to analyze the assets of the café, it has sufficient cash inflow with fixed. It is assumed
that the company has current assets of $462500 which was enhanced by $508750 in the year
2019. It is also expected that the current assets of the café will enhance by 20% in the future
which will be $555000. Furthermore, the fixed assets are also increases every year with the
passing of time. Therefore, the total assets of the company is 3.9 million in the year 2018 which
is expected to enhance 4.3 million in the year 2019 and further enhance by 4.7 million in the year
2020.
Such variance is occur due to the main reason, the company continuously invest its amount on
purchasing its assets and enhance its overall inventory that directly increase the cash flow of the
company. Therefore, such variance showcases the positive growth of the company to the certain
extent. It is also expected that the company is growing in an effective and efficient manner
(Marti and Scherer, 2016).

Managing Budget and Financial Plan 4
Analysis of Cash Flow
In order to analyze the flow of cash in the café, it can be found that the company has sufficiently
mange its cash flow while operating its business. The cash flow of the café in the year 2018 was
3.71 million which will be enhance by 408.8 million in the year 2019 that will be further
expected to enhance by 490.63 million. It represent that the company has sufficient cash inflow
that will provide an opportunity to enhance the cash inflow in an effective and efficient manner.
The variance occur in every year is due to the reason that it is expanded that the sales of the
company will enhance every year by 10 to 20% that will enhance the debtors of the cafe and
which directly provide an opportunity to the café to enhance its cash flow in an effective and
efficient manner (Morden, 2016)
Challenges faced by the company in Financial Position
In order to enhance the overall sales and revenue of the café, there are certain challenges that are
faced by the company are explained in the below points:
 The expenses of the company is expected to be enhance by 10 to 20% it represent that the
company does not adopt any strategy that help in controlling over the cost of the café in
an effective manner. Such increase in the expenses of the café enhances the chance of
reducing revenue of café to the certain extent.
 The café has huge amount of current assets which represent that the café has vacant funds
that does not provide any productivity. It creates loss to the company in the near future to
the certain extent.
 The liabilities of the company is low that create an issue for the café to invest its amount
in the productive resources in an effective and efficient manner.
 The company does no able to control over its overall income in an effective manner
which can provide great productivity to the company to the certain extent (Böhm, Eggert
and Thiesbrummel, 2017).
Risk Involved with the financial decision
The risks that are involved with the financial decision are explained in the below points:

Managing Budget and Financial Plan 5
 The café can face the possibility of default on debt they undertake however, it may also
experience failure in an undertaking that cause the issue of financial burden on the
business to the certain extent.
 Some investments come with the expense as well as fees that serve to reduce the total
return. The risk if enhancement of overall expenses with the expansion of business can
occur for the café. It will affect overall performance as well as revenue of threat to the
certain extent.
 Café can face high cost risk in marketing to launch a new product or expanding in the
new market in order to earn higher sales in an effective manner (Faisal, Khan and Al-
Aboud, 2018).
Recommendation
In order to analyze the challenges faced by the cafe, there are certain recommendations that are
provided to the café as they are explained in the below points:
 The café should analyze the fundamental base of the business in which should measure
the intrinsic value of the security by evolution the aspects of he underling the business
that also include the assets of the company as well as its earing in an effective and
efficient manner.
 The company should focus over its cost by adopting effective budgetary system. I will
help the company to set the target for cost according to which the expenditure will be
done. It will help the company to analyze the overall cost that will help the on controlling
such cots in an effective and efficient manner (Chang, Tang and Liu, 2016).
Conclusion
From the above analysis it can be concluded that Beans café can expand its business. As the
market and financial performance of the café represent as the positive growth that will provide
an opportunity to the café to grow in the competitive market in an effective and efficient manner.
However, the company faces certain challenges in managing the financial position such as
enhance the overall cost, face risk if high cost and so on that affected overall profit of the
company to the certain extent. The overall expenses of the café are expected to be enhanced by

Managing Budget and Financial Plan 6
10 to 20% which is required for the café o focus on to control over the overall cost of the café in
an effective and efficient manner.

Managing Budget and Financial Plan 7
References
Böhm, E., Eggert, A. and Thiesbrummel, C. (2017) Service transition: A viable option for
manufacturing companies with deteriorating financial performance?. Industrial Marketing
Management, 60, pp.101-111.
Chang, S.C., Tang, Y.C. and Liu, Y.J. (2016) Beyond objective knowledge: The moderating role
of field dependence–independence cognition in financial decision making. Social Behavior and
Personality: an international journal, 44(3), pp.519-527.
Cornwall, J.R., Vang, D.O. and Hartman, J.M. (2016) Entrepreneurial financial management:
An applied approach. London: Routledge.
Faisal, K.A.A., Khan, A.K. and Al-Aboud, O.A. (2018) Study of Managerial Decision Making
Linked to Operating and Financial Leverage. International Journal of Accounting and Finance
Research, 7(1), pp.139-143.
Karadag, H. (2015) Financial management challenges in small and medium-sized enterprises: A
strategic management approach. EMAJ: Emerging Markets Journal, 5(1), pp.26-40.
Marti, E. and Scherer, A.G. (2016) Financial regulation and social welfare: The critical
contribution of management theory. Academy of Management Review, 41(2), pp.298-323.
Morden, T. (2016) Principles of strategic management. London: Routledge.