Financial Forecast Creation: Big Ed's White Goods Ltd Analysis

This project presents a financial forecast for Big Ed's White Goods Ltd, focusing on the creation of a business plan to achieve its goals. The project includes an analysis of purchase costs, selling prices, and the impact of inflation on various products. It details the design and execution of the business plan, covering planning, build-up, implementation, and close-out stages. The assignment also analyzes assumptions, such as rising purchase costs and potential sales decline, and assesses the impact of external factors like the economic, political, and technological environments on the firm. The financial model includes sales revenue, cost of goods sold, gross margin, and indirect expenses, leading to a net profit calculation for January. References to relevant literature are also provided.

ASSESSMENT 1 Financial forecast
creation

TABLE OF CONTENTS
Designing the business plan for attaining goals and targets of entity..........................................5
Execution of the business plan.....................................................................................................6
Analysis of assumptions and parameters.....................................................................................6
External factors and their impact on the firm..............................................................................6
Documentation ............................................................................................................................7
REFERENCE...................................................................................................................................8

Estimation regarding purchase cost and selling price are as follows:
Products
Purchase cost of
goods
Increased
purchase cost by
5%
Old selling
price per
unit
New price
(Increases by
8%)
fridges $800 $840 $1,600 $1,728
freezers $250 $263 $800 $864
microwaves $150 $158 $470 $508
Range hoods $80 $84 $190 $205
ovens $900 $945 $2,100 $2,268
cook tops $200 $210 $560 $605
dishwashers $450 $473 $990 $1,069
Vacuums $130 $137 $390 $421
Coffee makers $250 $263 $600 $648
Toasters $35 $37 $99 $107
Irons $78 $82 $156 $168
Mixers $45 $47 $89 $96
Deep fryers $45 $47 $99 $107
Portable A/Cs $180 $189 $350 $378
Hairdryers $9 $9 $35 $38
Irons $19 $20 $45 $49
Scale Sets $12 $13 $24 $26
Kettles $34 $36 $78 $84
Small Bins $13 $14 $40 $43

Large Bins $22 $23 $60 $65
Wine coolers $130 $137 $299 $323
Washing Machines
$220 $231 $340 $367
Dryers $210 $221 $330 $356
Other expenses
Particulars Amount (in $) Amount (in $) increased as
per inflation rate 0.5% for
first quarter
Phone Service / Calls $65 $65.33
Electricity $133 $133.16
Gas $50 $50.25
Water $46 $46.06
Insurance $108 $108.87
Payroll $38,750 $34,833
Cleaning $71 $71.18
Finance Costs $138 $138.19
Advertising $47 $46.90
Rent $2,083 $2,093.75
Petrol $47 $46.90
Accountants Fees $31 $30.98
Maintenance $117 $117.67
Bank Fees $18 $17.59
Office Supplies $50 $50.25
Estimated budget for the month of January on the basis of historical data set is as follows:
Particulars Amount (in $)
Sales revenue 86629.167
Purchase cost of goods 47000
Gross margin (Sales – COGS) 39629.17
Indirect expenses
Phone Service / Calls $65.33
Electricity $133.16
Gas $50.25
Water $46.06
Insurance $108.87

Payroll $34,833
Cleaning $71.18
Finance Costs $138.19
Advertising $46.90
Rent $2,093.75
Petrol $46.90
Accountants Fees $30.98
Maintenance $117.67
Bank Fees $17.59
Office Supplies $50.25
Total indirect expenses $37850.41
NP (GP – indirect expenditures) $1778.76
Designing the business plan for attaining goals and targets of entity.
In consideration with the development of industrial operations there is need to have
proper management and execution of the funds and costs required for such activities. There are
various techniques which are need to be implement by Big Ed’s White goods Ltd for better
increment in the efficiency as well as revenue retention. In accordance with the planning for
meeting the specific goals there are several stages which are meant to be followed by the
professionals such as:
Planning: In relation with the operations of the Big Ed's White goods Ltd. It is essential
to have the adequate plans and strategies which will be fruitful for scheduling and framing the
work of entity.
Build-up: At this stage the business has its framework and the operational criteria with
proper scheduling which will be profitable for the development as well as motivating the
workforce to make efforts (McKeever, 2016). It includes cost allocation to various operations
and requirement of funds for the operations.
Implementation: By considering the prepared plan for the project, the implication of the
plan will need proper execution and management. In terms initiating the business there is need to
have proper goals and targets which will be attractive to workforce in terms of making necessary
efforts.
Close-out: At this stage the professionals of entity will analyse the outcomes which they
have acquired from the operations and they make necessary modification to the same. It will be

helpful technique in terms of meeting the aims and objectives of the organization in a required
time.
Execution of the business plan
To initiate the planned process there has been various strategies and goals were designed
and the necessary efforts was made in consideration with achieving such targets. There was lack
of time to conduct such surveys over the issues and also the necessary individuals were not
reflecting the appropriate thinking towards one problem (McKenzie, 2017).
Analysis of assumptions and parameters
First assumption is that purchase cost of goods is expected to rise by 5%. This increase in
purchase cost seems to be correct because every year inflation rate increased to some extent.
Hence, it is obvious that purchase cost will also increase to some extent and from this point of
view estimated increase of 5% on yearly basis seems reasonable. Consumer confidence declined
to some extent and due to this reason it is expected that sales may decreased by 12%. Consumer
confidence declined because with technology upgradation they expect that firm will offer them
better quality of products (Hilton. and Platt., 2013). In case consumer confidence declined then
in that situation sales declined most of times by 10%. Company main policy is to earn at least
moderate amount of profit in its business and due to this reason if it increase sales price by 8%
then it is considered as appropriate decision. Layoff of employee will not much impact on firm
as same quantity of work will be get done from other employees. In case due to increase in sales
price sales declined reduction in employee cost will offset its effect.
External factors and their impact on the firm Economic environment: Economic environment refer to the impact that nation monetary
policy and fiscal policy have on the country economy. Changes in economic environment
have direct impact on the companies cash flow and due to this reason results much
different then forecast can be obtained if economy move up or down at fast rate. Political environment: Political environment refers to sort of policies that political party
intends to carry out in the nation (Adeoye, and Elegunde, 2012). All these things support

business growth or diminish same. Hence, this is another factor that is taken in to account
while making projection.
 Technological environment: Advance technology have impact on business and it is
important to compare self technology base with same of competitors. By doing so extent
to which firm can compete is identified. Hence, mentioned factor is also considered while
making projection.
Documentation
In budget cash inflows are included and under this sales revenue is computed. From
computed value of sales revenue expenses are subtracted which are indirect to the business. In
this way, financial model is developed.

REFERENCE
Books and journals
Adeoye, A.O. and Elegunde, A.F., 2012. Impacts of external business environment on
organisational performance in the food and beverage industry in Nigeria. British Journal of
Arts and Social Sciences. 6(2). pp.194-201.
Hilton, R.W. and Platt, D.E., 2013. Managerial accounting: creating value in a dynamic
business environment. McGraw-Hill Education.
McKeever, M., 2016. How to write a business plan. Nolo.
McKenzie, D., 2017. Identifying and spurring high-growth entrepreneurship: experimental
evidence from a business plan competition. American Economic Review. 107(8). pp.2278-
2307.