Cockatoo Real Estate: Financial Analysis & Feasibility Study Report

This report presents a comprehensive financial analysis of Cockatoo Real Estate Private Limited's project to open new branches in Sydney. It includes an assessment of profitability, break-even point, and return on capital employed, recommending project acceptance based on positive financial indicators. The analysis incorporates financial projections, sensitivity analysis of cash flow, competitor analysis, and a SWOT analysis. A marketing plan to acquire properties is also outlined. The report concludes that the project is financially viable and offers potential benefits to the company, supported by a net present value of $15,489,417.74, emphasizing the importance of a pilot investigation to validate assumptions and ensure compliance with WHS regulations. Desklib provides this and other solved assignments for students.

FINANCIAL ANALYSIS
Profitability and liquidity analysis
Financial analysis
PC-AS0197

1
Table of Contents
Part-1................................................................................................................................................2
Part-2................................................................................................................................................3
Introduction......................................................................................................................................3
Review the financial viability of the project undertaken by Cockatoo Real Estate Private Limited
.........................................................................................................................................................3
Financial projection for the cash flow of the Cockatoo Real Estate Pty Ltd...................................6
Sensitivity analysis of the cash flow projection of Cockatoo Real Estate Pty Ltd..........................7
Competitor analysis.......................................................................................................................10
Competitors analysis......................................................................................................................10
SWOT analysis of the proposal.....................................................................................................10
Marketing plan to acquire a pipeline of properties to be marketed...............................................11
Conclusion.....................................................................................................................................12
References......................................................................................................................................13

2
Part-1
To
The Chairman of Cockatoo Real Estate Pty Ltd
This business mail has been framed to the Chairman of Cockatoo Real Estate Pty Ltd for
the consultancy for viability of opening branches in Sydney. After analysing the profitability,
break-even point, financial viability return on capital employed available on the invested capital,
it is found that company should accept the project of opening up its 10 pilot branch Camper
down in Sydney as it will give good amount of return on capital employed to investors.
However, in order to assess the viability of the project, we need to take the access to an empty
retail premises for a pilot investigation. The main reason for getting access to the empty retail
premises for the pilot investigation is based on the mock up a simulation branch and analysing
the available business factors which may positively and negatively impact the project. It will also
help in analysing whether the undertaken office equipment and infrastructure would be
complying with the international WHS legislation laws and regulation. Action required by the
board of directors- all the directors needs to pass special resolution in the board meeting for
giving their consents on the particular events and matter. There will be other points as the
research would be made on the internal and external factors for analysing the viability for the
project proposal. The estimated time for the report to be submitted would be 6 months which will
required to analysis the all the feasible factors associated with the project.
Thanks for considering the mail and looking forward to the positive reply.

3
Letter of transmittal
Dear
The Chairman of Cockatoo Real Estate Pty Ltd
I submit herewith a proposal in support of the research program entitled to opening up its 10
pilot branch Camper down in Sydney. This project is beneficial one and in orders to analysis the
feasible factors; we need access to the empty retail premises for the pilot investigation.
I am requesting to allow us to get the access to the empty retail premises for the pilot
investigation.

4
Part-2
Executive summary
This report will analysis the review the financial viability and possible benefits which
company would have after opening up other inner suburban branches in Sydney over the next 12
months. It will be used to identify the feasible factors which might impact the acceptance of the
project.
Introduction
This report is accompanied with potential issue, challenges, financial viability and related
financial returns and opportunities for opening up of pilot branch in Camper down and if
successful will open 10 other inner suburban branches in Sydney over the next 12 months. The
acceptance of this project would be based on the break-even point, financial viability return on
capital employed available on the invested capital.
Review the financial viability of the project undertaken by Cockatoo Real Estate Private
Limited
The financial projection and estimation of the profit and loss associated with the particular
project reflects how company could be benefited after undertaking the proposed project. The
estimated listing sales per year have been decided on the basis competitors offering and market
external factors. The estimated fees from sales of apartment would be $ 15000000 which may
also increase with the increase in its services (Hartmann, and Driessen. (2017, 259-470).
The estimated projection for the profit and loss of Cockatoo Real Estate Private Limited has been
computed as below (Lin,et al. (2015, 459-470)
CRE Limited
Budgeted
Profit and
Forecasted Income statement

5
Loss Account
for Camper
down branch
Year ended
31 December
2019 2020 2021 2022 2023 2024
$ $
INCOME
Fees from Sale of Apartments
1500
000
1650
000
18150
00
18150
00
19965
00
19965
00
Commissions from Financial
services sales (assume 1/3 on sales
x 1000)
2500
0
TOTAL
INCOME
152500
0
1677
500
1845
250
2029
775
22327
53
24560
28
27016
31
29717
94
EXPENDITU
RE
Fixed Costs

6
1 x Manager;
2 x Sales
negotiators; 1
x secretary
(410,00
0)
-
4510
00
-
4961
00
-
5457
10
-
60028
1
-
66030
9
-
72634
0
-
79897
4
Rent/Rates/
Insurance of
Commercial
Business
premises
(460,00
0)
-
5060
00
-
5566
00
-
6122
60
-
67348
6
-
74083
5
-
81491
8
-
89641
0
Vehicle costs
(30,000
)
-
3300
0
-
3630
0
-
3993
0
-
43923
-
48315
.3
-
53146
.8
-
58461
.5
Lease of
Business
Equipment
(P.copier etc)
(30,000
)
-
3300
0
-
3630
0
-
3993
0
-
43923
-
48315
.3
-
53146
.8
-
58461
.5
Selling and
Corporate
Marketing
Costs
(50,000
)
-
5500
0
-
6050
0
-
6655
0
-
73205
-
80525
.5
-
88578
.1
-
97435
.9
Depreciation
of Plant and
equipment
(30,000
)
-
3300
0
-
3630
0
-
3993
0
-
43923
-
48315
.3
-
53146
.8
-
58461
.5

7
Head Office
Costs
(100,00
0)
-
1100
00
-
1210
00
-
1331
00
-
14641
0
-
16105
1
-
17715
6
-
19487
2
Total Fixed
Costs
(1,110,
000)
-
1221
000
-
1343
100
-
1477
410
-
16251
51
-
17876
66
-
19664
33
-
21630
76
Variable Costs
Detailing,
stationery and
marketing 0
$500 per
listing per
year
Total Variable
Costs 0 0 0 0 0 0 1 2
TOTAL
COSTS
(1,110,
000)
-
1221
-
1343
-
1477
-
16251
-
17876
-
19664
-
21630

8
000 100 410 51 66 32 74
PROFIT/
(LOSS) FOR
YEAR 415,000
4565
00
5021
50
5523
65
60760
1.5
66836
1.7
73519
8.8
80871
9.6
GROSS
MARGIN 27.21%
27.2
%
27.2
%
27.2
% 27.2% 27.2% 27.2% 27.2%
(Please see the attached profit and loss account)
Break-even point analysis- It is the point at which company would have any profit and loss
form its business functioning. This could be computed by using the formula i.e. contribution/ per
unit sales (Hartmann, and Spit. 2016, 361-367).
Particular 2018 2019 2020 2021 2022
Sales (in units)
$
800,000.00
$
880,000.00
$
968,000.00
$
1,064,800.00
$
1,171,280.00
Unit costing
$
1.88
$
2.27
$
2.75
$
3.32
$
4.02
Total sales
$
1,500,000.00
$
1,996,500.00
$
2,657,341.50
$
3,536,921.54
$
4,707,642.57

9
(-) Variable
Costs
$
37,500.00
$
41,250.00
$
45,375.00
$
49,912.50
$
54,903.75
Contribution
$
1,462,500.00
$
1,955,250.00
$
2,611,966.50
$
3,487,009.04
$
4,652,738.82
(-) Fixed Cost
-$
1,110,000.00
-$
1,221,000.00
-$
1,343,100.00
-$
1,477,410.00
-$
1,625,151.00
Net Profit
$
2,572,500.00
$
3,176,250.00
$
3,955,066.50
$
4,964,419.04
$
6,277,889.82
Break-even
point
$
780,000.00
$
861,818.18
$
951,471.07
$
1,049,773.70
$
1,157,619.73
These above are the points of listing sales which company needs to make in order to run its
business operations at no profit and no loss point (Chapman, and Ward, 2018.).

10
Financial projection for the cash flow of the Cockatoo Real Estate Pty Ltd
Year
Particular 2018 2019 2020 2021 2022
Sales (in units)
$
800,000.00
$
880,000.00
$
968,000.00
$
1,064,800.00
$
1,171,280.00
Unit costing
$
1.88
$
2.27
$
2.75
$
3.32
$
4.02
Total sales
$
1,500,000.00
$
1,996,500.0
0
$
2,657,341.50
$
3,536,921.54
$
4,707,642.57
(-) Variable
Costs
$
37,500.00
$
41,250.00
$
45,375.00
$
49,912.50
$
54,903.75
Contribution
$
1,462,500.00
$
1,955,250.0
0
$
2,611,966.50
$
3,487,009.04
$
4,652,738.82
(-) Fixed Cost
-$
1,110,000.00
-$
1,221,000.0
0
-$
1,343,100.00
-$
1,477,410.00
-$
1,625,151.00
Net Profit $
2,572,500.00
$
3,176,250.0
$ $ $

11
0 3,955,066.50 4,964,419.04 6,277,889.82
Breakeven point
$
780,000.00
$
861,818.18
$
951,471.07
$
1,049,773.70
$
1,157,619.73
(-)Depreciation
$
-
$
-
$
-
$
-
$
-
Net Profit before
Tax
$
2,572,500.00
$
3,176,250.0
0
$
3,955,066.50
$
4,964,419.04
$
6,277,889.82
(-) Tax @28%
$
720,300.00
$
952,875.00
$
1,186,519.95
$
1,489,325.71
$
1,883,366.94
Net Profit after
tax
$
1,852,200.00
$
2,223,375.0
0
$
2,768,546.55
$
3,475,093.33
$
4,394,522.87
(+) Depreciation
$
-
$
-
$
-
$
-
$
-
Cash Inflows
$
1,852,200.00
$
2,223,375.0
0
$
2,768,546.55
$
3,475,093.33
$
4,394,522.87
(+) Salvage
Value
$
9,500,000.00