Financial Analysis of Sugar Bowl: A Case Study Report

This report provides a detailed financial analysis of the Sugar Bowl case study. It begins by examining managerial decisions made by Shelby Givens, including strategies related to cost management, marketing, and operational changes. The report then delves into fiscal management, exploring how Givens reduced costs and set prices to maximize revenue. It also assesses the appropriateness of various actions taken by the company and suggests further actions for improvement. The analysis covers funding strategies, including loans and equity shares, and evaluates alternative financing options. Techniques to improve the financial situation, such as cost reduction and budget preparation, are discussed. The report presents and interprets key financial ratios, including current ratio, quick ratio, and debt ratio, to assess the company's financial health. Finally, it suggests financial strategies to maximize revenue, such as building strong supplier and consumer relationships and expanding the business. This analysis provides a comprehensive overview of Sugar Bowl's financial performance and strategic decisions.

Financial Analysis

FINANCIAL ANALYSIS 1
Introduction
Financial Analysis is the procedure f or analyzing, summarizing and evaluating the
financial position of the organization (Millo, Barman, & Hall, 2016). In this paper, the financial
analysis will be done on the case study of “Sugar Bowling”.
1.
1.1 Managerial Decisions
Managerial decisions are the decisions that have been taken for the operations of the firm.
There are many decision have been taken by the management of the firm such as target growth
rates, hiring or firing the staff, and deciding what products to well. According to Sugar Bowling,
it has been found that Shelby Givens took many steps to earn the high revenue (Bridge, &
Dodds, 2018).
She renovates its grandfather lounge which is with the name of Westlake. At the initial
stage of sugar bowling, she took decision to maintain cost and streamlined operations to
encourage its investors towards its business. She came up with the new ideas for starting the
bowling the business in Raleigh. She took initiative to take ideas from the different businessman
so that she performs well and earn high profit.
Givens persuaded Westlake’s Board to pursue a different path for Westlake. In 2010, she
changed the menu and interior such as she creates a lively and bowling lounge with the night
club. She develops menu by containing Pizza, hot dogs and beer on tap in order to attracts the
younger consumers to enjoy the bar, table service, finger foods and small plates in tapas style.

FINANCIAL ANALYSIS 2
She also updated the outdated interior to consume the space of 16000 square foot interior.
In this space, she designs casual dining, socializing and bowling for 150 people which is exactly
the double capacity which helps to earn the revenue from the new business to pay the rent and
insurance amount (Zalosh, & Hamermesh, 2013).
She took 9 months to operate the Sugar Bowl for planning. She decided to close her old nosiness
Westlake which is earned $15000 for four months for renovations. The company has three
employees of full time that handled Westlake (Zalosh, & Hamermesh, 2013). She decided to not
to waste money in hiring the new employees and hires the old employees as they are with the
company from a very long time. Out of three, she designated Smith on operation manager for
temporary purpose until Westlake will reopen.
1.2 Fiscal Management
Fiscal management is the procedure of planning, controlling and directing the financial
resources to reduce the cost and earns the revenue (Spacey, 2019). Givens grow its business by
contracting with many companies and different events. It also reduces the cost to earn the real
income and the financial decisions of the company are:
Givens maintain its food and beverage cost to reduce its expenditure to earns the high
revenue. In food and beverage, Givens decided to provide the food from catering instead of
building the kitchen in the lounge as it consumes more cost. Catering values is far less than the
installing kitchen.

FINANCIAL ANALYSIS 3
(Source: Zalosh, & Hamermesh, 2013)
Givens appoint Petty to manage the financial situation. Petty and Givens set the prices for
the operation of the organization for the growth of the business. They decided the price
according to finalize hours of operation and rates for bowling, food and beverages.
(Source: Zalosh, & Hamermesh, 2013)
In Marketing and Advertising, Givens and Petty decided to use the online marketing
method instead of offline method. Online marketing method helps the company to save the cost.
Within the budget of $40000, the company promotes the services through online and offline
method.

FINANCIAL ANALYSIS 4
(Source: Zalosh, & Hamermesh, 2013)
For the opening of club, the company decided to use public relations to boost the
awareness. It uses the less cost $200 for the opening of club in which it offers Sugar Bowl t-shirt
for the people who bowled a strike. Played Music and also served free lemonade and ice tea in
free as menu items. This helps to attract the consumers within the budget.
1.3 Appropriate and Inappropriate Actions
Appropriate Action: The Appropriate actions for the company are:
 It is observed that the action taken by the company for catering the food instead of
installing kitchen in lounge and night club.
 It has been found that Givens took initiative to renovate the lounge by managing the
space by developing interior to enhance the capacity and reduce the rent and insurance.
Inappropriate Action: Inappropriate actions of the company are:
 Wastage of time to design the menu at the initial stage is the inappropriate action for the
company as it finally decided to cater the food.

FINANCIAL ANALYSIS 5
 It is observed that Givens eliminating the insurance amount from the salary amount
which directly demotivate the employees to perform their duties appropriately. It states
the inappropriate action for the company (Caldwell, 2020).
Further Actions
 It is suggested that Givens has to encourage the employees by providing them vouchers
and gifts as compensation to encourage them.
 It is observed that Givens has to issue the shares instead of borrowing the money on debt.
2. Funding Strategy
Funding is the act of giving the resources to finance or money to operate the business
effectively. There are many funding strategies that can be used by the companies to finance the
operational activities and these are crowdfund, bootstrap, run a pre-sale, loan, ask friends and
families for cash and many others. According to the case study of Sugar Bowling, it is observed
that Givens take the loan of the amount of $400000 from financial institution of SBA (bank’s).
She also raised $200000 the capital through friends and family. Borrowing the loan from banks
and family and friends are the funding strategies that are used to finance the activities to renovate
and expand the bowling facility to convert Westlake Lanes, Inc. into Sugar Bowl (Zalosh, &
Hamermesh, 2013).
Borrowing money from family and friends is appropriate for the company as she is not
liable to pay the interest amount on the borrowing money. But borrowing the money on debt
from financial institutions is not appropriate as there is lot of conditions is required to be fulfilled
by the company to borrow the money. Givens provided her home as loan collateral due to which

FINANCIAL ANALYSIS 6
if the company faces the losses then it may loss his homes which is not a good startup for Sugar
Bowl and its owner.
2.1 Alternative of financing
Equity Shares: It is observed that the Givens can issue the shares with the high amount to raise
the capital. Equity shares are one of the best techniques of funding strategies to finance the
operations of business to operate effectively. The company is not liable to pay interest or the
amount of return to shareholders. It can pay the return amount according to the profit of the year.
It is beneficial for Sugar Bowl for operation (Hornuf, & Neuenkirch, 2017).
Bootstrap: Bootstrap is the financing technique of raising the capital. In this strategy, the
company has to use the credit card as it raise the capital with no or low interest rates. It is an
advantage for Sugar Bowl to raise the capital in this method as it has to pay the no or low interest
rate (Schiff, 2014).
Encourage investors: Investment of investors helps the company to raise the capital. It is also
one of the best techniques to raise the capital for operation. Sugar Bowl has to encourage the
investors to invest in the company to operate the business smoothly. The company cannot pay
the amount of interest to investors on providing the capital (Morgan, 2019).
2.2. Techniques to improve financial situation
Sugar Bowl can use the many techniques to enhance the financial performance during the time
period of spring of 2011 and these are:
Reducing cost: Reducing the cost of marketing and advertising technique helps the company to
improve its financial situation by increasing the revenue as compare to expenditure.

FINANCIAL ANALYSIS 7
Preparation of Budget: Preparing the budget helps the company to control the expenditures and
also enhances to increase the revenue amount.
Manage Loans and payment: Paying the amount of payment on time helps the company to
improve the financial situation of the organization (Root, 2019).
Funding strategy: Funding Strategies helps the company to raise the capital by using the
different techniques to finance it (Robinson, 2020).
3. Financial Ratio
2006
200
7
200
8
200
9 2010
201
1
Current
ratio
$
50,900 3.41
$
31,0
44 2.07
$
32,6
10
1.
3
0
132
57 0.44
3228
11 12.67
150
544 2.90
$
14,907
150
00.0
0
$
25,0
00
300
00
2548
8
519
95
Quick
ratio
$
35,488 2.38
$
24,4
73 1.63
296
67
1.
1
9
905
7 0.30
2988
06 11.72
665
94 1.28
$
14,907
$
-
$
15,0
00
$
-
$
25,0
00
$
-
$
30,0
00
$
-
$
25,4
88
$
-
$
51,9
95
$
-

FINANCIAL ANALYSIS 8
Total
asset
turnover 0.00 0.00
$
104,90
7
$
15,0
00
250
00
300
00
2548
8
519
95
Inventor
y
turnover 0.00 0.00
15412
657
1
294
3
420
0
2400
5
839
50
Debt
ratio
$
54,907 0.52
$
136,
567 0.84
119
850
0.
5
5
154
208 0.81
7496
96 1.03
776
203 0.96
$
104,90
7
$
163,
147
216
732
191
303
7313
11
809
560
Net
profit
margin
-
6758
5 -13%
637
93 3%

FINANCIAL ANALYSIS 9
5256
60
214
218
0
Return
on
assets
-
6758
5
-
265%
637
93
123
%
$
104,90
7
$
-
$
15,0
00
$
-
$
25,0
00
$
-
$
30,0
00
$
-
$
25,4
88
$
-
$
51,9
95
$
-
Return
on
equity
-
6758
5 222%
637
93
192
%
$
50,000
$
26,5
80
968
82
370
95
-
3049
0
333
03
According to the financial ratio of the company, Net profit margin is 3% in the year 2011
which states that the company financial position is strong as it earns the high revenue
continuously. Financial position of the company is getting strong as the net profit has been
increases. The industry average net profit margin is 8% which depicts that the company
capability to generate the profit is less as compare to industry average. As per the debt ratio of
the company, it is observed that the debt ratio of Sugar Bowl is 96% and industry debt ratio is

FINANCIAL ANALYSIS 10
58%. The amount of liability of the company is high as compare to the amount of total assets due
to which its chances of solvency ratio is high. The industry average ratio is less as compare to the
industry ratio which depicts that the company has high amount of liability as compare to equity
(Accounting Tools, 2018). Return on Assets of the company is 8% in the year 2011 and industry
average ratio is 6% which is less as compare to the company. It states that the company does not
utilize the assets properly to generate the net income. The liquidity position of the company is
2.90 which states that its liquidity position is good as it has huge amount of current assets as
compare to the current liability (Cleartax, 2018). The high amount of current assets helps the
company to pay its short term obligations for the smooth operations (Finance Management,
2019).
4. Financial strategies for Sugar Bowl
 There are many financial strategies that Givens maximize the revenue by staying in Sugar
Bowl and these are:
 Givens has to set the low prices in serving the food to consumers by building the strong
relations with the suppliers. Building the strong relations helps the company to reduce the
price of catering and earns the high revenue (Neubert, 2017).
 Givens can also build the strong relations with the numbers of consumers and sign the
contracts for big parties and events. Booking of programs and events helps the company
to increases the revenue (Zalosh, & Hamermesh, 2013).
 According to case study, the company has to raise the price after one or two years as its
brand image has been increases. Increasing pricing of services and catering helps to earns
the high revenue and also become the reason for Givens to stay in the company.

FINANCIAL ANALYSIS 11
 The company has to expand the business in different fields in order to increase the
frequency of consumers. Increasing frequency of the company helps to earn the high
revenue (Money Crashers, 2019).
 It has to reduce the cost of Licensing, Legal and Audit, and marketing. It reduces the
expenditure of the company with the high amount of revenue which directly enhances the
real income. Decreasing cost also helps to earn the revenue.
5. Pro Forma Budget
2012 2013 2014 2015 2016
Income
Lane Rental
$
589,184
$
678,965
$
780,809.87
$
936,972
$
1,171,214.8
0
Food Sale
$
712,487
$
783,735.65
$
901,296
$
1,081,555
$
1,351,943.9
9
Liquor Sale
$
947,618
$
1,042,379.4
2
$
1,198,736.3
3
$
1,438,483.5
9
$
1,798,104.4
9
Total
$
2,249,28
9
$
2,505,080
$
2,880,842
$
3,457,011
$
4,321,263
Variable Cost of Sales
Food Purchased
$
357,540
$
393,294.53
$
440,489.87
$
502,158.45
$
582,503.81
Liquor Purchased
$
415,117
$
456,629.18
$
511,424.69
$
583,024.14
$
676,308.00
Food & Beverage
Supplies
$
301,979
$
332,176.68
$
372,037.88
$
424,123.19
$
491,982.89
Total $
1,074,63
$
1,182,100
$
1,323,952
$
1,509,306
$
1,750,795

FINANCIAL ANALYSIS 12
7
General Overhead
Expenses
Marketing and
Advertising
$
44,000
$
48,400
$
53,240
$
58,564
$
64,420
Salaries: Full Time
$
151,314
$
157,366.31
$
163,660.96
$
170,207.40
$
177,015.70
Salaries: Part Time
$
74,846
$
76,342.47
$
77,869.32
$
79,426.71
$
81,015.24
Catering wage 75556.5 77823.2 80157.9 82562.6 85039.5
Coupons
$
28,080
$
29,203.20
$
30,371.33
$
31,586.18
$
32,849.63
Legal and Audit
$
10,908
$
11,017.08
$
11,127.25
$
11,238.52
$
11,350.91
License & Permits
$
10,950 - - - -
Office Supplies 11284 11735.36 12204.7744
12692.9653
8
13200.6839
9
Rent
$
132,870
$
139,513.50
$
149,279.45
$
162,714.60
$
180,613.20
Repair & Maintenance
Labor
$
78,881
$
79,669.81
$
80,466.51
$
81,271.17
$
82,083.88
Repair & Maintenance
Supplies
$
153,520
$
155,055.20
$
156,605.75
$
158,171.81
$
159,753.53
Utilities
$
67,094
$
69,107.03
$
71,180.24
$
73,315.64
$
75,515.11
Travel & Promotion
$
-
Insurance
$
94,500
$
99,225
$
104,186
$
109,396
$
114,865
Miscellaneous
$
27,500
$
35,750
$
48,262.50
$
67,568
$
97,972.88
Total General
$
961,303
$
990,208
$
1,038,612
$
1,098,715
$
1,175,696
It is assumed that the net profit of the company has been increases by 5% in every year.
The budgeting decision of the company is prepared with the assumption of increasing sales of

FINANCIAL ANALYSIS 13
the company with the high brand image. Figure has been changed in the budget pro forma by
increasing and decreasing the amount of revenue and expenditure (Schroeder, Clark, & Cathey,
2019). Yes, I utilize all the amount of previous years of financial information while preparing the
financial budget. Preparing budget according to the previous year of financial position make it
logically which states it increases in the next five years.
Conclusion
At the end, it is concluded that Sugar Bowl has high profit margin and it is increases
continuously. It has been evaluated that the financial position of the company has been improved
as its net profit has been increases continuously. In the coming five years, it has been determined
that the financial performance will improve with the increases revenue.

FINANCIAL ANALYSIS 14
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FINANCIAL ANALYSIS 15
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