Background Ten years ago, Alasdair and Deborah set up a small business to exploit their sole rights to a design of popular plastic dog toy. They started cautiously, with a single moulding machine. Demand rapidly increased, however and in 2016 they invested in a second machine. For a while, things went very well, and the couple were able to support a comfortable lifestyle on their income from the business. Recently, however, it has proved difficult to sell their rather dated products into an increasingly competitive market. Their primary customers have been reducing order quantities, and they have had to explore new outlets. This has led to some difficulties with cancelled orders and late payments. They began to run up large losses about four years ago, and although they have managed to reduce some expenses they are running into increasing problems. They are coming under some pressure from their bankers, who are unwilling to either extend their short-term credit or take out further long-term loans. Deborah's nephew, who has a profitable interest in a similar business, has suggested that he might be willing to extend some credit to them - but this would be at about twice the cost of their current borrowing. He would also require security in the form of a mortgage against Deborah and Alasdair's house, which is worth about 750,000. They have engaged you to look at the business, and to consider some development options. Task 1 - Financial Analysis The file called 'Financial Statistics' contains summary data from the company's accounts since inception. What information can you extract from this data? Your approach should include, but not be limited to, calculating and interpreting financial ratios. What further information would assist your interpretation? What does it tell you about the strengths and weaknesses of AlDeb Ltd.? Put your answer in the form of a short report to Alisdair and Deborah that they can present to their bankers, lenders, and prospective investors. It should be no longer than 1,000 words, excluding tables.

Task 2 - Net Present Value and Cost Modelling Alisdair has been looking at industrial 3d printers, which could possibly be used to replace their current plant & also allow some manufacturing flexibility in the future. He has collated some information on a particular model (see the file 'Printer Data'). Deborah thinks it would only be worth exploring this further if they could match the profit performance they achieved in their early years of trading. Construct a cost/volume/profit model to help you to evaluate the options taking Deborah's nephew's loan offer as the basis for your cost of capital (this may take some interpretation). Write a short (1,000 words excluding tables) summary of what this investigation tells you and explain what role it might play in deciding how Deborah and Alisdair go forward.

Task 3 - Future Plans Here is some information relevant to the future of AlDeb Ltd.: 1. Deborah's nephew has offered to buy the business outright for 500,000, as it stands. 2. One option both Alisdair and Deborah would like to consider is to continue the business as it is, but to look for efficiency savings and low-risk profit opportunities. The couple have asked you to appraise each of these possibilities. Prepare a document (maximum of 1,500 words excluding tables) summarising the conclusions you can draw from the information that you have. Include a short explanation of what further information it would be useful to have before they made any important decisions.