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You are the assistant of the CFO of a medium sized company which is producing "traditional" chocolate bars (distributed to wholesalers and retailers and all sold in the medium price segment where typically is a strong competition). Currently the discussion of the members of the management board is kept on expanding the product program by innovating in a new chocolate bar type. The discussion is dominated by exchanging pros and cons since the product innovation will require an enormous capital expenditure and what about the return (= sales). O Your task is to contribute to an objectification of the discussion by drawing up a presentation highlighting following issues: a. Highlighting important issues of your" Marketing concept! b. For the past year the fiscal year statement is available (see attached fiscal year statement as excel file or pdf file), but some business transactions have been forgotten Consider additionally - and notice this in the the given fiscal year statement - following transactions: Capital expenditure in the beginning of the past year) for a machinery 300.000,- (economic life time 4 years) a license 120.000,- (depreciation 33,3% per year) Redemption of loans (end of the past year) 40.000,- Provision for a court case (in context of product liability law): 65.000,- Considering this additional transactions which is the new equity ratio? Hint: How you make the entries is up to you, important: it must be comprehensible! C. Expanding the capacity is very often risky (this is also an argumentation in company's current discussion for those board members who don't prefer expanding the capacity)! Since: although an increasing level of demand is forecasted, sometimes after expanding the capacity the demand collapses and the (new) cost situation damages the company's profit. Illustrate the described situation in a way you decide for! o 13 14 Accounting transaction 1 Land 2 Building 3 Machineries 4 production costs 5 material costs 6 wages for production 7 wages for salesmen 8 training costs 9 advertisement 10 R&D 11 overhead costs 12 interests 13 sales 14 stockkeeping level of finished goods 15 stockkeeping materials 350.000,00 700.000.00 1.200.000,00 232.000,00 768.000.00 288.000,00 192.000.00 70.000,00 70.000,00 150.000,00 210.000,00 152.000.00 2.475.000,00 148.500,00 84.000,00 2. 3 4 5 6 7 8 9 10 11 12 P & L Statement 14.000,00 2.475.000.00 240.000,00 148.500,00 232.000,00 768.000,00 288.000,00 192.000,00 70.000,00 70.000,00 150.000,00 210.000,00 152.000,00 2.386.000,00 237.500,00 profit 2.623.500,00 2.623.500,00 Calculation of costs/finished unit premisses: - material costs/unit: - number of produced units - production costs/unit: costs/unit (based upon direct costs) 24,00 32.000.00 9,00 33,00 1 2 3 14 15 Balance Sheet 350.000,00 500.000,00 equity 686.000,00 1.900.000,00 debt 960.000,00 237.500,00 profit 148.500,00 84.000,00 final cash value 409.000,00 2.637.500,00 2.637.500,00 Land 1 Building 2 Machineries 3 production costs 4 material costs 5 wages for production 6 wages for salesmen 7 training costs 8 advertisement 9 R&D 10 overhead costs 11 interests 12 cash outs for addit. materials 15 Cash Statement cash outs cash ins 350.000,00 500.000,00 equity 700.000,00 1.900.000,00 loans 1.200.000,00 2.475.000,00 sales 232.000,00 768.000,00 288.000,00 192.000,00 70.000,00 70.000,00 150.000,00 210.000,00 152.000,00 84.000,00 total cash out final cash level 4.466.000,00 4.875.000,00 total 409.000,00 cash in You are the assistant of the CFO of a medium sized company which is producing "traditional" chocolate bars (distributed to wholesalers and retailers and all sold in the medium price segment where typically is a strong competition). Currently the discussion of the members of the management board is kept on expanding the product program by innovating in a new chocolate bar type. The discussion is dominated by exchanging pros and cons since the product innovation will require an enormous capital expenditure and what about the return (= sales). O Your task is to contribute to an objectification of the discussion by drawing up a presentation highlighting following issues: a. Highlighting important issues of your" Marketing concept! b. For the past year the fiscal year statement is available (see attached fiscal year statement as excel file or pdf file), but some business transactions have been forgotten Consider additionally - and notice this in the the given fiscal year statement - following transactions: Capital expenditure in the beginning of the past year) for a machinery 300.000,- (economic life time 4 years) a license 120.000,- (depreciation 33,3% per year) Redemption of loans (end of the past year) 40.000,- Provision for a court case (in context of product liability law): 65.000,- Considering this additional transactions which is the new equity ratio? Hint: How you make the entries is up to you, important: it must be comprehensible! C. Expanding the capacity is very often risky (this is also an argumentation in company's current discussion for those board members who don't prefer expanding the capacity)! Since: although an increasing level of demand is forecasted, sometimes after expanding the capacity the demand collapses and the (new) cost situation damages the company's profit. Illustrate the described situation in a way you decide for! o 13 14 Accounting transaction 1 Land 2 Building 3 Machineries 4 production costs 5 material costs 6 wages for production 7 wages for salesmen 8 training costs 9 advertisement 10 R&D 11 overhead costs 12 interests 13 sales 14 stockkeeping level of finished goods 15 stockkeeping materials 350.000,00 700.000.00 1.200.000,00 232.000,00 768.000.00 288.000,00 192.000.00 70.000,00 70.000,00 150.000,00 210.000,00 152.000.00 2.475.000,00 148.500,00 84.000,00 2. 3 4 5 6 7 8 9 10 11 12 P & L Statement 14.000,00 2.475.000.00 240.000,00 148.500,00 232.000,00 768.000,00 288.000,00 192.000,00 70.000,00 70.000,00 150.000,00 210.000,00 152.000,00 2.386.000,00 237.500,00 profit 2.623.500,00 2.623.500,00 Calculation of costs/finished unit premisses: - material costs/unit: - number of produced units - production costs/unit: costs/unit (based upon direct costs) 24,00 32.000.00 9,00 33,00 1 2 3 14 15 Balance Sheet 350.000,00 500.000,00 equity 686.000,00 1.900.000,00 debt 960.000,00 237.500,00 profit 148.500,00 84.000,00 final cash value 409.000,00 2.637.500,00 2.637.500,00 Land 1 Building 2 Machineries 3 production costs 4 material costs 5 wages for production 6 wages for salesmen 7 training costs 8 advertisement 9 R&D 10 overhead costs 11 interests 12 cash outs for addit. materials 15 Cash Statement cash outs cash ins 350.000,00 500.000,00 equity 700.000,00 1.900.000,00 loans 1.200.000,00 2.475.000,00 sales 232.000,00 768.000,00 288.000,00 192.000,00 70.000,00 70.000,00 150.000,00 210.000,00 152.000,00 84.000,00 total cash out final cash level 4.466.000,00 4.875.000,00 total 409.000,00 cash in