just question 1 please

TEEBOK COMPANY CASE STUDY (75 marks) Teebok Co. is an Irish sportswear manufacturer. It has recently seen a decline in profitability owing to Covid 19. As a result, Teebok is faced with having to suspend its operations immediately unless it can find alternative markets to ensure the business can remain operational. The window to implement a new plan is very tight. Luckily, the production and sales directors had already assembled a team to devise a plan, referred to as 'Go Online,' to diversify the business away from its reliance on the direct retail market. While much of the outline of Go Online is ready, it still requires input from the finance department. Although the team had intended to present Go Online at a strategy conference planned for later this year, events have now overtaken them and an emergency meeting of Teebok's senior management team has been called for next week. The principle agenda items are an assessment of the current level of stress on the firm's liquidity and a discussion of the proposed Go Online which, it is hoped, can go into production quickly. To assist with these discussions, you are required to prepare a financial report package for the meeting regarding Teebok's current liquidity condition and the expected financial implications of the Go Online proposal under consideration. 2 Your report package must include the following: 1. Trading, profit and loss account and balance sheet 31st March 2022 (20 m) Forecast trading profit and loss for the six months ended 30th September 2022, in contribution form. (20 m) 3. Cash forecast for the six months ended 30th September 2022. (20 m) 4. Evaluation of Teebok 's liquidity position and recommendations to improve it. (15 m) You have ascertained the following information to assist with your assessment: Teebok is registered for VAT and charges 23% VAT on its sales. VAT returns are submitted on-line following the end of each (calendar) two monthly period and payment is made by the 23 of the relevant month. Ignore taxation other than VAT. A loan of 69,000,000 was taken out with Irish Bank plc on 1st October 2015 and is repayable in full on 1st October 2025. The interest rate on the loan is 10% per annum, payable quarterly on 1st January, 14 April, 1 July and 1st Oct each year. All Teebok's sales and purchases are on 30-day credit terms. All other expenses are paid immediately on receipt of invoice. Teebok depreciates its property, plant & equipment on a straight-line basis as follows: Buildings 40 years Machinery 20 years Delivery vans 5 years Fixtures & fittings 10 years Office furniture & equipment 10 years The following appendices are included: Appendix 1: Trial balance extracted from Teebok ecords 2022 Appendix 2: Details of Go Online's new manufacturing line and financial projections for the six months to 30th September 2022 Appendix 3: Abridged financial statements for two previous years to 30th September 2021 and 2020. O o 0 O Please note that whilst your report package is to include specified statements and reports, it is necessary to include all relevant data and conclusions into the financial assessment to ensure that the full economic impact considered. Appendix 1 - Trial Balance @31st March 2022 000 000 50,000 206,655 69,000 100,000 25,000 85,000 12,750 18,500 7,400 14,000 4,200 13,500 5,400 Share capital Retained earnings @31st March 2021 Loan Building (cost) Building accumulated depreciation @31st March 2021 Machinery (cost) Machinery accumulated depreciation 31st March 2021 Delivery vans (cust) Delivery vans accumulated depreciation @31st March 2021 Fixtures & fittings (cost) Fixtures & fittings accumulated depreciation @31st March 2021 Office furniture & equipment (cost) Office furniture & equipment accumulated depreciation @31st March 2021 Inventory @ 14 April 2021 Trade receivables Bank overdraft Trade payables VAT payable Sales revenue Purchases Wages and salaries Light and heat Selling expenses Advertising Client entertainment Legal and professional fees Maintenance and repairs Motor expenses Office expenses Interest expense 147,500 87,300 15,950 45,700 6,220 370,000 248,750 62,500 7.250 6,500 3,000 2,750 1,500 4,800 6,500 3,750 5,175 818,275 818,275 . 0 On 31st March 2022 the following expenses had not been accounted for. Teebok plans to pay the outstanding amounts in April 2022. Wages - overtime for March 2022 3,200,000 Petrol for delivery vans (inclusive of VAT @ 13.5%) 150,000 o Legal fees (inclusive of VAT @ 23%) 1,230,000 Inventory on hand @31st March 2022 is valued at 171,250,000 Amounts due from trade receivables at 31st March 2022 are expected to be received 50% in Apr and remainder in May. Amounts due to trade payables at 31st March 2022 are expected to be paid in full in April 2022