You have been asked by your 58 year old father, Gamal to help him assess a new venture. It is

Friday night, and he needs the work finished by Sunday, in preparation for an early Monday

morning meeting, so you know that he will not be able to give you any more information than

he already has (and you will be unable to contact him over the weekend), and therefore you may

need to rely on your own assumptions and estimates for some of the analysis where appropriate.

Gamal lives in London, UK, and recently took early retirement (from a trading company he

joined 30 years ago), and left the company with a lump sum (after tax) payment of 450,000.

Surprisingly, rather than being depressed by his new state of independence, he is excitedly

contemplating a new career as an online retailer of nuts, such as almonds, hazelnuts, pistachios

and walnuts. He is confident that he can set up a business to import the nuts from the USA and

sell them in the UK. His wife, who he met at business school, is pleased with his passion for this

possible new venture, but concerned that it might turn into a financial disaster. She has

suggested that he develop a financial plan to evaluate the venture and its viability.

After a couple of hours with Gamal you have assembled the following information from him:

- WeAreNuts, an established US processor of roasted mixed nuts (owned by one of Gamal's

university colleagues), is prepared to give him exclusive rights to sell their products in the UK

for a five year period in exchange for an upfront payment for those rights;

- The nuts retail in the USA for an average of US 7 per pound (lb), and WeAreNuts is prepared

to set the selling price to Gamal at a 45% discount to this price;

- WeAreNuts would ship to Gamal on receipt of payment for each order;

- Gamal has found out that air freight from the USA would cost on average $5 per kg and that

the total time from him placing an order to receiving the goods in London would be two weeks

(including the preparation and packing time in the USA);

- Gamal plans to order from the USA monthly and intends to maintain a minimum stock of four

weeks' worth of sales to ensure that he will be able to manage fluctuations in demand;

- He will buy a special refrigerator at a cost of 1,200 to keep the nuts in good condition, and

has found a small industrial room he can rent nearby at a cost of 450 per month (payable

monthly in advance, plus an initial deposit of three month's rent);

- Gamal will sell the nuts throughout the UK by internet only, and is planning to spend 2,500

with a website designer to develop the site;

- He has already spent 4,200 on a market study that told him that once established, demand

would be about 1,500 kg a month, although in the first year sales would start at only 200 kg in

the first month before building up slowly to the full level at the end of the first year;

- The above study assumed an average selling price of 16.50 per kg (ignore any impact of sales

tax in your calculations), and noted that the market was price sensitive and that the forecast

volumes would increase by 50% if Gamal would price the nuts at a 10% lower price;

- Packaging and shipping in the UK would average 2.30 per kg, and Gamal is not intending to

charge that to the customer;

- All sales would be by credit card, with the credit card company taking 1% per sale and

remitting the monthly total to Gamal five days after the end of each calendar month;

- He believes that one person could run the nut operation part-time at a total cost (including

employer's social charges) of 2,750 per month;

- Gamal believes that if necessary he could borrow up to an additional 40,000 at 8% p.a.;

- Gamal's marginal tax rate on investment or earned income is 30%, payable one year in arrears;

he has also told you that he can invest any available cash at an after tax 4% per annum.

Gamal remembers lectures on discounted cash flow analysis at business school (although he

admits that he did not fully understand them, unlike his wife who was a distinction student). He

has asked you to prepare a financial analysis while he is away to help him with the decision,

making clear any assumptions that you make;

How to make balance sheet of the same.

UCBS7037 Financial Management Assessment University of Cumbria and Robert Kennedy College General Instructions - Please read carefully University of Cumbria, Financial Management, September 2016: Assessment General Instructions - Please read carefully 1. You are required to complete the assessment outlined below and submit your completed final document through the RKC Online Campus by the end of Unit 6. Your grade will be based 100% on this final document, to which you will also receive written feedback. 2. In addition you must upload part of your draft of the above document by the end of Unit 3 (see Interim Assignment, below). This draft will not be graded, but it is an important way of monitoring your progress, and you will receive feedback with respect to the topic(s) covered in the interim assignment. 3. Please ask any questions about the interim assignment and final assessment in the Forum. Final Assessment You have been asked by your 58 year old father, Gamal to help him assess a new venture. It is Friday night, and he needs the work finished by Sunday, in preparation for an early Monday morning meeting, so you know that he will not be able to give you any more information than he already has (and you will be unable to contact him over the weekend), and therefore you may need to rely on your own assumptions and estimates for some of the analysis where appropriate. Gamal lives in London, UK, and recently took early retirement (from a trading company he joined 30 years ago), and left the company with a lump sum (after tax) payment of 450,000. Surprisingly, rather than being depressed by his new state of independence, he is excitedly contemplating a new career as an online retailer of nuts, such as almonds, hazelnuts, pistachios and walnuts. He is confident that he can set up a business to import the nuts from the USA and sell them in the UK. His wife, who he met at business school, is pleased with his passion for this possible new venture, but concerned that it might turn into a financial disaster. She has suggested that he develop a financial plan to evaluate the venture and its viability. After a couple of hours with Gamal you have assembled the following information from him: - WeAreNuts, an established US processor of roasted mixed nuts (owned by one of Gamal's university colleagues), is prepared to give him exclusive rights to sell their products in the UK for a five year period in exchange for an upfront payment for those rights; - The nuts retail in the USA for an average of US 7 per pound (lb), and WeAreNuts is prepared to set the selling price to Gamal at a 45% discount to this price; - WeAreNuts would ship to Gamal on receipt of payment for each order; - Gamal has found out that air freight from the USA would cost on average $5 per kg and that the total time from him placing an order to receiving the goods in London would be two weeks (including the preparation and packing time in the USA); - Gamal plans to order from the USA monthly and intends to maintain a minimum stock of four weeks' worth of sales to ensure that he will be able to manage fluctuations in demand; - He will buy a special refrigerator at a cost of 1,200 to keep the nuts in good condition, and has found a small industrial room he can rent nearby at a cost of 450 per month (payable monthly in advance, plus an initial deposit of three month's rent); - Gamal will sell the nuts throughout the UK by internet only, and is planning to spend 2,500 with a website designer to develop the site; - He has already spent 4,200 on a market study that told him that once established, demand would be about 1,500 kg a month, although in the first year sales would start at only 200 kg in the first month before building up slowly to the full level at the end of the first year; - The above study assumed an average selling price of 16.50 per kg (ignore any impact of sales tax in your calculations), and noted that the market was price sensitive and that the forecast volumes would increase by 50% if Gamal would price the nuts at a 10% lower price; - Packaging and shipping in the UK would average 2.30 per kg, and Gamal is not intending to charge that to the customer; - All sales would be by credit card, with the credit card company taking 1% per sale and remitting the monthly total to Gamal five days after the end of each calendar month; - He believes that one person could run the nut operation part-time at a total cost (including employer's social charges) of 2,750 per month; - Gamal believes that if necessary he could borrow up to an additional 40,000 at 8% p.a.; - Gamal's marginal tax rate on investment or earned income is 30%, payable one year in arrears; he has also told you that he can invest any available cash at an after tax 4% per annum. Gamal remembers lectures on discounted cash flow analysis at business school (although he admits that he did not fully understand them, unlike his wife who was a distinction student). He has asked you to prepare a financial analysis while he is away to help him with the decision, making clear any assumptions that you make; the analysis should not exceed 4,000 words (excluding the content of exhibits, headings, etc), or a total of 25 pages (everything included), and should include: - A summary of all assumptions and estimates that you have made for your analysis, including justifications where appropriate; - A break even analysis; - A Profit and Loss Statement for the first year of operations and Balance Sheet at the end of the first year; - Monthly cash flow for the first year of operation; - Annual cash flow thereafter; - A clear explanation, in plain English, of how much cash the venture will need to get started; - Any sensitivity analysis that you think would be helpful; - The most that Gamal could offer WeAreNuts as an upfront fee for the exclusive rights for the five year period (which does not include any nut purchases) which would leave him no better or worse off than if he had not undertaken the venture, and the amount you suggest he should actually offer them; - Conclusions and recommendations; - A critical reflection of the analysis that Gamal has asked you to prepare - what, if anything, would you do differently in a financial analysis of this opportunity, and why? Gamal has explained that he is going to be out of town for a wedding so will be unable to provide any assistance at all, but as he pointed out before leaving \"you will find this easy with computers and the internet to help\". Your report should demonstrate skills of critical reflection, effective communication and balanced judgement; note that this is not a market report. Scripts that are excessively long (i.e. exceeding the word or page limit by more than 10%) will not be read beyond the point of the word limit; there is no minimum word limit. Do not put your name on the paper. The overall structure should be as follows: 1. Cover Page (1 page) 2. Table of Contents/List of Exhibits (1 page) 3. Executive Summary 4. Main Report (within the 4,000 word limit as above) 5. Exhibits (if any) 6. List of references. The data in your answer should be clearly laid out in tabular format so that your approach and answer are both plainly evident. Submissions should be machine readable and in MS-Word or PDF format only; submit only one file, and include any Excel analysis as images, not embedded files. Grading will be based on the following breakdown: - Assumptions, estimates and sensitivity analysis: - Cash flow and DCF analysis: - Other financial details (break even, balance sheet, etc): - Critical reflection: - Referencing and presentation: 25% 25% 25% 15% 10% Interim Assignment The Interim Assignment is to develop a Profit and Loss Statement for the first year of operations which you will see is also part of the required content of your final assessment paper. You should clearly explain any assumptions in this P&L Statement and you may, if you wish, make any changes to your P&L Statement for your Unit 6 final assessment submission. The Interim Assignment is not graded. Criteria and Weighting 70% and above (Distinction) Assumptions, estimates and sensitivity analysis (20%) Excellent - wide range of key and peripheral assumptions, demonstrating critical evaluation and understanding of the issues Cash flow and DCF analysis (25%) Excellent understanding of the theory and its application and subtleties Other financial details (25%) Excellent understanding of the theory and its application and subtleties Critical reflection (20%) Referencing and presentation (10%) Excellent understanding of the strengths and limitations of the required analysis, with clear ideas on areas of improvement Excellent piece of writing, well-structured, coherent progression of argument, well-articulated and accurately referenced, with excellent summary and clear conclusions and recommendations 60% - 69% (Merit) Substantial selection of key and peripheral assumptions, demonstrating analysis and critical evaluation of a wide range of relevant issues for the professional context. Good exploration of knowledge and theory relevant to the assignment. Analysis and evaluation of concepts are critical and fairly insightful. Good exploration of knowledge and theory relevant to the assignment. Analysis and evaluation of concepts are critical and fairly insightful. Good understanding of the strengths and limitations of the required analysis, with some ideas on areas of improvement Well written, well-structured, coherent progression of argument, reasonably articulated and accurately referenced. Good summary, conclusions and recommendations 50% - 59% (Pass) Good selection of key and peripheral assumptions with critical evaluation of significant issues for the professional. Adequate exploration of knowledge and theory relevant to the assignment. Analysis and evaluation of concepts lacks criticality and insight. Adequate exploration of knowledge and theory relevant to the assignment. Analysis and evaluation of concepts lacks criticality and insight. Adequate understanding of the strengths and limitations of the required analysis, with few ideas on areas of improvement Fairly well written and structured, some coherence, some inaccuracies in referencing and minor issues with expression. Appropriate 40% - 49% (Fail) Limited selection of assumptions; some recognition and critical analysis of issues of significance for the professional context. Poor exploration of knowledge and theory relevant to the assignment. Analysis and evaluation of concepts are inadequate. Poor exploration of knowledge and theory relevant to the assignment. Analysis and evaluation of concepts are inadequate. 0% - 39% (Significant Fail) Limited evidence demonstrating poor recognition of significance for the professional context. Very weak or missing exploration of knowledge and theory relevant to the assignment. Analysis and evaluation of concepts are non-existent. Very weak or missing exploration of knowledge and theory relevant to the assignment. Analysis and evaluation of concepts are non-existent. Unclear understanding of the strengths and limitations of the required analysis, with few ideas on areas of improvement Weak or confused understanding of the strengths and limitations of the required analysis Poorly written and structured, incoherent and inaccurately referenced. Lacks summary, conclusions and recommendations Very weak piece of writing. Incoherent and poorly articulated. Inaccurately referenced. Lacks summary, conclusions and recommendations You have been asked by your 58 year old father, Gamal to help him assess a new venture. It is Friday night, and he needs the work finished by Sunday, in preparation for an early Monday morning meeting, so you know that he will not be able to give you any more information than he already has (and you will be unable to contact him over the weekend), and therefore you may need to rely on your own assumptions and estimates for some of the analysis where appropriate. Gamal lives in London, UK, and recently took early retirement (from a trading company he joined 30 years ago), and left the company with a lump sum (after tax) payment of 450,000. Surprisingly, rather than being depressed by his new state of independence, he is excitedly contemplating a new career as an online retailer of nuts, such as almonds, hazelnuts, pistachios and walnuts. He is confident that he can set up a business to import the nuts from the USA and sell them in the UK. His wife, who he met at business school, is pleased with his passion for this possible new venture, but concerned that it might turn into a financial disaster. She has suggested that he develop a financial plan to evaluate the venture and its viability. After a couple of hours with Gamal you have assembled the following information from him: - WeAreNuts, an established US processor of roasted mixed nuts (owned by one of Gamal's university colleagues), is prepared to give him exclusive rights to sell their products in the UK for a five year period in exchange for an upfront payment for those rights; - The nuts retail in the USA for an average of US 7 per pound (lb), and WeAreNuts is prepared to set the selling price to Gamal at a 45% discount to this price; - WeAreNuts would ship to Gamal on receipt of payment for each order; - Gamal has found out that air freight from the USA would cost on average $5 per kg and that the total time from him placing an order to receiving the goods in London would be two weeks (including the preparation and packing time in the USA); - Gamal plans to order from the USA monthly and intends to maintain a minimum stock of four weeks' worth of sales to ensure that he will be able to manage fluctuations in demand; - He will buy a special refrigerator at a cost of 1,200 to keep the nuts in good condition, and has found a small industrial room he can rent nearby at a cost of 450 per month (payable monthly in advance, plus an initial deposit of three month's rent); - Gamal will sell the nuts throughout the UK by internet only, and is planning to spend 2,500 with a website designer to develop the site; - He has already spent 4,200 on a market study that told him that once established, demand would be about 1,500 kg a month, although in the first year sales would start at only 200 kg in the first month before building up slowly to the full level at the end of the first year; - The above study assumed an average selling price of 16.50 per kg (ignore any impact of sales tax in your calculations), and noted that the market was price sensitive and that the forecast volumes would increase by 50% if Gamal would price the nuts at a 10% lower price; - Packaging and shipping in the UK would average 2.30 per kg, and Gamal is not intending to charge that to the customer; - All sales would be by credit card, with the credit card company taking 1% per sale and remitting the monthly total to Gamal five days after the end of each calendar month; - He believes that one person could run the nut operation part-time at a total cost (including employer's social charges) of 2,750 per month; - Gamal believes that if necessary he could borrow up to an additional 40,000 at 8% p.a.; - Gamal's marginal tax rate on investment or earned income is 30%, payable one year in arrears; he has also told you that he can invest any available cash at an after tax 4% per annum. Gamal remembers lectures on discounted cash flow analysis at business school (although he admits that he did not fully understand them, unlike his wife who was a distinction student). He has asked you to prepare a financial analysis while he is away to help him with the decision, making clear any assumptions that you make; A summary of all assumptions and estimates that you have made for your analysis, including Justifications where appropriate; - A break even analysis; - A Profit and Loss Statement for the first year of operations and Balance Sheet at the end of the first year; - Monthly cash flow for the first year of operation; - Annual cash flow thereafter; - A clear explanation, in plain English, of how much cash the venture will need to get started; - Any sensitivity analysis that you think would be helpful; - The most that Gamal could offer WeAreNuts as an upfront fee for the exclusive rights for the five year period (which does not include any nut purchases) which would leave him no better or worse off than if he had not undertaken the venture, and the amount you suggest he should actually offer them; - Conclusions and recommendations; - A critical reflection of the analysis that Gamal has asked you to prepare - what, if anything, would you do differently in a financial analysis of this opportunity, and why? Gamal has explained that he is going to be out of town for a wedding so will be unable to provide any assistance at all, but as he pointed out before leaving \"you will find this easy with computers and the internet to help\