Convincing Features
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Report – A 1,500 word report which is in a professional format, including an Executive Summary. The report is based around the same scenario as the presentation and should contain details and calculations which support the recommendations made in the presentation. The report should include:
Remember the report is a supporting document to your presentation, the two should be consistent.
The scenario below is divided into sections to provide guidance on the contents of the presentation. You should read the scenario thoroughly and ensure that you consider the guidance and include all required elements in a single report and a single presentation.
BGC Ltd is a rapidly growing company which provides cleaning services to retail companies and offices. Most of their work is in High Street shops, out of town shopping malls and offices. The company also produces its own cleaning products which are organic and have a low carbon footprint. These cleaning products are used exclusively by the company on its own cleaning contracts. The company was set up by three friends from college, Bev, Gio and Cam several years ago. The company began to experience rapid growth five years ago but the COVID-19 pandemic which began in 2020 caused the growth of the company to falter.
| 2021 | 2020 | 2019 | 2018 |
|---|---|---|---|
| Turnover £9,216 | £14,523 | £16,289 | £13,777 |
| Cost of Sales -£8,853 | -£13,534 | -£15,010 | -£12,570 |
| Gross Profit £363 | £989 | £1,279 | £1,207 |
| Admin exp -£257 | -£478 | -£463 | -£473 |
| Other Operating Expenses -£49 | -£56 | £45 | £23 |
| Profit Before Interest and tax £57 | £455 | £861 | £757 |
| Interest Payable and similar charges -£28 | -£20 | -£1 | -£16 |
| Profit Before Taxation £29 | £435 | £860 | £741 |
| Tax on profit -£108 | -£157 | -£166 | -£147 |
| Profit for the financial year -£79 | £278 | £694 | £594 |
| 2021 | 2020 | 2019 | 2018 | |
|---|---|---|---|---|
| Non Current Assets | Goodwill £31 | £31 | £31 | £34 |
| Tangible Assets £2,465 | £2,090 | £1,494 | £1,462 | |
| Total £2,496 | £2,121 | £1,525 | £1,480 | |
| Current Assets | Inventory £298 | £564 | £542 | £760 |
| Trade Receivables £932 | £1,532 | £1,755 | £1,274 | |
| Cash at bank and in hand £19 | £32 | £286 | £262 | |
| Total £1,249 | £2,128 | £2,583 | £2,296 | |
| Current liabilities | Trade payables £1,296 | £952 | £721 | £881 |
| Net Current Assets -£47 | £1,176 | £1,862 | £1,415 | |
| Total Assets less Current Liabilities £2,449 | £3,297 | £3,387 | £2,895 | |
| Creditors falling due after one year £557 | £400 | £52 | £61 | |
| Net assets £1,892 | £2,897 | £3,335 | £2,834 | |
| Capital and reserves | Called up Share Capital £1 | £1 | £1 | £1 |
| Profit and Loss Account £1,891 | £2,896 | £3,534 | £2,833 | |
| Total £1,892 | £2,897 | £3,535 | £2,834 |
Prepare a report for the directors of BGC Ltd discussing the performance, liquidity and solvency of the company over a minimum of the last two years of the financial information provided. Your report should include, but is not limited to, reference to your calculations of the following ratios:
Your workings should be included in the Appendix to the report. In the body of your report you should include the ratios you have calculated along with an appraisal of the company’s performance in the last two years of the financial information provided.
Provide a brief analysis of the current performance, liquidity and solvency of BGC Ltd based on your ratio analysis, highlighting any areas of opportunity or concern. You are not required to include workings of ratios in your Powerpoint.
The company has been experiencing cashflow problems and is unable to pay its creditors on time. Prepare a cash budget for the company for the first quarter of 2022, based on the following information:
a.The opening cash balance on 1 January 2022 is £19,000
b. Sales for January, February and March 2022 are forecast to be £500,000, £600,000, and £700,000 respectively
c. Sales will be collected as follows:
I. 50% in the month of sale
ii. 40% in the month following sale
iii.10% in the second month following sealed.
d.Cost of sales is 80% of sales.
e.Wages and other fixed expenses for January, February, and March are expected to be £150,000, £170,000, and £180,000 respectivelf.
f.Purchases will be paid for as follows:
Based on the information above, produce a cash budget for January to March 2022, including the opening balance, cash inflows, cash outflows, and closing cash balance.
Part C (30% weighting of report mark)
BGC Ltd is looking to the future and is keen to move the company forward. However, there is some disagreement within the directors of the company. An extract of the minutes from a meeting highlights some of the conversation which took place:
Gio: We need to recruit more cleaning staff and sales people. Then we can take on more contracts and drive the business to be the market leader.
Bev: But our competitors are undercutting us. In order to compete, we have to continually reduce our prices. I think we should be leaving the retail sector – the High Street is really suffering and out of town malls are not as successful as they were. We should really consider moving into the domestic market. People hate cleaning and love coming home to a clean house. We could use our award-winning cleaning products in domestic settings and keep the office contracts as well.
Cam: We need to do some analysis to find out which areas of our business are more profitable.
Gio: If we moved to domestic cleaning, we could continue to use the vans and cleaning equipment we already have, and our customers would pay us there and then.
Cam: We need to do some analysis to find out which areas of our business we want to focus on.
Following this meeting, the following information has been made available. This consists of:
Analysis of current market:
| Sector | 2021 | 2020 | 2019 | 2018 |
|---|---|---|---|---|
| Sales Retail | 2765 | 7988 | 9611 | 8955 |
| Sales Office | 6451 | 6535 | 6678 | 4822 |
| Total | 9,216 | 14,523 | 16,289 | 13,777 |
| Gross Profit Retail | 89 | 357 | 504 | 489 |
| Gross Profit Office | 274 | 632 | 775 | 718 |
| Total | 363 | 989 | 1,279 | 1,207 |
Some analysis of the future markets for cleaning in the retail, office, and domestic sector revealed the following:
| Predicted markets in 2022 | Cash inflow Boom | Cash inflow Static | Cash inflow Recession |
|---|---|---|---|
| Office | 800 | 375 | 250 |
| Retail | 500 | 50 | -150 |
| Domestic | 1100 | 400 | -200 |
Chances of Boom: 25%
Chances of Static: 35%
Chances of Recession: 40%
Report Requirements:
Using calculations to support your reasoning, critically discuss the company’s plans for the future. Provide recommendations based on whether BGC Ltd should:
i. Carry on in the retail and office sectors
ii. Shut down the retail element and move into the domestic market
Your recommendations should be fully justified.
Presentation Requirements:
Within your presentation, you should provide a critical discussion of the company’s plans, making justified recommendations for the directors.
