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Business Report of Fashion Clothing and Financial Statements
Question
A group of friends have formed a new business called Fashion Clothing, an online and mailorder clothing business, in which they have invested £200,000 of their own capital. They intend to manufacture and sell quality clothes. They have set up the business and are selling direct to the final consumer, using a combination of aggressive marketing across a range of different media and also with the use of an automated Web site that accepts online orders. To support this, they also have a department of telephone sales and support staff ready to help customers. The sales staff work in teams and receive a basic salary plus commission for each successful sale. By the start of July 20X5, they have spent £150,000 on tangible noncurrent assets, and they currently have the remaining £50,000 in their business bank account.
They provide you with the following forecasted figures for their first 6 months of trading:
|
|
£
|
|
Sales for the next 6 months |
1,350,000
|
|
Cost of the materials used up in sales |
390,000
|
|
Labour costs for the 6 months |
480,000
|
|
Other expenses for the 6 months, including marketing costs and £15,000 depreciation of tangible noncurrent assets
|
345,000
|
|
Materials purchased during the 6 months |
520,000
|
Their projected cash receipts and payments are estimated to be as follows:
|
Month (20X5) |
Sales Receipts |
Payments for Materials |
Labour and Other Expenses |
|
|
£ |
£ |
£ |
|
July |
150,000 |
120,000 |
These payments are divided equally over each of the 6 months |
|
August |
120,000 |
100,000 |
|
|
September |
150,000 |
60,000 |
|
|
October |
210,000 |
60,000 |
|
|
November |
260,000 |
60,000 |
|
|
December |
285,000 |
60,000 |
|
|
Totals |
1,175,000 |
460,000 |
|
In addition to the above, they expect to have to pay a tax bill of £20,000 in December 20X5 and also plan to buy (and pay for) £30,000 additional tangible noncurrent assets in that same month. All transactions will go through their business bank account.
Prepare a Business Report for the friends who have invested in Fashion Clothing, commenting on the business’ prospects and including the following five financial statements.
Summary
This question belongs to finance and discusses about preparing a business report for friends who invested in Fashion clothing.
Word count: 1339
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