Prepare a basic income statement forecast

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Reference no: EM132220460

Assignment: Case Study - America Coffee

It is January 1st, 2018. You are a senior analyst at America Coffee House Inc., (ACH), one of the leading coffee chains and wholesaler of coffee/bakery products in North America. The CEO of America Coffee House, Susan Matthews, has reached out to you to draft a report.

Purpose
You will review and analyze the mission statement, case information, and financial statements of America Coffee House. You will use the information from your review to develop a SWOT analysis with the purpose of seeking support for proposed investment projects. You will also prepare a notional UCC asset tax values continuity schedule to analyze the impact of capital equipment disposals.

How to Proceed

Prepare your preliminary business case report by analyzing financial and non-financial data from the case information provided below. You will need to undertake, and include, the following:

1. Create a title page with your author identification (Full Name, Student ID).

2. Review the information and financial statements provided below to gain an understanding of potential investment initiatives that would be supportable by management. Describe the intent of the mission statement from the annual report, and prepare a SWOT analysis (strengths, weaknesses, opportunities, and threats). Based on your SWOT analysis, assess and explain in detail if America Coffee House is currently delivering on its mission statement.

3. Conduct financial statement analysis using liquidity ratios, debt ratios, profitability, and asset utilization ratios (at least three for each type of ratio). Comment on each of the ratios and what they say about the company's performance over the last five years.

4. Prepare an assessment for each of the investment proposals included below, with a rationale that is aligned with the SWOT analysis and financial statement ratio analysis. Recommend if ACH should go forward with any of the proposed investments based on this analysis.

5. Prepare a basic income statement forecast for the subsequent fiscal year, using a percentage of sales approach and using information included in the materials below to support assumptions that correspond for each revenue and expense. Each line item (e.g., marketing expenses) should have a note and an explanation on how it was calculated.

6. The CEO also needs help understanding the tax consequences of the disposal of a freighting truck. Prepare a CCA schedule for tax depreciation of a freighting truck purchased three years ago on January 1, 2015 for $350,000 (assume Class 16 with CCA rate of 40% and half-year rule applying). Calculate the tax consequence if the truck were to be sold at the beginning of this year (i.e., end of 2017) for either $90,000 or $120,000. The truck is the only asset in the class. Utilize the average tax rate that America Coffee House had in the last five years in your analysis of the tax impact.

Attachment:- assignment.rar

Reference no: EM132220460

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Reviews

len2220460

1/21/2019 10:10:03 PM

Calculation of Recaptured CCA 1 Calculation of Tax Savings 1 Interpretation of recapture 1 Correct Tax Rate 1 Total 100

len2220460

1/21/2019 10:09:56 PM

General & Administrative 1 Research, IT, & Development 1 Depreciation & Amortization 1 Gain from Asset Sale 1 Interest Expense 1 Tax 1 Loss from lease terminations or gain from license sales 1 Explanation of Calculations 11 Q6 Equipment Disposal Marks CCA Schedule 5 Calculation of Terminal Loss Sold 1 Calculation of Tax Savings 1 Interpretation of terminal loss 1

len2220460

1/21/2019 10:09:50 PM

Q5 Financial Forecast Marks Total Revenue Growth 1 Wholesale Segment Revenue 1 N American Revenue 1 International segment 1 Gross Profit margin 1 Advertising & Marketing 1

len2220460

1/21/2019 10:09:42 PM

Q4 Investment Proposal Marks Student Evaluation of Coffee Roaster Purchase 4 Evaluation of Store Re-modeling 4 Recommendation Reasoning 4

len2220460

1/21/2019 10:09:37 PM

Q3 Financial Statement Analysis Marks Three solvency (debt) ratios calculated correctly 3 Three liquidity ratios calculated correctly 3 Three activity ratios calculated correctly 3 Three profitability ratios calculated correctly 3 Interpretation for each ratio (1 mark for each) 12

len2220460

1/21/2019 10:09:29 PM

Grading You will be assessed in accordance with the following rubric: Q1 Title Page, Readability, Format, Spelling and Grammar Marks Student Title Page, Readability, Format, Spelling & Grammar 12 Q2 SWOT Analysis Marks Student At least three reasonable strengths 3 At least three reasonable weaknesses 3 At least three reasonable threats 3 At least three reasonable opportunities 3 Mission Statement Intent 2 Mission Statement alignment 2

len2220460

1/21/2019 10:09:22 PM

Format for Submission Your report narratives may be done in Word or Excel, but calculations and tables of values must be prepared in Excel with the amounts derived from actual formulas that use your variables, rounded to four (4) decimals or lower. The Excel tab worksheet must be print and presentation ready, formatted to print in 2 to 3 pages without page fragmentation of equations or tables between pages. It is permissible to break your report down using the questions listed above as headings. Submit your report file(s) into the Assignment 1: Case Studydropbox on UM Learn. Your assignment must be submitted by the deadline date found in the course schedule provided in the Course Outline.

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