Reference no: EM13660794
Consultancy report for anthony's orchard
To prepare for this Individual Assignment:
1. Review the readings and media for this unit, including the Anthony's Orchard case study media.
2. Familiarise yourself with the Anthony's Orchard company and its current situation; this can be done by exploring each of the tabs across the top of the screen in the Anthony's Orchard case study media. Hint: You should focus on the financial information.
To complete this Individual Assignment:
1. Review the Financial Statements: Analyse the current financial state of Anthony's Orchard and evaluate the impact of a major customer cancelling their expected order. This analysis should include the following:
- Your view of the current financial health of the company
- Your assessment of the materials and labor costs
- Your assessment of the income statement
- Your assessment of the cash flow statement
- Your assessment of each of the business units in Anthony's Orchard
- C-V-P analysis of the current year's financials
Conduct a What-If Analysis: This what-if analysis concerns an unforeseen circumstance that could impact the company's current health as well as its future plans. A major customer is considering cancelling their order for prepared apple products. This customer accounts for 25% of the prepared apple product revenue. Evaluate the impact of this on the budgeted statements contained in the case study.
Notes:
You should fully state and justify any assumptions that you choose to make in relation to the financial data you use. For example, if you make assumptions about the state of the economy or the industry over the period you cover in your analysis, be sure to state these and identify why you believe they are worth consideration here.
Be sure to include references to any sources you use as well, including external sources of economic data or industry statistics.
AND
To prepare for this Individual Assignment:
Review the Anthony's Orchard case study in the unit resources.
Consider the following:
- The company, according to Anthony's Orchard Strategic Plan, is hoping to purchase an apple press in order to start a new line of prepared apple products-apple juice.
- The company estimates this new product offering will generate an additional $95,000 net income per year and estimated cash flows of $90,000 per year. The cost of the apple press will be $950,000 and this expenditure, as shown in the budgeted cash flow statement, is expected to take place in the fourth quarter of 2012.
- The apple press is expected to have a seven-year life and no salvage value.
- The company requires a 10% return on investment for new capital investments and the company uses a cost of capital of 8%.
- The company's revenue goal for 2015 is $25 million.
- Assume a minimum 12% gross margin on revenue.
To complete this Individual Assignment, answer the following:
- Do you think the company's revenue goal of $25 million by 2015 is realistic?
- Explain how purchase of the apple press might affect the company's revenue goals. Based on this information, explain whether Anthony's Orchard should invest in the apple press. Support your response with relevant information provided in the case study, the previous year's financials for 2010, the current year's financials for 2011 and the budgeted year's financials for 2012.
- Draft budgeted financial statements from 2012 to 2015 under both options that provide a realistic assessment of expected revenues and costs, and explain how you have arrived at these budgeted figures.