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Managing Financial Resources and Decisions Assignment 3 BTEC Nguyen Huu Phong 2017 tại University of Greenwich Viet Nam, đây là một trong những môn rất quan trọng và cần thiết cho những người muốn theo nghành businness cụ thể là human resource management như mình. Bài assignment này được mình làm tại trường. Các bạn có thể xem và tham khảo nhưng lư
Contents Introduction LO3 Be able to make financial decisions based on financial information 3.1 Analyze budgets and make appropriate decisions 3.2 Explain the importance of financial planning 3.3 Explain the calculation of unit costs and make pricing decisions using relevant information 3.4 Assess the viability of a project using investment appraisal techniques Conclusion 10 References 11 1 Introduction Today, the drinking coffee have gradually become a habit of everyone from everyone to students, people of all ages People who like speed and an aromatic essence of coffee, this has gradually changed the way that people who sell coffee or Instead of content makers to coffee now many places have espresso machine to do, you know those big coffee chain in the world such as Starbucks uses espresso machine Use the espresso for a delicious coffee and tasty more, because of this reason that gradually more people like to drink in places with espresso more than filter coffee Capture this trend, I open a small shop selling coffee espresso to serve everyone LO3 Be able to make financial decisions based on financial information 3.1 Analyze budgets and make appropriate decisions Project name: My coffee shop is named "COFFEE in BLACK" which sells espresso coffee Location: On No.10 Street, District 6, Ho Chi Minh City It then the next Kinh Duong Vuong - Galaxy Cinema and in dining area of district This place is very crowded in the evenings and lasts until mid-late at night and during the day there are quite many employees work The ground we rent include a foothold to sell wide 10m2 in the middle of this bustling area Segment: With cheap prices, great and fast, becoming an expresso coffees for everyone especially those who like the strong flavor of the coffee Task Task Task Task Task Task Task Weekly Ideas and concept Market search 10 Search for supplier Production Search for location, decorate Buying equipment and tools Training employees Gantt chart: the chart above is the weekly Gantt chart, after this period I will be able to start my own business Task description: Task 1: Ideas and concept 2 I am a coffee lover and especially black coffee and milk coffee are the best coffee in Vietnam Vietnamese people sometimes like to drink coffee like that and have a little more modernity At present, there are many models selling coffee as fast as we do, but they use filter coffee and instant coffee These things take away the essence of coffee, so also with their business model but we instead use espresso machines to make coffee This will break the concept of coffee taken in the morning that it will not be delicious That is why "COFFEE in BLACK" was born and brought the wonderful coffee to anyone at affordable prices Task & 3: Market search and search for supplier As mentioned above, we refer to surveys of some friends in community groups We recognize that morning workers tend to enjoy coffee, but they are usually in a hurry, and we rely on them to bring them the best coffee in the mornings to bring to work place Black coffee and milk coffee are also the favorite drinks of a large segment of consumers in Vietnam including young people Another special thing is, the coffee takes away as we sell very little in the evening although a large number of customers like to drink these kinds of coffee in the evening We will appear all day, all the time and in the future is everywhere so people can enjoy the fastest, cheapest and best coffee Task 4: Production Due to the quickest criteria, we will train employees to use espresso machines and make coffee that are designed to meet the needs of our customers at all times while maintaining the best quality The next job is to add milk, sugar and ice Customers just carry and enjoy In addition, we will give away our own ice cubes to keep our customers' best quality coffee while on the road Task 5: Search for location, decorate I have observed and visited many places around me live, luckily next to the place where I eat every day there is an easygoing owner whom I know They let me rent space and freely use electricity and water from their homes, of course included in the 10m2 rental price that I hired On decor, we will decorate the simplest of the two colors WHITE and BLACK This represents the culture for us "COFFEE in BLACK" Task 6: Buying equipment and tools Because my friends have opened cafes, they should introduce me to buy products and tools from Khoinghiepcafe.com The facilities and equipment for making coffee here are of good quality and I choose them The other items I buy at the market and stores for convenience and maximum cost savings 3 Task 7: Training employees Because our menu is simple and they are drinks that any Vietnamese can make it Of course, I have individual formulas with appropriate levels so that the coffee is always delicious and impressive The training of staff took place quite quickly in days Week 1: Instruct the staff to use the Espresso machine, mix the coffee by the formula available Of course I will give them a try and the drinkers are me and my friends If all accepts more than 90%, then the employee meets the requirement Week 2: Learn how to greet and take care of your customers Smile, talk briefly with them and pay attention to the habits of frequent customers I will supervise them in the later working sessions Absolutely not emotionless 3.2 Explain the importance of financial planning Cash shortage situation in which the physical amount of cash on hand differs from the book recorded amount of cash When a business is involved with over-the-counter cash receipts, occasional errors may occur in making change The cash shortage or overage is revealed when the physical cash count at the end of the day does not agree with the cash register tape Assuming that the count is $600 and the cash register reading shows $620, the cash shortage and overage account would be charged for $20 It is shown in the income statement The reasons for cash shortage in my project is not enough capital to sustain operations To this project can work well I need some more money in reserve to handle the unwanted happening such as fires, the equipment of the crash, theft, To prevent these issues, I will install the camera, fire extinguisher, and the medical box Cash surplus Cash surplus or deficit is revenue (including grants) minus expense, minus net acquisition of nonfinancial assets In the 1986 GFS manual nonfinancial assets were included under revenue and expenditure in gross terms This cash surplus or deficit is closest to the earlier overall budget balance (still missing is lending minus repayments, which are now a financing item under net acquisition of financial assets) Cash surplus is the excess money that I have gained during the project operation With this money, I will send save and use to handle these situations unfortunately happen Cashflow problem 4 Cash flow problems mean a business spends more money than it earns If you spend $4,000 on rent, supplies and payroll this month, for example, but only take in $3,500 in sales you have a cash flow of negative $500 You also have projected cash flow problems If your expected expenses outpace anticipated sales, you have a projected cash flow problem Most businesses that have cash flow problems so because they fail to look at their financial statements until problems become too big to handle Even a company that makes a profit can have a negative cash flow because of the lag time shipping out products, when the customer pays and the posting date of the funds This problem happens with my diner if has few customers To solve this problem, I will take out the promotions such as discounts, advertising or buying one meal get another drink free Overtrading Overtrading takes place when a business accepts work and tries to complete it, but finds that fulfilment requires greater resources - ie more people, working capital or net assets - than are available This is often caused by unforeseen events such as when manufacture or delivery take longer than anticipated, resulting in cashflow being impaired Overtrading that I may encounter is when the number of parking space are not enough for diner’s area served Then the only workaround is to get food order over the phone so that customer my diner won’t often out of parking space and the customers don’t have to go to my diner to order meal Financial distress Financial distress is a condition where a company cannot meet, or has difficulty paying off, its financial obligations to its creditors, typically due to high fixed costs, illiquid assets or revenues sensitive to economic downturns A company under financial distress can incur costs related to the situation, such as more expensive financing, opportunity costs of projects and less productive employees Employees of a distressed firm usually have lower morale and higher stress caused by the increased chance of bankruptcy, which would force them out of their jobs My project using capital borrowed from relatives and when Financial distress situations occur If this case happens only when my Gym business loss, then I will borrow more money to pay for staff and other pay intervals Fortunately, Thanks to my capital was borrowed from relatives, so I will easily convince extends the repayment period 5 3.3 Explain the calculation of unit costs and make pricing decisions using relevant information According to BusinessDictionary stated that: “In cost accounting, unit of product or service for which cost is computed Cost units are selected to allow for comparison between actual cost and standard cost, or between different actual costs.” Project size: THINGS TO PURCHASE TO START THIS PROJECT Quantity(unit, kg) BREVILLE BES 870XL – AUSTRALIA (Espresso machine) Specialized car for selling coffee and espresso machine Price (VND) Value 18.900.000 18.900.000 5.000.000 5.000.000 Sign 1.000.000 2.000.000 Knock Box 365.000 730.000 Hot cup (cover lid, logo) 500 3.000 1.500.000 Cold cup (cover lid, logo) 500 2.500 1.250.000 Drinking Straw 1000 50 50.000 30.000 30.000 Ice Coffee Roasters 266.000 1.330.000 Milk 48 20.000 960.000 Sugar 16.000 48.000 6 Plastic Bag 1000 65 65.000 TOTAL 31.863.000 The total amount of money to buy related equipment is 31,863,000 VND In addition, the space rent is 2,000,000 VND / month and we have to deposit months is million BUSINESS SPACE Location: No.10 Street, District 6, Ho Chi Minh City Space: 10m2 Rental deposit months 2.000.000 6.000.000 I hired a bright employee from 5am to 8pm with a monthly salary of 1.500.000VND and an employee working with a midday employee from 11am to 2pm with a salary of 1.500.000 VND In the evening, I will stand for sale due to not busy learning, thus saving part of the cost of hiring staff So in total, I spend 3,000,000VND per month for employees Salary for employees Rental cost TOTAL employees 1.500.000 3.000.000 2.000.000 5.000.000 As a coffee shop, we will continue to operate all day except for big holidays The total amount calculated above is 5.000.000 VND Working capital in the first three months is 15,000,000 VND In addition, because of the curb sale, we need some small fees to be allowed to trade about 500,000 VND TOTAL INVESTMENT Cash 15.500.000 Equipment and tools 31.863.000 Costs incurred 5.000.000 TOTAL 52.363.000 This is my total investment cost for this project The above cost will help my project to operate in months, months is the time that I have to ensure the project operation smoothly and smoothly Pricing strategy: 7 Prices of ice coffee and hot coffee are the same and milk coffee is higher than black coffee 2,000 VND Milk coffee will cost 14.000 VND and black coffee is 12.000 VND This is the reasonable price for a cup of coffee in Viet Nam 3.4 Assess the viability of a project using investment appraisal techniques CASHFLOW Sales growth rate in the first months: 20% r=12%/year Months Q Variable cost Price Revenue Fixed cost 600 720 864 1.03 1.244 1.49 1.792 2.150 2.580 10 2.580 11 2.580 12 2.580 13 2.580 14 2.580 15 2.580 16 2.580 17 18 2.580 2.580 12.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00 Profit 52.363.000 Discount cashflow Accummulative CF -52.363.000 -52.363.000 7.200.000 3.600.000 5.000.000 -1.400.000 -1.386.139 -53.749.139 8.640.000 4.320.000 5.000.000 -680.000 -666.601 -54.415.740 10.368.000 5.184.000 5.000.000 184.000 178.589 -54.237.151 12.441.600 6.220.800 5.000.000 1.220.800 1.173.165 -53.063.987 14.929.920 7.464.960 5.000.000 2.464.960 2.345.325 -50.718.662 17.915.904 8.957.952 5.000.000 3.957.952 3.728.570 -46.990.092 21.499.085 10.749.542 5.000.000 5.749.542 5.362.702 -41.627.390 25.798.902 12.899.451 5.000.000 7.899.451 7.295.010 -34.332.379 30.958.682 15.479.341 5.000.000 10.479.341 9.581.679 -24.750.701 30.958.682 15.479.341 5.000.000 10.479.341 9.486.811 -15.263.890 30.958.682 15.479.341 5.000.000 10.479.341 9.392.882 -5.871.008 30.958.682 15.479.341 5.000.000 10.479.341 9.299.883 3.428.875 30.958.682 15.479.341 5.000.000 10.479.341 9.207.805 12.636.680 30.958.682 15.479.341 5.000.000 10.479.341 9.116.639 21.753.319 30.958.682 15.479.341 5.000.000 10.479.341 9.026.375 30.779.694 30.958.682 15.479.341 5.000.000 10.479.341 8.937.005 39.716.699 30.958.682 30.958.682 15.479.341 15.479.341 5.000.000 5.000.000 10.479.341 10.479.341 8.848.520 8.760.911 48.565.218 57.326.129 19 2.580 20 2.580 21 2.580 22 2.580 23 2.580 24 2.580 12.00 12.00 12.00 12.00 12.00 12.00 30.958.682 15.479.341 5.000.000 10.479.341 8.674.169 66.000.298 30.958.682 15.479.341 5.000.000 10.479.341 8.588.286 74.588.584 30.958.682 15.479.341 5.000.000 10.479.341 8.503.253 83.091.837 30.958.682 15.479.341 5.000.000 10.479.341 8.419.063 91.510.900 30.958.682 15.479.341 5.000.000 10.479.341 8.335.706 99.846.606 30.958.682 15.479.341 5.000.000 10.479.341 8.253.174 108.099.780 Breakeven analysis is the analysis between price, revenue, profit and cost to calculate breakeven point and generate profit Based on these calculations, we set up a table to find out the breakeven point Based on this table, I can see the sales calculated by the formula (Revenue = Selling Price x quantity) With each cup of coffee we make is priced at 6.000 VND, this is the cost of sales, we have calculated the reasonable price for each cup of coffee sold 12,000 VND, suitable for the majority of people in Vietnam It is estimated that we will sell 600 cups in the first month and reach sales of 7,200,000 VND, then months continuous will have a growth rate of 20% By the third month, we sold 864 cups and achieved a turnover of 10,368,000 VND and profit of 184,000 VND, at which we will maintain the operation without loss Quantity 850 10.200.00 revenue fixed cost variable 5.000.000 cost profit 5.100.000 100.000 From statistics, it can be seen that if the growth rate of 20% is continuous for months and stopped at the highest level, then after 11 months, we will pay back in 12 months NPV = net present value IRR Payback 107.029.485 9% per months 12 months Net Present Value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows NPV is used in capital budgeting to analyze the profitability of a projected investment or project Internal rate of return (IRR) is a metric used in capital budgeting measuring the profitability of potential investments Internal rate of return is a discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero IRR calculations rely on the same formula as NPV does Payback period: I reached the breakeven point of my project in 12th month when I sold 2580 cups per month with sales of 30,958,682 VND and profit of 10,479,431 VND Thereby, we can see, my project has the potential to grow and be able to recover capital in just 12 months with the standard set Conclusion Through this report, we can realize that it can be seen that setting up a clear business plan will tell us what needs to be done and what needs to be done to evaluate whether the project is viable and potential In addition, during project implementation, it is necessary to continuously monitor and adjust deviations from the plan 10 10 References • • • 11 Khoinghiepcafe (2016) How to open Cafe Espresso, Available at: http://khoinghiepcafe.com/tu-van-mo-quan-cafe-espresso-voi-30tr/?v=e14da64a5617 (Accessed: 29 April 2017) Caphenguyenchat (2017) Coffee price, Available at: http://caphenguyenchat.vn/banggia-nguyen-chat-coffee (Accessed: 29 April 2017) Dungcubarcafe (2017) Knock Box, Available at: https://dungcubarcafe.com/sanpham/knock-box-nhua-110mm/ (Accessed: 29 April 2017) 11