finance group 1
TRANSCRIPT
GROUP # 01• Muhammad Usman Siddiqui
• Syed Faizan Haider Zaidi
• Muhammad Faizan Babar
• Saad Hamid
• Sardar Noman Salim
• Hasnain Shabbir
• Sayed Sahil Adbullah
FRESH BITES INC.
OUR MISSION :
Better quality at better prices
Better ambience
Targeting youth and families
OUR PRODUCTS :
• Fast Food
Coffee
Juices
Desserts
OWNERSHIP AND FINANCING DETAILS Seven Owners Financing Scheme – 80% Equity
Financing , 20% Debt Financing
INDUSTRY ANALYSIS: SWOT ANALYSIS
Strengths Cost advantage Hygienic Food Free Deliveries
Weaknesses Inexperienced Limited Products Low Market Share
Opportunities Optimistic Future
Economic Conditions Tastes and Preferences Online Availability
Threats Inflation Intense Competition Prevailing Economic
Conditions
PORTER’S FIVE FORCES
Threat of Substitutes (HIGH)
Competitive Rivalry (HIGH)
Bargaining Power of Customers (HIGH)
Threat of New Entrants (HIGH)
Power of Suppliers (LOW)
ASSUMPTIONS FOR INDUSTRY MODEL Sales Forecasts through conducting interviews
Just in time method of production is followed
Dessert items are outsourced
Straight line method of depreciation is followed for each asset throughout the period
Inflation rate is kept constant at 10% per year
The number of kWh of electricity will increase as number of customers will increase
Rent of premises will increase by 17% each year
Closing Stock of raw materials are held at fixed percentage of the following year’s production
LIQUIDITY RATIOSYEARS 2014 2015 2016 2017 2018
CURRENT RATIO
2.8 4.3 5.7 4.2 6.9
ACID TEST RATIO
2.1 3.6 4.9 3.4 6.1
YEARS 2014 2015 2016 2017 2018
DEBT TO EQUITY
32% 24% 18% 14% 10%
DEBT TO TOTAL ASSETS
24% 19% 15% 12% 9%
TIMES INTEREST EARNED
23.28 33.41 54.18 109.2 323.22
DEBT RATIOS
YEARS 2014 2015 2016 2017 2018
G.P MARGIN
58.12%
58.42%
58.64% 58.85% 59.04%
O.P MARGIN
11.20%
11.76%
12.54% 14.17% 16.96%
N.P MARGIN
7.07% 7.53% 8.13% 9.27% 11.16%
RETURN ON EQUITY
35.99%
33.29%
32.84% 36.30% 38.04%
RETURN ON ASSETS
27.30%
26.94%
27.85% 31.78% 34.53%
PROFITABILITY RATIOS
INVESTMENT RATIOS
YEARS 2014
2015 2016 2017 2018
E.P.S 4.77 5.87 7.65 11.007 17.390
D.P.S 1.5 1.5 2 4 2
INTEREST COVERAGE RATIOS
23.27
33.40 54.18 109.19 323.22
DIVIDEND COVER RATIOS
3.185
3.91 3.82 2.75 8.69
ACTIVITY RATIOS
YEARS 2014 2015 2016 2017 2018
FIXED ASSET TURNOVER
6 7 9 6 9
FINANCIAL LEVERAGE MULTIPLIER
74.89%
56.99%
42.89%
61.81%
39.95%
BREAKEVEN RATIOS
YEARS 2014 2015 2016 2017 2018
OPERATING LEVERAGE
5.20 5.003 4.70 4.176 3.519
FINANCIAL LEVERAGE
1.045 1.031 1.019 1.009 1.003
Sensitivity Analysis
NPV IRR
Tax rate falls to 25%
208868931%
Inflation rate increases to 15%
2482704 34%
Interest rate increase to 15%
435614 23%
FUTURE PROSPECTS
To expand the business by entering into bigger markets both within as well as outside the city.
Expanding the product line by adding different cuisines; national as well as continental.
To maintain the same level of consumer loyalty and trust by providing them best possible services.
To remain a lucrative prospect for the company’s shareholders.