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A business analysis of Alt Ausee Ice Cream.

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Introduction

Contents List Page no. 1.1 Report Objectives 2 1.2 Methodology / Models used 2 1.3 Key Business points re. Alt Ausee Ice Cream 2 1.4 Key Results of Report 2 1.5 Assessment of expansion proposal; 3 1.6 Other Management options 3 1.7 Conclusions / recommendations 4 1.8 Appendix inc.Graphs , Charts, Comments & data. 5 to 11 inc. 1.1 Report Objectives; To forecast sales & profits for Alt Ausee Ice Cream for next 12 months and use results to advise on specific investment proposal (expansion ) taking account of relevant factors ( real or potential ) and available information. Conclusions, explanations & recommendations to be included.. 1.2 Methodology / Models used; Forecasting future performance based on understanding past performance ( i.e. Regression ) Based on figures only ( i.e. Quantitative forecasting). Using Excel to predict the future ( i.e. extrapolating the trend ) allowing for seasonal variations. Assessing the risk ( i.e. acceptable or not ) 1.3 Key Business points re. Alt Ausee Ice Cream. High quality product i.e. high margins Growing business ... present production capacity almost reached Seasonal peaks ( Dec & Aug ) and lows ( Nov & Feb ) Expansion costly ( increase fixed costs by 20% ) Market split between Great Britain (60%) and Germany (40%) Germany over 20% more profitable New products have increased recent sales Storage problems 1.4 Key Results of Report While initial results would seem to indicate a promising future for Alt Ausee Ice Cream further examination indicates that the proposed expansion should not be undertaken at this stage without further information or investigation. ...read more.

Middle

COMMENT; Graph shows steady growth in sales for both Great Britain and Germany. GB and Ger both increase by over 39% from 99/00 to 01/02. Based on this past performance ( which represents annual summaries ) future looks positive for continued sales increases. NB Based on 60% / 40% split of sales between GB & Ger resp. FIG 1 Source Data Sales total by location 1999 to 2002 inc. GB Ger 1999/2000 303.6 202.4 2000/2001 343.2 228.8 2001/2002 423 282 Chart source; Excel 97 Basic skills; J Muir, 1997,unit 12, page 149 to 160 COMMENT; Trend line indicates strong " positive "relationship between time and sales, i.e. this would indicate that sales look set to continue to increase. Strength of the relationship has been reduced by seasonal figures which have the affect of giving a low R2 value ( 0.097 in this case ) Important factor is that there is a "slope" FIG.2 source data Total Sales by \quarter total sales ( tonnes ) 1999 2 1 115 1999 3 2 181 1999 4 3 142 2000 1 4 68 2000 2 5 134 2000 3 6 168 2000 4 7 169 2001 1 8 101 2001 2 9 152 2001 3 10 247 2001 4 11 187 2002 1 12 119 Chart source; Excel 97, further skills, J Muir; Unit 9, pages 129 to 139 COMMENT; Using forecast trend functions ( which account for variations such as seasonal factors in historical data ) ...read more.

Conclusion

This assumes sales volumes and exchange rate remain unchanged. Source data for FIG.6 Total Sales by \quarter Total Returns Fixed costs net profits Net profits var costs deducted (* = add. equip) pre-project post project 1999 2 1 �1,260,400 �1,250,000 �10,400 �10,400 1999 3 2 �1,982,800 �1,250,000 �732,800 �732,800 1999 4 3 �1,556,800 �1,250,000 �306,800 �306,800 2000 1 4 �744,800 �1,250,000 -�505,200 -�505,200 2000 2 5 �1,469,600 �1,250,000 �219,600 �219,600 2000 3 6 �1,843,200 �1,250,000 �593,200 �593,200 2000 4 7 �1,840,800 �1,250,000 �590,800 �590,800 2001 1 8 �1,093,600 �1,250,000 -�156,400 -�156,400 2001 2 9 �1,666,400 �1,250,000 �416,400 �416,400 2001 3 10 �2,707,600 �1,250,000 �1,457,600 �1,457,600 2001 4 11 �2,050,000 �1,250,000 �800,000 �800,000 2002 1 12 �1,305,200 �1,250,000 �55,200 �55,200 est 2002 2 13 �1,918,000 �1,500,000 �668,000 �418,000 est. 2002 3 14 �1,853,200 �1,500,000 �603,200 �353,200 est. 2002 4 15 �1,895,600 �1,500,000 �645,600 �395,600 est. 2003 1 16 �1,950,400 �1,500,000 �700,400 �450,400 Cumulative �7,138,400 �6,138,400 Chart source; Excel 97 Basic skills; unit 5, page COMMENT; Exchange rate fluctuation will have a major affect on net profits. i.e. 20 to 25 % decrease. If combined with comparison with increased fixed costs then affect could be decrease of over 50% in net profits Source data for FIG. 7 est 2002 2 Fixed costs Net profit Net profit Net profit est. 2002 3 post-project pre-project post-project post project est. 2002 4 euro=1.65 euro=1.48 euro = 1.65 est. 2003 1 �1,500,000 �668,000 �331,200 �418,000 �1,500,000 �603,200 �268,880 �353,200 �1,500,000 �645,600 �310,040 �395,600 �1,500,000 �700,400 �362,360 �450,400 49a2, Assign # 2, Alt Ausee Ice Cream; Student Reg. No 1022033 1 ...read more.

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