For this unit you need to submit only the first part of your consultancy report which includes:
· Section 1: Financial Analysis
· Section 2: Analysis of the Investment
You will submit the rest of the Consultancy Report as part of your Unit 5 Project.
Word count: the suggested word count for this assignment is 2000 words.
Advice on word count: Submissions that range from 10% below to 10% above the recommended word count are acceptable. Students should recognise that assignment submissions that fall outside these parameters may be marked down. This restriction encourages the development of a concise writing style, as assignment quality is likely to suffer given the potential for overly verbose submissions. The policy is available to review on page 16 of the University of Roehampton Online Policies document, which can be foundhere.
Section 1: Financial Analysis (Overview of the given case study organisation and its current financial situation)
In this section, you need to provide an analysis of the current financial health of the company. Using the data providedhere, assess materials and labor costs, the income statement, the cash flow statement and each of the business units in Anthony’s Orchard.
Additionally, conduct a cost-volume-profit (C-V-P) analysis of the current year’s financials.
To prepare for the Section 1 of the Project:
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 the Section 1:
· Review the Financial Statements: Analyse the current financial state of Anthony’s Orchard. This analysis should include the following:
o Your view of the current financial health of the company
o Your assessment of the materials and labor costs
o Your assessment of the income statement
o Your assessment of the cash flow statement
o Your assessment of each of the business units in Anthony’s Orchard
o C-V-P analysis of the current year’s financials
Section 2: Analysis of the Investment (Future capital investment opportunities and strategic financial plan)
In this section, you need to provide an analysis of the proposed investment in an apple press. Consider the impact this investment has on the company’s stated revenue objectives, and draft projected financial statements that provide a realistic assessment of expected revenues and costs.
As you have heard in the media presentation from CFO Mary Scott, Anthony’s Orchard is faced with another type of expansion decision. CEO Bob Frost is eager to expand the product line to include apple juice. Of course, a decision to expand a product line has very many variables. In this section, you will focus on one of these: the additional cost resulting from the purchase of an apple press (a piece of equipment required to manufacture apple juice). You also will investigate the value of a number of financial measurements. Ultimately, you will develop a recommendation for the company, and this analysis will help you to support that recommendation.
To prepare for the Section 2 of the Project:
· Review the Anthony’s Orchard case study in the unit resources. Consider the following:
o 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.
o 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.
o The apple press is expected to have a seven-year life and no salvage value.
o The company requires a 10% return on investment for new capital investments and the company uses a cost of capital of 8%.
o The company’s revenue goal for 2015 is $25 million.
o Assume a minimum 12% gross margin on revenue.
To complete the Section 2, 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.
Additional Guidance
A recurring theme of this module is the value of data to decision-making. Be mindful that your audience for this consultancy report is the management of Anthony’s Orchard. The work you submit here should be a useful tool to the organisation while it considers the idea proposed by company CEO Bob Frost in the media piece—the production and distribution of Anthony’s Orchard apple juice within the next 3 to 5 years. Your consultancy report should be well thought-out, and developed in a manner that provides insight and guidance.
Strategic Plan & Growth Initiatives
Please see below for excerpts from our Long Term Vision and strategic planning sessions:
- In 2012, the Company is hoping to purchase an apple press, which would allow us to start a new line of prepared apple products – apple juice. Our plans include an estimated $95,000 net income per year and an estimated $90,000 of cash inflows per year from the new line of apple juice. We expect a 10% return on this investment.
- We continue to search for new orchards throughout the country so that we may diversify the types of apples we produce. While we feel that Braeburn and Honeycrisp are among the best, we understand that you the customers might like additional variety.
- Our 2015 revenue goal is to exceed $25 million dollars, which will involve either acquiring new orchards, or expanding our line of products.
Budget Overview
Anthony's Orchard begins budget planning each year in August and finalized by the start of our fiscal year in October. Each departmental director, as defined by the company's organizational structure, provides labor and materials cost forecasts. The Senior VP of Operations compiles these numbers to estimate total costs. The Senior VP of Sales forecasts sales based on fruit yield estimates from the Operations division, and the Senior VP of Finance prepares the final annual budget for approval by the Executive Committee and Board of Directors.
Anthony's Orchard uses a FIFO accounting method to minimize crop waste. Factory overhead uses a flexible budget to respond to business demands and scale with crop yield. Variable overhead varies with the number of direct labor hours in operations areas, including processing, retail store, and harvesting.
Budget info and financial data
Pick Your Own Apples
Bring the whole family and pick as many apples as you can carry. The orchard is open during apple season 8 a.m. to 6 p.m. daily. We sell all of our apple varieties by the pound. Bring your own bag and we offer a discount.
Thanks to all the wonderful folks who continue visiting our Orchard.
See you soon!
CSA Program, May - August
Our Community Supported Agriculture (CSA) program is a win-win for you and for us. You get the best selection of our apples, picked and delivered weekly right to your door. And you help Anthony's Orchard by becoming a loyal patron of our hard work.
We'll deliver your CSA every Wednesday through our peak season, May – June for our Honeycrisp apples and July – August for our Braeburn apples. You can participate in our CSA as a full share member (for a family of four) or half share member (for a family of two):
- Full share: 2 dozen per week, £10
- Half share: 1 dozen per week, £5
For more information visit our store or look for a flyer at your local market
Fall Harvest Festival, October 1 - 31
Join us for our annual Fall Harvest Festival during the month of October with tricks and treats for the young and the young at heart. Take a spooktacular hayride through the orchard and over to our pumpkin patch, where you can pick out your very own future jack-o-lantern. Just watch out for our very own phantom of the orchard, old Apple Lloyd Webber!
Educational Programs
Turn our orchard into your classroom with special programs designed to enhance learning and build appreciation for farming and agriculture. Guided tours through the orchard and production facilities offer students an opportunity to learn more about where their food comes from and how it moves from the field to the market. We'll also work with you to tailor the lessons to meet the needs of your class' age group and your curriculum.