accounting assignment

MGMT 8500 CASE ONE Let me roll it

NOVEMBER 1, 2019 CONESTOGA COLLEGE

Kitchener, Ontario, Canada

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Copyright notice

Shankha Bhattacharyya, Professor – Accounting, Conestoga College, prepared this case to facilitate an evaluation item in MGMT 8500. Copyright for this case rests solely with the College and Author. Any form of further transmission including copying, extraction or references, require explicit permission of the above. (November 2019)

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LET ME ROLL IT (LMRI)

Orly Reimer, Jason Schmidt and Takeshi Fujimura has been close friends since their high school days.

After graduating from York University, they began exploring several career options. The growth of

the sharing economy and crowdsourcing caught their attention and wanted to start their venture in

that area. After much discussions, test marketing and prototyping they launched a grocery delivery

service and named it as ‘Let Me Roll It’(LMRI). This was set up as a Sole Proprietorship under Takeshi.

It was summer of 2015 when LMRI was launched. Interested clients would download the LMRI app

and order groceries and LCBO items. The shopping list would go to one of the three founders, who

would in turn get to the store and complete the shopping. Once complete, they would deliver at the

address indicated and that would complete the process. The client would prepay on the app and

therefore no cash transactions were necessary. In the beginning this service covered a mid-sized city

east of Toronto and was a great success. In the following two years the service was expanded to

similar sized cities in the region and achieved similar success.

Fast forward to 2018. The vision of the three founders set in place a strong foundation to expand

LMRI to larger markets. At the of December 2018, LMRI’s operating statistics were as follows:

• Active client base: 1 200

• Average annual spend per client: $ 400

• 2018 revenue: $ 480 000

During Christmas break, the three founders were preparing the Operating Plan for the period 2019-

2022. They realized that to implement the plan several strategic issues needed to be addressed and

decided to seek help from Conestoga Consulting Group.

You are the consultant from Conestoga Consulting Group and allocated to work with LMRI founders.

You have just held your first meeting with them. You are reviewing your meeting notes and see the

following:

• To maintain the growth momentum, LMRI can no longer be a bootstrapped venture and it

needs to change its structure from Sole Proprietorship. The question is to decide between

converting LMRI to either a Partnership or a Private Corporation. The three founders would

like to know the features of both these forms and like you to recommend one that is a good

fit with the business.

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• Orly, Jason and Takeshi have not prepared any financial statements since starting the

venture and inquired as to why they were necessary? You explained to them the concepts of

external and internal users of financial statements and what each user would need the

financial statements for? Following the entity change, as proposed above, they would like

you to prepare a list of both internal and external users and what their potential interest

would be in Financial Statements of LMRI.

• All of them feel that to support LMRI growth, they may need to raise capital soon Their

options are to borrow funds as a loan from BDC (Business Development Corporation)1, or

issue shares and raise equity capital. You explained to them about ratio analysis, which

caught their attention. Specifically, they would like to know the ratios which the lender

(BDC) would be interested in and the ratios a potential shareholder would look at before

considering investing in LMRI?

Your next meeting with them is in two weeks. Prepare a memo, addressed to the three founders,

with your analysis of the above discussion points.

Required:

1. Prepare your memo with the following guidelines:

• Word count: maximum 750

• Font: Arial, 11 point

• Line spacing: 1.5

• Cover page and Table of Contents

• Header and Footer

• Page numbering

2. No external research is required to write this report.

3. A good report would be one, which integrates related content you learned in Weeks 1-3, to

the facts as presented in this case.

4. No quantitative analysis is necessary.

5. Please upload your responses in form of MS Word, to the assigned folder on eConestoga.

6. This assignment will be verified through Turnitin.

7. Plagiarism and any form of copying will be deemed as an offence and dealt with as per

College policies.

1 https://www.bdc.ca/en/pages/home.aspx