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Week4AssignmentFIN317.docx

Table of Contents 1. Financial Start Up Needs 2 a. Analysis 2 b. Rationale 3 2. Financing Options 3 3. Financial Ratios 4

1. Financial Start Up Needs

a. Analysis

Start-up needs

Quantity

Total based on month

Amount

Cash at hand

200,000

30

6000,000

Set of cooking tools and Equipment’s

Total needed is 4 as each cost 300,000

0

12,00,000

Purchase of chicken and other needed raw material

5 kg per day and each kg is 1000 of chicken and 10,000 for other material

150000+300000

450,000

Rent cost

250,000 monthly

250000

250000

Water and cold drink dispenser

100,000 per dispenser of water and cold drink. Total needed in quantity is 2

400,000

400,000

Air conditioners

5 as each has a cost of 100,000

500000

500000

Tables and chairs

15 sets as each costs 150000

2250,000

2250,000

Standby generator

200000

0

200,000

Utility expenses (electricity bills, fuel etc)

100,000 per day

30

30,00,000

Labour cost

Total 20 working staff and each would be paid 50000, and for executives 7 managers it needs to pay 120000

30000000+840000

30840000

Total

42090,000

b. Rationale

Café grill would require cash at hand of Rs. 200000 to meet day to day operations and financial needs. And it also requires a set of cooking tools and equipment in order to cook fries, burgers, broasts and other needed stuff for cooking. Not only this it would also require chicken and other raw material needed to cook chicken and other stuff and it will also incur the cost of rent as we will not go for the purchase of land and building because it will incur an excessive cost as paying aren’t in a month would be simple enough. Café grill would also need to have water, and cold drink dispensers in order to serve drinks, water and ice cream to customers. Since it also needs to have an air conditioner in order to create a smooth and comfortable environment for customers as because its competitors offer all these facilities along with it will also need a standby generator in case of electricity breakdown occurs so that our customers don’t get dissatisfied with the environment we provide. Lastly, it will incur some utility expenses such as electricity bills of light, machines and needed equipment and incurrence of fuel charges for generator.

2. Financing Options

There are many ways through which company can generate the amount of money to cater its business needs as café grill can also go for the joint stock company, loans from bank, peers or friends, a sole proprietorship in case if he has his own saving hence in my opinion and partnership. The best financing option for café grill would be going for partnership among all of its partners as it can obtain money by a partnership of 5 partners among each other. As one of the options can be that each partner must invest an equal amount of money in the business and also invest sufficient expertise and time needed to run this restaurant business. Since another option can be active partners who may invest less amount of money and provide expertise and knowledge in the business and sleeping partner must invest a huge amount of investment and pay a very little time to manage the day to day operations. And approaching through this type of financing would be finding credible partners who may invest a certain sum of money as these credible partners can be one of your friends, relatives or colleagues.

3. Financial Ratios

Although there are many direct ways to measure the performance of the business as we can measure it by evaluating the number of assets café grill have, low amount of liabilities it has and etc. but the two most important rations in order to measure the performance of the business is Return on Equity ratio (ROE) and current assets (CA) ratio as firstly current assets ratio means that the amount of currents assets it has in comparison to its liabilities. In other words, A high proportion shows a greater degree of protection, which expands flexibility for the company And also high ratio indicates that company can have good financial efficiency of using its assets efficiently to create revenue and its capability to deal with those advantages whereas return on equity refers to measuring the financial efficiency that tells us how much company generate profits relative to its stockholder investment as A rising ROE recommends that an organization is expanding its capacity to produce profits without requiring as much capital. It additionally demonstrates how well an organization administrates its investors' capital. Hence with these two ratios, we can measure the company performance of how it is performing.