Assignment on the Financial Analysis of Coffee Shop

Introduction of Financial Analysis of Coffee Shop

The assignment is based on the financial analysis of a business that is working in a building to serve the business entrepreneur with its services of coffee. There is a new entrant in the market that is a huge umpire in the area and obviously they will enjoy the services of Tim. With the increase in the people who are working in this area is automatically give increase to the sales volume. There is not only change in sales volume as well as in other many aspects that are dealing in the business transactions on routine basis. The paper is not about the calculation of the sales volume or profit; it is just about to see the impact of the increase in the sales on the other variables that exist in the business market. There are assumed and projected values that could be used to determine the business productivity in coming time period.

Main Body of Financial Analysis of Coffee Shop

The analysis is based on three different domains that are used to define the business scope in the market. As there is an entrant of new business in the area it will increase the sales volume of the coffee. There will be more employees who will be working in the business tycoon that will take the services of coffee on the daily basis. With the increase in the business volume as there is increase in sale it will not only lead to increase in the profit but also it will increase some expenses and cost of the business. This year Tim is expect to go to increase the business volume with the increase in the customer’s strength. As for concerned with the different aspects or components of the business that will be affected with the shifting of business in the nearby building. There is no need to calculate the figures so here we could discuss the impact of increase in the sales volume of the coffee shop business in the market that is as in follows:

Income earned: with the increase in the number of employees working in the business building could also increase the demand for the accessories that they have to use in their routine life. People working in the business are adding the value of coffee business. Total revenue of business will increase as the business volume increase due to increase in the number of people who are working and using the products of the business (Subramanyam, 2009).

Salaries: the existing staff of coffee shop could work overtime or there may be increase to hire new staff as there is need of more staff to handle the large number of customers with quality product. With the increase in the duty hours of the staff there will be increase in the salaries of staff.

Rent: with the establishment of new and a large business in the market, there will be increase in the rent of the building as it is adding value in the building that could be increase the rent of building.

Depreciation: depreciation is fixed therefore it will not be changed.

Supplies: as there is need to increase the sales volume with the increase in the population so there is basic need of increase in the supplies that is used in the service of coffee so there is no shortage and difficulty to manage the demand of the customers in the area.

Lease: refrigerator is on the lease that is being used in the business, with the increase in sales volume it will not be affected as the amount of lease is already fixed. There may be need of a new refrigerator which has no concern with the existing lease. So here is issue of existing lease that will remain constant and have no impact of decrease and increase (Fai, Weng, & Hoe, 2016).

Tax: tax is always paid on the profit that is earned by the business. As there is clear cut increase in the sales volume that increase the profit of the business. Tax will be increased according to the government rate as it is paid on specific limit of the profit earned by the business.

Interest on loan: if there is need of further loan in the business to expand the volume of the business then there may be increase in the interest of loan that will be bought in the new financial year. But there is no concern of existing loan it could not be affected with the increase in the volume of the business.

Insurance: insurance is made to secure the business from unavoidable circumstances and risks that could be face by the business in future. To secure this kind of loan, there is insurance coverage that compensates the risk of loss in the business. The insurance cover is already taken by the business so there is no increase in the insurance premium amount as it is already decided.

As for above analysis give true position of the business that demonstrate about the expense impact and profit. According to this analysis, with the increase volume of sale expenses of business will increase as the large the business the large the expenses have to bear by the business. Similarly there is also increase in the profit of the business that is based on the assumed values of the business. Net profit of the business will increase due to increase in the sales of business that is fact that with the increase in volume profit is also increased in a successful business.

Conclusion of Financial Analysis of Coffee Shop

The paper is concluded with the analysis of the coffee business that the increase in the sales volume increases the profit; however, there is also increase in the expenses incurred by the business. There are some components that remain constant as they are fixed in the business. As there is a contestant of new business in the territory it will expand the business volume of the espresso. There will be more representatives who will be working in the business investor that will take the administrations of business on the regular schedule. With the expansion in the business volume as there is increment in deal it won't just lead to increment in the benefit yet in addition it will build a few costs and cost of the business. There isn't just change in deals volume just as in other numerous viewpoints that are managing in the business exchanges on routine premise. As indicated by this examination, with the expansion volume of offer costs of business will increment as the huge the business the huge the costs need to manage by the business. Additionally there is likewise increment in the benefit of the business that depends on the expected estimations of the business (Tsamenyi, Cullen, & González, 2006).

 References of Financial Analysis of Coffee Shop

Fai, L. K., Weng, S. L., & Hoe, L. W. (2016). Financial analysis on the company performance in Malaysia with multi-criteria decision making model. Systems Science and Applied Mathematics , 1 (1), 1-7.

Subramanyam, K. R. (2009). Financial statement analysis. Includes index,.

Tsamenyi, M., Cullen, J., & González, J. M. (2006). Changes in accounting and financial information system in a Spanish electricity company: A new institutional theory analysis. Management Accounting Research , 17 (4), 409-432.