Chef's Toolkit
Case #2
Chef’s Toolkit - Case Anaylsis
Define the Issues Chef’s Toolkit has exhausted all of their financial resources trying to develop their product. The owner, Peter Jeffery, is seeking external investment to fund the launch of his product, and the potential investor, Dale Reid, has asked for projected financial statements for the company’s pessimistic, expected, and optimistic projected sales for the first year of operation ending July 30, 1995. Analyzing the Case Data Fragmented information was given in the case, along with a balance sheet and a production schedule for the expected sales of 10,000 units. There was no statement of cash flows, income statement or any information about their cash account or their accounts payable account. Generating Alternatives Dale Reid could choose to either invest $85,000 for 50% of the company, choose to invest more or less for a negotiated percentage of the company, or not invest in Chef’s Toolkit. The pessimistic projected sales is 5,000 units per month, totaling 60,000 units in the year. The expected amount of sales is 10,000 units, summing to 120,000 units per year. The optimistic projected sales is 30,000 units per month resulting in a total of 360,000 units sold in the year. In the optimistic option, a double mold is needed since the total required production exceeds the maximum amount for the single mold. Selecting Decision Criteria • Low additional investment • High revenues with low expenses • Return on Investment • Break Even Analysis Analyzing and evaluating alternatives Break Even = Revenues - Expenses = 0 Single Mold = x(1.82) - x(1.215) - x(0.162) - 63,975 63,975 = x(0.443) 144,413 = Break even units/year Single Mold (pessimistic and expected) = 12,035 units/month Double Mold = x(1.82) - x[(1.215+0.865)/2] - x[(0.144+0.062)/2] - 125,975 125,975 = x(0.677) 186,078 = Break even units/year Double Mold (optimistic) = 15,507 units/month
Chef’s Toolkit - Case Analysis 1
Case #2
Chef’s
Chef’s Toolkit - Case Anaylsis
Define the Issues Chef’s Toolkit has exhausted all of their financial resources trying to develop their product. The owner, Peter Jeffery, is seeking external investment to fund the launch of his product, and the potential investor, Dale Reid, has asked for projected financial statements for the company’s pessimistic, expected, and optimistic projected sales for the first year of operation ending July 30, 1995. Analyzing the Case Data Fragmented information was given in the case, along with a balance sheet and a production schedule for the expected sales of 10,000 units. There was no statement of cash flows, income statement or any information about their cash account or their accounts payable account. Generating Alternatives Dale Reid could choose to either invest $85,000 for 50% of the company, choose to invest more or less for a negotiated percentage of the company, or not invest in Chef’s Toolkit. The pessimistic projected sales is 5,000 units per month, totaling 60,000 units in the year. The expected amount of sales is 10,000 units, summing to 120,000 units per year. The optimistic projected sales is 30,000 units per month resulting in a total of 360,000 units sold in the year. In the optimistic option, a double mold is needed since the total required production exceeds the maximum amount for the single mold. Selecting Decision Criteria • Low additional investment • High revenues with low expenses • Return on Investment • Break Even Analysis Analyzing and evaluating alternatives Break Even = Revenues - Expenses = 0 Single Mold = x(1.82) - x(1.215) - x(0.162) - 63,975 63,975 = x(0.443) 144,413 = Break even units/year Single Mold (pessimistic and expected) = 12,035 units/month Double Mold = x(1.82) - x[(1.215+0.865)/2] - x[(0.144+0.062)/2] - 125,975 125,975 = x(0.677) 186,078 = Break even units/year Double Mold (optimistic) = 15,507 units/month
Chef’s Toolkit - Case Analysis 1
Case #2
Chef’s