monte bianco
Cafes Monte Bianco
Memo
To:
Mr. Giacomo Salvetti
From:
Andrea Yates cc: Prof. Susan Murray
Date:
September 5, 2013
Re:
Private Label
Per your request, I developed a profit plan and financial assessment for Cafes Monte Bianco possible strategy change to private label. I have determined we should look at maintaining our strategy of selling premium brand and private label coffee.
Profit Plan
Sales
I forecasted sales for 2001 compared to 2000 would decrease by 3,312,408,000 liras due to the reduced sales price of private label coffee.
Operating Expenses Our operating expenses will be lowered significantly by going strictly to private label. We will be able to eliminate marketing costs, as well as, reduce selling costs, research and development costs, and administrative costs by 12,440,161,000 liras. Additionally, fixed costs will be lowered due to our increased capacity from 3,500,000 to 6,000,000.
Profits
Even with the increased capacity and decreased spending in SG&A, we will not be able to make as much in Net Profit as we were in 2000. We will have an estimated 333,828,000 liras shortfall.
Liquidity
If we switch to a complete private label strategy, I am concerned about the liquidity of Cafes Monte Bianco and our ability to keep the necessary inventory and raw materials on hand to meet demand. When making the statement of cash flows, I made the assumption we had no finished good or raw material inventory and that we were paying all of our bills on time, given the lack of information. While our net cash flow seems ok, I don’t believe most of my assumptions are correct.
Cafes Monte Bianco
Estimated Statement of Cash Flows
For the Year Ended Dec. 31, 2001
Cash Flows from Operating Activities
Operating Income (EBIT) 12,440,161
Depreciation Expense 2,593,700
Increase in A/R (10,273,133)
Decrease in A/P (487,331)
Decrease in Finished Goods 1,148,400
Decrease in
Memo
To:
Mr. Giacomo Salvetti
From:
Andrea Yates cc: Prof. Susan Murray
Date:
September 5, 2013
Re:
Private Label
Per your request, I developed a profit plan and financial assessment for Cafes Monte Bianco possible strategy change to private label. I have determined we should look at maintaining our strategy of selling premium brand and private label coffee.
Profit Plan
Sales
I forecasted sales for 2001 compared to 2000 would decrease by 3,312,408,000 liras due to the reduced sales price of private label coffee.
Operating Expenses Our operating expenses will be lowered significantly by going strictly to private label. We will be able to eliminate marketing costs, as well as, reduce selling costs, research and development costs, and administrative costs by 12,440,161,000 liras. Additionally, fixed costs will be lowered due to our increased capacity from 3,500,000 to 6,000,000.
Profits
Even with the increased capacity and decreased spending in SG&A, we will not be able to make as much in Net Profit as we were in 2000. We will have an estimated 333,828,000 liras shortfall.
Liquidity
If we switch to a complete private label strategy, I am concerned about the liquidity of Cafes Monte Bianco and our ability to keep the necessary inventory and raw materials on hand to meet demand. When making the statement of cash flows, I made the assumption we had no finished good or raw material inventory and that we were paying all of our bills on time, given the lack of information. While our net cash flow seems ok, I don’t believe most of my assumptions are correct.
Cafes Monte Bianco
Estimated Statement of Cash Flows
For the Year Ended Dec. 31, 2001
Cash Flows from Operating Activities
Operating Income (EBIT) 12,440,161
Depreciation Expense 2,593,700
Increase in A/R (10,273,133)
Decrease in A/P (487,331)
Decrease in Finished Goods 1,148,400
Decrease in