Chef's toolkit Inc. Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Chef's toolkit Inc. Case Study Solution

Introduction

Chef’s toolkit company is determined to start up a new invention at their store named as Pasta Server. This would require additional funding from the owner. However, a person wanted to invest $85000 with the 50% stake in the company. Therefore, the task is to calculate forecasted financial statements so that owner can take any further decision

Financial Analysis

As forecasting of financial statements has been taken place and shown in the excel sheet, the analysis has been divided into four heads such as production budget, cash budget, Budgeted Income Statement and Budgeted Balance sheet. Moreover, sensitivity analysis has also been done which shows that how much production would take place such as 5000, 10000 and 30000 units per month.

It has been analyzed in production budget that if company would be selling 5000 units per month, a total of 60,000 units in a year has to be manufactured. On the other hand, by selling 10,000 and 30,000 units company would have to produce 120,000 and 360,000 units per year.

The cash budget shows that in the operating year, inflows of the company would be 216,435. By subtracting it from the outflows of 216435, net cash of the year would be 490,665. By adding up additional equity, the total cash flows after financing would be 575,665. On the other hand, the cash budgets for pessimisticscenario shows that by producing 5,000 units per month, cash flow of 309,615 would be generated at the end of year. The optimistic scenario determined that by producing 30,000 units per month, the inflows of 1939,300 would be generated. By subtracting it from outflows and adding additional equity fund, net cash would be calculated at 1,679,815.

Statement of all three cases have been developed. It has been stated that by producing 10,000 units per month, a total revenue of 516,000 would be generated. By subtracting COGS, gross profit of 432,000 has been determined. Furthermore, all the operating expenses, which have been totaled to 140,892 has been subtracted, which resulted at EBIT of 291,108. Lastly, the tax of 20% has been implemented on the EBIT. Therefore, net income of 232,886 has been generated.

Similarly, if the company would be selling 5000 units, the gross profit of 216,000 would be generated. By deducting total expense of 100,272, EBIT of 157,728 is received. After implementing 20% tax on EBIT, net profit of 126,182 is achieved. Lastly, by analyzing optimistically, the gross profit of 1,548,000 has been achieved. After deducting operating expenses and implemented tax, the net profit of 1,315,570 has been generated.

Chef’s toolkit Inc. Harvard Case Solution & Analysis

By making balance sheet, it has been determined that if company would be adding its net profit as retained earnings and working on base case, company would require additional equity of 258,457. Pessimistic analysis shows that equity requirement would be 125,787 and Optimistic analysis shows that requirement of equity would reach to 423,894.............................

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