KINDLY HELP IN 1 & 2 APPENDIX PART..

1:35 7 Done Capstone - v60 - hand... Q MGMT 8500: $22 -capstone -V60 Appendix Two (Benchmarking studies) Objective: To conduct ratio analysis of a comparable company (Waterloo Corporation) and compare with that of the industry. Waterloo Corporation Comparative Statements of Financial Position 31-Dec-19 Assets 2019 2018 Cash $ 53,000 $ 30,000 Accounts receivable 52.000 48,000 Merchandise inventory 55,000 73,000 Prepaid Expenses 50,000 31,000 Property, plant, and equipment 270,000 250,000 Total assets $ 480,000 $ 432,000 Liabilities and shareholders' equity Accounts payable $ 23,000 $ 33,000 Short-term bank loan payable 57,000 69,000 Bonds payable 115,000 160,000 Common shares 170,000 95,000 Retained earnings 123.000 75.000 Total liabilities and shareholders' equity $ 488.000 $ 432.000 Waterloo Corporation Income Statement Year Ended December 31, 2019 Net sales $ 500,000 Cost of goods sold 210.000 Gross profit 290,000 Expenses Operating expenses 153,000 Amortization expense 23,000 Interest expense 12,000 Total expenses 188.000 Profit before income tax 102,000 Income tax expense 27.000 Profit $ 75,000 Additional information for 2019: Cash dividends declared and paid. 27,000 A EA Net cash provided by operating activities in 2019 71,000 Page 8 | 12 MGMT 8500: $22 -capstone -V60 Methodology: Based on the above information the consulting group will conduct ratio analysis for the following ratios: O Current ratio O Receivable's turnover O Times's interest earned O Profit margin O Days in inventory Return on assets E12354 Capstone - v60 - hand... MG MT 8500: 522 -capslone -V60 Overview: The capstone case is testing your understanding ofthe entire course material in a scenario which resembles a real-life organization. You are provided with a case, where business owners are trying to decide on a new strategic direction. They have engaged your group as Consultants (Conestoga Consultants). They have provided you with their vision and your group in turn has developed scenarios relating to implementation of these scenarios. You will notice that there are four scenarios and in each of them the methodology and objective are provided. You must analyze these scenarios and discuss their outcomes with the business owners. The outcomes will be delivered in form of a report in MS Word format and supporting calculations in an Excel Workbook. Grading: This is a group assignment. worth 20% of yourfinal grade Related textbook content: The content you are being assessed on. covers the entire course from Weeks 1 6 and 9-14. Group contract: Prior to the start of group work, you will completethe group contract and upload to the Assignment folder. One contract is to be submitted per group. Group conflicts or teamwork issues: If any such issues arise, please inform your professor as early as possible. Your professor will meet with the team and arrive at a resolution Peer review form: One form per student must be uploaded to the assignment folder along with yournal submission. Due date: Vour professor will inform you ofthe due date. This will be due in Week 15. Page 2|12 MG MT 3500: 522 -capstone -V50 CASE It was a regular working day in 0ctober'21, when four business partners gathered for strategy session for their organization: Food is Life (FIL). Sac kg ro u n d: FIL operated a chain of Quick Service Restaurants (05R) in business localities in the GTA, Mississauga, Brampton, Oakville, Kitchener, Waterloo, and Cambridge. Theirfirst outlet opened in 2007 in Vaughn and then continued to expand to other areas. 1:354 Capstone - v60 - hand... MG MT 8500: 522 ecapstone rVO Reshaping business strategy The four business partners set up their meeting with a view to re-orient their business strategy in the context of changes coming to how work would look like when the economy reopened after the pandemic. The goal was to develop a business model which would be relevant with the hybrid work model which was likely to be the norm once post pandemic recovery takes shape. Andrea began the meeting with a discussion what work would look like in the post pandemic era. Clients of Fit were in all age groups ranging from 25 48 and were ofce workers. Due to their workload they preferred to buy food from a Quick Service Restaurant so that they can consume the food as and when their work schedule allowed for. With the hybrid work model, they would be attending ofce two or three days a week and work from home for the remainder. The food consumption pattern would shift from consumption only in the ofcelprepandemicl, to consumption both at office and home (post-pandemic). The question therefore was: how can FiL adapt to this change in consumer behaviour? Joan thanked Andrea for her insight and began herdiscussion. She pointed out at this time, there was a very short time lag between food being prepared at FIL and being consumed by the client. The time lag possibly was no more than two hours. As a result, consumers were able to eat freshly prepared food which was packed to retain the attributes of the cooked meal till it reached the consumer. She expressed opinion that the food production process needed a transformation. in addition to the food being prepared and delivered to the client for consumption, there has to be a secondary process where food would be prepared and packed. The packed food would retain its original attributes for 48 hours. Therefore, a client can order two versions of the same meal. One, which she can consume in the office within the next two hours and second, the packed version, which can be taken home, kept in the refrigerator, and consumed on the following day. She would come up with a list of menu itemswhich could be cooked and packed. She requested Andrea to explore the possibility of building a new brand based on the packed meals. At this point, Victor took over and pointed out that to implement this strategy, the following steps would be necessary: - A new facility, where food preparation and food packaging can happen - Benchmarking studies to analyze performance of similar companies - Product costing and estimation of manufacturing volume to meet nancial goals - Multichannel marketing of packed food Akeme pointed out that implementing the above would lead to several operational issues as well. In order to resolve them, it may be necessary to incur additional fixed expenses. As a next step, they decided to retain the services of Conestoga Consulting (CC), a reputed consulting agency. The scope of work for CC would be to develop nancial projections based on the above issues and provide a recommendation as to the best way fonuard for FlL. Page 4|12 MG MT 8500: 522 -capstone -V60 initial meeting with Conestoga Consulting: A group of five consultants met with the four business partners to develop a plan of action. it was decided that the consulting group will develop financial projections as requested and provide a report to FlL in two weeks. PrOJECt work for Conestoga Consulting: Issue #1: New facility for FIL 1:354 Capstone - v60 - hand... MG MT 8500: 522 wcapstone ~V60 initial meeting with Conestoga Consulting: A group of five consultants met with the four business partners to develop a plan of action. it was decided that the consulting group will develop financial projections as requested and provide a report to FlL in two weeks. Project work for Conestoga Consulting: Issue #1: New facility for FIL For acquiring the new facility, the consulting group wanted to evaluate both options of leasing the facility as well as an outright purchase. They gathered data which is presented in Appendix 1. Issue #2: Benchmarking studies of similar companies The consulting group decided to conduct a ratio analysis of two companies and compare trends across major ratios. This would allow them to provide feedback to Fit as to operating metrics they should follow in their new venture. Relevant data is presented in Appendix 2. Issue #3: Product costing and estimation of manufacturing volume to meet financial goals The consulting group wanted to develop a Contribution Margin income statement and conduct a Cost- Volume-Profit Analysis so that the estimated manufacturing volume can be projected, Ef this estimated volume could be sold entirely. then the target protability can be met. Relevant data is presented in Appendix 3, Issue #4: Multi channel marketing of packaged food items The consulting group wanted to develop calculations using the relevant costing model of 'Special Orders'. They felt that in order to maximize production capacity 'special orders' should be accepted. These orders would represent onevtirrie sales opportunities of the products in a very high volume. Due to the high volume, client would have to be offered a price which is lowerthan the list price, Relevant data is presented in Appendi: 4. Required: At the end of the two-week period, the consulting group would be meeting with the business partners. Prepare a report showing all the calculations and your recommendations for all the four issues. Page 5|12 MGMT 8500: $22 rcapstone -V50 Deliverables: 1) Written report with the following content: n Appendixl: Leasing I Explain the calculations I Your recommendations 1:35 7 Done Capstone - v60 - hand... Q MGMT 8500: $22 -capstone -V60 Appendix Two (Benchmarking studies) Objective: To conduct ratio analysis of a comparable company (Waterloo Corporation) and compare with that of the industry. Waterloo Corporation Comparative Statements of Financial Position 31-Dec-19 Assets 2019 2018 Cash $ 53,000 $ 30,000 Accounts receivable 52.000 48,000 Merchandise inventory 55,000 73,000 Prepaid Expenses 50,000 31,000 Property, plant, and equipment 270,000 250,000 Total assets $ 480,000 $ 432,000 Liabilities and shareholders' equity Accounts payable $ 23,000 $ 33,000 Short-term bank loan payable 57,000 69,000 Bonds payable 115,000 160,000 Common shares 170,000 95,000 Retained earnings 123.000 75.000 Total liabilities and shareholders' equity $ 488.000 $ 432.000 Waterloo Corporation Income Statement Year Ended December 31, 2019 Net sales $ 500,000 Cost of goods sold 210.000 Gross profit 290,000 Expenses Operating expenses 153,000 Amortization expense 23,000 Interest expense 12,000 Total expenses 188.000 Profit before income tax 102,000 Income tax expense 27.000 Profit $ 75,000 Additional information for 2019: Cash dividends declared and paid. 27,000 A EA Net cash provided by operating activities in 2019 71,000 Page 8 | 12 MGMT 8500: $22 -capstone -V60 Methodology: Based on the above information the consulting group will conduct ratio analysis for the following ratios: O Current ratio O Receivable's turnover O Times's interest earned O Profit margin O Days in inventory Return on assets E1:354 Capstone - v60 - hand... Cost oi goods sold Gross profit senses 1O Of13 gem Total expenses Profit belore income tax Income tax expense Profit Edd'l'ona 'ntolmal'un m 2913. Cash dividends declared and paid. Net cash -rovided b o rati - activities in 2019 Page 8|12 MG MT 3500: 522 -capstone -V50 Methodology: - Based on the above information the consulting group will conduct ratio analysis for the following ratios: Current ratio Receivable's turnover Times's interest earned Profit margin Days in inventory Return on assets 0 Cash current debt coverage ratio 0 As a next step the group will compare the ratios calculated above with industry benchmarks. The benchmarks are indicated within brackets besides each ratio. 0 Current ratio (2 to 1) Receivable's turnover (11 times) Times interest earned (16 times) Profit margin (16%) Days in inventory (115 days) Return on assets (11%) Cash current debt coverage ratio (2 times) X 120963991-3971672.jpeg .trr ......... _'_-..-..-.-.-. ""\"l Objective: Should WMM lease or construct their own production facility Optlon 1: Construct Costs to incur: Actual expenditure towards buying land, 5 500.000 construct building and getting ready for use Taxes. insurance, and repairs (per year) $ 20.000 Intended years of use 18 Projected market value in 18 years 5 1,000,000 Budgeted maximum expenditure towards buying 3 500,000 land, construction of building and getting ready for use. Remainder in four payments of; $ 175.000 won 2: Loose Intended years of use 18 First lease payment due now S 100,000 Rest of the lease payments (years 2-17) 5 120.000 Operating costs to be paid by WMM Property taxes (annual) 5 17,000 Insurance (annual) 5 18.000 Initial one-time deposit, will be returned in year 3 8,000 18 Required rate of return 16% Methodology: The consulting team is proposing to perform a NPV analysis and determine the benefit to leasing or construction. Based on the analysis, they will recommend the preferred option (construction or leasing). 1:354 Capstone - v60 - hand... MG MT 3500: 522 -capstone -V50 Deliverables: 1) Written report with the following content: I Appendixl: Leasing I Explain the calculations I Your recommendations Appendix 2: Benchmarking 0 Explain the comparisons of ratios you calculated against industryvalues e Provide recommendations on how to improve three of them Appendix 3: CW e Explain your calculations I Provide a recommendation Appendix 4: MCM 0 Explain your calculations 0 Provide a recommendation Formatting specifications: I Executive summary (1 page) e 1000 words maximum (excluding executive summary) 0 Calibri orArial font 0 11 point e Line spacing - 2 e Header and footer e Cover page e Table of Contents (formatted using MS Word) 2) Excel Workbook showing calculations: o Blank format is provided o Complete one spreadsheet for each scenario Page 6|12 MG MT 8500: $22 acapstone rVEO Appendix One (Construct or lease) Objective: Should FIL lease or construct their own production facility Costs to incur: Buying land, construct building and getting ready 5 600,000 for use Taxes, insurance, and repairs (per year) Intended years of use Pro'ected market value in 15 ears 1:354 Capstone - v60 - hand... MGMT 3500: 522 -capstone -V50 CASE it was a regular working day in 0ctober'21, when four business partners gathered for strategy session for their organization: Food is Life (FlL). Background: FlL operated a chain of Quick Service Restaurants ((153) in business localities in the GTA, Mississauga, Brampton, Oakville, Kitchener, Waterloo, and Cambridge. Theirfirst outlet opened in 2007 in Vaughn and then continued to expand to other areas. FlL outlets offered food and beverages for takeout and delivery only. There was no dine in option available. The rapid expansion of food delivery service provided a strong headwind for FlL. Since their outlets did not require a prominent location, the leasing costs were minimized. The above factors contributed to the success and growth of FlL till Covid struck in early 2020. Most the revenue generated by FIL was from lunch items, afternoon snacks and early evening dinners consumed by clients working in their ofces. With 90% of client working from home, the demand for such services almost disappeared overnight. FIL had to downsize its operations, close outlets, and lay off nearly 60% of its workforce. Positive news began to appear in 0ctobef21 with the arrival of vaccines in Canada. Both the Federal and Provincial governments expressed condence of vaccinating most of the population by December'21 and allow restaurant businesses to function normally by November 21. About business partners Andrea Jimenez (Andrea) is the Senior Vice President- Marketing. She spent over fteen years with Fortune 500 companies in the Consumer-Packaged Goods sector. She developed rnulti-channel marketing strategies for FlL which led to FlL being positioned as an agile, innovating enterprise. Joan Smith (loan) was the Corporate Chef of FiL. She spent nearly twenty years with leading hotel chains in Western Canada before taking on the current role in FlL. She displayed exemplary skills at developing new products which contributed to the profitability of FiL. Victor Wiseman (Victor) was the Chief Financial Officer of FIL. He too came from a hospitality background, having worked with leading hotel chains in Toronto. His expertise was in Capital Budgeting and product costing, which worked well in conjunction with the culinary skills ofJoan when new products were being developed. Akeme Jones (Akeme) wasthe Senior Vice President-Operations. His background was as a General Manager in Fast Food Outlets. With his exemplary people skills and ability to train new hires, FIL was able to hire operations staff with little or no experience and develop them to high performing team members. Page 3|12 MG MT 8500: $22 ecapstone N60 Reshaping business strategy The four business partners set up their meeting with a view to re-orient their business strategy in the context of changes coming to how work would look like when the economy reopened after the pandemic. The goal was to develop a business model which would be relevant with the hybrid work model which was likely to be the norm once post pandemic recovery takes shape. Andrea began the meeting with a discussion what work would look like in the post pandemic era. Clients of PH. were in all age groups ranging from 25 48 and were ofce workers. Due to their workload they 1:354 Capstone - v60 - hand... 2) Excel Workbook showing calculations: I Blank format is provided Complete one spreadsheet for each scenario 8 of 1 3 Page 6|12 MG MT 8500: 522 icapstone N50 Appendix One (Construct or lease) Objective: Should FIL lease or construct their own production facility Option 1: Construct Costs to incur: Buying land, construct building and getting ready for use Taxes, insurance, and repairs (per year) 5 40,000 Intended years of use 15 Projected market value in 15 years 5 2,100,000 Maximum down a ment FIL can make 5 800,000 Remainder in four payments of Option 2: lease Intended years of use First lease a ment due now Rest of the lease payments (years 2-15) 5 125,000 Operating costs to be paid by FIL Property taxes (annual) 5 15,000 Insurance annual) 5 25,000 Initial one-time deposit, will be returned in year 15 Re uired rate of return M ethodologg: The consulting team is proposing to perform a NPV analysis and determine the benet to leasing or construction. Based on the analysis, they will recommend the preferred option (construction or leasing). Page 7|12