Task for P$5$:

C$.$P$5$ Explain the main influences on business performance from a given set of

data.

Scenario:

You are considering investing in the high$-$end short$-$term rental business but is

unsure about the factors that may influence the performance of the business. You

have the following data: the predicted revenue, yearly costs $($insurance$,$ utility bills,

maintenance$),$ the cost of goods sold, and the investment appraisal.

Task:

Using the provided data $($including costs, revenue, and cash flow projections$),$

explain the main influences on the business performance.

Specifically, consider:

Cost of goods sold $(3\%$ of sales revenue$)$: How do fluctuating sales affect

overall performance?

Operating costs $($insurance$,$ utilities, maintenance$)$: Which of these might have

the largest impact on performance, and why?

Revenue predictions: How realistic are they based on market trends and

customer demand?

Current Ratio $-$ Calculate the current ratio, state the formula, calculate and

explain what it means

ROCE $-$ Work out Return on Capital Employed, state formula and explain what

it means.

Trade Payables $-$ Calculate tade payables, state formula and explain what it

means.

Investment appraisal: How does the net cash flow and present value inform

you about the long$-$term success of the business?

What You Should Include in Your Answer:

A breakdown of how each component $($costs$,$ revenue, cash flow$)$ impacts the

business's financial performance.

Discuss external factors like market demand, economic conditions, and the

potential for cost inflation.

Highlight risks and opportunities that you might encounter based on the data.