A Business Analysis Of Cyril Farm Ltd. Assignment Sample

Introduction Of The A Business Analysis Of Cyril Farm Ltd Assignment Sample

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Knowledge and skills in Finance and Financial Management

In the context of Cyril Farm Ltd., The following key highlights include –

• To know about Agricultural Economics- the Company has complete knowledge about the prices of the commodity, market demand and supply forces, and government policies for the expansion of the Agriculture business within a country (Hussain, Salia, and Karim, 2018).
• Knowledge about cost accounting, management accounting, and financial accounting for the smooth functioning of its day-to-day operations.
• Risk – The growth and expansion of the company depend upon the risk-taking ability of a company.
• Financial Planning –It includes Capital budgeting, Crop planning, and how much funds would be needed to invest into a long-term investment in the form of fixed assets.
• Agriculture Financing – The company has detailed and complete knowledge about agriculture financing options like – loans facility, government grants, and subsidies.

Strategic analysis using SWOT analysis

Strengths:

• Grains of outstanding quality: Cyril Farm Ltd is renowned for its grains of extraordinary quality that have won awards.
• Sustainable farming practices: The Company works closely with neighborhood organizations to advance farming practices that are sustainable and protect the environment.
• Contemporary farming tools and techniques: Cyril Farm Ltd has invested in contemporary agricultural instruments and techniques to ensure that its operations are efficient and environmentally friendly(GURL, 2017).

Weaknesses:

• As a cereal-growing company, Cyril Farm Ltd. is strongly dependent on the weather, which can be unpredictable and affect crop productivity.
• Limited product selection: Cyril Farm Ltd's capacity to provide a broad range of items is constrained by the company's primary focus on cereal production.

Opportunities:

• To expand its product line and reduce its reliance on the weather, Cyril Farm Ltd. should consider diversifying into various crops.
• Market expansion: The Company can consider entering new markets to increase its clientele.
• Government support for environmentally friendly farming practices: Cyril Farm Ltd. may profit from a variety of initiatives the UK government has put out to promote environmentally friendly farming practices.

Threats:

• Other cereal-growing companies compete with Cyril Farm Ltd., which could lower its market share.
• The revenue of Cyril Farm Ltd. could be affected by fluctuations in cereal prices.
• Changes in government policy might affect Cyril Farm Ltd.'s operations and profitability.

Ratio-based evaluation of financial success

• Profitability Ratios: The profitability ratios of Cyril Farm Ltd may be examined using metrics like Return on Assets (ROA) and Return on Equity (ROE). These ratios determine how well the company can generate profits from its assets and equity. Higher ROA and ROE indicate more profitability(Atz, et.al 2022).
• Liquidity ratios: Current ratios and quick ratios are two liquidity ratios that can be used to evaluate Cyril Farm Ltd's ability to pay its short-term loans. A higher current-to-quick ratio indicates that the company has the cash necessary to service its debts.
• Efficiency Ratios: You can determine how efficiently Cyril Farm Ltd. uses its assets and inventories by looking at efficiency ratios like the asset turnover ratio and inventory turnover ratio. Higher asset turnover and inventory turnover ratios indicate that the company is using its resources more effectively(Alaminos, Esteban, and Fernández-Gámez, 2020).
• Solvency ratios can be used to gauge Cyril Farm Ltd's ability to meet its long-term financial obligations. Examples of such ratios include the Debt-to-Equity Ratio and the Interest Coverage Ratio. The company is less indebted and has sufficient resources to cover its interest payments, as evidenced by a lower Debt-to-Equity Ratio and a higher Interest Coverage Ratio.

Overall, the strategic and financial assessments based on SWOT and ratios reveal that Cyril Farm Ltd has strengths in the production of premium cereals, environmentally friendly farming practices, and investments in cutting-edge farming equipment and technologies. However, Assignment Sample the company faces challenges like reliance on the weather and a limited product portfolio(Wild, 2017). The ratio-based financial performance research found that Cyril Farm Ltd. had great profitability, liquidity, efficiency, and solvency ratios, indicating robust financial health.

The role and functions of accounting and finance members in the team within the management structure

The following key roles and functions of finance and management accounting of Cyril Farm Ltd. include –

• Strong Financial Analysis and Planning–Accounts and finance department assist the management in take rational decisions about the investing of finance and provide opportunities, about the available resources to get this finance into a business. Hence, Financial Planning must be accomplishing the company’s goals and objectives(Osmani, et.al.2017).
• Budgeting and Forecasting–Accounts and Finance team members assist the management to make effective budget allocation of department-wise activities of a business and ensure that fund is utilized effectively and efficiently, they also allow management to forecast the business revenue, expenditures, and cost accurately(Eze, and Uzochukwu, 2020, p. 7).
• Meet Statutory obligations – Every company has to prepare its financial statement for compliance with tax. The accounts and Finance team are primarily responsible for preparing such financial statements as per the government rules and regulations.

Relationship between finance and strategic Theories concerning company's actions and accounting

Accounting plays a significant role in the establishment of the relationship between Finance and Strategic Theories, the company’s action in taking financial decisions that help in achieving the organizational goals and objectives of Cyril Farm Ltd. are as follows –

Finance theories talk about how individuals or businesses or companies manage their finances. The theories include – risk-taking ability, predicting and forecasting the future, Value of time and money in their daily routine. It also encourages us to make strong strategic planning and the execution of the same is also important(Shahwan, and Esra'a, 2021).

The following actions would be needed into consideration concerning Financing and Strategic theories, that are acknowledged by the Accounts and Finance department of Cyril Farm Ltd. – Decisions regarding Financial Reporting, cost accounting, financial accounting, management accounting, ratio analysis, budgeting, and forecasting, that meets the legal and statutory requirements of the Cyril Farm Ltd.

To understand the business performance based on key factors of Cyril Farm Ltd.

The following key factors include being –

• Operational Efficiency–It refers to the situation, where a company needs to analyze and check its operational efficiency such as productivity, Utilization of the company's resources.
• Market Share - The market position of a company, will help to know the growth and potential the company has.
• Revenue of the business – Revenue is the foremost important element of every business. Revenue analysis gives insight into the potential growth, and areas of expansion, and tells the overall growth of the businesses (Cyril, 2022).
• Customer Satisfaction –Business growth and expansion depends upon the level of satisfaction of our valuable customers.

Importance of Professional Communications skills in making business report

For to make a Business report several times company needs a professional communication skills. The study highlights the following points are as –

• Clear and concise message–Professional communication skills help businesses to channelize their message clearly and in a concise form to their end users. A well-professional report gives a positive impact on the growth and performance of a business (Konar, 2021).
• Increase audience engagement –A well-defined professional business report helps the engagement of more target audiences in a business.
• Act Professionally –Professional Communication skills help businesses to act more professionally and allow us to communicate well with our end users.

An analysis of the new business opportunity for Cyril Farm Ltd

The evaluation of financial viability is crucial for Cyril Farm Ltd. to achieve its strategic goals, particularly as it explores a new business opportunity. Sensitivity analysis and net present value (NPV) are two prominent tools utilized in financial analysis. NPV analysis is a prevalent financial approach utilized to evaluate the profitability of a proposed business concept (Herison, et.al.2022, p. 386). The valuation method calculates the current worth of anticipated cash inflows generated by the project, subtracted from the current worth of anticipated cash outflows. If the outcome is affirmative, the project is deemed financially advantageous, whereas if it is negative, the project is not advised. The subsequent steps shall be undertaken to conduct the NPV analysis:

• Calculate the initial investment required to commence business operations. The aforementioned sum will cover preliminary expenditures such as those linked to adhering to legal and regulatory requirements, promotional and publicity efforts, and additional operational expenses.
• The task at hand is to ascertain the anticipated monetary inflows for the given project. The projected cash inflows are expected to be determined by the estimated sales revenue. To generate a realistic estimate, it is imperative to take into account numerous factors, including but not limited to market demand, competition, price strategy, and marketing campaigns.
• Calculate the projected expenditures: The anticipated cash outflows comprise expenses related to the procurement of raw materials, production expenses, overhead costs, and other operational expenditures (Shrotriya, 2019, p. 754).
• The Net Present Value (NPV) is computed by discounting the expected cash inflows and outflows to their present value utilizing a discount rate that is commensurate with the cost of capital. A positive net present value (NPV) indicates that the project is deemed financially viable; while a negative NPV suggests that it is not advisable to proceed with the project.
• Evaluation of sensitization: Organizations employ sensitivity analysis as a crucial method to assess the potential impact of modifications to business variables on a project's profitability. Identifying the pivotal variables that may exert a substantial impact on the accomplishment of the project and evaluating their potential hazards are imperative (Nariswariand Nugraha, 2020, p. 96)

The ensuing steps shall be adhered to conduct sensitivity analysis:

• Determine the fundamental elements that will exert influence on the project. Significant factors to be considered will comprise the sales volume, production expenses, the final price paid by customers, adherence to regulatory standards, and additional concerns (Marchioni, and Magni, 2018, p. 372).
• Determine the possible range of outcomes for each variable. Identify the potential results for each variable, ranging from the optimal scenario to the least favorable scenario.
• Calculate the net present value of the proposed project. Calculate the net present value of the project for each scenario based on the anticipated results for each variable.
• Analyze the obtained outcomes. Analyze the outcomes to ascertain the degree of risk linked with the project. If a project is susceptible to fluctuations in a specific variable, it may be imperative to implement strategies aimed at minimizing the associated risks (Abdelhady, 2021, p. 342).

Cyril Farm Ltd can assess the financial feasibility of the potential business concept by utilizing the NPV and sensitivity analysis methodologies. Through a comprehensive analysis, the organization can identify prospective risks, formulate a risk mitigation strategy, and make an informed decision on whether to proceed with the project. Through the implementation of this strategy, Cyril Farm Ltd will enhance its capacity for expansion, profitability, and attainment of its strategic goals. The enterprise may explore potential avenues for marketing its products via online channels and e-commerce platforms. The increasing trend of internet shopping presents an opportunity for Cyril Farm Ltd. to expand its consumer base by entering this sector. The corporation may consider exploring the potential of the organic and non-GMO markets as an additional market segment (Ros?on, Ksi??ek-Nowak, and Nowak, 2020). Cyril Farm Ltd. has the potential to differentiate itself from competitors by offering organic and non-GMO cereal products, as there is an increasing consumer preference for healthier and environmentally sustainable food choices.

To assess the financial feasibility and potential risks associated with the new business opportunities for Cyril Farm Ltd., it is recommended to conduct a thorough analysis using the NPV and sensitivity analysis methods previously discussed. It is recommended that Cyril Farm Ltd. conducts comprehensive research on the legal prerequisites necessary for the successful operation of the new business venture. Ensuring compliance with the regulations and laws of the country will mitigate the risk of penalties or hazards for the company. In summary, through adherence to these prescribed protocols, Cyril Farm Ltd. can effectively evaluate and appraise the financial feasibility of the prospective commercial prospect via the utilization of NPV analysis. The assessment of financial feasibility and potential hazards of a novel business prospect can be accomplished by the management team through the estimation of capital requirements for establishment and operations, the expenses incurred in the production and introduction of a fresh product, and the acquisition of comprehensive data regarding legal conformity.

Appendices

SWOT analysis

SWOT analysis is an important and powerful tool for predicting the future well and this analytical study allows businesses to make an effective framework to know more about the business's internal and external environment (GURL, 2017). After a detailed analysis of the Cyril farm ltd., the following findings based on SWOT analysis are as follows –

Hence, study well the Cyril Farm Ltd., SWOT Analysis give insights about the clear focus work areas, improves business strategic planning, provides guidelines for making effective and rational-decision making, improves the risk management ability of a business, and improves business communication process, which leads to getting more collaboration with others.

Financial Performance Analysis

Accounting ratios are the financial metrics that are used to analyze and evaluate the business's financial performance and help to provide guidelines for improving the financial performance by taking corrective measures (Atz, et.al 2022).

Accounting ratios can be computed from the Company’s financial statements, including – Profit and Loss Statement, Balance Sheet, Cash Flow Statement (CFS), etc. Accounting Ratios help to depict the true and correct position of the businesses (Alaminos, Esteban, and Fernández-Gámez, 2020).

To understand the performances of Cyril Farm Ltd. and to check the financial soundness of a business. Based on the given information, The Charactered Accountant has considered the following Accounting Ratios are as follows –

• Debt-equity Ratio(DER)–It suggests the long-term solvency capacity of “Cyril Farm Ltd.” And the formula for calculating –

(For the year 2021-22)

DER =

DER =

Hence, the Debt-Equity Ratio of Cyril Farm Ltd. is 0.155: 1. The Debt equity ratio of the company indicates that the company is in a position to pay off its debt (Wild, 2017).

• Debt to Capital Employed Ratio (DCE) – This ratio indicates the Total debt of Cyril Ltd. Over its total Assets and the formula for calculating DCE –

(For the year 2021-22)

DCE =

Total Debt = Long-term Debt of a company (Bank loan) + Short-term Debt of a company (Trade and other payables + Bank Overdraft)

Total Debt = £767 +£1131

Total Debt = £1898 – put this figure into a formula

DCE =

DCE =

DCE = 0.31: 1

Hence, DCE of the Cyril Farm Ltd. is 0.31:1, which indicates the company has more assets than its outside liabilities. If in the case of dissolution, the company has the potential to pay back its debts out of sold-out assets (Eze, and Uzochukwu, 2020, p. 7).

• Working Capital Turnover Ratio – The Working Capital turnover ratio indicates the working situations of the company (Herison, et.al.2022, p. 386). This ratio represents how effectively and efficiently Cyril Farm Ltd. manages its day-to-day operations to earn revenue the formulas are –

Working Capital Turnover Ratio (for the year 2021-22) =

Net Revenue from Operations = Total Revenue – (Cost of Goods Sold/ Cost of sales+ Operating Expenses)

Net Revenue from Operations = £3220 – (£1970 +£675)

Net Revenue from Operations = £575 – put this figure into a formula

Operating Expenses = Selling and Distribution Expenses + Administrative Expenses

Operating Expenses = £275 +£400

Operating Expenses = £675 – put this figure into a formula

Working Capital = Current Assets (Inventories + Trade and other receivables + Cash and Cash equivalents) – Current Liabilities (Trade and other payables + Bank Overdraft)

Working Capital = (£450 + £435 + £210) – (£364 + £0)

Working Capital = £1095 – £364

Working Capital = £731

Hence, Working Capital Turnover Ratio (WCTR) =

WCTR = 0.8 times

The WCTR of Cyril Farm Ltd. is 0.8 times, which shows the company can meet its day-to-day expenditures and has the potential to earn more revenue shortly.

• Net assets or Capital Employed Ratio (2021-22) – Net Assets Ratio also known as Fixed Assets turnover Ratio (FATR); indicates the optimum utilization of a company's total assets to earn net revenue (Shrotriya, 2019, p. 754).

Formula -

Net Assets Ratio (NAR)or Capital Employed Ratio (CER) =

Net Fixed Assets = Non-current Assets = Current Assets

Net Fixed Assets = 4964 +1095

Net Fixed Assets = 6059 – put this figure into a formula

FATR =

FATR = 0.09 times

Hence, 0.09 times, Cyril Farm Ltd. is in a position to utilize its total assets to earn revenue.

• Net Profit Turnover Ratio (N/P TR) – This ratio shows the profitability of Cyril Farm Ltd. and the formula for calculating N/P TR is –

N/P ratio =

N/P ratio =

N/P ratio = 12.14%

Hence, the net profit turnover ratio of Cyril Farm Ltd. is 12.14%which indicates the company has more growth potential (Nariswariand Nugraha, 2020, p. 96).

The new business opportunity for Cyril Farm Ltd.

NPV

The Net Present Value is a strong analytical financial tool for calculating the present and future value of money. The NPV is used to know the true and fair value of the inflow and outflow of cash in a particular accounting period. The more positive the NPV, the more influences the growth and development of a business (Marchioni, and Magni, 2018, p.372).

The following steps can be taken into consideration for analyzing and evaluating business performances, with the use of NPV analysis. The steps are –

• Estimate the fund required for the establishment and operates the day-to-day operations of a business.
• Estimate the cost would be incurred for the production and launching of a new product into a market.
• Get complete information about filling the all-legal compliances for hassle-free business operations.

Sensitivity analysis

Sensitivity analysis is a financial tool to assess the changes happening in the external business environment, and the impacts of these changes affect the performance of businesses. In the context of new business opportunities for Cyril Farm Ltd., Sensitivity analysis helps to identify the scope of new opportunities, and how this opportunity drives the sales of a business (Abdelhady,2021, p. 342).

The following corrective steps would be needed to understand the sensitivity analysis, steps include –

• To identify the new variables that improve the financial performance of the businesses. Variables like – Sales volume, production cost, final price charge to its customers, legal compliances, etc (Ros?on, Ksi??ek-Nowak, and Nowak, 2020).
• Determine the new product range.
• Estimate the net present value of the new project.
• In-depth study of Sensitivity analysis.
• Calculate the risk involved within the projects.

Hence, the above-mentioned these analytical factors will help Cyril Farm Ltd. to get the needful information about its new business opportunities and the company will get assistance to develop its strategic planning with more return on investment, less risk involved, and increase the sale of its business (Bogataj and Bogataj).

References

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