Setting Up And Running A Ship-Owning And Ship-Management Company Assignment

Introduction Of Setting Up And Running A Ship-Owning And Ship-Management Company Assignment

Setting up and running a shipping company and also a ship management company is how the vessels can be used as an advantage in the market. The purpose of the report is the analysis of the Game scenario where the purchase and selling of the vessel at the right time can be profitable. The first question aims at the report on capital transactions for 3 years on S&P of new builds and 2nd hand ships where a cash flow is developed. The second task is the development of trading income and incurred expenses on each vessel and the overall performance of the fleet for 3 years. Furthermore, there is the assessment of the outcome of capital transactions and trading income on the annual basis for 3 years.

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Cash flow for the newly built ships

The Analysis of the New built ships

Table 1: Calculation New built ships

The start-up of the Ship Management Game started with a capital of $4,000,000 on January 2023. The expenses for January till December are the same and for all three (2023, 2024, 2025) years starting from the crew of $21,875, provision of $2920, crew med and travel of $2,340, spares of $3,500, cabin stores $1750, Engine stores of $1,500, deck stores $1,600, lubricant $4,500, paints $1,200, repairs $3,000, certificates $1000, insurance 2250, P&I $ 1000, management 6000. As per all the expenses, the expenses added up to a total of 54,435 in January 2023.

Thus, cash inflow resulted in an amount of 3,945,565 by subtracting the total expenses of 54,435 from the initial capital of 4,000,000 for January 2023. The income for the following months starting from February of $3,945,565, March $3,891,130, April $3,836,695, May $3,782,260, June $3,727,825, July $3,673,390, August 3,618,955, September $3,564,520, October $3,510,085, November $3,255,650, December $3,401,215 which was generated from deducting the expenses which were same in every month from the opening balance of every month. Thus, the last closing balance for the year 2023 was 3,401,215 in December.

The closing balance of the year 2023 of 3,401,215 has been made it the opening balance for the year 2024 starting from January. As mentioned earlier, the amount of all expenses of the crew, provision, crew med, and travel, spares, cabin stores, engine stores, deck stores, lubricant, paints, repairs, certificates, insurance, P&I, management, are the same from the previous year adding up to a number of total expenses of $54,435 as same as the previous year. The cash inflow for January 2024 is 3,292,345 transferred to be the closing balance for February. The opening balance starting from March is $2,37,910, April $3,183,475, May $3,129,040, June $3,074,605, July $ 3,020,170, August $2,965,375, September $ 2,911,300, October $2,802,430, December $2,747,995. Thus, the cash inflow was generated from the same process as the previous year resulting in a closing balance of $2,747,995 in December for the year ending 2024.

The opening balance for the year 2025 will be 2,747,995 in January as the closing balance for the previous year is being carried forward. As all expenses are the same as the last two years with the same particulars resulting in a similar amount of total expenses of 54,435. The cash inflow for the year 2025 starting from January is $ 2,639,125, February$ 2,584,690, March $2,530,255, April $2475,820, May $2,421,385, June $2,366,950, July $2,312,515, August $2,258,080, September $2,203,645. October 2,149,210, November $2,094,775, December $2,040,340. Every cash inflow was transferred to the opening balance for the following month.&

The closing balance for the year ended 31st December 2025 was $2,040,340. The start-up of the Ship Management Game has made a lot of expenses with the same credentials and needs to control its expenses. By adding some cash sales to the company, the analysis which shows most of the recurring expenses throughout can have an equilibrium of income and expenses.

Cash flow for the second-hand built ships

Figure 1: Calculation of second hand ships

The start-up of the Ship Management Game started with a capital of $2,450,000 on January 2023. The expenses for January till December are the same and for all three (2023, 2024, 2025) years starting from the crew of $21,875, provision of $2920, crew med and travel of $2,340, spares of $3,500, cabin stores $1750, Engine stores of $1,500, deck stores $1,600, lubricant $4,500, paints $1,200, repairs $3,000, certificates $1000, insurance 2250, P&I $ 1000, management 6000. As per all the expenses, the expenses added up to a total of 54,435 in January 2023.

Thus, cash inflow resulted in an amount of $2,395,565 by subtracting the total expenses of 54,435 from the initial capital of $2,450,000 for January 2023. The income for the following months starting from February of $2,395,565, March $2,341,130, April $2,286,695, May $2,232,260, June $2,177,825, July $2,123,390, August $2,068,955, September $2,014,520, October $1,960,085, November $1,905,650, December $1,851,215 which was generated from deducting the expenses which were same in every month from the opening balance of every month. Thus the last closing balance for the year 2023 was $1,851,215 in December. The figure has been forward the closing balance of the year 2023 of $1,851,215 and making it the opening balance for the year 2024 starting from January.

As mentioned earlier, the amount of all expenses of the crew, provision, crew med, and travel, spares, cabin stores, engine stores, deck stores, lubricant, paints, repairs, certificates, insurance, P&I, management, are the same from the previous year adding up to a number of total expenses of $54,435 as same as the previous year. The cash inflow for January 2024 is $1,742,345 transferred to be the opening balance for February. The opening balance starting from March is $1,687,910, April $1,633,475, May $1,579,040, June $1,524,605, July $1,470,170, August $1,415,735, September $1,361,300, October $1,306,865, November 1,252,430, December $1,197,995. Thus, the cash inflow was generated from the same process as the previous year resulting in a closing balance of $1,197,995 in December for the year ending 2024.

The opening balance for the year 2025 will be 1,197,995 in January as the closing balance for the previous year is being carried forward. As all expenses are the same as the last two years with the same particulars resulting in a similar amount of total expenses of 54,435. The cash inflow for the year 2025 starting from January is $1,089,125, february$1,034,690, March $980,255, April $925,820, May $871,385, June $816,950, July $762,515, August $708,080, September $653,645. October $599,210, November $544,775, December $490,340. Every cash inflow was transferred to the opening balance for the following month. The closing balance for the year ended 31st December 2025 was $490,340.

Trading income and incurred expenses over three years period

The calculation has been conducted on the basis of the five vessels that are divided among 5 classes that range from class 1 to class 5. These vessels travel for 12 months where the three years' trading income and incurred expenses have been calculated on each of the 5 classes of vessels and the overall performance of the fleet. There have been assumptions that have been taken for the overall assessment of the performance of the ship where the highest net worth can be determined (Akbulaev and Mirzayeva, 2020). The primary motive for the calculation is conducted for increase the return of the capital that was received by friends and family for the acquisition process. There has been a consideration for all the types of income that are generated by each of the vessels along with the overall present value of the fleet. There have been calculations for the 3 years on each class of vessels where the practice of accurate accounting method has been implemented.

Table 2: Calculation of 1st year trading income and incurred expenses of 5 classes and fleet

The above table contains the overall trading income and incurred expenses of 5 classes of vessels along with the fleet's performance for the 1st year. The revenue has been assumed to be the sum of the average ship value that denotes the condition of the market that is crucial for the assessment of the games. Class 1's revenue is calculated with the help of the newly built and other years of 2nd hand ships that can have been assumed as revenue for the 1st year. The calculated value of revenue for class 1 is $4350000, class 2 is $3902350, class 3 is 6650000, class 4 is $10550000 and class 5 is $13150000 along with the fleet value of $38602350. The other revenue has been stated to be the flat fees that are charged to the management company that has been stated to be under the other revenues (Feyrer, 2019). The fees that are charged are $6000 which is the incorporation of all services that are on the number of vessels. The T/C rates are also indicated to be income that is deducted from the operating expenses of each of the vessels that are not comprised of the bunker cost.

The total revenue value is calculated at $4567900 for class 1, $4120725 for class 2, $6869050 for class 3, $10769580 for class 4 and $13370290 for class 5. The fleet value that is comprised of all 5 classes of the vessel is calculated at $39697545 for year 1. The total expenses have been calculated on the basis of operating expenses that have been incurred in the expenses where the dry docking’s value is estimated by taking Cyprus's flag that is multiplied by 1.4. The port expenses are assumed on the "Alexandria" port on the general services per day for each of the classes of vessels.

Table 2: Calculation of 1st year trading income and incurred expenses of 5 classes and fleet The above table contains the overall trading income and incurred expenses of 5 classes of vessels along with the fleet's performance for the 1st year. The revenue has been assumed to be the sum of the average ship value that denotes the condition of the market that is crucial for the assessment of the games. Class 1's revenue is calculated with the help of the newly built and other years of 2nd hand ships that can have been assumed as revenue for the 1st year. The calculated value of revenue for class 1 is $4350000, class 2 is $3902350, class 3 is 6650000, class 4 is $10550000 and class 5 is $13150000 along with the fleet value of $38602350. The other revenue has been stated to be the flat fees that are charged to the management company that has been stated to be under the other revenues (Feyrer, 2019). The fees that are charged are $6000 which is the incorporation of all services that are on the number of vessels. The T/C rates are also indicated to be income that is deducted from the operating expenses of each of the vessels that are not comprised of the bunker cost. The total revenue value is calculated at $4567900 for class 1, $4120725 for class 2, $6869050 for class 3, $10769580 for class 4 and $13370290 for class 5. The fleet value that is comprised of all 5 classes of the vessel is calculated at $39697545 for year 1. The total expenses have been calculated on the basis of operating expenses that have been incurred in the expenses where the dry docking’s value is estimated by taking Cyprus's flag that is multiplied by 1.4. The port expenses are assumed on the "Alexandria" port on the general services per day for each of the classes of vessels.

Table 3: Calculation of trading income and incurred expenses of 5 classes of vessel and fleet for 2nd year

The above table contains the calculation for year 2 of the 6 classes of vessels along with the overall fleet performance. The port expenses have been considered for general services per day for Barcelona that has been ascertained for the second year along with the drydocking costs value of 6-10 years for the computaion. The net profit value that has been computed is $4234053.75 in class 1, $3750638 in class 2, 46436773.75 in class 3, $10283498.75 in class 4, and $12829128.75 in class 5.

Table 4: Calculation of trading income and incurred expenses of 5 classes of vessel and fleet for 3rd year

The above table contains the computation for the 3rd year for trading income and incurred expenses where the dry docking costs and Post expenses have different values. The value of dry docking is assumed to be 11-15 years in Cyprus flag and port expenses are assumed to be on the port value for New Orleans. This can be denoted that the highest value is identified in class 5 and the overall performance of the fleet of the net profit value is at $112693306.

Analysis of overall business report on capital transactions and trading income in 3 years

The requirement for conducting the overall assessment of the capital transaction is to denote the gains in the long term that are derived from the transactions. This can be assessed and compared with the gains from the short-term transactions where this indicates the improper occurrence of the transactions on the capital transactions that are on the regular frequency of each of the transactions (Hajjar et al. 2020). The economic results for both the capital transactions and operating expenses for vessels have been conducted on the basis of the accounting equation for 3 years. There is also the overall analysis that has been conducted on the basis of the overall performance and revenue value for each vessel. There has been a summation of all the values of the 5 classes of vessels that are considered under the accounting equation.

Table 5: Economic result of the capital transaction and fixtures for Year 1

The above table contains the economic results on the basis of the capital transaction and fixtures of all the vessels for year 1. This has been conducted through the computation of the accounting equation where the capital value has been considered for the overall computation. This can be denoted that the start-up capital of $4000000 is comprised of personal funds and funds from friends and family that have invested. There is the consideration for management fees where the company charges flat fees on the management company that is considered other income. The flat fee amount is $6000 which has been calculated by 12 months where the total value is $72000 and added to the capital. Furthermore, the T/C rates are also considered to be other income that is added with the capital value and other income where the overall calculated value is $4087195. Then the consideration of the commission on a fixture that has been charged at 1.25% was also added to the value that is comprised of the start-up capital and other income. This can be deduced that the overall value can denote the performance of the capital transactions based on the one year of all the vessels.

Table 6: Economic result of the capital transaction and fixtures for Year 2

The above table comprises the year 2 computations of the capital transaction and fixtures where the value can be denoted for all the vessels. The calculation is conducted with the overall value of all 5 vessels in the form of an accounting equation. This can help impact the monitoring of the capital that has relevancy ascertained on the performance of the vessels where the value can denote the positions. This can help in assessing the overall function in year 2 that has been conducted on an annual basis where each year's calculation has been conducted. The T/C rates have been assumed to be on the Continent which is the trading route that has been considered for the performance of the capital transaction where all the vessels have operated. The calculated value total expenses of all the vessels for year 2 has been assumed to be at $155625 which is deducted from the value of $4087491 which gives the total outcome of $3931866.25.

Table 7: Economic result of the capital transaction and fixtures for Year 3

The above table contains the calculation of the economic result of the capital transaction and fixtures for Year 3 for all the operations of the vessels. The capital is assumed to be $4000000 where the income of management fees is the same as the last two years which is $72000. The T/C Rates have been assumed from North America where the overall value is calculated at $15450 which is stated to be other income where the summation of all the income and capital is $4087450. The assumed value for the total expenses of all the vessels is calculated at $98500 and the commission value has also been added where the value is $31.25. The final value indicates the overall expenses that have been incurred during the operation of the vessels during the time of sustenance or getting the assets (Mallapragada et al. 2022). The value can help determine the decision regarding increasing the capacity production and revenue earning capacity Neog and Gaur,(2020). The overall economic outcome that has been calculated at $3988981.25 denotes the capital transaction and fixtures for the third year.

Table 8: Overall summation of the all the results

The above table consists of the overall summation that can be denoted as the business reports on the capital transaction and trading income for the three years. This is conducted on an annual basis where the above calculation is conducted on a total of three years and this is denoted through the Profit and Loss account. The calculated value revenue from the operation is at $108000 which is on the management fees that are charged and stated to be other income. The other income is the T/C rates where the annual value is calculated at $32640 and hence the total revenue is calculated at $1112640. The value of the expenses has been assumed for the vessel's operating expenses for 12 months where the total expense is calculated at $371410.The bunker cost is calculated to be separate where the profit before the bunker cost is $741230 and this is deducted from the bunker cost at $2310. Therefore, the calculated value on the overall net profit denotes the economic results of the fixtures that are regarded as the expenses where the profit after bunker costs is calculated at $738920.

Conclusion

The report can be concluded that the shipping markets have been considered on the basis of the cash flow, trading income and capital transactions for three years. The values are computed where the new build and second ships have been considered for three years where the cash flow has been conducted. There is also the trading income and incurred expenses that have been calculated on each of the vessels along with the fleet. This can be stated that there are 5 classes that are class 1, class 2, class 3, class 4 and class 5 along with the performance of the fleet. The last question indicates the calculation of the economic results of the capital transactions and trading income that are based on the computation for 3 years. The values like revenue. dry docking, port expenses are assumed on the basis of the vessel where each of the port's vessels has operated in the region. The operation of the vessel is conducted on the basis of the expenses that have incurred where the game denotes the winner as the vessel with the highest net worth is the winner.

References

Akbulaev, N. and Mirzayeva, G., 2020. Analysis of a paired regression model of the impact of income from international tourism on the foreign trade balance.& African Journal of Hospitality, Tourism and Leisure,& 9(1), pp.1-13.

Feyrer, J., 2019. Trade and income—exploiting time series in geography.& American Economic Journal: Applied Economics,& 11(4), pp.1-35.
Hajjar, R., Ayana, A.N., Rutt, R., Hinde, O., Liao, C., Keene, S., Bandiaky-Badji, S. and Agrawal, A., 2020. Capital, labor, and gender: the consequences of large-scale land transactions on household labor allocation.& The Journal of Peasant Studies,& 47(3), pp.566-588.

Mallapragada, G., Gupta, A. and Josephson, B., 2022. The impact of social capital and transaction efficacy on salesperson performance.& Production and Operations Management,& 31(9), pp.3525-3542.

Neog, Y. and Gaur, A.K., 2020. Tax structure and economic growth: A study of selected Indian states.& Journal of Economic Structures,& 9, pp.1-12.

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