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Finance and Accounting - Term Paper Example

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Finance and Accounting

SwissChoc SA (owned by a family friend) is prepared to give him exclusive rights to sell their products in the USA for a ten year period in return for an upfront payment. “The distributor is an independent selling agent who has a contract to sell the products of a manufacturer. The distributor cannot represent him- or herself as the producer but may display the producer's trade name in signage and in the sales situation” (US Legal, 2012). Since the information provided is not adequate, we have to make certain reasonable assumptions while working out the statements required in this respect. However, the lack of details in these areas is not materially going to affect the reliability of the statements. The assumptions made in this connection have been stated in the report to enable the user to bring in additional details, if it is felt necessary to have a more detailed report on the project. There is uncertainty in the price front as the details given with regard to prices at which the product could be sold are not specific. Instead George has given a price range with minimum and maximum prices for the products to be marketed. There are difficulties in predicting the correct prices due to interplay of the brands, price levels (cheap and costly with various price levels in between), market segments, tastes and flavors. Therefore, sensitivity analysis has been undertaken to highlight impacts due to variations in price realization with justifications for adopting a particular method for working out the reasonable upfront fee payable to the manufacturer – supplier SwissChoc SA and the return on investment that could be expected from the business venture of George. Cash flow statement for the first year of operations In The Statement – I, “Cash flow statement for the first year of the operations of Mr. George”, while considering various factors contributing to the cash flow, both in flow and out flow we have made certain assumptions after carefully considering various implications related to the business. Sale Price: The sale price is considered at $ 135 per kilogram of the chocolate. This is the mean price as per the price range given by George adopted for the purpose of our calculations. The mean price is worked out as below. Highest price = $ 150 Lowest price = $ 120 Average price adopted for calculation = (Highest price + Lowest price)/2 or (150 + 120) / 2 = 135. The chocolates are consumed mostly by the college and school going students. If the tastes and flavors are acceptable to them pricing is not going to be a prohibiting factor in taking a buying decision by them. Since George is an experienced person with business school background along with his wife, his price estimates should be realistic. Moreover, the Swiss made chocolates are reputed for their taste and quality. Therefore, there will not be any resistance from the parents for their children eating these chocolates. The price comparison for this product would be very difficult as in the case of other fast moving consumer goods with different brands and varieties. The George’s internet business model by marketing completely through credit cards means that the people targeted are high end and sophisticated customers, where the quality and service are more important rather than the price. Therefore, adopting the average price, if not the highest price would be very reasonable. Capital account of George: The amount shown under capital ...Show more


Mr. George is planning to set up a business to import chocolate from Switzerland and sell it in the USA through internet and credit cards. The business proposal for retailing of fine Swiss chocolates given by George has been analyzed based on the information provided. …
Author : lueilwitzcreola
Finance and Accounting essay example
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