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Case Title Cafes Monte Bianco: Building a Profit Plan Price   $75
   
Solution ID 1573
Case ID 198088
Spreadsheet

Profit and Loss Statement

Cash Flows

Debtors

Variable Costs

Selling Costs

Mixed Strategy

Abstract

Non production expenses are showing a huge decrease compared to the financial results of year 2000 (see P&L sheet). There are no marketing costs as an advertisement to sale ratio is 0% at the given sales volume of private brand coffee. Selling, administrative and research expenses also show a significant decline. Profits yet are at the lower side showing a decrease of around 520 million Liras compared to year 2000. This is because of the lesser gross profit margins in the private brand coffee sold to retailers. Gross profit margins of premium coffee are 14,000 to 22,000 liras per KG compared to 2,200 liras per KG of private brand coffee. That is why; despite high volume of sales and utilization of full production capacity, expected profits are less than year 2000. 

No of Words 1262
Questions Covered
  1. Evaluate the profit implications of switching all production to private brand coffee. Estimate key accounting variables for profitability, cash and ROE 
  2. Based on your analysis, what recommendations would you make to Giacomo?
  3. What assumptions did you make to complete your analysis? How critical are these assumptions to your conclusions? For the monthly cash calculations, you may need to make some assumptions about how cost figures accrue each month.
  4. Prepare a list of additinal information that you would ask for to improve the quality of your analysis.
  5. If you have time, Analyze the profitabilitability of a mixed strategy where the company sells Grade A coffee with an advertising level of 7% and the rest of the production would be devoted to private brand coffee.
Keywords Performance measurement ,Planning systems, Profit planning, Profitability analysis, Return on investment
   
Status Available
 

 

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