Revenue General Merchandise Revenue Assignment | AccountingCoach

Time series graphs of total group revenue and general merchandise revenue

 

YearsTotal RevenueGeneral merchandise revenue
20057490.503641.60
20067797.703644.40
20078588.104002.80
20089022.004059.30
20099062.103918.30
20109536.604152.00
20119740.304233.60
20129934.304195.10
201310026.804090.30
201410309.704092.50
201510311.403988.40

Time series of total revenue

Revenue General Merchandise Revenue Assignment On the basis of time line graph above we can define that there is increase in the total revenue of group year by year which is defined in above graph and this shows company is on growth. The overall revenue of the company is including revenue from general merchandise revenue and this is expressed in the above graph (Ko?acz, et. Al 2016).

Time series graph of general merchandise revenue

Revenue General Merchandise Revenue Assignment | AccountingCoachIn other side we can see that for general merchandise revenue of the company is not constant and after year 2011 revenue is decreasing continuously. General merchandise revenue of the company is decreased due to its lack in matching the fashion requirement which cannot be recovered even after making efforts by the CEO of the company. The first rise is achieved due to the profit margin which is derived from the difference between the cost of production and selling price (Ko?acz, et. Al 2016).

Scatter graph showing relationship between total group revenue and general merchandise revenue-

Scatter graph shows relationship between total group revenue and general merchandise revenue defines that both are making impact on each other as in general merchandise revenue is making impact on the overall group revenue but it do not decreases with the decrease in the general merchandise revenue of the company. This shows that total group revenue have participation of other revenue which is making it to increase (Francis, et. Al 2016).

Trend line Analysis

Forecasting for year 2016, 2017 and 2018

Total group Revenue= y = 281.5x +7567

y (2016) = 281.5*12 + 7567

y = $10,945

y (2017) = 281.5*13 + 7567

y=$ 11226.5

y (2018) = 281.5*14 + 7567

y = $11,508

Revenue General Merchandise- y = 39.78x + 3763

y (2016) = 39.78*12+3763

y = $4240.36

y (2017) = 39.78*13+3763

y = $4280.14

y (2018) = 39.78*14+3763

y = $4319.92

The forecasted revenue for M&S are represented by following table-
YearTotal Revenue ($)General Merchandise Revenue ($)
201610,9454240.36
201711226.54280.14
2018115084319.92

This trend line analyses is based on the forecasting for the year 2016, 2017 and 2018 which is made on the basis of the available data of the company’s revenue which is diversified in total group revenue and general merchandise revenue. R² equation defines the reliability which is available in the forecasting done. The standard reliability factor is 1 which shows overall effectiveness of forecasting and estimation made for the revenue in organisation. For total group revenue R² is calculated as 0.9303 which is nearby 1 (Francis, et. Al 2016). This defines that forecasting can be taken as effective and accurate to a good level. And for general merchandise revenue R² which is reliability factor is calculated as 0.043 which is very low from 1 and this shows the inefficiency and low level of accuracy of forecasting done for revenue. By these analyses we can say that there exists more reliability in total group revenue in comparison with general merchandise revenue of M&S.

Revenue General Merchandise Revenue Assignment | AccountingCoach

Conclusion

This report is overall study of various aspects which are related to the effective working of the company by appropriate business decision making in company. Mark & Spencer is a British merchandise company which is involved in clothing, home wear, and footwear and luxury food products. The general merchandise of the company has been affected by its inefficiency in meeting the fashion requirement. And this cannot be done even after making efforts by the CEO of the company which has invested to increase profitability of general merchandise of company. There is requirement to take decision for the effective running of the company which can be done doing analyses and research. From this report we have identified different perspectives of the customers which can make effect on increase in the revenue from the general merchandise of the company. Primary and secondary data is also collected for research purpose which is analysed by using various capital budgeting methods and tools. This analysis is expressed in graphs and charts for example time chart, trend line chart, and scattered charts which is helping in taking effective decision in business (Hendriks, et. Al 2016). There are prepared network diagram of different activities and estimated the longest path to complete any project. Non critical activities are also identified and the future estimation for the profits of the company and their reliability.

Determine the critical path of the project.

Critical path- It is project management technique in which there are identified various paths in which the task can be completed and then analyse the most critical path among those paths. This helps in managing projects in organisation in effective manner which can lead to achieving project goals (critical-path analysis 2016).

TaskDescriptionDuration (Working Days)Constraints
ARequirement Analyses5
BSystem Design15A
CProgramming25B
DTelecoms15B
EHardware Installation30B
FIntegration10C,D
GSystem Testing10E,F
HTraining/Support5G
iHandover and Go live5h
Calculation of critical path

For calculation of critical path we will calculate different paths and will select the longest path from them.

The different paths in the network diagram and their duration are as follows:
A-B-C-F-G-H-I=5+15+25+10+10+5+5 = 75 days
A-B-D-F-G-H-I = 5+15+15+10+10+5+5 = 65days
A-B-E-G-H-I = 5+15+20+10+5+5 = 60 days

The critical path of this project will be A-B-C-F-G-H-I which is of 75 days.

Network Diagram is as follows-
Calculate the planned duration of the project in weeks.

As in provided in the assignment it is assumed that project team will work in standard working week. This week includes 5 working days in a week and we will also calculate this critical path in weeks. The calculation is as follows.

Days included in critical path= 75

Days in a standard week= 5

Critical path in weeks= 75/5 = 15

Identify any non- critical tasks and the float (free slack) on each.
TaskDescriptionDurationLate start (LS)Early Start (ES)Total Float
ARequirement Analyses5550
BSystem Design1520200
CProgramming2545450
DTelecoms15453510
EHardware Installation3055505
FIntegration1055550
GSystem Testing1065650
HTraining/Support570700
IHandover and Go live575750

In the activity D and E there are calculated float which is difference between early start and late start is calculated as 10 and 5 respectively.

Calculation of Net Present Value and internal rate of return of both projects for different cost of capital-
YearsCash Flows
Project AProject B
0-50,000-50,000
13500020000
23000020000
32500034000
43000046000
 

(Abazari, et. Al 2013)

 

If cost of capital is 10%

NPV$41,713.49$37,885.51
IRR50%39%
If cost of capital is 60%
NPV($3,578.19)($8,979.80)
IRR50%39%
Brief memorandum report

Net present value of project can be defined as the difference between the present value of cash outflows and present value of cash inflows in a project. It is a capital budgeting tool which is adopted to analyse the profitability of a project. Positive NPV defines profitability in the project results and negative NPV defines the losses which are resulted by the project (Maroyi, et. Al 2012).

Internal Rate of Return (IRR) is defined as a discount rate which makes all the cash flows in NPV equal to zero and defines and measures the profitability of potential investments. This makes the positive cash follows equal to negative cash flows.

Both the projects above are calculated the NPV and IRR by taking discount rate as 10% and 60%. While taking discount rate as 10% the project A should be selected as in both NPV and IRR are in favour and leading to positive results. In case of discount rate taken as 60% there are provided two options. On the basis of NPV project B is more profitable and on the basis of IRR project A is more profitable (Maroyi, et. Al 2012).

References
  • Abazari, Y., Hosseini, S.E., Mohemi, M., Goldani, H. & Shakiba, H. 2013, “Analytical study of application of capital budgeting techniques in the food industrial of Mashhad Tous industrial units and to identify existing bottlenecks“, Advances in Environmental Biology, pp. 2048.
  • critical-path analysis2016, , 6th edn, Oxford University Press.
  • Djokovic, F. 2013, “BUSINESS DECISION MAKING ON FINANCING OPERATING ACTIVITIES IN HOTEL INDUSTRY”, Socioeconomica : Scientific Journal for Theory and Practice of Socio-economic Development,  2, no. 3, pp. 67-79.

Enrique Benjamín Franklin Fincowsky 2011, “Business making decisions”Contabilidad y Negocios : Revista del Departamento Académico de Cienc

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