Essay,Amplification,Dialogue

Topics: Balance sheet, Asset, Generally Accepted Accounting Principles Pages: 12 (635 words) Published: December 6, 2013
Business Model: We were select small business because Small businesses are vital in today's economy because many of the revenue obtained by the government are from business taxes. In addition, since we are currently in a Global Financial Crisis which is affecting nearly everyone around the world, the existence of small businesses can stimulate the economy and hopefully improve the economies all around the world. Finally small businesses are important because it can provide more job opportunities for people so that the unemployment rate is low.

Introduction: We tried to make a financial statement on our Grocery Shops. With some direct information and internet information we have made this report. We are the group member tried our best to make this report. Here we complete the balance sheet, income statement Our Grocery Shop. As we are new investor we do not know better how to open a grocery shop, that’s why we take some information from "two brother grocery shop’s owner. Actually we did not get enough information, Owner gave us some information . So Owner just give us an assumed information. We were invested 250000Tk. As a initial investment. Place Selection: According to information we were selected three public place for setting up our grocery shop. These places are Tongi, House building and Banani. Among these we consider Banani as a most suitable place for setting up this shop, Because we got more profit, high rate of ARR(Accounting Rate of Return), more PI(Profitability Index) and less payback time in this place. We make income statement and balance sheet of this place grocery shop. The name of our grocery shop is “Orindom Retail Stores”.

Investment Appraisal

Tongi,

Invest (250000)
Years
Income
1
100000
2
140000
3
160000+100000
Interest rate=15%
Net Present Value= -C+∑PV of all FV
NPV= -250000
= -250000+86956.52+90737.24+170954.22
= -250000+348647.99
= 98648.00
Average annual return or annual profit Accounting Rate of Return(ARR) = ------------------------------------------------------

Initial cost of investment

Total profit = Revenue – Cost
=400000-250000
=150000

Annul profit = 150000/3
=50000
ARR = 50000/250000
= 20.00%

Net Present Value Profitability Index (PI) = ---------------------------- Initial Capital Cost

=98648.00 /250000 = 39.46%

Payback, (monthly)

Months x Initial Investment Payback = ------------------------------------------ Total Cash Received

Payback = (36*250000)/400000
= 22.5 months

House Building,
Invest (250000)
Years
Income
1
100000
2
110000
3
100000+100000
Interest rate=15%

NPV= -250000
= -250000+86956.5217+83175.80+72326.78
= -250000+242459.00
= -7541.00

Average annual return or annual profit Accounting Rate of Return(ARR) = ------------------------------------------------------

Initial cost of investment

Total profit = Revenue – Cost...
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