Best Financial Services Incorporation Case Study Solution
Triple Bottom Line Concept:
By utilizing the triple bottom line concept in which the company will focus on the profits, people and the planet, it could achieve the competitive advantage over competitors, which has only a purpose of growing the profits for the company. It is necessary to be learned that profit is not only a part to get success, but the social and environmental concerns are too. By managing the people and environmental concerns, company can get the huge success in the competitive market and can increase its market share as compared to its competitors.
Ethical Concerns:
In order to maintain the CFP’s reputation, the Beth should retain the employees of Mitchell because after purchasing the business block of Mitchell, company can terminate the previous employees because their working environment will not in accordance with the Best Financial Services Incorporation and to maintain the CFP position, company will hire those employees who will be accordance with these requirements. So, to avoid this ethical concern, Beth should train them according to the CFP’s requirements.
Exhibit 1: Cash Flow Statement for the Year 2007
| Operating Activities | |
| Net Income | 103,227 |
| Add: Non Cash Activities | |
| Depreciation & Amortization | 6,458 |
| Increase / Decrease in CA & CL | |
| Marketable securities | 1,279 |
| Accounts payable | (95) |
| Net Cash From Operating Activities | 110,869 |
| Investing Activities | |
| Purchase of Office Equipment | (4,829) |
| Net Cash From Investing Activities | (4,829) |
| Financing Activities | |
| Proceeds from Line of credit | 1,287 |
| Dividend paid | (106,177) |
| Net Cash From Financing Activities | (104,890) |
| Net Increase in Cash | 1,150 |
| Cash at the Beginning | 24,967 |
| Cash at the End of the Year | 26,117 |
Exhibit 2: Projected Income Statement for the Year 2008
| Income Statement | ||||
| For the Years ending December 31, 2008 | ||||
| 650,000 | 800,000 | |||
| REVENUE | 70% | 90% | 70% | 90% |
| Mutual fund sales commissions | 120,040 | 121,340 | 127,540 | 128,840 |
| Mutual fund trailers | 225,936 | 225,936 | 226,936 | 226,936 |
| Life insurance sales | 7,258 | 7,258 | 7,258 | 7,258 |
| Other revenue | 49,836 | 49,836 | 49,836 | 49,836 |
| Total revenue | 403,070 | 404,370 | 411,570 | 412,870 |
| OPERATING EXPENSES | ||||
| Advertising & promotion | 15,850 | 16,050 | 15,850 | 16,050 |
| Salary of New Advisor | 37,000 | 37,000 | 37,000 | 37,000 |
| Commission of new advisor | 1,500 | 1,500 | 3,000 | 3,000 |
| Delivery | 300 | 300 | 300 | 300 |
| Fund management fees | 31,036 | 31,136 | 31,691 | 31,791 |
| Legal Fee | 5,000 | 5,000 | 5,000 | 5,000 |
| Insurance | 2,821 | 2,831 | 2,881 | 2,890 |
| Interest expense | 6,480 | 6,480 | 6,480 | 6,480 |
| Meals and travel | 10,077 | 10,109 | 10,289 | 10,322 |
| Office supplies & maintenance | 18,944 | 19,005 | 19,344 | 19,405 |
| Professional fees | 3,225 | 3,235 | 3,293 | 3,303 |
| Rent | 17,460 | 17,460 | 17,460 | 17,460 |
| Paper and Postage | 350 | 435 | 350 | 435 |
| Salaries & wages | 115,521 | 115,521 | 115,521 | 115,521 |
| Utilities | 6,046 | 6,066 | 6,174 | 6,193 |
| Amortization | 6,592 | 6,592 | 6,592 | 6,592 |
| Education & training | 2,200 | 2,200 | 2,200 | 2,200 |
| Miscellaneous | 1,209 | 1,213 | 1,235 | 1,239 |
| Bank charges | 150 | 151 | 152 | 153 |
| Total operating expenses | 281,761 | 282,284 | 284,810 | 285,333 |
| Net Earnings before tax | 121,309 | 122,086 | 126,760 | 127,537 |
| Income tax | 7,764 | 7,814 | 8,113 | 8,162 |
| Net Earnings After Tax | 113,545 | 114,272 | 118,647 | 119,375 |
| Percentage of Sales | 28.17% | 28.26% | 28.83% | 28.91% |
Exhibit 3: Projected Balance Sheet for the Year 2008
| Balance Sheet | ||||
| As at December 31, 2008 | ||||
| 650,000 | 800,000 | |||
| ASSETS | 70% | 90% | 70% | 90% |
| Current assets: | ||||
| Cash | 41,573 | 42,300 | 46,675 | 47,402 |
| Marketable securities | 8,544 | 8,544 | 8,544 | 8,544 |
| Total current assets | $ 50,117 | $ 50,844 | $ 55,219 | $ 55,946 |
| Long-term assets: | ||||
| Investment | 49,900 | 49,900 | 49,900 | 49,900 |
| Office equipment | 45,590 | 45,590 | 45,590 | 45,590 |
| Less: Accum. amort., office equipment | 31,225 | 31,225 | 31,225 | 31,225 |
| Net Office equipment | 14,365 | 14,365 | 14,365 | 14,365 |
| Vehicle | 23,905 | 23,905 | 23,905 | 23,905 |
| Less: Accum. amort., vehicle | 14,344 | 14,344 | 14,344 | 14,344 |
| Net Vehicle | 9,561 | 9,561 | 9,561 | 9,561 |
| Total long-term assets | 73,826 | 73,826 | 73,826 | 73,826 |
| Total Assets | 123,943 | 124,670 | 129,045 | 129,772 |
| LIABILITIES & SHAREHOLDER’S EQUITY | ||||
| Liabilities: | ||||
| Accounts Payable | 1,139 | 1,139 | 1,139 | 1,139 |
| Line of credit | 4,966 | 4,966 | 4,966 | 4,966 |
| Interest Payable | 3,896 | 3,896 | 3,896 | 3,896 |
| Total current liabilities | 10,001 | 10,001 | 10,001 | 10,001 |
| Long-term liabilities: | ||||
| Seven Year Bank Loan | 50,000 | 50,000 | 50,000 | 50,000 |
| Total long-term liabilities | 50,000 | 50,000 | 50,000 | 50,000 |
| Total liabilities | 60,001 | 60,001 | 60,001 | 60,001 |
| Shareholder’s Equity | ||||
| Common Stock | 50,000 | 50,000 | 50,000 | 50,000 |
| Retained Earnings | 13,942 | 14,669 | 19,044 | 19,772 |
| Total shareholder’s equity | 63,942 | 64,669 | 69,044 | 69,772 |
| Total Liabilities & Shareholder’s Equity | 123,943 | 124,670 | 129,045 | 129,772 |
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