Mcphee Distillers Case Study Solution
- As specified in the previous analysis, the net loss in the fiscal year 2016 is due to the reduction in unit sales, thus, Kings ley should reflect certain sales growth tactics for instance, increasing advertising and marketing activities, expanding towards new markets, etc., in order to increase the net profits.
Conclusion
In conclusion, the business model implemented by Kings ley is relatively profitable as presented in the income statement. Conversely, the company should reflect certain improvement for instance,focus on sales growth strategies, expansion of the current production capacity, etc., to increase its sales and increase the profitability of business,without conceding over the quality.
EXHIBITS
Exhibit 1: Income Statement
| McPhee Distillers | |||
| Income Statement | |||
| For the Period ended on Dec 31st 2014, 2015 and 2016 | |||
| 2014 | 2015 | 2016 | |
| Revenues (Working 1) | $ 2,437,500 | $ 2,312,500 | |
| Less: COGS (Working 2) | $ (1,687,500) | $ (1,950,000) | |
| Gross Profit | $ 750,000 | $ 362,500 | |
| Less: SG&A Expenses | |||
| Advertising and Promotion | $ (75,000) | $ (75,000) | |
| Lease | $ (60,000) | $ (60,000) | |
| Office and Administrative | $ (15,000) | $ (15,000) | |
| Salaries and Wages | $ (50,000) | $ (50,000) | |
| Repairs and Maintenance | $ (75,000) | $ (75,000) | |
| Supplies | $ (25,000) | $ (25,000) | |
| Utilities | $ (40,000) | $ (40,000) | |
| Warehousing | $ (100,000) | $ (100,000) | |
| Depreciation (Production Equipment) (Working 3) | $ (28,571) | $ (28,571) | |
| Local Creative Agency Fees | $ (50,000) | ||
| Total Operating Expenses | $ (518,571) | $ (468,571) | |
| Net Income (Loss) | $ 231,429 | $ (106,071) | |
Exhibit 2: Cash Flow Statement
| McPhee Distillers | |||
| Cash Flow Statement | |||
| For the Period ended on Dec 31st 2014, 2015 and 2016 | |||
| 2014 | 2015 | 2016 | |
| Cash Beginning | 250000 | -677500 | |
| Cash Flow From Operating Activities: | |||
| Net Income | 231429 | -106071 | |
| Add: Depreciation Expense | 28571 | 28571 | |
| Add(Less): Change in Inventories | -1187500 | 775000 | |
| Net Cash Flow From Operating Activities | -927500 | 697500 | |
| Cash Flow From Investing Activities: | |||
| Purchase of Production Equipment | -500000 | ||
| Net Cash Flow From Investing Activities | -500000 | ||
| Cash Flow From Financing Activities | |||
| Initial Investment (Kingsley) | 250000 | ||
| Initial Investment (Piercy Distillers) | 500000 | ||
| Net Cash Flow From Financing Activities | 750000 | ||
| Cash Ending | 250000 | -677500 | 20000 |
Exhibit 3: Balance Sheet
| McPhee Distillers | |||
| Balance Sheet | |||
| For the Period ended on Dec 31st 2014, 2015 and 2016 | |||
| 2014 | 2015 | 2016 | |
| Assets: | |||
| Current Assets: | |||
| Cash | 250000 | -677500 | 20000 |
| Inventory | 1187500 | 412500 | |
| Total Current Assets | 250000 | 510000 | 432500 |
| Non-Current Assets: | |||
| Production Equipment | 500000 | 500000 | 500000 |
| Less: Accumulated Depreciation | $ (28,571) | $ (57,143) | |
| Production Equipment net | 500000 | 471429 | 442857 |
| Total Non-Current Assets | 500000 | 471429 | 442857 |
| Total Assets | 750000 | 981429 | 875357 |
| Liabilities and Equities: | |||
| Liabilities: | Nil | Nil | Nil |
| Equities: | |||
| Common Stock (250 Shares of 1000 each) | 250000 | 250000 | 250000 |
| Preferred Stock (500 Shares of $1000 each) | 500000 | 500000 | 500000 |
| Retained Earnings (Working 1) | 231429 | 125357 | |
| Net Worth | 750000 | 981429 | 875357 |
| Total Liabilities and Equities | 750000 | 981429 | 875357 |
This is just a sample partical work. Please place the order on the website to get your own originally done case solution.
Related Case Solutions & Analyses:
3i Group plc: May 2006
Sales Force Training at Arrow Electronics (B)
Information System Strategy at Neelkanth Drugs
CASE ANALYSIS: JADE SHAMPOO (A)
Effectiveness of an Improvement Project
OPERATIONS STRATEGY AT GALANZ
POPULATION AND SOCIAL CHANGE
Speech
Strategic Formulation
ILinc: Case Study of Start Up
