Chef’s Toolkit

illustration 2 Chefs Toolkit baptistry Anaylsis De? ne the Issues Chefs Toolkit has exhausted every of their ? nancial resources trying to develop their product. The owner, dick Jeffery, is seeking external coronation to fund the launch of his product, and the potential investor, Dale Reid, has asked for project ? nancial records for the caller-ups disheartened, pass judgment, and plausive intercommunicate gross tax for the ? rst year of operation ending July 30, 1995. Analyzing the Case Data fragmented information was given in the case, along with a balance sheet of paper and a production schedule for the expected sales of 10,000 units.There was no statement of change ? ows, income statement or any information about their cash account or their accounts payable account. Generating Alternatives Dale Reid could choose to either invest $85,000 for 50% of the company, choose to invest more or less for a negotiated piece of the company, or not invest in Chefs Toolkit. Th e pessimistic communicate sales is 5,000 units per calendar month, totalitying 60,000 units in the year. The expected amount of sales is 10,000 units, summing to 120,000 units per year.The optimistic projected sales is 30,000 units per month resulting in a total of 360,000 units interchange in the year. In the optimistic option, a double mold is needed since the total required production exceeds the maximum amount for the angiotensin converting enzyme mold. Selecting Decision Criteria small(a) additional investing High revenues with blue expenses Return on investment Break Even Analysis Analyzing and evaluating choices Break Even = Revenues Expenses = 0 angiotensin-converting enzyme Mold = x(1. 82) x(1. 215) x(0. 162) 63,975 63,975 = x(0. 43) 144,413 = Break even units/year Single Mold (pessimistic and expected) = 12,035 units/month doubled Mold = x(1. 82) x(1. 215+0. 865)/2 x(0. 144+0. 062)/2 125,975 125,975 = x(0. 677) 186,078 = Break even units/year Double Mo ld (optimistic) = 15,507 units/month Chefs Toolkit Case Analysis 1 Case 2 Chefs Toolkit Case Analysis ROI = (Cash in? ow-Cost of investment)/Cost of investment Pessimistic (-41,711-54,894)/54,894 = 176% Expected (-4,791-36,724)/36724 = -113% Optimistic (194,983. 20-6,046. 70)/6,046. 70 = 3125%Both the pessimistic and expected sales forecasting show that with an investment well under the proposed $85,000 is required, a negative fork over of investment is expected. Also, according to break-even analysis operating with the single mold and excluding warehousing costs, a minimum of 12,035 units essential be sold to break even. Under a similar situation with the double mold, 15,507 units must be sold to break even, which is about half of the optimistic sales projection. Also under the optimistic sales projection, a positive return on investment is expected.Because the company is turning pro? t,less additional investment is required. Additionally under the pessimistic and expected sit uation, the company turns losses, and under the optimistic projections, Chefs Toolkit only has a net income of 13% of its revenues. Selecting Preferred alternative According to the above information and the projected pro-forma statements, Dale Reid should not invest his money in the company. The companys lack of stream assets, high expenses and low per-unit revenue create an unfortunate and unpro? able investment in pessimistic and expected situations. Only in the optimistic production and sales does the company begin to turn pro? t, but this pro? t is low. Chefs Toolkit needs desperate restructuring and additional revenue sources before Dale Reid should invest. Developing and Implementing the figure To reduce production costs, Chefs Toolkit should look into ? nding less expensive producers and packagers. They should in any case look into additional revenue streams or ? nding a way to retail their product directly to the customer to take out the middleman.This would increase their revenue per unit signi? cantly. Chefs Toolkit can explore online retailing since they essentially fathert have any sort of bricks-and-mortar store front, so it would ? ow with their current business model. Also, if they aim to switch 13,500 units per month, they will turn pro? ts (see break-even analysis-single mold) and not require a double mold since they will produce and sell a total of 162,000 units (the max for the single mold) within the ? rst year.However, presently Peter Jeffery and his wife have exhausted all of the companys assets as well as substantial amount of their personal assets. The risk in their current situation is high and they need immediate revenue to take off recouping their research and development costs. They also need money to even find producing the product so that they can sell it. This should be brought up in their discussion with Dale Reid, and hopefully Peter can persuade him to invest despite the bleak pro-forma ? nancials. Chefs Toolkit Case An alysis 2