Financial forecasting 120 Essay

Submitted By Мариела-Петрова
Words: 1612
Pages: 7

MARIELA RAVNACHKA

UNIT 3
FINANCIAL FORECASTING FOR BUSINESS

TASK 1

Start-up costs are linked and associated with setting-up a business such as legal fees, purchasing of equipment, rented property deposit. Start-up costs means a different sort of costs, which a new business owner should get in so that the business can exist.
Operating costs are expenses that relate to a business activities and they are divided into fixed and variable costs. Different businesses have different costs associated with them.
Variable costs are expenses which keep changing in proportion to the activities of a business. Also they are one of the components in calculation of a total costs and they vary for example with the level of sales. Variable costa are the raw materials, labour of costs, machine maintenance and packaging.
Fixed costs are expenses which do not vary with changes in production level or level of sales. For example the shop owner has to pay the shop rent whether how sales he has. Fixed costs are also water and electricity bills, insurance and business rate. JD Sports Plc is the one of the leading retailer of branded sportswear and fashion wear. JD Sports start the business in 1981 with one single shop in Bury, UK and today they have over 800 stores in four countries.
Their revenue for 2014 is £ 1,330 892 000 which is higher than 2013 where the profit was £ 1 258 892 000.Operetaing expenses where fixed costs and variable costs are included for 2014 are £19.1 million which is quite higher than 2013 where operating expenses were £5.3 million.
As plc JD Sports` start-up costs depend from how many shareholders they have and how much is the share price on the market. On 1 February 2014 the Company`s issued share capital was £ 2,443,083 comprising 48,661,658 ordinary shares of 5p each.

P2
Revenue is the amount that the business earns in period of time received of selling goods or provides service. The revenue could be operating revenue or non-operating revenue. For example operating revenue is the profit which the business earns selling goods or provides service. Non-operating revenue is the money earned from some side business operation like interest rate received, taxes, bank loan.
JD Sports Plc. has operating revenue which they earn selling goods like sports wears, fashion wears and accessorizes. As a big sport fashion company their revenue is the most important thing together with satisfied customers. As a big company JD Sports is linked with big profit per year. There are several methods which they do to increase their profit:
Promotions
Expand the business in different countries
Advertising
Market share increase
Reduce cost
This year 16 new store were opened and basic earnings per share has increased by 3.5% from 79.71p to 82.50p

P3
Gross profit is the total amount of revenue when the cost of sales is deducted.
Net profit is the amount left when the operating expenses are subtracted from the gross profit amount.

M1

The cost, revenue and profit are the most important elements when the business operates on the market.
The costs of the business are all variable and fixed costs added together. The total costs will obviously increase when the new services or a new products are available on the market when the business expands.
Revenue is the income which business makes from selling products or provide services. Simply to calculate the revenue you take the amount of sold times the price of product or service. Businesses want to increase profit so they need to make as much revenue as possible and to reduce the costs.
The main aim of most businesses is to make profit However, profit is calculated using total revenue and total costs. Therefore, businesses must consider the revenue along with the costs corresponding to the specific number of output in order to increase profit.

For a big company like JD Sports Plc the profit, the revenue and the cost are very important part of the business cycle.
The profit is used…