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BUSINESS
MODEL
SUBJECT- FINANCIAL
MANAGEMENT
BUSINESS NAME-
FITFOOD
Rent=Rs 40,000
Salary of:-
Cook-10,000
Delivery Boy- 6,000
Cashier- Rs 8,000
Dietician- Rs 15,000
• Electricity and Maintenance of vehicle-
Rs 7,000
TOTAL FIXED COST PER MONTH =
Rs 86,000
MARKETING
DEPARTMENT
All Marketing
activities:-
Promotion
• Signage
• Distribution of Menus
• Distribution of Fliers/ads/coupons
• Business cards
Run Social Page
Digital Marketing
Sales Promotion
TARGET
CUSTOMERS
AREA RANCHI specially areas of Harmu, Ratu Road, Upper
Bazaar, Ashok Nagar, Main Road etc.
AGE 15-50
THOSE
TYPE OF WHO ARE INTERESTED IN GYM AND WANT HEALTHY DIET.
CUSTOMER
MONTHLY TOTAL
MONTH INTEREST INTEREST BALANCE
1 3,00,000
2 3,00,000
3 3,00,000
4 3,00,000
1 Rs 1006182.5 Rs 300000
2 Rs 1012430 Rs 600000
3 Rs 1018742 Rs 900000
4 Rs 1025121 Rs 1200000
Break even Analysis
1400000
1200000
1000000
800000
Total Cash outflow
600000 Total Cash Inflow
400000
200000
0
1st 2nd 3rd 4th Month
ARR
• Accounting Rate of Return (ARR) is the
average net income an asset is expected to
generate divided by its average capital
cost, expressed as an annual percentage.
• The ARR is a formula used to make
capital budgeting decisions.
• These typically include situations where
companies are deciding on whether or
not to proceed with a specific investment
(a project, an acquisition, etc.) based on
the future net earnings expected
compared to the capital cost.
• ARR formula
• The formula for ARR is:
• ARR = average annual profit / average
investment
Where,
• Average investment = (book value at
year 1+ book value at end of useful life)
/2
• Average annual profit = total profit over
investment period/number of years.
CALCULATION OF
ARR
Month Net Profit Earned (in Rs)
1 46,000
2 46,000
3 46,000
4 46,000
ARR (46000*100)/2,50,000
= 18.4
CONCLUSION
• Here we can see that payback period is 3
months and 10 days which is acceptable.
• Average rate of return is about
18.4% so it is acceptable to go for
this business.
• Business is meeting Break-even in around
4th month which indicates that close to 4th
month, the owner will recover its all cost
and will start earning profit.