Report Accounting Shoes Market
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1) Introduction of the proposal
This report has been requested by a group of potential investors to observe the market trends and the leverage existed in the footwear/shoe industry. This report has been compiled by the potential entrepreneur and submitted on 03/12/2011. The report entails the forecasted financial statements and comprehensive Break-even analysis of proposed business in the footwear industry.
2) Main Section
We conducted the survey in the footwear market to know the demand of our footwear products through presenting our samples of footwear. In this survey, as we target the elite class to be our customers, we have consulted the leading footwear outlets and potential customers to know their inclination towards our product. We received very warm response from the both categories and decided to uphold this demanding idea.
2.1) Expected turnover
Our survey has led us to expect the turnover of our footwear to be at 500,000 units at minimum in the first twelve months of our business. In consideration of the purchasing power of our targeted segment of society, we have decided to sell our footwear at premium per unit price of £150. Considering the two outcomes of survey, the demand and per unit selling price our expected turnover in the first financial year of our business would amount to £ 75,000,000.
2.2) Profit margin
Profit in footwear industry in the recent past has always been high. We expect per unit profit amounting to £ 28. The determination of this per unit profit margin takes into account different parameters of our business i.e. availability of raw material, cost of raw material, availability and expertise of labor to produce our quality footwear.
2.3) Raw material
Raw material is easily available in market as the suppliers assure us they will provide us the raw material in normal as well as in crunch political and economic situations. According to our survey, we cost to £ 40 per unit of raw material and it costs us £ 24,000,000 per annum.
2.4) Labor and FOH
These both sources are known as conversion costs and both are necessary for our footwear products. We conducted survey and came to know that experts and technical labor regarding our footwear easily available for us. Labor will cost us £ 30 per unit and it will cost us £ 18,000,000. While the FOH will cost us $ 20 per unit and aggregate per annum cost will be £ 12,000,000.
Every business has to face the fixed cost; this cost, according to our forecast would be £ 5,000,000. Thus, the forecasted total cost £ 70,000,000.
2.5) Capital Market
We conducted the survey in the capital market, due to healthy conditions of footwear industry, the financial institutions are eager to provide significant amount of long-term loans to this industry. Our forecasted need of long-term loans is £ 10,000,000. Not only the financial institutions will be taken into consideration for enhancing the worth of business but also suppliers