Digitization of Business level 4


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In context to determine crucial aspects of “Chop- Chomp Ltd”, it is necessary to make a proper evaluation of their regular business. It has been found that this particular company is operating an online meal-kit-style subscription business which is entirely focused on meat marinades, spices and inventories. The primary objective is to enhance creatively to home cooking for all busy householders. In order to make a proper analysis of the overall performance of an organisation it is necessary to make a proper swot analysis of their overall performance and growth position. According to the market research information, this particular company is developing a positive alignment with this trend (World Health Organization, 2013).

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They started their operations in 2010, whereas their trademark and brand registration are protected by the Trademark Act of 1994. They have decided to expand their operation into producing monthly Taste box subscription products which are related to various fresh and non-fresh ingredients. Their overall business is regulated in capturing the wide market, as they are regulating presently in the UK. Apart from this, the product is sourced from all over the world. Some parts are from Mexico with a total of 30% and South Africa with 40%. The company negotiated about 60 days' credit terms with maximum suppliers during the time of expansion in 2013.




The major positive point collected with respect to this company is their dedication to home cooking services.

Another important part of the company is that they package their hand-selected choice of international goods in branded packaging.

Their business was started by producing gift boxes which hampers their overall product sold to consumers are not available to the high street.



Their overall success is increased through their expansion of business. The niche operations of recipe boxes and their subscription have promoted various major players such as TESCO and other companies.

The major issues they are facing are associated with the online market which is dominated by store-based players such as Hello Fresh and Naked Wines.


Review of business opportunity

Under this particular analysis, certain essential aspects related to the current position of Chop and Chomp Company are mentioned. It is necessary to make a proper evaluation of all necessary data which are helpful in order to detect their overall cost of financing. This will assist an organisation in managing its overall growth and performance during the time. The company have been offering or supplying spices and marinades to a small chain of 13 restaurants of which 8 are located in central London and 5 are situated in North London. According to these particular opportunities, they would make an impact on the overall financial year of 2018. 

It has been found that the company is providing products in huge amounts with included value components of subscription business in respect of their presentation and their recipe cards. In accordance with the profit margin which would be significantly less than their existing subscription business. While it would continue supplies under a 3-year contract and distribution costs that are very low (Yancy and et. al., 2013). It has been advised by various restaurants to make promotion of their upcoming sales. At the present time, a total of 80% of their earning are being generated by subscription box businesses with a proper balance in the next coming time from ad-hoc sales of their overall products which would consist of butcher farm shops and one-off gift boxes.

Calculation of loan repayments: In the case of investment appraisal the costs of capital will be taken in to account as the financing structure and be adjusted for the loan. Henceforth, the initial process can often be helpful for a business to get the proper financing it requires and can afford it. Thus, positive opportunities are that which get the money a company can invest.

Consideration of the depreciation plan for their vehicle is not accounted for as part of the investment appraisal. As it is said to be a non-cash movement and can be more effectively used as a decision-making process in some businesses.

(1): Loan Amount if they are taking, it was 11500 per month


Principal (A)

Interest (B)

Total Payment (A + B)


Loan Paid To Date


₹ 39,846.02

₹ 7,681.81

₹ 47,527.83

₹ 98,153.98



₹ 57,222.56

₹ 6,147.88

₹ 63,370.44

₹ 40,931.42



₹ 40,931.53

₹ 1,315.43

₹ 42,246.96

₹ 0.00



(2): Depreciation table on total vehicle

Cost: $32,000.00, Salvage: $0.00

Life: 3 years, Factor: 2

Convention: Mid-Year

First Year: 6 months



Depreciation expenses










(3): Investment appraisal


Cash inflows

P.v factor @ 8.5%

Present cash inflows


















Present value





Sensitivity Analysis:

According to the given analysis, it has been seen that banks will asked to take into consideration about total risk that the company cannot able to attain their forecast and overall projects which will be not profitable in the coming time (Kimberlin and et. al., 2015). According to the turnover which would be fixed contractually as a key variable that is making a huge impact on the increase in total cost of sales. The company would be able to try to improve their products in the next 3 years. It is necessary to determine the overall investment return one can get from their total investments.

Cost of inflation :



Inflation Rate


₹ 114,000.00



₹ 119,390.10



₹ 125,872.54



₹ 131,907.52



₹ 134,493.95


Additional consideration:

According to this particular evaluation, it has been seen that potential for extra product sales by which overall restaurant promotions. This has to be done on an average that each restaurant covers around 125 every Thursday and Friday evening. 150 on Saturdays and 65 covers on Sundays, Mondays and Wednesdays. Advertising through using the restaurant of an organisation would increase the overall customers of research. Moreover, it has been based on prior advertising, the company would estimate that one extra regular subscription sales will increase the total of every 10000 people (Johnson and et. al., 2015). There are certain assumptions that need to be taken into consideration. Some of them are discussed below:

  • The assumptions of total income from additional customers to see a promotion in the next 1 year. The impact of that particular additional customers is to see the promotion in the next 2 years as cash-flows in that year.
  • Whereas the gross profit margin of new customers is the line with the total current gross profit margin of the company at 55 %.


Historical financial analysis


Trail balance





Cash balance at the bank



Mortgage loan at 7%



Shareholder loan at 4%



Tangible assets















Capital and reserves






It is known as an effective statement which consists of all debits and credit records of financial transactions that are being done during an accounting period of time. The primary sources for preparing trail balance is taken from journals and ledger posting. This would be helpful in preparing the final account of an organisation. A trial balance is said to be a bookkeeping worksheet under which the balances of all ledgers are complied with as per debit and credit columns. It has been seen that these are prepared periodically which is mainly at the closing of every reporting duration of time. The total balance generated during the time is collected as 86654. These are done by making proper evaluations of all expenditures that are done during the time. The financial account of an organisation is prepared by using the necessary information mentioned in the trial balance. The company can use third-party delivery to their monthly subscription boxes during that time. It is necessary to make proper distribution which is a significant cost to an organisation (August and Shanahan, 2017).


Future profitability and current valuation analysis

Valuation analysis


Valuation analysis

 Net Asset Value (also known as net book value)


2017 (ï¿¡'000)


Fair Value

Non-Current Assets




Current Assets




Less: Current Liabilities




Less: Long-Term Liabilities




Net Asset Value




From the above calculation, it has been found that total net assets valued as per the mentioned book value are providing positive results with 128228 during 2017. after making all crucial adjustments total fair value, has been made a total value of 162228. It has been seen that there is an increase in the fair value of net assets after the valuation of information. It is known as the total value of an organisation's assets deducted from the value of all debt obligations. It is often related to open-ended or mutual capital investments made by the company during the time. This seems to be a more viable way of reading into the total value of the overall investment done by an organisation.

Income multiple (Enterprise Value  to EBITDA)


2017 (ï¿¡'000)

Profit before interest and tax


Plus: deprecation




Plus/minus required adjustments


Maintainable EBITDA


From the above-mentioned data, the total income is multiple as per the enterprise value by overall earnings generated during the time. The total maintainable earnings incurred by the company is about 25243 is incurred by the company after paying all expenses or depreciation charged by the company. It is said to be amortization is a financial measure which is calculated by using a company's total net earnings, before paying interest amount, taxes and other important aspects (Beveridge, 2014). This is an essential measure to evaluate the performance of a company without having all factors applicable in financing decisions. The variation of operation earnings because this does not consider non-operating expenses and other non-current expenses.

Discounted Cash flow model (also known as Net present value or multi-period income model)


2017 (ï¿¡'000)


Maintainable Earnings


Market Multiples



Less: debt




Equity Value



According to the above equity valuation, it has been seen that the total value collected during the time is about 1787071.5. The primary objective of equity valuation is to estimate a company's overall earnings during the time. There are certain assumptions related to fundamental value techniques which is the value of securities derived from underlying business operations at the closing of the accounting year. This is simply defined as an effective method which can be categorised into balance-sheet techniques, discounted cash-flow approaches and other relative methods. This will be essential to determine the overall intrinsic value of shareholder equity of an organisation.

Forecast year-on-year revenue growth rates




Growth rate














It has been seen that it is an estimation of total current year financial performance which is being used to develop near-term plans for their capital purchasing of all necessary aspects of an organisation. This is mainly adjusted as per the monthly earnings in response to actual business outcomes generated during the year. The long term forecasting is more risky in terms of revenue growth of an organisation (Drucker, 2011). If the company is forecasting 7925 earnings in 2018 they are getting a total 9113 with 15%. whereas in 2019, it slowed down with a total of 9113 and reduced by 10% during the time and so on.

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It has been concluded from the above report that, SWOT analysis is an effective tool which helps the organisation is to identify their strengths and weaknesses. It helps to grab the opportunities through the effective use of their strengths. Financial statements include income statements, balance sheets etc. It helps in determination about their income and expenses and also their assets to determine their current position. NPV and IRR are two effective investment appraisal techniques which help the organisation regarding the selection of the most appropriate and profitable project which provides a maximum return. Valuation of the company provides the opportunity to build its structure stronger for the accomplishment of its desired objectives.


  • World Health Organization ed., 2013. Global tuberculosis report 2013. World Health Organization.
  • Yancy, C. W. and et. al., 2013. 2013 ACCF/AHA guideline for the management of heart failure: a report of the American College of Cardiology Foundation/American Heart Association Task Force on Practice Guidelines. Journal of the American College of Cardiology. 62(16). pp.e147-e239.
  • Kimberlin, D. W. and et. al., 2015. Red Book, (2015): 2015 Report of the Committee on Infectious Diseases. American academy of paediatrics.
  • Johnson, L. and et. al., 2015. NMC horizon report: 2015 library edition (pp. 1-54). The New Media Consortium.
  • August, D. and Shanahan, T., 2017. Developing literacy in second-language learners: Report of the National Literacy Panel on Language-Minority Children and Youth. Routledge.
  • Drucker, P. F., 2011. Landmarks of tomorrow: A report on the new. Transaction Publishers.
  • Beveridge, W. H., 2014. Full Employment in a Free Society (Works of William H. Beveridge): A Report (Vol. 6). Routledge.

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