Financial Analysis of Q Notes - Essay Example

FINANCIAL RESEARCH SALES: The sales for the first year of operations shown specifically below Jan Feb March April May June July 000.00 2,000.00 3,000.00 5,000.00 5,000.00 5,000.00 5,000.00 Aug Sept Oct Nov Dec TOTAL 6,000.00 6,000.00 7,000.00 10,000.00 10,000.00 65,000.00 comes from its music engineering and music technology business. The other fund sources come from grants and also comes from grants charitable contributions from companies that Q notes company has visited to request to help make true the dreams of the company as well as the dreams of a better life for the students of Q notes. The sales have increased because now the sales from its sound engineering and music technology business has started to become a household name due to the high quality work done by the students of Q notes school. TAX DEDUCTIONS OF Q NOTE DONORS. According to cyberhaven.com with the website http://www.cyberhaven.com/businessbooks/taxes/0966159608AMUS12737.html, in its article entitled The Charity's Guide to Charitable Contributions (Law & Tax Guides for Charities Series) Pamela McAllister, she said that "Charities face increasingly complex government regulation. Charitable fundraising is becoming more difficult and competitive. At the same time, society's need for charitable services is growing. In such a challenging environment, how can charities keep up with ever-changing legal requirements -- and still have time to raise money and carry out their charitable missions A new series of Law and Tax Guides for Charities helps show the way. The first title in the series, The Charity's Guide to Charitable Contributions, is a practical, plain-English guide to what charities need to know about the federal income tax deduction for charitable contributions. It's an essential tool for every charity. Veteran tax lawyer Pamela McAllister guides readers through the maze of federal tax laws with topics ranging from membership premiums to special event, auctions to thrift shops. Readers discover clear, step-by-step instructions for determining how much of a contribution is deductible and what to tell their donors in a wide range of everyday situations, plus valuable practical advice on maintaining positive donor relations." This article by Pamela McAllister shows the charitable organizations like Q note how to follow the technical requirements of the donation law by giving them important checklists, guidelines, and sample forms that surely will help charities be professional and knowledgeable, assist their donors, and avoid tax penalties it also has countless real-word examples. So this financial research on charities is shows us that our Q note school will thrive because the United Kingdom government encourages companies to give to charitable institutions like Q note. In return the donating companies will report the donations as deductions from the total gross income. This donation will then lower the total amount of business income that the company will use as basis for computing the amount of taxes the company will pay the United Kingdom government. If the donations are bigger, then the gross income deduction will also be bigger. But the United Kingdom tax law also states that there is a limit to the amount of donations that a company will give to charitable institutions like Q note. Although, this will lessen the charitable contribution amount that each charitable organization will receive from one company, the charitable organizations can spend more time looking for other companies that will be philanthropic enough to give excess funds to the Q note School. Therefore the charitable organizations and also the donor company or companies.benefits from this taxation law pertaining to charitable contributions. SOUND ENGINEERING. Since there is a big market for songs and recordings of meetings, conferences and the like, the student graduates will have a bright future in the chosen field of work as compared to the alternative of joining the inner city street gangs and live a dangerous life of hurting other people and hurting themselves. GROSS DOMESTIC PRODUCT. They say that gross domestic product is a factor in financial research because the it directly affects how big the increase or decrease is on the annual inflation rate. According to the journal Nzier economic journal, dated September 29, 2001, Gross domestics product is defined as " GDP: its measurement and meaning GDP, or Gross Domestic Product, is a measure of how big an economy is. Nominal GDP is expressed in current prices i.e. in the common dollars that we all know and love. Real GDP is expressed in constant prices i.e. in the dollar values of a particular year, which is known as the base period. Real GDP is in effect nominal GDP after adjustment for inflation. Changes in real GDP are often referred to as volume increases in GDP, and are a measure of economic growth. Most economic analysts focus on real GDP because it shows the underlying strength of an economy. But let's look first at nominal GDP." It is commonly known that nominal GDP is the total sum of all the goods and services generated by one country during a specific time period, usually one year. But this only partially correct because we have to correct the total output value that we term as gross output in order to make sure that we are not counting the economic variables twice. For example, if a company makes $100,000 of chairs and tables during a one year time period. The company also spends $40,000 on the raw materials like wood, nails, paint and other to manufacture the chairs and tables. Therefore the net amount that the company contributes as income is only $60,000 because the costs (cash outflow) of producing the goods (chairs and tables) will reduce the total cash inflow. The chairs and tables as well as cash inflow from giving other services and goods is identified as intermediate consumption. According to Nzier "summing over all the firms in the economy we have: GDP = gross output minus intermediate consumption and we can see that GDP and value added are the same thing. Now we can define GDP more formally: GDP is the total market value of goods and services produced within a given period after deducting the cost of goods utilized in the process of production." The economy affects the sales and the charitable contributions that is equated to Q note's cash inflow because when the economic situation of the London environment worsens, then the companies that donate the grants to Q note will experience difficult times resulting to the donor companies' tightening of their belt. In difficult times, it is compulsory for companies to cut costs on areas where they could in order to prevent the companies' closing shop due to bankruptcy. During difficult times, also, the customers of Q notes in the Sound engineering and Music Technology market will also have to cut costs. One way of cutting costs will be to reduce the amount spent like reducing the amount of work that Q note will have to do. Q note will concentrate its efforts to generating charity funds from companies located in the trident areas composed of the London boroughs of Lambeth, Wandsworth and Southwalk. COMPETITOR Kids Company offer their services in twenty five inner city schools and children's centers at street level and post sixteen school programs like the Arches II and the Urban Academy. The company help around 6,000 children yearly. There are over 661 volunteers per year where 661 have backgrounds in social work and therapy. In fact, Exeter stated that Kids Company receive voluntary help and goods that reached over 2.5 million which is an additional amount added to the annual budget the company has. Kids Company was established so that young children will be given the opportunity to feel emotional, educational and practical support and to shield them from the harsh realities of life like inner street crimes, drugs and others. The children will be given psychotherapeutic help in an environment where empathy and attachment are strengthened between the young ones and the trusted adults. The organization focuses all its energies to helping the child that sees that a misbehaving child is a sign that he or she was hurt and is angry at the world around him or her. The staff are experts in mental health, and other emotional situations such as neglect, physical and emotional abuse, sexual abuse as well as drugs and violence. Therefore, the child is the primary client of Kids Company just like the Child is the primary client of Q Note. This financial research shows that if the competitors like kids company has been making profits for the last few years that it has existed by paying its costs like electricity, food, salaries of employees, water, telephone, and other amenities. Actually it is not called profits because the Kids company gets its funds mostly from charity which means that it receives money donations from companies and individuals whose hearts have been touched. But even if it is a non profit organization, we still have to know whether the Kids company has been getting more donations than the expenses that it has to pay. Based on their website, Kids Company was even able to open up twenty five inner city schools and children's centers at street level and post sixteen school programs like the Arches II and the Urban Academy. And the above even further states that the company has come to the aid of around 6,000 children yearly and more than there are over 661 volunteers per year where 661 have backgrounds in social work and therapy. Further proof shows that Kids Company receive voluntary help and goods that reached over 2.5 million which is an additional amount added to the annual budget the company has Also, since Arches II and Urban Academy have been existing for the past years, there it shows that the market is still open for the Q notes company to operate on the same principle of generating money funds from charitable companies and individuals. So this financial research, again, shows two more proofs that the Q notes school will be able to generate sales from donations. Since the Kids Company is very profitable, then it follows the Q note school will also be very profitable. Reference: Shattered Lives: Children Who Live with Courage and Dignity, Camila Batmanghelidjh, www.Shrinkingchildhoods.org.uk www.urbanacademy.org.uk, http://www.kidsco.org.uk/ OPERATING EXPENSES In order to generate business from its sound engineering and music technology services sector, the company has to attract customers. The company also has to attract donor companies to divert a portion of their allocated charity funds to Q note. One BIG or major expense is the advertising expense. The income statement and statement of cash flows indicates that a BIG Initial budget of 10,000.00 has been earmarked for the first month of operations. The advertising budget then is reduced to the fixed monthly operating expense amount of only 3,650.00. The company will be hiring teachers and paying them minimum wage per day. The total number of hired employees will be based the budgeted cash flows wages for the years 1 to 3. It is common knowledge that advertising informs people who have a NEED or CRAVING to be satisfied will look at yellow pages, newspaper, journal, Television, and other media for companies that will fill their needs or cravings. The customers will also look at many competing companies to determine their choice based on cost, quality and speed of service. Therefore, Q note company is on its right track when it allocated a big amount of advertising expenses. The advertisement will bring in the cash inflow needed. This is the reason why on the third year the sales has leaped very very high to the tune of 156,250 per month. According to http://en.wikipedia.org/wiki/City_of_London website, London's population is composed of 84.6% White, 6.8% South Asian, 2.6% Afro-Caribbean , 2.0% Chinese. Although the above shows that London's Africa Caribbean population is only 2.6 percent, still this small population will have an EFFECT on the peace and order of London if these homogenous group are members of the inner city crime groups. This is why Q note is so eager to pluck them out before they join the initiation rites of the inner city crime groups. According to Wikipedia the gross domestic product for the years 2002 to 2006 is as follows: Year GDP in billions of USD PPP % GDP Growth 2002 1575.906 2.0 2003 1640.829 2.5 2004 1736.377 3.2 2005 1825.837 1.9 2006 1910.818 2.2 Consumer prices inflation RPI: 3% (2004), CPI: 1.6% (2004) The Labour force in the United Kingdom is divided into the following groups: Services 46% Government 28% manufacturing/construction 24% energy 1% agriculture 1%(2004) and the United Kingdom has a Gross Domestic Product ranking of 6th place totaling $1.869 trillion with a growth rate of 1.8% per year and a Gross Domestics Product per capita of $30,0309 and inflation rate in 2006 of CPI 2.4%. The poverty rate is high at 17% in 2002 and the labour force in 2003 is 29,600,000 persons. The major industries include machine tools, industrial equipment, scientific equipment, shipbuilding, aircrafts, motor vehicles and parts, electronic machinery, computers, processed metals, chemical products, coal mining, oil production, paper, food processing, textiles, clothing, and other consumer goods. Based on the above statistical data, the Q note company will generate sales as projected by the budgeted statement of cash flows. Read More