The Return On Capital Employed ratio

This parentage figure shows to that profits generated by my business in a year are high to pay back from the money invested in my business. These sets of result tell me that I have a good financial performance in the first year of starting my business. The research I have done from the Internet and text books show that the average figure for a ROCE is between 20 -25 % for a business like fast food takes. Comparing my estimate ROCE figure it shows that my estimated ROCE as a percentage is more then double the average percentage for a ROCE figure.

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This shows to me that I have had excellent sales in the first year of trading. This data helps me to plan and see where my business will be in the future years. Looking from the first year ROCE estimated result it tells me that my business will expand as a business increase sales and investments within the business. Comparing my figures to a another business in the same market selling fast food (Mc Donalds) who are a well known company that are based world wide. Their ROCE figure is 22% currently . Comparing these figures to my estimated ROCE of 47.

12% , this show that my percentage ROCE more then double that Mc Donalds. Which show to me that I am doing well as a business in having a good financial performance in the first year of trading. This percentage shows to me for every i?? 1 of sales revenue I will get i?? 0. 26 remaining after all my direct cost and business expenses have been deducted. From looking at the Net profit Margin for the first year of trading it shows to me that I have high Net profit Margin from just the first year of trading.

This tells me that in the future years of trading my Net profit Margin will grow a few percent higher each year of trading. The money left after the deductions from the Net Profit Margin will contribute towards covering the corporation of tax within in the year paid on the profit made to Inland Revenue. The money left after tax will be my retained profit and the end the financial year. With this money I will put back into the business for re-investment in my business. Comparing my Net Profit Margin to other Fast Food outlet which are Mc Donalds with a Net Profit Margin of 15%.

I found this figure from my research from the internet. Looking at my Net Profit Margin of 26. 95% to Mc Donalds Net Profit margin of 15% it shows that I have a high gross profit Margin compared to Mc Donalds who are muti national company . This shows to me that as I progress my business in the years I will increase my NET profit Margin and will try to be as successful as Mc Donalds Comparing the ROCE,Goss Profit, Net Profit to a big muti national company (Mc -Donalds) to my sandwich shop is not a good comparison but this gives me a rough idea of where my business would stand if I was to trade.

Comparing this information will also help me in being successful as Mc Donalds. If I was to compare my financial figure with a similar business who are my competitors, this would give a more accurate compassion of my business performance with my competitors that I will be competing with. I could not find this type of information about my competitors. Which there for I used Mc Donalds financial data to give me a rough guide to my business performance. This percentage shows for every i??

1 of sales revenue I get i?? 0. 68 will remain after all the other direct expenses have been deducted. From looking at the Gross Profit Margin for the first year of trading it seems higher then other businesses who start up and have a Gross Profit Margin less then 50% or just near around 50%. This shows to me that I have a small proportion of cost and high sales. This information tells me that I have achieved a good Gross profit Margin in the first year of trading and its shows to me that sales volume will grow.

After taking the remains of all direct expenses from the Gross Profit Margin the money left will contribute towards covering the other expenses of my business. Comparing my Gross Profit Margin figures with a fast food outlet like Mc Donalds who have a Goss profit Margin of 43. 2% and my estimated Gross Profit margin of 67. 80% this shows to me that I have a higher Gross Profit Margin from the sales return than Mc-Donalds. This shows to me that I have high sales making my business a success in the future year of trading. Market Share The market that I am targeting is the local market.

I am going to target the local market because I am basing my business in a local city center. Where I expect that local people to be my target customers. The market segment of people that I am aiming my sandwiches is working class people and students. I have decided to target this segment because my business is in a area where there are many offices and shops where people work and might come in my sandwich bar for their lunch. I have also targeted student to be my customers because student from all over come into town and might drop in for lunch.

The market share I will get will be very small because I am in a competitive /k and in a large market where there are many different fast foods take away shops. I will increases my market share by competing with my competitors doing different promotion such as buy one get a drink free. I also could introduce new meal that would attract customers. Which then after few year of trading I might come popular and well known and therefore my market share will have grown and if I remained competive in the market I will gain higher market share and will come well known as McDonalds.

The disadvantage in making a higher market growth is that I will have to spend lots of money on marketing and promotion, which will affect my finance of my business in my cash flow forecast and profit, will go down. The advantage I will have of gaining a large market share will be a long-term advantage for my business of having more customers and high sales and profits. Looking at my business at from this point where I am starting I will take a big risk in competing with this big market in making my sandwich bar competitive as other fast food shops.