FINANCIAL ANALYSIS CASE STUDY

RfyL PLC is a successful Public Limited Company. In the 2008, Lucas and Wendy handmade
their range of sports and leisure shoes and sold a limited range to local independent retailers
and to a wider audience via the internet fashion site ASOS.
In 2012, they were approached by Footlocker and Schuh, who wished to stock their footwear
in their national network of stores. Wendy and Lucas were able to automate some of their
cheaper more standard lines in order to fulfil the Footlocker orders and started renting out
the unit next to the one they had always traded from. They were able to use retained profits
from previous years in order to make the necessary investments in equipment and working
capital.
In July 2013, they signed a contract with JD Sports. This required investment in a new factory
in September 2013, with a new automated production line to produce higher volume, more
sports-focused lines. The investment in the new factory required a 3,000,000 bank loan for
non-current assets and a further 100,000 for investment in working capital.
The factory and equipment provided significant spare capacity since Lucas and Wendy
anticipated further expansion and contracts in the pipeline. They have now secured a further
contract with Debenhams, which they anticipate shall create a further 2,000,000 sales per
annum.
They require a loan from the bank to cover the investment in raw materials required to stock
up for this contract, the recruitment of more operatives and the training of new operational
staff. They also need to train existing staff in the hand-make section, since there have been
some quality issues on the Schuh order recently.
They also need to recruit a new operations Manager, since operations are becoming too
complex for them to manage; and a new contract relationship manager. They also need to
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FINANCIAL ANALYSIS CASE STUDY

invest in a new stock management and billing system; and a new accounting system. They
are looking for a loan of 250,000 in order to make these changes.
In groups of 3 or 4, you need to prepare 4-6 ratios from the financial statements attached,
and a 5-10 minute presentation to the Bank Manager to ensure that he shall agree to lend
you the 250,000 loan. Be prepared for some tricky questions, and needing to convince him
of the business ability to make prompt loan repayments.

Balance Sheet

Year ended 31st August

2013
,000

Non-Current Assets
Current Assets

Year ended 31st August

2014
,000

4,520

7,615

Stock

162

1,527

Trade Receivables (Debtors)

298

896

Cash

115

27

Current Liabilities

172

746

Net Current Assets

403

1,704

Non-Current Liabilities

3,100

Net Assets

4,923

6,219

Reserves and Equity

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FINANCIAL ANALYSIS CASE STUDY

Share Capital

2,500

2,500

Retained profit

2,423

3,719

Total Equity and Reserves

4,923

6,219

Year ended 31st

August 2013
000s

Year ended 31st

August 2014
000s

Sales Revenue

3,462

6,028

Cost of Sales

964

1,912

Gross Profit

2,498

4,116

Expenses

1,268

2,332

Profit (before tax) for the Year

1,230

1,784

Income Statement

Interest
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FINANCIAL ANALYSIS CASE STUDY

278

Taxation

28

62

Profit (after tax) for the Year

1,202

1,444

Dividends

42

148

Retained Profit

1,160

1,296

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