Morasco wants an assessment of the financial viability of this venture.
a) Based on the data and assumptions provided, present a columnar statement of financial performance for Feb next year. This report should compare the results for both London and Paris as well as providing a combined result.
b) Show the break even sales required for the total venture in both dollar and volume terms.
c) Calculate the break even sales required for London and Paris in both dollar and volume terms.
d) Show the margins of Safety for Paris, London and the entire operation.
e) If the Australian dollar appreciated (strengthened) by 5% against Sterling and depreciated 10% against the Euro, advise Morasco what effect this would have on profits and breakeven point.
f) Comment on the viability of the venture. Be sure to include as part of your report risk of exchange rate exposure.
All working must be shown in the calculations of breakeven analysis
Clearly show the exchange rate and date of the rate