Livoria Essay

2213 Words Oct 23rd, 2014 9 Pages
Date: Jan 4, 2013
To: Paul Livoria and Sam Livoria
From: Dev Das
Introduction
Livoria Sandwiches needs to achieve growth in sales to reach $1.1 million in Net Income by 2015 while paying off its litigation payment of $500,000 by May 2015 and back taxes of $22,500 by Q1 2013. This report will analyze the two options available namely diversifying the menu or converting the business to a franchise and identify the alternative that will achieve growth targets and meet payment obligations.
Financial Assessment
Livoria Sandwiches has a good underlying business model and financial performance in 2012 except for the litigation charge (See Appendix 4). Contribution margin % was 53% compared to the industry’s 45%. This means Livoria’s costs of
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This option achieves the $1.1 million in Net Income by 2015 with the staff constraints and after paying off the litigation payment of $500,000 and back taxes of $22,500 in Q1 2013. Also there is no need to borrow cash from the line of credit at the bank as cash flow is greatly improved. Appendix 5 shows the cash flow statements for

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