Emma's Stock Valuation 2009

ExecutiveSummary. Group 4.

Part I

Being Emma's financial analyst we would suggest that in Part 1 of the question,

The remaining cost has been apportioned by ratio between the number of customers in each restaurant times the costs. (75:25)

* The cost in revenue per customer in Kitchen and Building has been calculated as per the ratio between the contribution per restaurant and the total contribution.

Part II

The contribution as per the respective restaurants deducted from the expenses from their segments gives us the profit per customer. The profit margins in Gourmet offering is much higher that Basic and thus could be an opportunity for a higher profit in the balance sheet if the costs are reduced or the customer base is increased.

Part III

After calculating the contribution from every segment we find that the highest profitable segment in Basic offering is from the Teen segment amounting to £ 417.14 and in the Gourmet offering is £371.30. On the other hand the lowest profitable segment is the Basic offering in Couples and in the Gourmet offering is Teens with no market and hence 0 contributions.

The suggestion to transfer 10 customers from one segment to another, after intense and thorough analysis, would be from Business Basic to Couples Gourmet.

Segment | contribution profit (a) | Number of customers(b) | (a*b) |

Couples Gourmet (x) | 9.23 | 10 | £92.3 |

Business Basic (y) | 2.53 | 10 | £25.3 |

profit (x-y) | | | £67 |

Table 1.1

Here, if we made the above transfer we would get a profit of £67.

Alternatively,