Riwan Breeders Chr Will Supply Difficult To Find Tropical Fish Accounting Essay

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Riwan Breeders (CHR) will supply difficult to find tropical fish to people having aquariums and they do not search out such fish from neighbouring pet shops and CHR provide such fish to clients door wherever in the United Kingdom within 1 to 2 day. 

CHR also supplies fish to fish retailers within the neighbouring vicinity.  CHR supplies an expediency and diversity which can't found in the conventional tropical fish trade business.

Riwan Breeders' asset consists of livestock watering troughs and aquariums, the containers and channels are covered in an insulated steel building.

CHR will be an individual ownership possessed by the founder Rizwan.  Mr. Rizwan planned to run the company fully by its own in first 2years and as sales boosts he add a broad supporter to assist with all phases of actions.

The major Products of Riwan Breeders are to supply exceptional tropical fish belonging to family Cichlidae; these fish are recognized and meant for their colourful look and attention-grabbing with belligerent activities 

CHR decided to bread up to 30 separate cichlid species, in count CHR will bring in fish that do not willingly breed in incarceration.

CHR's major market fragment are Internet user, who live in UK and own aquariums. On the other hand potential clients include tropical fish merchants and daily walk in clients.  Fish raring is the 2nd most fashionable hobby in the UK while photography still number 1st.

Rizwan guess that at the end of year 2010 there will be roughly 7.00 million Internet users who live in UK and own an aquarium.  It is a very conventional guess.  Rizwan assess that 5.00% (350000) of these consumers will view CHR site in 1st year time and that 2.50% (8750) of those possible clients will essentially buy fish

The CHR's target two market sections within the fish hobbyist business, which are

Direct sale of tropical fish to collectors via online

Sales to fish retailers with in the CHR's local area 

CHR's main market section is internet users who lives in UK and own an aquarium

As for as the Financial Projection concerned, for the building and for equipments expenses required, and the expenses will be sponsored by an sponsor bank as a loan, while a small owner investment of preliminary catalogue and apparatus.


The CHR's most important objectives are

Find a fast reliable shipping service

Sales of £10000 per month

Maintain an inventory turnover ratio of six


Riwan Breeders (CHR) will supply hard to find tropical fish from the scientific family Cichlidae to aquarists who do not have access to these fish through local pet stores.  CHR decided to bread up to 30 separate cichlid species, in count CHR will bring in fish that do not willingly breed in incarceration. CHR will ship live fish to its clients' doors anywhere in the continental United Kingdom within one to two days. 


Efficiently breed several species of tropical fish.

Quickly and reliably deliver the fish to clients.

Develop a strong reputation within the fish keeping community.

Ensure that all large search engines link to CHR site


Riwan Breeders will be a privately-owned tropical fish breeding business.  Rizwan will offer rare cichlid species to clients throughout the country.  CHR clients do not have access to the species Rizwan offer through their local fish shops.

Riwan Breeders will consist of eighty 150 gallon livestock watering troughs and forty 40 gallon aquariums; totalling 13600 gallons of water.  The containers and channels will be covered by an insulated steel building built on a concrete slab.  Breeding stock will be housed in the 150 gallon troughs fertilized eggs will be moved from the troughs to the 40 gallon aquariums prior to hatching in most cases.  The location of the business is undetermined.


CHR start-up costs include expenses for the building purchase and for expensed equipment.  The start-up costs will be financed by an angel investor a bank loan and a small owner investment of initial inventory and equipment.  The assumptions are shown in the following table.



Start-up expense

Legal £500

Stationery etc. £50

Insurance £500

Expensed equipment £25000

Other -

Total start-up expense £26050

Start-up assets

Cash required £40000

Start-up inventory £900

Other current asset -

Long-term asset £35000

Total asset £75900

Total requirement £101950

Start-up funding

Start-up expenses to fund £26050

Start-up assets to fund £75900

Total funding required £101950


Non-cash assets from start-up £35900

Cash requirements from start-up £40000

Additional cash rose -

Cash balance on starting date £40000

Total assets £75900

Liability and capital


Current borrowing -

Long-term liabilitie £42360

Accounts payable (outstanding bills) -

Other current liabilities (interest-free) -

Total liabilitie £42360


Planned investment

Owner £9590

Angel investor £50000

Additional investment requirement -

Planned investment (total) £59590

Loss at start-up (start-up expenses) (£26050)

Capital (total) £33540

Capital and liability (total) £75900

Funding (total) £101950


CHR will be an individual proprietorship owned by Rizwan


From the family Cichlidae, Riwan Breeders will provide rare tropical fish.  The colourful appearance and interesting aggressive behaviour of these fish are well known. The fish will be sold as juveniles ranging in length from one to four inches.  As adults some of these species can grow to almost two feet in length the average adult will be around eight to ten inches long.  The shipping of adult sized cichlids is impractical due to their size.


In online business there are other sellers who also offer tropical fish and some common cichlids but the important difference between them and CHR is that, Rizwan offers the less common cichlids that the other sellers can't.

We know that if a customer looking to buy a particular fish online, they may have to go to another site to understand upon the concerns and performances of the fish, they are interested for buying and then again go back to an other site to buy the fish but CHR will offer both information on the fish species.


As CHR develops, Rizwan offer live plants and other kinds of curious cichlids, more over CHR also offer newly revealed species of South American catfish and probably some more familiar cichlid species


CHR's major market fragment are Internet user, who live in UK and own aquariums. On the other hand potential clients include tropical fish merchants and daily walk in clients.  Fish raring is the 2nd most fashionable hobby in the UK while photography still number 1st.

Rizwan guess that at the end of year 2010 there will be roughly 7.00 million Internet users who live in UK and own an aquarium.  It is a very conventional guess.  Rizwan assess that 5.0 % (350000) of these consumers will view CHR site in year 1 time and that 2.50 % (8750) of those possible clients will essentially buy fish


Internet clients: the majority of CHR clients will be Internet users.  Research estimates that this segment consists of seven million Internet users.

Tropical fish retailers: these clients consist of six tropical fish shops within 100 miles CHR business.  While these clients are few they will buy considerably more fish per order than Internet clients.

Market Needs

Tropical fish enthusiasts are on the Internet looking for information on particular species and places to obtain them.  Most people do not have access to retail fish shops that regularly carry a large number of different cichlid species.  Some of the most beautiful and interesting cichlids cannot be found in these shops at all.  CHR will supply these hard-to-find species to hobbyists.

Retail fish shops do not have access to the species that clients may ask for and CHR supplies.  CHR will sell CHR fish to retail shops within 100 miles of the breeding centre.  The fish will be sold to the shops at wholesale prices.


Competition in the online fish-selling industry is based on customer satisfaction.  If the ordered fish arrives as advertised and in good health the customer is satisfied and if a business can consistently supply customer satisfaction through quality product and quick service the consumer will become loyal and regard product price as secondary in importance


CHR decided to market to the tropical fish leisure pursuits who are looking for hard to find cichlid species and Rizwan will sell to them firstly.

CHR product sold primarily over the internet to clients within the UK and these clients are looking for interesting and colourful examples of cichlid species that are not available in their local fish shop.

CHR scheme is to offer exceptional and unusual cichlids via the internet.  Via internet clients become able to gaze through internet pages for information on a scrupulous cichlid species and then they can make their mind to pay for the fish


CHR economical edge will be CHR

Site design

On site product supply

Wide variety within the cichlid family


CHR sales forecast assumed that no changes in cost or price and it are a sensible supposition for the last few years.

CHR expects a jump in sales in 2010 due to increased maturity of CHR breeding stock and Rizwan expect CHR sales to rise fairly in 2011.

CHR sales will level off in the latter part of the first year due to CHR sales reaching maximum breeding capacity and capacity will increase with time. Rizwan expects the product line to change with CHR client needs and desires

Forecasting for Sales

Year 1st 2nd 3rd

Unit sold

Sold through internet sale 14700 35000 40250

Sold to retailers 3900 4800 6000

Other 0 0 0

Total unit sold 18600 39800 46250

Unit prices year 1 year 2 year 3

Internet sale £6.00 £6.00 £6.00

Retailer £1.90 £2.00 £2.00

Other £00 £00 £00


Internet sale £88200 £210000 £241500

Retailer £7400 £9600 £12000

Other - - -

Total sale £95600 £219600 £253500

Direct / unit cost (year) 1st 2nd 3rd

Internet sale £50 £50 £50

Retailer £50 £50 £50

Other £00 £00 £00

Direct cost of sale

Internet sale £7350 £17500 £20125

Retailer £1950 £2400 £3000

Other - - -

Subtotal direct cost of sale £9300 £19900 £23125


CHR will be a small business owned by Rizwan.  He will be involved in all aspects of the business until it grows beyond his ability to manage.  CHR one employee will have important responsibilities and will be paid accordingly.  The atmosphere of the business will encourage free thinking and teamwork.


Year 1st 2nd 3rd

Production personnel

General assistant £18000 £18000 £24000

Second general assistant - - £18000

Other - - -

Subtotal £18000 £18000 £42000

Sale and marketing human resources

Name / Title - - -

Other - - -

Subtotal - - -

General / administrative human resources

Owner £36000 £48000 £60000

Other - - -

Subtotal £36000 £48000 £60000

Other employees

Name / Title - - -

Name / Title - - -

Name / Title - - -

Other - - -

Sub-total - - -

Total employees 2 2 3

Total payroll employees £54000 £66000 £102000

The following topics outline the financial plan for Riwan Breeders.


The subsequent table illustrates the general assumptions,


Year 1st 2nd 3rd

Plan month 1 2 3

Current interest rate 10.0% 10.0% 10.0%

Long-term interest rate 10.0% 10.0% 10.0%

Tax rate 25.4% 25.0% 25.4%

Other 0 0 0

BREAK EVEN (analysis)

CHR break even analysis is calculated costs required to keep the business running.  Payroll mortgage payments utilities marketing Internet costs accounting expenses and expenses involved with aquarium water conditioning factor into CHR break-even analysis.  Rizwan guess total monthly fixed costs as exposed under,

Break-even Analysis

Monthly unit break even 1110

Monthly revenue break even £5705


Average /unit revenue £5.14

Average /unit variable cost £50

Approximated monthly fixed cost £5150


Riwan suppose a high extent of effectiveness from this course of action, and high fringes and account return inbuilt to the industry.  Profit in the first year (2009) will be lower than projected potential due to the immaturity of two-thirds of the breeding stock and low name recognition within the industry.  By September 2010 all of the breeding stock will have matured and 100% of the projected profit potential will be realized.

Profit &Loss

Year 1st 2nd 3rd

Sale £95600 £219600 £253500

Direct costs of sale £9300 £19900 £23125

Production payroll £18000 £18000 £42000

Other - - -

Total cost of sale £27300 £37900 £65125

Gross margin £68300 £181700 £188375

Gross margin % 71.44% 82.74% 74.31%

Operating expense

Sale and marketing expense

Sale and marketing payroll - - -

Advertising/promotion £1440 £2880 £4320

Travel £1200 £1800 £2400

Miscellaneous £1800 £1800 £1800

Total sales and marketing expense £4440 £6480 £8520

Sales and marketing % 4.64% 2.95% 3.36%

General / administrative expense

General / administrative payroll £36000 £48000 £60000

Sales, marketing /other expense - - -

Depreciations £12000 £12000 £12000

Leased equipments - - -

Utility £1260 £1300 £1400

Rent - - -

Payroll tax £8100 £9900 £15300

General and administrative expense (other) - - -

General and administrative expense (total) £57360 £71200 £88700

General and administrative % 60.00% 32.42% 34.99%

Other expense

Other payroll - - -

Consultant - - -

Contract/consultant - - -

Total other expense - - -

Other % 0% 0% 0%

Total operating expense £61800 £77680 £97220

Profit before interest and taxe £6500 £104020 £91155

EBITA £18500 £116020 £103155

Interest expense £3873 £3230 £2559

Taxes incurred £412 £25198 £22518

Net profit £2215 £75593 £66078

Net profit/sale 2.32% 34.42% 26.07%


As CHR breeding stock mature and CHR reputation becomes known the business will experience increased cash flows.  Rizwan may expand at this time with the construction of another building adjacent to the original structure.

Cash Flow

Year 1st 2nd 3rd

Cash received

Cash received from operation

Cash sale £57360 £131760 £152100

Cash from receivable £29351 £76310 £98248

Subtotal cash from operation £86711 £208070 £250348

Supplementary cash received

Sale Tax VAT HST/GST Received - - -

Current borrowing (new) - - -

Other liabilities (new, interest-free) - - -

Long-term liabilities (new) - - -

Sale of other current asset - - -

Sale of long-term asset - - -

Investment received (new) - - -

Subtotal cash received £86711 £208070 £250348

Expenditure year 1st year 2nd year 3rd

Expenditure from operation

Cash spending £54000 £66000 £102000

Bill payment £24437 £65049 £73300

Subtotal spent on operation £78437 £131049 £175300

Additional cash spent

Sales tax VAT HST/GST paid out - - -

Principal repayment of current borrowing - - -

Other liabilities principal repayment - - -

Long-term liabilities principal repayment £6708 £6708 £6708

Other current asset purchases - - -

Long-term asset purchases - - -

Dividend - - -

Subtotal cash spent £85145 £137757 £182008

Net cash flow £1566 £70313 £68340

Cash balance £41566 £111878 £180218


This chart shows the planned balance sheet for Riwan breeders


Year 1st year 2nd year 3rd


Current asset

Cash £41566 £111878 £180218

Accounts receivable £8889 £20419 £23572

Inventory £1183 £2530 £2940

Other current asset - - -

Total current asset £51638 £134828 £206730

Long-term asset

Long-term asset £35000 £35000 £35000

Accumulated depreciation £12000 £24000 £36000

Total long-term asset £23000 £11000 (£1000)

Total asset £74638 £145828 £205730

Liabilities and capital year 1st year 2nd year 3rd

Current liability

Payable Accounts £3230 £5536 £6068

Borrowing current - - -

Current liability (other) - - -

Current liability (subtotal) £3230 £5536 £6068

Long-term liabilitie £35652 £28944 £22236

Total liabilitie £38882 £34480 £28304

Paid-in capital £59590 £59590 £59590

Retained earning (£26050) (£23835) £51758

Earning £2215 £75593 £66078

Total capital £35755 £111348 £177426

Total liabilities and capital £74638 £145828 £205730

Net worth £35755 £111348 £177426


The subsequent chart sketch some of the most vital ratios from the breeding of pets industry


Year 1st 2nd 3rd Industry Pro

Sales growth 0% 129.71% 15.44% 3.52%

Percent of total asset

Accounts receivable 11.91% 14.00% 11.46% 8.54%

Inventory 1.58% 1.74% 1.43% 11.36%

Other current asset 0% 0% 0% 30.17%

Total current asset 69.18% 92.46% 100.49% 50.07%

Long-term asset 30.82% 7.54% -0.49% 49.93%

Total asset 100% 100% 100% 100%

Current liabilitie 4.33% 3.80% 2.95% 24.29%

Long-term liabilitie 47.77% 19.85% 10.81% 29.26%

Total liabilitie 52.09% 23.64% 13.76% 53.55%

Net worth 47.91% 76.36% 86.24% 46.45%

% of sale

Sales 100% 100% 100% 100%

Gross margin 71.44% 82.74% 74.31% 59.45%

Selling general & administrative expense 74.41% 48.60% 48.18% 37.30%

Advertising expense 1.51% 0.11% 0.14% 0.42%

Profit before interest and tax 6.80% 47.37% 35.96% 2.80%

Main ratio

Current 15.99 24.35 34.07 1.31

Quick 15.62 23.90 33.58 0.63

Total debt to total asset 52.09% 23.64% 13.76% 65.25%

Pre-tax return on net worth 7.35% 90.52% 49.93% 3.14%

Pre-tax return on asset 3.52% 69.12% 43.06% 9.04%

Additional ratio Year 1st Year 2nd Year 3rd

Net profit margin 2.32% 34.42% 26.07% n.a

Return on equity 6.20% 67.89% 37.24% n.a

Activity ratio

Account receivable turnover 4.30 4.30 4.30 n.a

Collection days 56 61 79 n.a

Inventory turnover 8.36 10.72 8.45 n.a

Account payable turnover 8.57 12.17 12.17 n.a

Payment days 27 24 29 n.a

Total asset turnover 1.28 1.51 1.23 n.a

Debt ratios

Debt to net worth 1.09 0.31 0.16 n.a

Current liab. to liab. 0.08 0.16 0.21 n.a

Liquidity ratio

Networking capital £48407 £129292 £201162 n.a

Interest coverage 1.68 32.21 35.62 n.a

Additional ratio

Assets to sale 0.78 0.66 0.81 n.a

Current debt/total asset 4% 4% 3% n.a

Acid test 12.87 20.21 29.70 n.a

Sales/net worth 2.67 1.97 1.43 n.a

Dividend payout 0.00 0.00 0.00 n.a