Group Information

Course - FIN 440 Section 04 Assignment # 03 Semester Summer 2011 ID # 081 637 030 # 092 0283 030 # 073 313 030 Heading - Field Assignment Date of Submission- 28th June, 2011

EXECUTIVE SUMMARY This group field assignment on a small business financial survey includes how a daily vegetable hawker finances their business. For this report we have interviewed three vegetable hawkers from Mirpur-1 and Banasree Bazar and Agargaow. After collecting and analyzing the data, we have found that the financial perspectives of the three hawkers are almost more or less the same, i.e. funds with which they have stared their business, equity funds and debts, risks, expansion plan, etc. So for the data collection and analysis part we have randomly selected ones information. From the analysis we have found that three of the vegetable hawkers are in this business for a long period of time and each of them have started their business with their personal funds, which means Debt funds are nil. So, they are quite flexible with their business. Whatever they earn goes in their pocket, except of some expenses. It is also found that besides investing for purchasing the raw materials they carry extra Tk.150 to Tk.200 cash for other activities. They price of the goods they sell is determined by the market and their Cash Conversion Cycle is very efficient, i.e. they are recovering their cash on a daily basis with profits. Besides they have got very little scope of expanding their business as their profit margin is low. The daily hawkers who we have interviewed have desire to expand their business. Though this is their only business, three of them mentioned that they are quite happy and but they want to earn more for the better life.

DATA COLLECTION We have interviewed two vegetables hawkers (from Mirpur-1, Agargaow and Banasree Bazaar) based on their business and financial matters.Summery of the collection of interviews: SL 1 2 3 4 5 How long is he/she in business? How much funds did he start with? Today their funds are? Equity or Debt funds? Repayments and Terms, Interest rates? How do they carry out their business/trade? a. What time do they start? b. How much cash they invest in the morning? Mizanur Rahman Area: Mirpur-1 2 years Tk. 500 cash Tk. 2100 Equity None Alam Miah Area: Banasree 4 years Tk. 800 cash Tk. 2300 Equity None Motin Agargaow 2 years Tk. 600-700 1800 Equety None

6am.-7am. Invest all his TK.2100

7am. Invest all his TK 2300

c. How much cash do they carry with them? Why?

He keeps 100 tk with him in the morning as changes & others expenses. Mirpur as he lives near by.

He keeps 80-100 tk with him in the morning as changes. Banasree as he lives near by.

d. Where do they sell? Why?

e. How do they price their goods? f. How long does it take them to recover cash? What are the risks they face? a. Business risks?

Keeping a little profit. 9-10 hours. Risk of eradication

Price is determined by the market. One day. May be unable to sell whole goods some day.

6am On Friday or holiday he invest all his money around 2600 tk but today he invest Tk. 1800 He keeps 50-80 tk with him in the morning as changes & others expenses. Agargaow Colony or in front of Agargaow bazer. Price is determined by the market. One day. Unable to sell the whole product in a day, or bad

weather. 7 b. Mastaans /Criminal risks? Expenses in carrying out their business? a. Business Expenses? b. Personal Expenses? Earnings Net Income? Can they increase their business? How? What would they need? Is it their only business? Is it enough to support them? Through out the year? Police, Mastaans Around 100 tk for rent of ven. 40-50 tk 200-300 tk He wishes to buy a fix place in a bazaar , Which will require 5000- 8000 taka. Yes, this is his only business and it is enough to support him through out the year. Police, Mastaans Tk.100 to Tk. 200 50 tk 300-400 tk Possibilities to increase his business by purchasing a space in a bazaar. Yes, it is his only business and sometimes it is not enough to support him. Police, Mastaans 100-150 Tk. 50 Tk. 200-400 Yes he can, by buying a place in bazaar but it is too expensive. Yes, it is not enough to support family. So his wife and daughter work in different house.

8 9

10

After gathering the three interviews, we have randomly selected Alam Miahs interview to do our financial analysis, who is running his business in Banasree. The statistics showed that almost three of the vegetable hawkers have more or less the same kind of information pattern. Limitations: Scope: Due to time constraint, we could not do thorough analysis of the interviewed data. The group has to convince the hawkers for the interview session. As this report is written on the basis of interview there is a question of reliability of the interview, provided by the hawkers. As the hawkers run day to day business, they are very busy during their business time and they did not want to give enough time for the interview session. The hawkers were not willing to disclose their proper information (income source).

DATA ANALYSIS
Business started with:

 Cash amount of TK. 800. No Equity or Debt. Present Day: Net Working Capital = Current Assets Current Liabilities. Net Working Capital = (Tk. 2,300 Tk 0) Net Working Capital = Tk. 2,300 Day 1 Taka Daily Cash Equity or Debt Inventory bought Ending cash balance
2,300 0 2,300 2,700

Day 2 Taka
2,300 0 2,300 2,700

4 years back he started saving a little amount from this ending cash balance (Tk. 1000 +) to reach at his present fund Tk. 2,300.

CASH CONVERSION CYCLE

Cash Conversion Cycle is the number of days between paying for raw materials and receiving cash from selling goods made from that raw materials. The higher the number, the longer money is tied up in business operations and unavailable for other activities such as investing. Cash Conversion Cycle of this vegetable hawker:

Cash Conversion Cycle = (Days of Sales Outstanding + Days of Sales Inventory Days of Payable Outstanding) Cash Conversion Cycle = 1 day + 0 day 0 day Cash Conversion Cycle = 1 day. Income Statement Of a Daily Vegetable (Figures Taka) Net sales Cost of Good Sold Gross Profit Operating Expenses : Transportation Cost Food and Refreshment Other Expenses Total Operating Expenses 110 60 10 (180) 2,900 (2,300) 600 Hawker

Net Income

420

Net Profit Margin: Net Profit Margin = Net Income/Sales = 420/2900 = 15%

Recommendation & Conclusion

Though all hawkers business strategy is same but they can maximize their value by developing certain activities.1) They can invest more money to expand their business. 2) For expanding business, it is essential to diversify their business product to get higher profit. 3) It is better to

borrow some money with minimum interest or without interest to expand their business. 4) They must keep in mind that they should try to achieve economies of scale according to market demand. 5) For expanding business, they can hire unpaid family member to increase their sales in different location. 6) They should minimize their refreshment cost to increase profit. We think, being a poor, they are just wasting their money for smoking.