Business Plan on "Financial Summary Report: The Lemonade Stand Business"

Business Plan 4 pages (1640 words) Sources: 4

[EXCERPT] . . . .

It divides the current assets with the current liabilities. The current ratio for Juicy Lemonade's first season was 1.94 and that of the second was 5.24 and according to Bloomberg (2015), YUM's current ratio was 0.7($1,646/$2,411). This reveals that Juicy Lemonade is in a better position to pay its short-term obligations. The cash ratio of 5.24 in the second season is also higher than that of YUM, 0.4, which also indicates that Juicy is more liquid.

It is also important to compare the debt to equity ratio to measure the long-term solvency of the two firms. Juicy Lemonades financial statement shows this ratio declined significantly from the first season to the second with a drop from 0.242 to 0.12. The debt to equity ratio for YUM at the end of the period stands at 0.207($6,732/$32,521). This shows that YUM finances more with debt as compared to Juicy, as at the end of the period. Juicy Lemonade should maintain this low debt to equity ratio because too much debt financing may be translated to mean the company is risky. Furthermore, debt finance comes with too many conditions from lenders, which may be detrimental to the business.

Conclusion

The financial performance of Juicy Lemonade stand as at the end of the period is healthy and strong. Its assets generate good revenue for the business, most of its financing comes from retained earnings, and it has an impressive profit margin. Moreover, the current and cash ratios increased in the second season, portraying its liquid nature and its capability to meet its short-term obligations. However, there was significant decline in the return on equity from the first season, which may cause alarm to the shareholde
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rs. To increase its profitability, Juicy Lemonade Stand can improve its customer service to increase sales, expand its operations, and diversify to other complementary products, such as hot dogs. Instead of holding too much cash as a current asset, it should also consider new ways to reinvest it into the business in order to increase its profitability in… READ MORE

How to Reference "Financial Summary Report: The Lemonade Stand Business" Business Plan in a Bibliography

Financial Summary Report: The Lemonade Stand Business.” A1-TermPaper.com, 2015, https://www.a1-termpaper.com/topics/essay/financial-summary-report-lemonade/4495717. Accessed 29 Sep 2024.

Financial Summary Report: The Lemonade Stand Business (2015). Retrieved from https://www.a1-termpaper.com/topics/essay/financial-summary-report-lemonade/4495717
A1-TermPaper.com. (2015). Financial Summary Report: The Lemonade Stand Business. [online] Available at: https://www.a1-termpaper.com/topics/essay/financial-summary-report-lemonade/4495717 [Accessed 29 Sep, 2024].
”Financial Summary Report: The Lemonade Stand Business” 2015. A1-TermPaper.com. https://www.a1-termpaper.com/topics/essay/financial-summary-report-lemonade/4495717.
”Financial Summary Report: The Lemonade Stand Business” A1-TermPaper.com, Last modified 2024. https://www.a1-termpaper.com/topics/essay/financial-summary-report-lemonade/4495717.
[1] ”Financial Summary Report: The Lemonade Stand Business”, A1-TermPaper.com, 2015. [Online]. Available: https://www.a1-termpaper.com/topics/essay/financial-summary-report-lemonade/4495717. [Accessed: 29-Sep-2024].
1. Financial Summary Report: The Lemonade Stand Business [Internet]. A1-TermPaper.com. 2015 [cited 29 September 2024]. Available from: https://www.a1-termpaper.com/topics/essay/financial-summary-report-lemonade/4495717
1. Financial Summary Report: The Lemonade Stand Business. A1-TermPaper.com. https://www.a1-termpaper.com/topics/essay/financial-summary-report-lemonade/4495717. Published 2015. Accessed September 29, 2024.

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