Part 1- Product life-cycle price optimization in a nutshell

 

Hi All,

I came back with an alchemy to sort out your financial planning issues. It is known that profit curiosity is inquisitive and a self-harm. So, relax and follow my modelling techniques. This is one of the reasons why I boast this as a free-to-use unprecedented Analytical model globally which outputs universal start-up business philosophies.

Points To Remember:

1.       Deferred tax planning was done adequately, and the rates are fictious. One can modify it as per their needs and the model will perform the same.

2.       Temporary difference on purchases of PPE is calculated from Net Book Value – WDV Capital Allowances rate but not tax rate. Grant accounting Method 1 or 2 are not adhered to cause this standard has its own prescribed treatment.

3.       For reporting purposes, I have used Grant accounting Method-1 and once again calculated Temporary Differences arising on depreciation only from these figures.

4.       The crux of the problem is Current taxes- I have calculated based on assumptions that PAT=/>0. So, no carryforward loss provisions are included. However, I could have implemented Current Tax to be 0 when PBT</=0 but promise to do that in the future tutorials. Also, no tax credit used.

5.       Another detrimental fact is linking. Make sure you link everything Dual Aspect wise lest Balance-sheet & Price anomalies will arise. When I first published it today morning, I did not link Land to PPE in the balance sheet and did not treat it's purchase in bank statement. I have a habit of leaving exercises because it'll give you practice. Since you all can't do the whole programming, I'd advise you to download excel, link Land to balance sheet and click solve on Solver. I'm pretty sure the results will be same. However, I'll add videos of it for understanding adjustment impacts. 

6.       Follow my inputs from videos and it will yield optimal results.

Steps To Follow:

    1.    I have programmed Solver to tally the balance sheet as main objective and Mark-up; WC Introduced & WC Repaid as variables to change. Then I have added constraints which you can find in my PFA Excel. These 2 videos will take you through the initial set-up and to discuss drawbacks: PAT & Bank have accumulated negative growth.  View/Download Excel

Adjustments after appraisal: 

2.       To mitigate negative numbers, I have optimized it further as you can see for yourself in this video. Sales, as a principal budget factor had taken its toll on our would-be factory/corporate/shop 😊 If you look at the sad part, the owners of '20 years of arduous efforts down-the-drain' company, will be left only with >1.78 Million bank drawings and the company still owes 1061$ in regard to Working Capital. Here, Banks have improved due to abnormal sales qty., but PAT remains in a deleterious situation. View/Download Excel

3.        To overcome previous PAT conundrum, I have used a different program and its outcomes are as follows: Bank balances are almost 0; negative profits have reduced and the good news is the company repaid a lucrative >16.22 Million to the shareholders 😊 Wow! However, it’s not a pragmatic approach because of the Price Per Unit discrepancies. View/Download Excel

Adjustments: Rectification of errors won't impact your program objectives

4.       To surmount price instability, I made changes to the inputs. To shed some light, my findings are excellent: Profits & Bank balances are no longer hindrances, plus, company repaid the owners overwhelmingly >20.76 Million in a span of 20 years. There is an issue however-  working capital was not introduced in the first year and after re-setting it, the results are optimal 😊 View/Download Excel

Adjustments: Rectification of Errors later on won't impact your main objective.

This is a one-page efficace demonstration to users and the objective of this is: To find Optimal price which will tally the Balance sheet irrespective of competitor’s price.

Limitations:

·         Did not include Price minimization & Profit maximization combo techniques in this. Will comply and update as early as possible during the next couple of months in Part 2. Furthermore, it's BEP Analysis is solidly compelling. Traditional BEP is a Fallacy! View/Download Excel.

This is a Dual Aspect model and inherent 100% accountability. No fallacious analysis included.

 

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Disclaimer: No CA/CEO/Employees/Lecturers/Deans/Police Etc., can claim my techniques used nor it’s resulting philosophies. This model can be used at user’s discretion and solely for Personal use only. This content and methods used cannot be replicated nor distributed as it is an infringement of Copyrights.