McPhee Distillers Case Study Analysis

Introduction

Kingsley started up a new business in the year 2014 with the title MCPHEE Distillers. MCPHEE Distillers is financed by Kinsley’s personal savings and her employer Piercy distillers, which is based on 250 common shares, with each having the price of 1000 and 500 preferred stock. The company’s objective is aimed to produce quality barrels of whiskey.(Erickson, 2016)

Problem Statement

It has been observed that company has to cut its production due to high cost of production. Thecompany is required to check its business performance and position after two years of its operations through using financial analysis. By doing so, the management can easily take decisions for the future operations.

Financial Analysis

MCPHEE Distillers, a producer of whiskey, is finding business reliability and performance through financial analysis.

Income Statement

Appendix 1 of an income Statement is prepared to analyze yearly business performance. In the beginning of year 2015; thecompany is generating a profit of 0.231429 million, having total expenses 0.518571 million. There are two assumptions for preparing this statement that the company would only pay and receive in cash and also the plant & equipment would be calculated in average. In 2016, the income statement showed a loss of 0.106071 million, which predicts that the company’s cost of production is higher than its sell price or it could have been the case that the  company was producing more whiskey barrels than its demand in the market. Thus, operating expenses were greater than the sales revenue…………………………………….

 

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