This is a challenging case.
Kathy had put £15,000 of her own money into the business as share capital. She had arranged for the bank to lend the company £60,000, at 10% interest, repayable in equal instalments over five years.
The tenancy agreement agreed with the brewers (who owned the land and buildings) was for five years and it cost £30,000, paid for in cash.
The outgoing tenant agreed to sell his existing trading inventories for £8,000 and various fixed assets, such as chairs, tables, ornamental copper and brass items for £20,000, also to be paid for in cash.
Behind the bars she had this sign “Please do not ask for credit as a refusal may offend”. It worked very well, she said.
The trading figures for her first year, with working papers and answers for you to check against, are available in the case study.
Once you have prepared the financials, put on your ‘Sherlock Holmes’ hat and get behind the figures.
Then advise Kathy on future stategy.