LTS Motorcycle Business Plan

Introduction

 The whole company is divided into ten departments with almost 1700 employees. LTS motors are the new made-up motorcycle company. LTS Company has much good connection with a much-reputed company. It has built up his own ultimate afford. Now it has 3 points in 3 districts. We have so many items, that means many brands of many model s motorbikes. Some remarkable products are given below.

Product Range of the LTS  Company Includes:

Yamaha FZ

Yamaha r15

Palsure

• CD Dawn
• CD Deluxe
• Pleasure
• Passion Plus
• Super Splendor
• Glamour
• Glamour PGM FI
• Achiever
• CBZ Extreme
• Hunk

Reasons for Investment

LTS Motors is looking at opportunities to cut prices in order to stay competitive. It also needs to create a more long-term revenue stream.

• Gross profit=$60m-38m=$22m
• Gross profit margin =(22/60)*100=36%
• Net Profit=$22m-$10=$12
• Net profit margin=(12m/60)*100=20%

Benefit is the sum of money left over after all expenses have been paid. There are two common benefit metrics. The disparity in sales income and direct manufacturing expenses is known as gross profit. These involve labor, equipment, and electricity costs at LTS Motors.

The other standard indicator of profit is net profit, which is obtained by subtracting fixed costs from gross profit. This capital provides a cash surplus that enables the corporation to acquire more capital while still providing a return to shareholders.

LTS Motors needs to open a storefront where they can offer their products. These would include alternate and long-term revenue streams. The expense of being out late, on the other hand, can vary.

LTS Motors needed to evaluate the expected financial benefits of both projects before the company could decide to proceed.

In the cash flow analysis of the three projects, the cash outflows are the initial investment (in year 0) and the maintenance costs (in years 1 to 3).

This cash flow represents that the new project will be helpful for the mother organization.

Investment Appraisal

A business needs to assess if an investment is worth doing – will it recover its costs, will it make savings, will it provide a profit on the original investment? Evaluating investment is very important for a business organization. If anyone makes any wrong decision in the acquisition, they will face big trouble. Now LTS Motors want to establish an out late for Bike in Bangladesh. If they set up it in Dhaka city, the initial cost will one corner. If Chittagong initial cost will 70 lacs, but if it is in Bogra, the initial cost will 50 lacs. And previous statistics says revenues of thies three out lates may differ we assume that

 There are several methods of analyzing an investment.

Payback

The most straightforward test to understand if an investment will pay for itself is to calculate its payback period. This is the time it will take for the original investment to pay for itself through savings.

The highest cost of most projects occurs at set-up. From assuming the cash flow examples, at the end of year 3, How much time they will take to reach the break down point.

Dhaka

• PB=(10000000*4)/16000000=2 years and 6 months

Chittagong

• PB=(7000000*4)/12000000=2years 4 month

Bogra

• PB=(5000000*4)/7200000=2 years and 9 months

Payback is a simple measure. It does help assess risk but does not consider the value of cash flows after the payback period. Financial forecasts are more uncertain the further they are projected into the future.

The Average Rate of Return

LTS Motors also looks for any investment to pay for itself and contribute to its profitability. One method of calculating this is the average rate of return (ARR). This shows the expected average return over the project’s life as a percentage of the original investment.

The ARR values help LTS Motors to decide if the projects will give sufficient return.

Dhaka

• ARR=(1500000/100000000)=15%

Chittagong

• ARR=(1250000/7000000)=17.86%

Bogra

• ARR=(800000/5000000)=16%

Discounted Cash Flow

A company must determine if the value of investing in one project outweighs the profit it would lose from not investing in other projects. This is referred to as “opportunity fee.”

Discounted cash flow allows a company to estimate how much capital it will earn in the future is worth now. It accounts for the impact of time on expenditure. It also demonstrates the impact of interest rates on the current valuation of potential earnings.

For eg, if a company invests £100 in a savings plan that pays 10% interest, the money would rise to be worth £110 in a year. In other words, £110 in a year is now worth £100. A comparable estimate shows that £100 over the course of a year is worth £90.90 (100 x 100/110). This is the current market price.

The discount factor for year 1 is 0.909 at a 10% discount rate.

£100 in two years has a current value of 100 x (100/110)2 = £82.60 at a 10% discount rate. Year two’s discount factor is 0.826.

The discount variables for future years are measured in the same way.

The net present value (NPV) represents the return on investment minus the project’s expenses. This will assist McCain in determining if each project is worthwhile.

At a 10% Discount Rate, the Net Present Value

Since discounting the estimated cash flows, the NPV of both schemes is equal and profitable. When designing a project, though, a company will weigh some critical considerations, such as the importance of social or environmental effects.

Internal Cost of Return on Investment

Discounted capital balance is often included in the internal cost of return (IRR). A company must determine the rate of return for which the net present value (NPV) is negative. This is contrasted to the market interest rate to see whether the investment would yield a higher return than, say, a bank deposit.

In certain cases, the IRR is measured using a calculator. Using trial and error, though, an estimate can be found. The net present value of the Dhaka, Chittagong, and Bogra scheme, for example, is barely positive when a discount rate of 12% is applied. This implies that the IRR must be slightly higher than 12%. The turbine projects’ net present value is calculated using a discount rate of 12%.

Sustainability Investment

A long-term strategy is needed for a successful enterprise. Customers, government stakeholders, like lenders, and environmental pressure organizations, such as Friends of the Earth, are among the challenges that companies must react to.

LTS Motors is still on the lookout for opportunities to cut expenses without sacrificing service for its consumers.

LTS Motors will control industry practices as a market leader. It employs corporate activities that go above what is required by law. For both the government and conservation organisations, the organization is dedicated to enhancing its environmental efficiency. It has devised a strategy to achieve all of these objectives.

Final Thoughts

A company must guarantee that the expenditures can yield a positive return. Any company’s primary aim is to maximize profits.

Suggestion For the Future Report

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