《SMARTSPORT公司利润分析》由会员分享，可在线阅读，更多相关《SMARTSPORT公司利润分析（15页珍藏版）》请在金锄头文库上搜索。
1、Registration number: Report on the Profitability of SmartSport Ltd1. Executive SummaryThis report is prepared to examine the profitability of fitness centre which will be run by SmartSport Ltd. Several researches have shown that the fitness and health sectors are growing moderately. Both the approac
2、hing of Olympic Games in London 2012 and the determination of government in reducing the health provision costs have stimulated awareness of health risks among the public. The indefinable economic conditions and potential competitions from the same industry and other industry increase the downside r
3、isk of the project. Using the information given, the forecasted income and cash flow arising throughout the project are obtained. The cash flow is, then, utilized to work out the beta and cost of capital by applying Capital Asset Pricing Model (CAPM). The cost of capital forms a basis for project ev
4、aluation tools. Three popular and recognized methods are used here. Net Present Value Method (NPV) shows that the project gives a positive cash flow of 911,769, Internal Rate of Return Method (IRR) indicates that the project has a return on investment of 20.58% and The Payback Period tells us the ti
5、me required to recoup the capital invested to be 5 years and 3.8 months. There are, however, many uncertainties that affect the validity of the appraisal results. Besides, assumptions made during the computation of income and cash flow might be misleading. These factors are discussed in detail in se
6、ction 7 of the report. Finally, section 8 describes our recommendations. According to the results of our analysis, the project is feasible but how to position the company to stand out among competitors is the clue to success. Continuous monitoring of the business risk is required throughout the proj
7、ect life.Registration number: 2. IntroductionWorld Health Organisation (2003) stated that physical inactivity is an avoidable risk factor for common noncommunicable diseases (NCDs) and deaths from NCDs will increase by 17% between 2005 and 2015 if there is no action to raise the public awareness of
8、the benefits of physical activity in the prevention of NCDs. With the encouragement from WHO and the incentive of reduced healthcare provision costs, prior to the awarding of the Olympic Games 2012 to London, the Governments strategy Unit and the Department for Culture, Media and Sport (2002) jointl
9、y produced a document which suggested that memberships of private clubs had increased by 21% between 2000 and 2001 and almost 3 million people are members of such clubs. This document has also shown the will of the UK Government to promote physical activity to gain health benefits. Furthermore, with
10、 estimated revenue at almost 3.6 billion and 11.9 percent of the UK population is now registered members of a health and fitness club or publicly-owned fitness facility (Leisure Database Company, 2007).3. Business Risk and OpportunitiesAccording to Gary Duncan (2008), the Britains economy has slowed
11、 down in the first quarter of 2008 as the credit squeeze tightened its grips and the credit crunch is expected to drag growth lower this year. Total services output, which health and fitness sector belongs to, rose by 0.6% compared with an increase of 0.7% in the fourth quarter in 2007. Although the
12、 slowdown was mainly due to business service and finance, there was decreased growth in most other service industry. Moreover, the advancement of technology, such as the imminent launch of the Wii Fit home fitness programme, can somehow be seen as a threat to the private health and fitness sector. S
13、imilarly, competitions may come from fitness centres that are already in the market or new entrants to the market in the future.Registration number: The Local Authority is likely to increase investment in the 2012 Olympics in the medium term, which provide a focus for a wide range of initiatives aim
14、ed at encouraging higher participation in sports and fitness activities and the forecast grow rate of health and fitness club market is around 4-5% per annum over the 2007-10 period (AMA Research, 2007). Besides, an increasingly popular emphasis on healthy living is encouraging greater use of health
15、 and fitness facilities. The HAFOS (the Health and Fitness Omnibus Survey) conducted by Leisure-net Solutions (2003) suggested that only 31 per cent of the participants felt they had sufficient exercise. However, the most encouraging discover is that 46 per cent of those who have not used a facility
16、 regularly in the past three months or more would choose to use a club or centre if they planned to increase their activity levels. The latest HAFOS (2006) found that nearly half of the sample prefers to get advice on how to lead more healthy lives at a leisure centre and/or health club. So, there is a huge potential market. How to position the club in the market is the key to success. 4. Calculation of Cash FlowsTo test the feasibility of the project, we will first have to work
