In the context of statistical analysis in finance assignment, BakeIT, a local company based in Kennesaw, GA, specializes in selling soft-baked cookies and trail bars. They distribute their products both directly to customers in the Kennesaw area and through independent shops in various cities. The owner of BakeIT has approached us with an opportunity to acquire the company. Our task is to assess the viability of this acquisition by examining historical sales data spanning three years. This analysis will help us make an informed decision about investing in BakeIT.
Over the three-year period, we have observed key trends and insights from the historical sales data:
- Top Products: Soft baked cookies have consistently been the top-selling category for BakeIT. Notable soft baked cookie varieties include Brownie Chip in 2020, Fudge Peanut Chunk in 2021, and Cranberry White Chocolate in 2022.
- Sales Performance: In 2022, BakeIT achieved its highest sales revenue for soft baked cookies, totaling $439,036.20. Cranberry White Chocolate stands out as the most profitable product in this category, generating a profit of $216,173.52. In the trail bars category, Cinnamon Raisin leads in profitability, with a profit of $140,727.62.
- Key Customer Segment: BakeIT's hometown, Kennesaw, accounts for the highest annual product orders in terms of total order price, amounting to $178,899.00.
- Pros and Cons for Investing in BakeIT: Before making a decision, we need to weigh the potential benefits and drawbacks of investing in BakeIT:
- Capital Growth Potential: There is substantial potential for capital growth by investing in BakeIT.
- Projected High Returns: Expectations indicate high returns in the coming years.
- Profitability: The company enjoys a high profit ratio compared to its production costs.
- Competitive Advantage: Investing in BakeIT would enhance our competitive position in the market.
- Risk Reduction: Diversifying our portfolio by investing in BakeIT helps in the reduction of risks.
- Capital Requirements: Increased capital requirements may be necessary for this investment.
- Supply Chain Challenges: The supply chain operation is currently cumbersome, potentially requiring optimization.
- Market Risk: There are inherent market risks associated with this investment, as with any business venture.
Recommendation: Based on our analysis and insights derived from the historical data, BakeIT appears to be a steadily growing company with increasing profit returns year over year. The financial outlook for BakeIT suggests a promising future with higher market returns. Therefore, as Perez Pops, we recommend investing in BakeIT to diversify our portfolio and gain a competitive edge over our rivals. This strategic move aligns with our goals of portfolio growth and success as Perez Pops.
Having thoroughly reviewed BakeIT's historical data, it is evident that this is a thriving company with positive profit projections for the future. While there are opportunities for improvement in supply chain management and marketing efforts, we believe that investing in this profitable venture is a prudent decision. As Perez Pops, we are excited to embrace this opportunity and look forward to the growth and success that BakeIT promises to bring.