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Fashion Startup's Profitability, Risk, and Liquidity AnalysisBusiness Start-Up

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Introduction - Fast Fashion Startup's Strategies for Quick, Affordable Designs

Contextual background

The study is mainly based on a start-up company that is mainly based in the fashion industry. The main aim of this trendsetter which is a big fashion company is “fast fashion” which is mainly less expensive and quicker for shipping and manufacturing methods and their methods. Based on that aspect, this coupled has mainly increased the purchasing power of the consumer and the latest style of fashion that helps in encouraging instant gratification (Amirrudin et al. 2017). The overall evaluation is mainly based on the demonstration of profitability, risk, marketing, liquidity, working, and making division. All of those parts have been evaluated in this summary portion.


Figure 1: Marketing

From the above pie chart of this company, it can be stated that the geographical split has been increased with a potential sales and the overall sales of this are more than 955200. The geographical region selection is one of the important aspects for increasing the marketing of the products that also helps in improving the target of the advertising of the products. For that reason, the company has selected some of the major places in the UK mainly including Northern Ireland, the Midlands, London, and Northern England. The above pie chart has shown that in Scotland the sales are on average 219696 which is 23%. In N. Ireland the overall sales are 191040 that are more mainly 20%. In Wales and N. England, the sales are 114624 which are 12%. In Midlands, the sales are 95520 which are 10% and in London, the sales are 219696 which are 23%. Based on this evaluation, it can be stated that in London and Scotland the sales are too high (Biondi and Bracci, 2018). However, in Midlands, the sales are too less. Due to that reason, the demand for the products is too high in that place which helps in advertising their products with a marketing budget.

Risk and profitability

From the above figure, it can be stated that the target profit of this company is an average sector but the target profit has met 1500000. The profit section also has met the target profit. In that case, the net profit that has expected is 333138.350. But in that case, the target profit has met 150000. This breaks down has happened because the quantity of the soldering items has been decreased that is 47760 to 34401.988. However, the sales revenue has also decreed from 23 to 20. Due to that reason, the target profit was down from the expected profit for including all of those aspects.

Based on the annual report, it can be stated that their marketing region is too high that is one of their greatest opportunity but another risk is that the sales quantity is too lees that make another risk factor. The variable expected margin safety is 47760 and the fixed variable is also 47760. However, the margin of safety is expected 50% and the best case is 59%.

From the above figure, it can be stated that the marketing selling price is an average of 40 dollars and the marginal cost is more than 34 for making the selling price (Helal et al. 2018).

Due to that reason, the company needs to focus on selling and marketing which helps in reducing the overall financial risks that help in increasing the profit numbers (Niinimäki et al. 2020). However, from the what-if analysis, it can be stated that they need to make their buying decision for increasing their profit margin.

From the above figure, it can be stated that the current ratio of this company is 87884.3 after their overall cost and savings. The total closing balance is 47760. The overall closing balance based on trade receivable is 642419 and the trade payable budget is 43100. Due to that reason, the company needs to arise more than 100000 for the additional finance.

Working capital

The company needs to make the proper decision and needs to less its overall directory cost which helps in saving their extra cost from the “what-if” analysis (Breuer et al. 2019). The company also needs to increase their product sales for improving its sales and the “what-if” analysis has shown that they need to implement the proper decision that helps in improving the business development.


The company needs to improve their excising cost for some major savings that helps in improving its profit margins. However, they also need to improve their liquidity ratio which also helps in improving their overall development (Reale, 2019). On the other hand, the company needs to focus on marketing to fulfilling the customer needs and improve their business.

Buy or make a decision

The bamboo shirt helps in promoting their overall business and helps in improving the cash flow structure. Due to that reason, they need to make their investment in making the new bamboo shirts that help improve their business development because it has made a great demand in the UK market (Shaari and Hong, 2018).

The trendsetter needs to consider making the buying decision because they need to develop their business and marketing that helps in improving their overall development (Manokaran et al. 2018). On the other hand, for fulfilling the target market they need to make their buying decision.

Investment decision

The trendsetters also need to reject the investment proposed based on the IRR and NVP criteria because they have no investment in their figure. The NPV shows that the figure is £9,090.91for not investing and IRR that is 7% for not investing.


Conclusively, it can be stated that the company needs to focus on their business trends for making the bamboo shirt that has a great demand in the UK market. However, they also need to improve their target market and needs focus on the customer needs and future plans. Moreover, for reducing the risk factors they need to decrease their excessive cost and need focus on the liquidity ratio for improving the business needs. Including, all of those aspects, it can be stated that the company can improve their competition and economy rather than in last 5 years. Also, they can face a lot of trading environmental risks rather than in the last 5 years.


Amirrudin, M.S., Abdullah, M. and Saleh, Z., 2021. Voluntary and compulsory integrated reporting: Evidence on reporting quality. Journal of Emerging Economies & Islamic Research, 9(3), pp.67-83.

Biondi, L. and Bracci, E., 2018. Sustainability, popular and integrated reporting in the public sector: A fad and fashion perspective. Sustainability, 10(9), p.3112.

Breuer, M., Leuz, C. and Vanhaverbeke, S., 2019. Mandated financial reporting and corporate innovation. National Bureau of Economic Research.

Helal, G., Ozuem, W. and Lancaster, G., 2018. Social media brand perceptions of millennials. International Journal of Retail & Distribution Management.

Manokaran, K., Ramakrishnan, S., Hishan, S. and Soehod, K., 2018. The impact of corporate social responsibility on financial performance: Evidence from Insurance firms. Management Science Letters, 8(9), pp.913-932.

Niinimäki, K., Peters, G., Dahlbo, H., Perry, P., Rissanen, T. and Gwilt, A., 2020. The environmental price of fast fashion. Nature Reviews Earth & Environment, 1(4), pp.189-200.

Reale, M., 2019. Digital market, bloggers, and trendsetters: The new world of advertising law. Laws, 8(3), p.21.

Shaari, A. and Hong, T.T., 2018. Evolution in fashion retail: Comparing fashion speciality store and department store in Malaysia. International Journal of Academic Research in Business and Social Sciences, 8(9), pp.1910-1918.

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