Basic Accounting Concept

In: Business and Management

Submitted By jay2keat
Words 4842
Pages 20
Asian Journal of Case Research 7(1) 2014
ISSN 1985-4579 pp:1-16 FUNDING PROMOTIONAL ACTIVITIES:
THE CASE OF JASMINE BEAUTY ENTERPRISE
Wan Sharinee Fitri Wan Yahaya1, A.K Siti-Nabiha2, Fathyah Hashim3

ABSTRACT
Established in 2008, Jasmine Beauty Enterprise (JBE) specialises in halal health and beauty products that it markets and sells in Malaysia. However, after four years of operation, the company’s founder, Jasmine, is still under pressure to sustain the business. Much of this pressure comes from health and beauty being such a competitive and volatile market, which requires JBE, a newbie in the industry, to invest heavily in brand and product promotions. Not only does JBE need to promote its products but, as customers are not really familiar with the company, it also needs to build brand trust and image. From 2008 to 2012, the company spent
RM1.2 million on marketing and promotional activities. However, sales did not increase as expected, and the lower-than-expected revenue has reduced the company’s profit margin.
There is also an issue of accrued sales, as a large amount of accounts receivables are affecting cash flow in the company, which needs to be addressed. Overall, these problems are limiting the company’s cash reserves, and its ability to grow. Jasmine felt that the company was not getting value out of the promotional activities and, as a result of JBE’s costly marketing and promotional activities, the company needs to seek a bank loan. A thorough analysis of the financial position and performance of the company is needed to ensure they are successful in obtaining a loan.

INTRODUCTION
On Tuesday, October 2, 2012, Miss Jasmine Ariff, the founder of Jasmine Beauty Enterprise
(JBE), received an important phone call from a bank officer, Mr. Harris Iskandar, about her loan request for JBE. The bank required the company to present…...

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