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A+ TUTOR QUEEN
FinalProject1.docxRunning head: FINAL PROJECT 2
FINAL PROJECT 2
Final Project: Small Business Financial Plan
Name of Student
Name of Instructor
Date
Executive Summary
Here we have introduced a fictitious small business company named “XYZ Sports Company”. The company is new and sells products related to sports like- shoes, gloves, etc. here we have calculated the Pro Forma Financial Statements including – Balance Sheet, Income Statement and also the Cash flow statement. This can help the firm to identify the growth as well as risks related to the change in the firm (Easton, et.al., 2018). The ratio analysis also helps to figure out the financial position of the firm.
Pro Forma Income Statement
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XYZ Sports Company |
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Pro Forma Income Statement for the period ending December 31, 2021 |
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Current Data of March 31, 2021 |
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Sales |
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520000 |
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Sales |
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350000 |
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Cost of Goods Sold: |
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Cost of Goods Sold: |
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Raw Materials |
170000 |
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Raw Materials |
100000 |
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Labor |
250000 |
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Labor |
200000 |
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Total Cost of Goods Sold |
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420000 |
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Total Cost of Goods Sold |
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300000 |
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Gross Profit |
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100000 |
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Gross Profit |
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50000 |
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Operating Expenses: |
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Operating Expenses: |
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Salaries |
40000 |
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Salaries |
30000 |
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Depreciation |
20000 |
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Depreciation |
10000 |
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Insurance |
12000 |
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Insurance |
8000 |
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Office Lease |
10000 |
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Office Lease |
8000 |
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Advertising |
4000 |
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Advertising |
2000 |
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Maintainance |
4000 |
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Maintainance |
2000 |
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Total Operating Expenses |
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90000 |
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Total Operating Expenses |
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60000 |
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Net Income |
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10000 |
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Net Income |
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-10000 |
Pro Forma Balance Sheet
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XYZ Sports Company |
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Pro Forma Balance Sheet for the period ending December 31, 2021 |
Current Data of March 31, 2021 |
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Assets |
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Assets |
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Current Assets |
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Current Assets |
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Cash |
40000 |
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Cash |
10000 |
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Accounts Receivable |
70000 |
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Accounts Receivable |
40000 |
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Inventory |
30000 |
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Inventory |
10000 |
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Total Current Assets |
140000 |
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Total Current Assets |
60000 |
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Fixed Assets |
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Fixed Assets |
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Machinery |
5000 |
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Machinery |
2000 |
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Equipment |
40000 |
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Equipment |
22000 |
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Total Fixed Assets |
45000 |
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Total Fixed Assets |
24000 |
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Total Assets |
185000 |
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Total Assets |
84000 |
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Liabilities |
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Liabilities |
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Current Liabilities |
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Current Liabilities |
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Account Payable |
30000 |
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Account Payable |
10000 |
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Long term Debt |
20000 |
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Long term Debt |
8000 |
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Total Current Liabilities |
50000 |
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Total Current Liabilities |
18000 |
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Long Term Liabilities |
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Long Term Liabilities |
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Loan Payment |
100000 |
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Loan Payment |
50000 |
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Total Long term Liabilities |
100000 |
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Total Long term Liabilities |
50000 |
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Total Liabilities |
150000 |
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Total Liabilities |
68000 |
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Stockholders' Equity |
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Stockholders' Equity |
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Capital |
25000 |
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Capital |
12000 |
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Retained Earnings |
10000 |
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Retained Earnings |
4000 |
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Total Stockholder's Equity |
35000 |
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Total Stockholder's Equity |
16000 |
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Total Liabilities and Stockholders'Equity |
185000 |
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Total Liabilities and Stockholders'Equity |
84000 |
Pro Forma Cash Flow Statement
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XYZ Sports Company |
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Pro Forma Cash Flow Statement for the period ending December 31, 2021 |
Current Data of March 31, 2021 |
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Cash Flow from Operataions |
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Cash Flow from Operataions |
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Payments |
500000 |
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Payments |
310000 |
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Material Purchase |
160000 |
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Material Purchase |
100000 |
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Payroll Costs |
210000 |
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Payroll Costs |
150000 |
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Other Payments |
88000 |
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Other Payments |
50000 |
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Total CashFlow From Operations |
42000 |
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Total CashFlow From Operations |
10000 |
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CashFlow from Investing |
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CashFlow from Investing |
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Equipment Purchase |
10000 |
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Equipment Purchase |
6000 |
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Total CashFlow from Investing |
10000 |
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Total CashFlow from Investing |
6000 |
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CashFlow from Financing |
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CashFlow from Financing |
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Loan Payments |
15000 |
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Loan Payments |
8000 |
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Total CashFlow from Financing |
15000 |
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Total CashFlow from Financing |
8000 |
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Net Change in Cash |
17000 |
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Net Change in Cash |
-4000 |
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Beginning Cash Balance |
23000 |
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Beginning Cash Balance |
15000 |
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Ending Cash Balance |
40000 |
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Ending Cash Balance |
11000 |
Ratio Analysis
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Profitability Ratios |
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Debt Ratio |
Total liabilities/ Total shareholder's equity |
4.29 |
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Debt-to-equity ratio |
Total liabilities/ Total assets |
0.81 |
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Long term debt to equity ratio |
long term liabilities/ total equity |
2.86 |
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Noncurrent assets to net worth |
non current assets/ equity |
1.29 |
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Liquidity Ratios |
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current ratio |
current assets/ current liabilities |
2.80 |
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quick ratio |
Liquid assets/current liabilities |
0.80 |
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Efficiency Ratios |
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ROE |
net income/shareholders equity |
0.29 |
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ROA |
net income/total assets |
0.05 |
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ROCE |
EBIT/capital employed |
0.40 |
Discussion
As we can see from the above analysis, that the increase in the sales of the introducing some new factors improved the financial condition of the firm. The net income has increased and there is a positive impact. The projection for sales and also costs by the firm results in a positive net income. The cash balance also improved and also the loan payment is completed with a profit. The financial ratios show the financial position of the firm which is also very much impressive (Robinson, 2020). The firm can repay its debts and produces enough cash for transactional purposes.
References:
Easton, P. D., McAnally, M. L., Sommers, G. A., & Zhang, X. J. (2018). Financial statement analysis & valuation. Boston, MA: Cambridge Business Publishers.
Robinson, T. R. (2020). International financial statement analysis. John Wiley & Sons.
