Feasibility Study

Calculations

Part 1 - Sales budget
	Quarter 1	Quarter 2	Quarter 3	Quarter 4	Year
Expected unit sales					- 0
Unit selling price($)
Total sales	- 0	- 0	- 0	- 0	- 0
Part 2 - Operating budget - Per Oil Change
Sales revenue
Variable costs
Contribution margin per oil change	0
Fixed costs
Net income	0
Part 3 Prepare income statement, balance sheet and cash flows statement
Proforma Income Statement
December 31
Sales revenue	- 0
Cost of goods sold	- 0
Gross profit	- 0
Operating expenses
Income before interest and tax	- 0
Interest Expense
Income before tax	- 0
tax expense	- 0
Net income	- 0
Proforma Balance Sheet
December 31
Assets
Current assets
Cash and equivalents
Short-term investments
Receivables
Merchandise inventories
Other current assets	0
Total current assets	0
Property and equipment
Less accumulated deprecation		Reflect negatively.
Net property and equipment	0
Other assets	0
Total assets	0
Liabiliities and Stockholders' equity
Current liabilities
Accounts payable
Accrued liabilities
Accrued income taxes
Accrued compensation payable
Other current liabilities
Total current liabilities	0
Long-term liabilities
Long-term debt
Other long-term liabilities
Total long-term liabilities	0
Total liabilities	0
Stockholders' equity
Common stock	0
Retained earnings and other	0
Total Liabilities and stockholders' equity	0
Proforma Cash Flows Statement
December 31
Cash flows from operating activities
Cash receipts from operating activities
Cash payments from operating activities
Net cash provided by operating activities	0
Cash flows from investing activities
Purchased equipment
Net cash used by investing activities	0
Cash flows from financing activities
Issurance of note payable
Net cash provided by financing activities	0
Net increase in cash	0
Cash at beginning of period	0
Cash at end of period	0
Part 4 - Calculate ratios
Ratios formula	Ratio name	Ratio type	Amount
		Liquidity
		Profitability
		Solvency
Part 5 - Capital Investment Decision
FV (future value)
N (number of years or periods)
I (interest rate)
PMT (net cash flow)	- 0
PV (present value)	$0
Present value of future cash flows from oil change	$0
Initial investment of equipment
Net present value	0

Sales Revenue (selling price per oil change by estimated sales units for the year COGS( Variable cost per oil change + fixed costs per oil change x expected unit sales) Gross Profit (sales - COGS) Operating expenses (estimate additional costs) Ex. 375,000 Income before interest and tax (Gross profit-operating expenses) Interest Expense (estimate) Ex. 27,000 Income before tax (Income before interest + tax-interest expense) Tax Expense (estimate tax rate, it is safe to use a general business rate of 20%) So take income before tax and multiply it by 20% Net Income (income before tax - tax expense)

All numbers under assets are estimated

All numbers under liabilities and equity are estimated This is a sole proprietorship so there is no stock of any kind

Cash receipts from operating activities are estimated Cash payments from operating activities are estimated and reflected negatively. Purchasing of equipment, estimate the total price of equipment to complete oil changes (reflect negatively) Notes Payable: Assume a bank loan for the business

Future Value is "0" Life of equipment stated in the deliverable Discount Rate Net Cash flows per year (net income from proforma income statement + annual depreciation = yearly net cash flows) Present Value (interest rate x number of periods x net cash flow payments x future value, 0)

Present value is from previous part Initial Investment (estimate the cost of equipment, could have done this previously in the balance sheet) (reflect negatively) Net Present Value ( present value - initial investment)