operations plan

Sources of Financing and Payback Period

Brave Academy is looking for investors to finance the start-up phase. The start-up costs will be approximately $100,000.00. We are offering a fifteen percent return per year on the investment over a three year period. The first year cash flow projections are provided down below. According to our projections we will be able to begin the repayment plan of initial investment after the first year of opening. At the end of the second year all investors should receive their initial investment and their return on investment. In the event we are not successful we will execute our exit plan to ensure that all investors are repaid their initial investment.

Cash Flow Projections

According to Ward (2014), “The cash flow projection shows how cash is expected to flow in and out of your business.” The cash flow projection provides an idea of how much capital investment will be needed for the business to be successful. For the investors that decide to invest in the Brave Academy, the cash projection will provide them with evidence that there will be enough money on hand to make the academy a good investment. Here is the first year’s cash flow projection.

Balance Sheet

The balance sheet is an important part of the financial plan. This section of the plan illustrates the net worth of a business at a specific point in time and also shows what a company owns compared to what they owe. The balance sheet shows a company’s assets and liabilities.

Income Statement

The income statement is one of the most important financial statements used. It shows how profitable the business is during a certain time period. Avercamp (n.d.) states, “the income statement shows revenues, expenses, gains, and losses; it does not show cash receipts nor cash disbursements.” Brave Academy’s income statement will list the expenses, total revenue, and the net income. By Brave Academy having a net income of $69,770, this demonstrates that the academy is able to use the invested and borrowed funds in a successful manner..Break Even Analysis

The break-even analysis is used to determine how much revenue is needed to equal the cost associated with making a profit. According to Ward (2014), “The breakeven analysis is especially useful when you're developing a pricing strategy, either as part of a marketing plan or a business plan.” The break even analysis for Brave Academy is as follows:

Sale Price Per Unit	$2000.00
Variable Cost Per Unit	$0
Fixed Cost	$35,625.00
Targeted Net Income	$0
Calculated Volume	17.8

In order to cover the fixed cost of $35,625, Brave Academy must have at least 18 students enrolled at $2,000 to break-even. In order to make a profit Brave Academy would have to bring in more than $35,625.

Ratio Analysis

According to BusinessDictionary.com (2014), “A ratio analysis is a financial analysis in which quantities are converted into ratios for meaningful comparisons, with past ratios and ratios of other firms in the same or different industries. Ratio analysis determines trends and exposes strengths or weaknesses of a firm.” The current ratio is a liquidity ratio that measure a company’s ability to pay short- term obligations (Investopedia, 2014). To find the current ratio you will divide current assets by current liabilities. According to Current Ratio Calculator (n.d.), “the higher the ratio, the more liquid the company is. A ratio of less than one is often considered a cause for concern.” The current ratio for Brave Academy is 15.798, with current assets being $73,070, and current liabilities being $4,625. Since Brave Academy has a current ratio of 15.798, this is a good indicator that the academy is capable of paying its obligations.

Possible Risk

By looking at the debt to equity ratio for Brave Academy which is 0.05 or 5% (total liabilities of $4,625/ shareholder’s equity of $84,770). This indicates that the company has enough assets to cover its debts. Therefore there will be little financial risk, but with the Academy being a new business there are always risk that can affect the company in the long run. Brave Academy will just have to continue to bring in enough revenue so that they can remain successful and not obtain any financial burdens in the future.

References

Avercamp, H. (n.d.). Income Statement (Profit and Loss Statement) | Explanation | AccountingCoach. Retrieved from http://www.accountingcoach.com/income-statement/explanation

Business Dictionary. (2014). Ratio Analysis. Retrieved from http://www.businessdictionary.com/definition/ratio-analysis.html

Current Ratio Calculator. (n.d.). Retrieved from http://www.online-calculators.co.uk/business/currentratio.php

Current Ratio Definition | Investopedia. (2014). Retrieved from http://www.investopedia.com/terms/c/currentratio.asp

Financial Glossary. (2011). Financial Plan Definition. Retrieved from http://financial-dictionary.thefreedictionary.com/Financial+plan

Fontinelle, A. (2014). Business Plan: Your Financial Plan | Investopedia. Retrieved from http://www.investopedia.com/university/business-plan/business-plan7.asp

Ratio Analysis Definition | Investopedia. (2014). Retrieved from http://www.investopedia.com/terms/r/ratioanalysis.asp

Ward, S. (2014). Breakeven Analysis - Fixed Costs vs. Variable Costs. Retrieved from http://sbinfocanada.about.com/cs/startup/g/breakevenanal.htm

Ward, S. (2014). Writing the Business Plan: The Cash Flow Projection. Retrieved from http://sbinfocanada.about.com/cs/businessplans/a/bizplanfinanc_3.htm

ASSETSLIABILITIES

Current AssetsCurrent Liabilities

Cash69770Accounts payable0

Accounts receivable0Short-term notes425

(less doubtful accounts)0Current portion of long-term notes0

Inventory0Interest payable0

Temporary investment0Taxes payable4200

Prepaid expenses3300Accrued payroll0

Total Current Assets73070Total Current Liabilities4625

Fixed AssetsLong-term Liabilities

Long-term investments0Mortgage0

Land0Other long-term liabilities23625

Buildings0Total Long-term Liabilities23625

(less accumulated depreciation)0

Plant & equipment27450

(less accumulated depreciation)0Shareholders' Equity

Furniture & fixtures12500Capital stock0

(less accumulated depreciation)0Retained earnings84770

Total Net Fixed Assets39950Total Shareholders' Equity84770

TOTAL ASSETS113020TOTAL LIABILITIES & EQUITY113020

For Year Ending December 31, 2015

(all numbers in $000)

Balance Sheet

Gross Sales460,800.00$

Less: Sales Returns and Allowances

Net Sales460,800.00$

Beginning Inventory-$

Add:Purchases-$

Freight-in-$

Direct Labor-$

Indirect Expenses-$

Inventory Available-$

Less: Ending Inventory

Cost of Goods Sold0

Gross Profit (Loss)460,800.00$

Advertising1,650.00$

Amortization-$

Bad Debts-$

Bank Charges180.00$

Charitable Contributions-$

Commissions-$

Contract Labor-$

Depreciation-$

Dues and Subscriptions-$

Employee Benefit Programs-$

Insurance 3,300.00$

Interest-$

Legal and Professional Fees2,400.00$

Licenses and Fees

Miscellaneous15,450.00$

Office Expense5,850.00$

Payroll Taxes4,200.00$

Postage-$

Rent66,000.00$

Repairs and Maintenance-$

Supplies4,200.00$

Telephone4,400.00$

Travel3,600.00$

Utilities4,800.00$

Vehicle Expenses

Wages275,000.00$

Total Expenses391,030.00$

Net Operating Income69,770.00$

Gain (Loss) on Sale of Assets

Interest Income

Total Other Income-$

Net Income (Loss)69,770.00$

BraveAcademy

FY Ending December 31, 2015

Other Income

Financial Statements in U.S. Dollars

Income Statement

Revenue

Cost of Goods Sold

Expenses

Start Up ExpensesCostStart Up ExpenseCost

Advertising$1,500Office Supplies$1,000.00

Books& Materials$10,000Rent & Securtity Deposit$12,000.00

Computers & Printers$16,000Salaries$24,000.00

Internet$600School Furnishing$12,500.00

Insurance$500Signage$1,100.00

Janitorial$300Supplies$450.00

License Fees$250.00Telephone$200.00

Miscallaneous$3,500.00Utilities$1,100.00

Investor Payback$15,000.00

Total$32,650.00Total$67,350.00$100,000.00