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University of Phoenix Faculty Material
Financial Prospectus Expectations
Prepare a 1,950- to 2,500-word paper with the following components of a financial prospectus for your venture. The Financial Prospectus must include the information you provided in the Venture Concepts Paper and Venture Budgeting and Forecasting Paper.
The information from your previous assignments must be revised, as necessary, based on material covered in this class.
Organize your prospectus into the following order:
Description of Venture
Development Concept
Management Biographies
Competitive Product or Service Statement (Market Analysis)
Construction and Preopening Budget
Operating Pro-Forma (Budget)
Samples of Financial Statements to be Used
Summary of Proposed Investment Terms
Return on Investment Analysis
Statement of the Viability of the Venture as an Investment
An explanation of each component of the prospectus may be found in the description of terms below.
Description of Terms
Description of Venture
An introductory illustration of the venture, with an overview of the brand and the product or service to be offered
Details of the product or service are covered in item 4.
Development Concept
The description focuses on components that must be built or created to support the venture.
Include the components of any physical structure, equipment, or anything that requires development investment.
Management Biographies
Use one page or less to describe the background of each of the principle owners.
If this venture requires special technical expertise, include the biographies of whoever is going to bring this needed expertise to the organization.
Competitive Product or Service Statement
A market analysis to show how this venture’s product or service competes with similar products or services in its market
Include how the product or service may be produced efficiently by this venture to achieve targeted profit margins.
Construction and Preopening Budget
The budget in the virtual organization, Kudler Foods, may be used as a model for this portion.
Include all of the costs associated with getting the venture to the point of performing its first sale. The budget, however, must include enough working capital to pay for its operations until the net profits may cover these expenses.
Operating Pro-Forma
The operating budget for the first 12 months that this venture will be operating after startup and training periods
If the venture requires phased operations when it first opens, these first few months need not be included in the pro-forma so that the pro-forma may illustrate a typical 12-month period as a new venture.
Samples of Financial Statements to be Used
An inventory of the financial statements that will be used to measure the performance of the venture, using data from the pro-forma
Include an Income Statement, Balance Sheet, and any other financial statements that would be significant and appropriate to illustrating the success of this venture.
Summary of Proposed Investment Terms
A description of how investors will benefit from this venture
The capitalization plan of Kudler Foods virtual organization shows how the venture capital partners will receive there investment back as soon as 80% of the venture’s net profits may pay it, and then 10% of the net profits of the venture until they are bought out or the venture is dissolved.
A description of what levels of investment will be accepted, if there are minimum or maximum levels of investment.
Privately held ventures usually offer membership units in a limited liability company at amounts equal to approximately 3% of the total startup cost, or whatever calculates to a round number such as $10,000 or $50,000.
Publicly traded ventures offer shares of stock typically offered at a price that is the value of the venture once it is operational divided by the amount of shares to be in inventory, which is usually 1,000,000.
Return on Investment Analysis
An illustration of how much investors will earn on the money that they invest in this venture
This analysis typically begins with a payback analysis, which illustrates how soon the investors will be paid back their initial investment.
After illustrating how soon the investor will be paid back and what dividends will be received according to the pro-forma, the actual ROI is expressed as a percentage using the following calculation: [annual dividends] / [initial investment].
Statement of the Viability of the Venture as an Investment
The selling statement that convinces venture capitalists and banks to invest in or loan money to the venture
Include statements that confirm the feasibility of the pro-forma and statements that confirm how realistic the startup budget is.