F I - FINANCE 100% ORIGINAL, PLAGIARISM FREE, & A++ QUALITY WORK
santth
finance_wk2_assignment.docRunning Head: Forecast Financials 1
Forecast Financials 6
Forecasted Financials
Forecasted Financials would help the company to estimate its performance over the first few years. The forecast income statement will make it easy to tell the forecasted income in the first few years. On the other hand, the projected statement of financial position gives a reflection of the entire future financial performance and the general nature of the business as a whole (Caux, 2005).
This is an illustration of how Kudler venture would perform. It gives an estimation of revenues and expenses and postulate of profit and loss. Going by the industry standards it is estimated that the business in the first year of operation will make the quoted volume of sales. This is based on the industry standards but an allowance for variance of 20% to the lower is provided for ( Association for Financial Professionals, 2006). The expenses likely to be incurred during the operation in the first year include wages and salaries, insurance, real estate (RE) taxes, maintenance, advertising, research and development, rents, interest on bank notes and capital venture loan. All these details are summarized in the table below.
|
|
Kudler Forecast Budget Income Statement (First Year of Operation) |
||
|
|
|
$ |
$ |
|
Sales |
|
|
3,001,115 |
|
Cost of Goods Sold |
|
|
(1,200,669) |
|
Gross Profit |
|
|
1,800,446 |
|
Wages and Salaries |
222,000 |
|
|
|
Insurance |
25,000 |
|
|
|
RE Taxes |
12,000 |
|
|
|
Utilities |
10,000 |
|
|
|
Maintenance |
25,000 |
|
|
|
Advertising |
100,000 |
|
|
|
R & D |
30,000 |
|
|
|
Rent |
24,000 |
|
|
|
Bank Loan Interest |
152,528.67 |
|
|
|
Depreciation |
36,000 |
|
|
|
Interest on Venture Capital Loan |
420,859.73 |
|
(1,057,388) |
|
Net Income |
|
|
743,058 |
The balance sheet of Kudler is expected to look as follows. It is estimated that at the end of the first year the firm will have accumulated some accounts payable and a depreciation charge against its assets.
|
|
Kudler Balance Sheet (First Year of Operation) |
|||
|
|
$ |
|
|
$ |
|
Cash |
|
|
Accounts Payable |
192,609 |
|
Accounts Receivable |
|
Accumulated Depreciation |
36,000 |
|
|
Inventory |
|
|
10 year 7.5% Long-term Loan (Bal. Fig) |
1,953,400.20 |
|
|
|
|
5 Year 15% Venture Capital Loan |
2,564,422.26 |
|
|
|
|
Cash from principal Owners |
300,000 |
|
|
|
|
Cash from Venture Capital Partners |
600,000 |
|
Fixed Assets |
|
|
Net Income |
464,446 |
|
Total Assets |
|
|
Total Liabilities |
752,446 |
The firm will acquire a 10 year 7.5% bank note of $2,100,000 which will have annual interest obligations. It will also acquire a 5 year 15% venture capital loan of $3,000,000. The schedule for the amortization is given as below.
Annual Amortization Schedule for the 10 year 7.5% Bank Note
|
|
Beginning Balance |
Interest |
Principal |
Ending Balance |
|
1 |
$2,100,000.00 |
$152,528.67 |
$146,599.77 |
$1,953,400.20 |
|
2 |
$1,953,400.20 |
$141,147.71 |
$157,980.73 |
$1,795,419.47 |
|
3 |
$1,795,419.47 |
$128,883.27 |
$170,245.17 |
$1,625,174.29 |
|
4 |
$1,625,174.29 |
$115,666.71 |
$183,461.73 |
$1,441,712.53 |
|
5 |
$1,441,712.53 |
$101,424.08 |
$197,704.36 |
$1,244,008.16 |
|
6 |
$1,244,008.16 |
$86,075.79 |
$213,052.65 |
$1,030,955.48 |
|
7 |
$1,030,955.48 |
$69,535.95 |
$229,592.49 |
$801,362.97 |
|
8 |
$801,362.97 |
$51,712.09 |
$247,416.35 |
$553,946.60 |
|
9 |
$553,946.60 |
$32,504.50 |
$266,623.94 |
$287,322.66 |
|
10 |
$287,322.66 |
$11,805.80 |
$287,322.64 |
$0.00 |
Annual Amortization Schedule for the 5 year 15% Venture Capital Loan
Annual Amortization Schedule
|
|
Beginning Balance |
Interest |
Principal |
Ending Balance |
|
1 |
$3,000,000.00 |
$420,859.73 |
$435,577.75 |
$2,564,422.26 |
|
2 |
$2,564,422.26 |
$350,838.67 |
$505,598.81 |
$2,058,823.42 |
|
3 |
$2,058,823.42 |
$269,561.36 |
$586,876.12 |
$1,471,947.29 |
|
4 |
$1,471,947.29 |
$175,218.36 |
$681,219.12 |
$790,728.17 |
|
5 |
$790,728.17 |
$65,709.31 |
$790,728.17 |
$0.00 |
Preopening Budget
The preopening budget is a n outline that will help the business to predict the total cost of opening the venture. Some of these costs are one-time. Others include initial investments, and operating costs (Bort, 2010). Te budget will also act as a checklist for documenting all resources of Kudler. The resources include those allocated for the startup.
Kudler Preopening Budget
(First Year of Operation)
|
|
Amount ($) |
|
|
Amount |
|
||
|
INVESTIGATORY |
|
|
PROJECT AND SUPERVISION |
|
|
||
|
Travel and Miscellaneous |
25,000 |
|
Development Fee |
1,000,000 |
|
||
|
Appraisal |
23,000 |
|
Travel Out-of-Pocket |
20,0000 |
|
||
|
Environmental |
13,000 |
|
Payroll |
125,000 |
|
||
|
Transportation Study |
15,000 |
|
|
SUBTOTAL |
__1,145,000 |
|
|
|
Legal |
25,000 |
|
|
|
|
||
|
|
________ |
|
PROFESSIONAL FEES & CONSTRUCTION |
|
|||
|
|
SUBTOTAL |
___101,000 |
|
Architect |
14,000 |
|
|
|
|
|
|
Reimbursable |
8,000 |
|
||
|
LAND |
|
|
Mechanical & Electrical |
38,000 |
|
||
|
Land |
588,000 |
|
Structural |
45,000 |
|
||
|
Closing Costs |
45,000 |
|
Civil |
62,000 |
|
||
|
Brokerage Fees |
28,000 |
|
Landscaping |
____34,000 |
|
||
|
Legal For Acquisition |
15,000 |
|
|
SUBTOTAL |
__167,000 |
|
|
|
Survey |
18,000 |
|
|
|
|||
|
|
________ |
|
CONSTRUCTION COSTS |
|
|||
|
|
SUBTOTAL |
__694,000 |
|
General Contract - Building |
100,000 |
|
|
|
|
|
|
Remodeling Fees |
150,000 |
|
||
|
INITIAL COSTS |
|
|
New Building Construction Fees |
1,860,027 |
|
||
|
Travel & Miscellaneous |
12,000 |
|
Bond |
9,000 |
|
||
|
Soils |
13,650 |
|
Builder's Risk |
18,000 |
|
||
|
Engineering Fees |
20,500 |
|
Building Permit & Plan Review |
28,500 |
|
||
|
Architectural Fees |
16,680 |
|
Utility Tap Fees |
10,000 |
|
||
|
Use Permit |
10,000 |
|
|
SUBTOTAL |
2,075,527 |
|
|
|
Model / Renderings |
14,250 |
|
|
|
|||
|
|
________ |
|
LAND IMPROVEMENTS |
|
|
||
|
|
SUBTOTAL |
___87,080 |
|
Landscaping : Exterior |
|
15,000 |
|
|
|
|
Landscaping : Interior |
|
17,260 |
|
||
|
INTANGIABLES |
|
|
SUBTOTAL |
_32,260 |
|
||
|
Accounting |
35,000 |
|
|
|
|||
|
Permit Expediter |
8,000 |
|
PROFESSIONAL FEES: FF&E |
|
|
||
|
Consulting Fee |
16,280 |
|
Interior Design |
78,000 |
|
||
|
Liquor License |
12,250 |
|
Kitchen |
52,000 |
|
||
|
Title Insurance |
25,000 |
|
Out-of-Pocket |
8,000 |
|
||
|
Legal |
16,250 |
|
|
SUBTOTAL |
130,000 |
|
|
|
|
|
|
|
|
|||
|
|
112,780 |
|
Furniture, Fixtures & Equipment |
729,500 |
|
||
|
|
|
|
|
|
Equipment: General Building Systems |
25,000 |
|
|
FINANCING FEES: CONSTRUCTION |
|
Equipment: Operating |
35,000 |
|
|||
|
Interest |
573,388.4 |
|
Supplies |
628,000 |
|
||
|
Taxes |
272,670.3 |
|
Pre-Opening |
145,000 |
|
||
|
Insurance |
25,000 |
|
Working Capital |
32,000 |
|
||
|
|
________ |
|
Contingency (10%) |
190,950 |
|
||
|
|
871,058.7 |
|
Interest Reserve |
__4,500 |
|
||
|
|
|
|
|
|
PROJECT TOTAL |
1,785,450 |
|
References
Association for Financial Professionals. (2006). Cash Flow Forecasting,.
Bort, R. (2010). , "Medium-Term Funds Flow Forecasting", Corporate Cash Management Handbook, Warren Gorham & Lamont, .
Caux, T. d. (2005). , "Cash Forecasting", Treasurer's Companion, Association of Corporate Treasurers.
