I need to get the business plan below done. I have spread sheet with all of this information completed as well as the chapter notes that need to be summarized and explained that I would have to send via email
SuzyRubenstein
chapter_11_professors_sample_spreadsheet.xlsxCH2
| CH 2: Product or Service | |
| Name of primary product or service | Game specific T shirts |
| Target market | Participants of SU Dome events |
| Their need that is served | Need to cheer for SU teams |
| Your assets that are utilized | Familiarity with dome events; international connections; EEE major |
| Partner's assets that are utilized | Student manager for SU Basketball; Marketing major |
CH3
| CH 3: Estimating Revenues | |||||||
| CH 3A: Marketing Plan | |||||||
| Product : Alex P Thevaranjan: State the items you like to bundle together in your primary product or service. | T-shirt in a see-through plastic wrapping | ||||||
| Price : Alex P Thevaranjan: This is the cash inflow from one unit of your product or service. This may come directly from may come directly from the consumers or indirectly from advertisers and donors. | $10 per T shirt | ||||||
| Place : Alex P Thevaranjan: This is where or how the exchange of money for goods will take place. | Sold on-line, in-stores and at busy spots on game days. | ||||||
| Promotion : Alex P Thevaranjan: This is how you plan to communicate your first 3 Ps to your target consumers. | Post Standard and TV / Daily Orange advertisements | ||||||
| CH 3B: Estimating Revenues | |||||||
| Target population : Alex P Thevaranjan: This is the number of individuals in your target market, all of them will not become consumers. |
: Alex P Thevaranjan: This is the cash inflow from one unit of your product or service. This may come directly from may come directly from the consumers or indirectly from advertisers and donors. |
: Alex P Thevaranjan: This is where or how the exchange of money for goods will take place. | 100,000 | ||||
| Price per unit | $10.00 | ||||||
| Number of steady state consumers per year | 5,000 | ||||||
| Average yearly consumption per customer | 4 | ||||||
| Steady state demand per year | 20,000 | ||||||
| Year | Y1 | Y2 | Y3 | Y4 | Y5 | Y:1-5 | |
| Demand Growth : Typically, it takes about two years before demand reaches steady state. | 80% | 90% | 100% | 100% | 100% | 470% | |
| Demand of P1 : This is the number of times you will be able to collect the price stated in cell B23 each year. |
: Alex P Thevaranjan: This is how you plan to communicate your first 3 Ps to your target consumers. | 16,000 | 18,000 | 20,000 | 20,000 | 20,000 | 94,000 |
| Price of P1 : This is the revenue you generate from one unit of your product or service. | 10.00 | 10.00 | 10.00 | 10.00 | 10.00 | 10.00 | |
| Revenues | 160,000 | 180,000 | 200,000 | 200,000 | 200,000 | $940,000 | |
| CH 3C: Demand Curve | |||||||
| Alternate price per unit | $12.00 | ||||||
| Corresponding steady state demand per year | 12,000 | ||||||
| Price sensitivty | -4,000.00 | ||||||
| Price elasticity | -2.00 | ||||||
| Price | Demand | ||||||
| 0.00 | 60,000 | ||||||
| 2.50 | 50,000 | ||||||
| 5.00 | 40,000 | ||||||
| 7.50 | 30,000 | ||||||
| 10.00 | 20,000 | ||||||
| 12.50 | 10,000 | ||||||
| 15.00 | 0 | ||||||
| 17.50 | -10,000 | ||||||
| 20.00 | -20,000 | ||||||
| 22.50 | -30,000 | ||||||
| 25.00 | -40,000 | ||||||
| 27.50 | -50,000 | ||||||
| 30.00 | -60,000 | ||||||
| CH 3D: Maximizing Revenues over Price | |||||||
| Price | Revenues | ||||||
| $1,057,500 | -4,000 | ||||||
| 0.00 | 0 | ||||||
| 2.50 | 587,500 | ||||||
| 5.00 | 940,000 | ||||||
| 7.50 | 1,057,500 | ||||||
| 10.00 | 940,000 | ||||||
| 12.50 | 587,500 | ||||||
| 15.00 | 0 | ||||||
| 17.50 | -822,500 | ||||||
| 20.00 | -1,880,000 | ||||||
| 22.50 | -3,172,500 | ||||||
| 25.00 | -4,700,000 | ||||||
| 27.50 | -6,462,500 | ||||||
| 30.00 | -8,460,000 | ||||||
| Price per unit | $7.50 | ||||||
| Steady State Demand per Year | 30,000 | ||||||
| Price sensitivty of demand | -4,000.00 | ||||||
| Price elasticity of demand | -1.00 | ||||||
| Year | Y1 | Y2 | Y3 | Y4 | Y5 | Y:1-5 | |
| Demand Growth | 80% | 90% | 100% | 100% | 100% | ||
| Demand of P1 | 24,000 | 27,000 | 30,000 | 30,000 | 30,000 | 141,000 | |
| Price of P1 | 7.50 | 7.50 | 7.50 | 7.50 | 7.50 | 7.50 | |
| Revenues | 180,000 | 202,500 | 225,000 | 225,000 | 225,000 | $1,057,500 | |
Revenues - Price Curve
0 2.5 5 7.5 10 12.5 15 17.5 20 22.5 25 27.5 30 0 587500 940000 1057500 940000 587500 0 -822500 -1880000 -3172500 -4700000 -6462500 -8460000
Demand - Price Line
0 2.5 5 7.5 10 12.5 15 17.5 20 22.5 25 27.5 30 60000 50000 40000 30000 20000 10000 0 -10000 -20000 -30000 -40000 -50000 -60000
CH4
| CH 4: Managing Costs | ||||||
| CH 4A: Production Plan - Flow Chart | ||||||
| Shipped to USA once a semester | Plain T shirts made in Mexico every semester | |||||
| Game specific logos printed | Printing machine purchased during start-up phase | |||||
| Packaged in a plastic bag | Employees needed | |||||
| Inventories in main shop at Marshall Square Mall | Owners take turns to manage stores | |||||
| Sold through online orders | Agreement with credit card companies | |||||
| Sold through Marshall store | Furniture and Office appliances purchased during start-up phase | |||||
| Sold on the game day | 10 part-time employees hired during event days | |||||
| CH 4B: Estimating Costs and Net Cash Flow | ||||||
| Repeating Operational Costs | One-time Start-up Costs | |||||
| Name of Cost | Variable Cost per unit : For some variable costs, you might have to think and work hard to estimate the VC per unit. It should never be higher than the price per unit. | Fixed Cost per year : Note these fixed costs must be stated per year. As such, you might have to do the necessary conversion to turn a daily, weekly or monthly cost into a yearly cost. | Start-up Expense : These are also costs that you incur in the beginning for something which cannot be resold. | LT Asset : These are costs you incur at the beginning to invest in something which can be resold. |
||
| T shirt | 4.00 | |||||
| Packaging materials | 0.50 | |||||
| Trip to Mexico | 1,000 | 2,000 | ||||
| Shipping costs | 2,000 | |||||
| Logo printing machine | 30,000 | |||||
| Employee (sales) salary | 0.50 | 12,800 | ||||
| Employee (packaging) | 0.25 | |||||
| Initial Promotion | 5,000 | |||||
| Routine Promotion | 1,000 | |||||
| Legal costs | 1,000 | |||||
| Insurance costs | 2,000 | |||||
| Store furniture | 2,000 | |||||
| Store rent | 18,000 | |||||
| ISP fee | 600 | |||||
| Accounting fee | 500 | |||||
| Total | $5.25 | $37,900 | $8,000 | $32,000 | ||
| Cash Flows during | Y1 | Y2 | Y3 | Y4 | Y5 | Y:1-5 |
| Cash collection from Customers | $180,000 | $202,500 | $225,000 | $225,000 | $225,000 | $1,057,500 |
| Cash payment for variable costs | 126,000 | 141,750 | 157,500 | 157,500 | 157,500 | 740,250 |
| Cash payments for fixed costs | 37,900 | 37,900 | 37,900 | 37,900 | 37,900 | 189,500 |
| Cash Inflow from Operations | $16,100 | $22,850 | $29,600 | $29,600 | $29,600 | 127,750 |
| Cash payment for start-up expenses | 8,000 | 8,000 | ||||
| Cash investment in LT assets | 32,000 | 32,000 | ||||
| Cash Out flow for Start-up Costs | -$40,000 | -$40,000 | ||||
| Net Cash Flow | -23,900 | 22,850 | 29,600 | 29,600 | 29,600 | 87,750 |
| CH 4C: Maximizing Net Cash Flow over Price | ||||||
| Price | Net Cash Flow | Revenues | ||||
| 217,000 | -$4,000.00 | ` | ||||
| 0.00 | -1,710,000 | 0 | ||||
| 2.50 | -875,750 | 587,500 | ||||
| 5.00 | -276,500 | 940,000 | ||||
| 7.50 | 87,750 | 1,057,500 | ||||
| 10.00 | 217,000 | 940,000 | ||||
| 12.50 | 111,250 | 587,500 | ||||
| 15.00 | -229,500 | 0 | ||||
| 17.50 | -805,250 | -822,500 | ||||
| 20.00 | -1,616,000 | -1,880,000 | ||||
| 22.50 | -2,661,750 | -3,172,500 | ||||
| 25.00 | -3,942,500 | -4,700,000 | ||||
| 27.50 | -5,458,250 | -6,462,500 | ||||
| 30.00 | -7,209,000 | -8,460,000 | ||||
| Price per unit | $10.00 | |||||
| Steady State Demand per Year | 20,000 | |||||
| Price sensitivity | -4,000 | |||||
| Price elasticity | -2.00 | |||||
| Year | Y1 | Y2 | Y3 | Y4 | Y5 | Y:1-5 |
| Demand Growth | 80% | 90% | 100% | 100% | 100% | |
| Demand of P1 | 16,000 | 18,000 | 20,000 | 20,000 | 20,000 | 94,000 |
| Price of P1 | 10.00 | 10.00 | 10.00 | 10.00 | 10.00 | 10.00 |
| Revenues | 160,000 | 180,000 | 200,000 | 200,000 | 200,000 | $940,000 |
| Cash Flows during | Y1 | Y2 | Y3 | Y4 | Y5 | Y:1-5 |
| Cash collection from Customers | $160,000 | $180,000 | $200,000 | $200,000 | $200,000 | $940,000 |
| Cash payment for variable costs | 84,000 | 94,500 | 105,000 | 105,000 | 105,000 | 493,500 |
| Cash payments for fixed costs | 37,900 | 37,900 | 37,900 | 37,900 | 37,900 | 189,500 |
| Cash Inflow from Operations | $38,100 | $47,600 | $57,100 | $57,100 | $57,100 | 257,000 |
| Cash payment for start-up expenses | 8,000 | 8,000 | ||||
| Cash investment in LT assets | 32,000 | 32,000 | ||||
| Cash Out flow for Start-up Costs | -$40,000 | -$40,000 | ||||
| Net Cash Flow | -1,900 | 47,600 | 57,100 | 57,100 | 57,100 | 217,000 |
Revenues / Net Cash Flow - Price
0 2.5 5 7.5 10 12.5 15 17.5 20 22.5 25 27.5 30 -1710000 -875750 -276500 87750 217000 111250 -229500 -805250 -1616000 -2661750 -3942500 -5458250 -7209000 0 2.5 5 7.5 10 12.5 15 17.5 20 22.5 25 27.5 30 0 587500 940000 1057500 940000 587500 0 -822500 -1880000 -3172500 -4700000 -6462500 -8460000
CH5
| CH 5: Strategizing to Enhance Profitability | ||||||||||||||
| Initial Net Cash Flow : Here, you want to keep track of improvements in NCF due to strategic thinking. | $217,000 | |||||||||||||
| Ater Strategic Positioning | $395,000 | |||||||||||||
| After adding Secondary Products and Services | $506,625 | |||||||||||||
| CH 5A: Strategic Positioning : Based on your DNA, choose the positioning that is more appropriate for your organization. | Product Differentiation | Operational Efficiency | ||||||||||||
| Strategy under chosen positioning | Invest in a higher quality logo printing machine ($40,000) and increase price to $12 | |||||||||||||
| CH 5B: Strategic Product-line Expansion | ||||||||||||||
| Product Number | Name of Product or Service | |||||||||||||
| P1 = | Game specific T shirts | |||||||||||||
| P2 = | Game specific caps | |||||||||||||
| P3 = | ||||||||||||||
| Products / Services | P1 | P2 | P3 | |||||||||||
| Steady state demand per year | 20,000 | 5,000 | ||||||||||||
| Price per unit | $12.00 | 8.00 | ||||||||||||
| Year | Y1 | Y2 | Y3 | Y4 | Y5 | Y:1-5 | ||||||||
| Demand Growth : For simplicity, we assume that the demand of P2 and P3 also grow at the same rate as that of P1. | 80% | 90% | 100% | 100% | 100% | |||||||||
| Demand of P1 | 16,000 | 18,000 | 20,000 | 20,000 | 20,000 | 94,000 | ||||||||
| Price of P1 | 12.00 | 12.00 | 12.00 | 12.00 | 12.00 | 12.00 | ||||||||
| Demand of P2 | 4,000 | 4,500 | 5,000 | 5,000 | 5,000 | 23,500 | ||||||||
| Price of P2 | 8.00 | 8.00 | 8.00 | 8.00 | 8.00 | 8.00 | ||||||||
| Demand of P3 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||
| Price of P3 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||
| Revenues | 224,000 | 252,000 | 280,000 | 280,000 | 280,000 | $1,316,000 | ||||||||
| Operational Cost | Start-up Cost | |||||||||||||
| Name of Cost | Unit Variable Cost | Fixed Cost | Start-up Expense | LT Asset | ||||||||||
| P1 | P2 | P3 | P1 | + P2 + P3 | P1 | + P2 + P3 | P1 | + P2 + P3 | ||||||
| T shirt | 4.00 | 0 | 0 | 0 | ||||||||||
| Packaging materials | 0.50 | 0 | 0 | 0 | ||||||||||
| Trip to Mexico | 0.00 | 1,000 | 2,000 | 0 | ||||||||||
| Shipping costs | 0.00 | 2,000 | 0 | 0 | ||||||||||
| Logo printing machine | 0.00 | 0 | 0 | 40,000 | ||||||||||
| Employee (sales) salary | 0.50 | 0.25 | 12,800 | 0 | 0 | |||||||||
| Employee (packaging) | 0.25 | 0 | 0 | 0 | ||||||||||
| Initial Promotion | 0.00 | 0 | 5,000 | 0 | ||||||||||
| Routine Promotion | 0.00 | 1,000 | 0 | 0 | ||||||||||
| Legal costs | 0.00 | 0 | 1,000 | 0 | ||||||||||
| Insurance costs | 0.00 | 2,000 | 0 | 0 | ||||||||||
| Store furniture | 0.00 | 0 | 0 | 2,000 | ||||||||||
| Store rent | 0.00 | 18,000 | 0 | 0 | ||||||||||
| ISP fee | 0.00 | 600 | 0 | 0 | ||||||||||
| Accounting fee | 0.00 | 500 | 0 | 0 | ||||||||||
| Cap | 0.00 | 3.00 | 0 | 0 | 0 | |||||||||
| 0 | 0.00 | 0 | 0 | 0 | ||||||||||
| 0 | 0.00 | 0 | 0 | 0 | ||||||||||
| 0 | 0.00 | 0 | 0 | 0 | ||||||||||
| 0 | 0.00 | 0 | 0 | 0 | ||||||||||
| 0 | 0.00 | 0 | 0 | 0 | ||||||||||
| 0 | 0.00 | 0 | 0 | 0 | ||||||||||
| 0 | 0.00 | 0 | 0 | 0 | ||||||||||
| 0 | 0.00 | 0 | 0 | 0 | ||||||||||
| 0 | 0.00 | 0 | 0 | 0 | ||||||||||
| Total | $5.25 | $3.25 | $0.00 | $37,900 | $0 | $8,000 | $0 | $42,000 | $0 | |||||
| Cash Flows during | Y1 | Y2 | Y3 | Y4 | Y5 | Y:1-5 | ||||||||
| P1 | P1+P2+P3 | P1 | P1+P2+P3 | P1 | P1+P2+P3 | P1 | P1+P2+P3 | P1 | P1+P2+P3 | P1 | P1+P2+P3 | |||
| Cash collection from customers | $192,000 | 224,000 | 216,000 | $252,000 | 240,000 | $280,000 | 240,000 | $280,000 | 240,000 | $280,000 | 1,128,000 | 1,316,000 | ||
| Cash payment for variable costs | 84,000 | 97,000 | 94,500 | 109,125 | 105,000 | 121,250 | 105,000 | 121,250 | 105,000 | 121,250 | 493,500 | 569,875 | 43.30% | = Varaible Cost Ratio |
| Cash payments for fixed costs | 37,900 | 37,900 | 37,900 | 37,900 | 37,900 | 37,900 | 37,900 | 37,900 | 37,900 | 37,900 | 189,500 | 189,500 | ||
| Cash Inflow from Operations | $70,100 | 102,100 | 83,600 | 104,975 | 97,100 | 120,850 | 97,100 | 120,850 | 97,100 | 120,850 | 445,000 | 556,625 | ||
| Cash payment for start-up expenses | 8,000 | 8,000 | 8,000 | 8,000 | ||||||||||
| Cash outflow to purchase LT assets | 42,000 | 42,000 | 42,000 | 42,000 | ||||||||||
| Cash Outflow for Investments | $50,000 | $50,000 | $50,000 | $50,000 | ||||||||||
| Net Cash Flow | $20,100 | $52,100 | 83,600 | 104,975 | 97,100 | 120,850 | 97,100 | 120,850 | 97,100 | 120,850 | 395,000 | 506,625 | ||
CH6
| CH 6: Uncertain Demand | |||||||||
| CH 6A: Primary Product | |||||||||
| Five-year demand | Net Cash Flow | ||||||||
| 94,000 | 395,000 | ||||||||
| 84,600 | 331,550 | ||||||||
| 75,200 | 268,100 | ||||||||
| 65,800 | 204,650 | ||||||||
| 56,400 | 141,200 | ||||||||
| 47,000 | 77,750 | ||||||||
| 37,600 | 14,300 | ||||||||
| 28,200 | -49,150 | ||||||||
| 18,800 | -112,600 | ||||||||
| 9,400 | -176,050 | ||||||||
| 0 | -239,500 | ||||||||
| Accounting Concept | Definition | Value | |||||||
| Intercept = | - (Fixed Operational Costs + Start-up Costs) = | -239,500 | |||||||
| Slope = | Unit Contribution Margin (UCM) = Price - Unit Variable Cost = | 6.75 | |||||||
| Operating Leverage = : This is the percentage of fixed costs in the total operational costs. | Fixed Costs / (Fixed Costs + Variable Costs) = | 27.75% | |||||||
| Breakeven Point (BEP) = : Point at which NCF = 0. | (Fixed Operational Costs + Start-up Costs) / UCM = | 35,481 | |||||||
| Margin of Safety (MS) = : How much can revenues drop before all NCF gets wiped out. | Current Demand - BEP = | 58,519 | |||||||
| Percentage Margin of Safety (PMS) = : What percentage drop in revenues will wipe out all NCF. | MS / Current Demand = | 62.25% | |||||||
| Degree of Operating Leverage (DOL) = : DOL is a measure of risk in NCF as demand becomes more uncertain. | 1/PMS = | 1.6063 | |||||||
| % Change in NCF = | DOL * % Change in Demand | ||||||||
| % Change in Demand | % Change in NCF | ||||||||
| 20% | 32.13% | ||||||||
| 10% | 16.06% | ||||||||
| 0 | 0 | ||||||||
| -10% | -16.06% | ||||||||
| -20% | -32.13% | ||||||||
| CH 6B: Business as a whole | |||||||||
| Five-year revenues | Net Cash Flow | ||||||||
| 1,316,000 | 506,625 | ||||||||
| 1,184,400 | 432,013 | ||||||||
| 1,052,800 | 357,400 | ||||||||
| 921,200 | 282,788 | ||||||||
| 789,600 | 208,175 | ||||||||
| 658,000 | 133,563 | ||||||||
| 526,400 | 58,950 | ||||||||
| 394,800 | -15,663 | ||||||||
| 263,200 | -90,275 | ||||||||
| 131,600 | -164,888 | ||||||||
| 0 | -239,500 | ||||||||
| Accounting Concept | Definition | Value | |||||||
| Intercept = | - (Fixed Operational Costs + Start-up Costs) = | -239,500 | |||||||
| Slope = | Contribution Margin Ratio (CMR) = 1 - Variable Cost Ratio = | 0.5670 | |||||||
| Assumption = | Sales-mix ratio (P1:P2:P3) remains the same | 4:1:0 | |||||||
| Operating Leverage = : This is the percentage of fixed costs in the total operational costs. | Fixed Costs / (Fixed Costs + Variable Costs) = | 24.95% | |||||||
| Breakeven Point (BEP) = : Point at which NCF = 0. | (Fixed Operational Costs + Start-up Costs) / CMR = | 422,425 | |||||||
| Margin of Safety (MS) = : How much can revenues drop before all NCF gets wiped out. | Current Revenue - BEP = | 893,575 | |||||||
| Percentage Margin of Safety (PMS) = : What percentage drop in revenues will wipe out all NCF. | MS / Current Revenue = | 67.90% | |||||||
| Degree of Operating Leverage (DOL) = : DOL is a measure of risk in NCF as demand becomes more uncertain. |
: This is the percentage of fixed costs in the total operational costs. |
: Point at which NCF = 0. |
: How much can revenues drop before all NCF gets wiped out. |
: What percentage drop in revenues will wipe out all NCF. |
: This is the percentage of fixed costs in the total operational costs. | 1/PMS = | 1.4727 | ||
| % Change in Revenues | % Change in NCF | ||||||||
| 20% | 29.45% | ||||||||
| 10% | 14.73% | ||||||||
| 0 | 0 | ||||||||
| -10% | -14.73% | ||||||||
| -20% | -29.45% | ||||||||
Net Cash Flow (NCF) - Demand
94000 84600 75200 65800 56400 47000 37600 28200 18800 9400 0 395000 331550 268100 204650 141200 77750 14300 -49150 -112600 -176050 -239500
% Change in NCF - % Change in Demand
0.2 0.1 0 -0.1 -0.2 0.32126582278481014 0.16063291139240507 0 -0.16063291139240507 -0.32126582278481014
Net Casfflow - Revenues
1316000 1184400 1052800 921199.99999999988 789600 658000 526400 394800 263200 131600 0 506625 432012.5 357400 282787.49999999994 208175 133562.5 58950 -15662.5 -90275 -164887.5 -239500
% Change in NCF - % Change in Revenues
0.2 0.1 0 -0.1 -0.2 0.294547248951394 0.147273624475697 0 -0.147273624475697 -0.294547248951394
CH7
| CH 7: Relevant Information | ||||||||||||
| Focus on Value | ||||||||||||
| Decision Maker: | You and Partner | |||||||||||
| Decision Goal: | Maximize Net Cash Flow | |||||||||||
| Available Options: | Reject | P1 | P1+P2+P3 | |||||||||
| Think Incrementally | ||||||||||||
| Benchmark Option | Reject | 66,762 | 75,828 | 83,879 | 79,884 | 76,080 | ||||||
| Option: P1 | Start-up | End of Y1 | End of Y2 | End of Y3 | End of Y4 | End of Y5 | Total | |||||
| Incremental Benefit (IB) of P1 | ||||||||||||
| Cash Inflow from Operations | 70,100 | 83,600 | 97,100 | 97,100 | 97,100 | 445,000 | ||||||
| Cash Inflow from sale of assets | 8,400 : At this point, the entrepreneurs can continue to manage their firms or choose to sell their firm. At the least, they should be able to sell their LT Assets. For simplicity, we have assumed it is 20% of the original value of the LT Assets. | 8,400 | ||||||||||
| Incremental Costs (IC) of P1 | ||||||||||||
| Initial Cash Outflow | 50,000 | 50,000 | ||||||||||
| Opportunity Cost of Time : This is the income generating opportunities you are foregoing while working for your own organization. | 80,000 | 80,000 | 80,000 | 80,000 | 80,000 | 400,000 | ||||||
| Opportunity Cost of Capital : This is the money making opportunities you are foregoing for the capital you are investing in your organization. Until we get to CH 8, assume that the opportunity cost of capital is zero. | 0 | |||||||||||
| Opportunity Cost of Resources : This is the money making opportunities you are foregoing from the personal resources you are investing in your organization. |
: At this point, the entrepreneurs can continue to manage their firms or choose to sell their firm. At the least, they should be able to sell their LT Assets. For simplicity, we have assumed it is 20% of the original value of the LT Assets. | 0 | 0 | 0 | 0 | 0 | 0 | |||||
| Incremental Value (IV) of P1 | -50,000 | -9,900 | 3,600 | 17,100 | 17,100 | 25,500 | 3,400 | |||||
| Option: P1+P2+P3 | Start-up | End of Y1 | End of Y2 | End of Y3 | End of Y4 | End of Y5 | Total | |||||
| Incremental Benefit (IB) of P1+P2+P3 | ||||||||||||
| Cash Inflow from Operations | 102,100 | 104,975 | 120,850 | 120,850 | 120,850 | 569,625 | ||||||
| Cash Inflow from sale of assets | 8,400 | 8,400 | ||||||||||
| Incremental Costs (IC) of P1+P2+P3 | ||||||||||||
| Initial Cash Outflow | 50,000 | 50,000 | ||||||||||
| Opportunity Cost of Time | 80,000 | 80,000 | 80,000 | 80,000 | 80,000 | 400,000 | ||||||
| Opportunity Cost of Capital | 0 | 0 | 0 | 0 | 0 | 0 | ||||||
| Opportunity Cost of Resources | 0 | 0 | 0 | 0 | 0 | 0 | ||||||
| Incremental Value (IV) of P1+P2+P3 | -50,000 | 22,100 | 24,975 | 40,850 | 40,850 | 49,250 | 128,025 | |||||
| Suppose Benchmark Option is | P1 | |||||||||||
| Option: P1+P2+P3 | Start-up | End of Y1 | End of Y2 | End of Y3 | End of Y4 | End of Y5 | Total | |||||
| Incremental Benefit (IB) of P2+P3 | ||||||||||||
| Cash Inflow from Operations | 32,000 | 21,375 | 23,750 | 23,750 | 23,750 | 124,625 | ||||||
| Cash Inflow from sale of assets | 0 | 0 | ||||||||||
| Incremental Costs (IC) of P2+P3 | ||||||||||||
| Initial Cash Outflow | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||
| Opportunity Cost of Time | 0 | 0 | 0 | 0 | 0 | 0 | ||||||
| Opportunity Cost of Capital | 0 | 0 | 0 | 0 | 0 | 0 | ||||||
| Opportunity Cost of Resources | 0 | 0 | 0 | 0 | 0 | 0 | ||||||
| Incremental Value (IV) of P2+P3 | 0 | 32,000 | 21,375 | 23,750 | 23,750 | 23,750 | 124,625 | |||||
| IV of P1+P2+P3 = IV of P1 + IV of (P2+P3/P1) | 128,025 | = | 3,400 | + | 124,625 | |||||||
CH8
| CH 8: Opportunity Cost of Capital and Operational Risk | ||||||||||
| Focus on Value | ||||||||||
| Decision Maker: | You and Partner | |||||||||
| Decision Goal: | Maximize the Present Value of Net Cash Flow | |||||||||
| Available Options | Reject | P1 + P2 + P3 | ||||||||
| Think Incrementally | ||||||||||
| Benchmark Option: | Reject | |||||||||
| Opportunity Cost of Capital | 15.00% : This is the next best use for the amount of start-up costs you need. |
|||||||||
| Risk adjustment | 10.00% : This is the additional discounting you do to account for demand uncertainty, DOL and your risk aversion. |
|||||||||
| Discount Rate | 25.00% | |||||||||
| Discount Factor | 1.25 | |||||||||
| Option: P1+P2+P3 | Start-up | End of Y1 | End of Y2 | End of Y3 | End of Y4 | End of Y5 | Nominal Value | Present Value | ||
| PV of Incremental Benefit of P1+P2+P3 | ||||||||||
| Cash Inflow from Operations | 102,100 | 104,975 | 120,850 | 120,850 | 120,850 | 569,625 | 299,839 | |||
| Cash Inflow from sale of assets | 8,400 | 8,400 | 2,753 | |||||||
| PV of Incremental Costs of P1+P2+P3 | ||||||||||
| Initial Cash Outflow | 50,000 | 0 | 0 | 0 | 0 | 0 | 50,000 | 50,000 | ||
| Opportunity Cost of Time | 80,000 | 80,000 | 80,000 | 80,000 | 80,000 | 400,000 | 215,142 | |||
| Opportunity Cost of Resources | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||
| Net PV (NPV) of P1+P2+P3 | -50,000 | 22,100 | 24,975 | 40,850 | 40,850 | 49,250 | 128,025 | 37,450 | = NPV : This is the PV of the incremental NCF you make by investing in your organization compared to investing the start-up cost elsewhere for a return you require in cell B12. |
|
| IRR of P1+P2+P3 | 52.82% | = IRR : This is the return your organization is giving you for the investment of your start-up cost. This is also the break-even discount rate, or the discount rate at which NPV=0. |
||||||||
|
: This is the next best use for the amount of start-up costs you need. |
: This is the additional discounting you do to account for demand uncertainty, DOL and your risk aversion. |
: This is the PV of the incremental NCF you make by investing in your organization compared to investing the start-up cost elsewhere for a return you require in cell B12. |
__Solver__
| 20162281459203890720 | dkFyjxmp5HalXxum | 1 | |||||||
| FALSE | FALSE | ||||||||
| #ERROR! | 42.72% | 0.00 | |||||||
| IzkB | IzkB | ||||||||
CH9
| CH 9: Incorporating Taxes | ||||||||||||||
| Marginal Tax Rate | 25% : This is the tax bracket you are in. As such, any additional income from the organization will also be taxed at this rate. |
|||||||||||||
| Focus on Value | ||||||||||||||
| Decision Maker: | You and partner | |||||||||||||
| Decision Goal: | Maximize future cash flow | |||||||||||||
| Available Options | Reject | P1+P2+P3 | ||||||||||||
| Think Incrementally | ||||||||||||||
| Benchmark Option: | Reject | |||||||||||||
| Opportunity Cost of Capital | 11.25% | |||||||||||||
| Risk adjustment | 7.50% | |||||||||||||
| Discount Rate | 18.75% | |||||||||||||
| Discount Factor | 1.19 | |||||||||||||
| Cash inflow from operations | 102,100 | 104,975 | 120,850 | 120,850 | 120,850 | |||||||||
| Start-up expense | 8,000 | |||||||||||||
| Depreciation expense | 6,720 | 6,720 | 6,720 | 6,720 | 6,720 | |||||||||
| Interest expense | ||||||||||||||
| Other tax-deductible expenses | ||||||||||||||
| Taxable Income | 87,380 | 98,255 | 114,130 | 114,130 | 114,130 | |||||||||
| Income Taxes | 21,845 : Incremental Income Taxes = Incremental Taxable Income * Marginal Tax Rate | 24,564 | 28,533 | 28,533 | 28,533 | |||||||||
| Option: P1+P2+P3 | Start-up | End of Y1 | End of Y2 | End of Y3 | End of Y4 | End of Y5 | Nominal Value | Present Value | ||||||
| PV of Incremental Benefit of P1+P2+P3 | ||||||||||||||
| Cash Inflow from Operations | 80,255 | 80,411 | 92,318 | 92,318 | 92,318 | 437,619 | 265,255 | |||||||
| Cash Inflow from sale of assets | 8,400 : Because the LT asset is being sold at book value, there is no capital gain, as such no capital gain taxes apply | 8,400 | 3,557 | |||||||||||
| PV of Incremental Costs of P1+P2+P3 | ||||||||||||||
| Initial Cash Outflow | 50,000 | 50,000 | 50,000 | |||||||||||
| Opportunity Cost of Time | 60,000 : The opportunity cost of time is lower because of the taxes the entrepreneurs have to pay on their alternate income. |
: Because the LT asset is being sold at book value, there is no capital gain, as such no capital gain taxes apply |
: This is the tax bracket you are in. As such, any additional income from the organization will also be taxed at this rate. |
: Incremental Income Taxes = Incremental Taxable Income * Marginal Tax Rate | 60,000 | 60,000 | 60,000 | 60,000 | 300,000 | 184,487 | ||||
| Opportunity Cost of Resources | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||
| Net PV (NPV) of P1+P2+P3 | -50,000 | 20,255 | 20,411 | 32,318 | 32,318 | 40,718 | 96,019 | 34,325 | = NPV : NPV is lower because of the additional cash out flow to IRS. |
|||||
| IRR of P1+P2+P3 | 42.72% | = IRR : IRR is lower because of the additional cash out flow. |
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CH10
| CH 10: Optimal Financing | |||
| After-tax IRR | 43% | ||
| Marginal tax rate | 25% | ||
| Start-up Costs | 50,000 | ||
| Source of funds for start-up costs | Amount | CoC before tax | CoC after tax |
| Available from entrepreneurs | 8,000 : This is the amount of funds that partners themselves can contribute towards the start-up costs. | 4.00% | 3.00% |
| Borrowed from a bank (max 20%) | 10,000 : Here we assume that a bank will not be willing to lend more than 20% of your start-up costs. | 15.00% | 11.25% |
| Available through credit card | 12,000 | 18.00% | 13.50% |
| Available through other investors | 20,000 | 66.00% | 49.50% |
| Weighted Average Cost of Capital (WACC) | 50,000 | 34.36% | 25.77% : The WACC of 10.2% is much smaller than the IRR after taxes of 73%. The difference is more than sufficient to compensate for the additional rtisk. Therefore, we will want to invest in the business. |
CH11
| CH 11: Financial Statements | |||||||||
| Cash Flow Statements for | Y1 | Y2 | Y3 | Y4 | Y5 | Y:1-5 | |||
| Cash collections from customers | 224,000 | 252,000 | 280,000 | 280,000 | 280,000 | 1,316,000 | |||
| Cash payments for variable operational costs | 97,000 | 109,125 | 121,250 | 121,250 | 121,250 | 569,875 | |||
| Cash payments for fixed operational costs | 37,900 | 37,900 | 37,900 | 37,900 | 37,900 | 189,500 | |||
| Cash payments to owner as salary | 70,000 | 90,000 | 80,000 | 80,000 | 80,000 | 400,000 | |||
| Cash payments to owner as resource rent | 0 | 0 | 0 | 0 | 0 | 0 | |||
| Cash payments for interest expense | 16,860 | 16,860 | 16,860 | 16,860 | 16,860 | 84,300 | |||
| Cash payments for tax expense | 0 | 0 | 0 | 3,364 | 4,318 | 7,681 | |||
| Cash payments for start-up expenses | 8,000 | 8,000 | |||||||
| Cash flow from operations | -5,760 | -1,885 | 23,990 | 20,626 | 19,673 | 56,644 | |||
| Cash collections from sale of assets | 0 | 0 | 0 | 0 | 8,400 | 8,400 | |||
| Cash investment in LT assets | 42,000 | 0 | 0 | 0 | 0 | 42,000 | |||
| Cash flow from investments | -42,000 | 0 | 0 | 0 | 8,400 | -33,600 | |||
| Cash contributions by owners | 8,000 | 8,000 | |||||||
| Cash distributed as dividends | 0 | 0 | 0 | 10,091 | 12,953 | 23,044 | |||
| Cash borrowed as long-term debts | 42,000 | 42,000 | |||||||
| Cash paid to settle long-term debts | 0 | ||||||||
| Cash flow from financing | 50,000 | 0 | 0 | -10,091 | -12,953 | 26,956 | |||
| Net cash flow | 2,240 | -1,885 | 23,990 | 10,535 | 15,120 | 50,000 | |||
| Ending cash | 2,240 | 355 | 24,345 | 34,880 | 50,000 | 50,000 | |||
| Marginal corporate tax rate | 25% | ||||||||
| Income Statements for : Income Statement goes after the economic income earned by a business. As such, this number becomes a useful predictor of a firm's future profitability. | Y1 | Y2 | Y3 | Y4 | Y5 | Y:1-5 | |||
| Revenues : Given the importance of the income number for outsiders, GAAP is careful not to overstate this number. As such, they have rules that are meant to slow down the recognition of revenues. | 224,000 | 252,000 | 280,000 | 280,000 | 280,000 | 1,316,000 | |||
| Variable operational expenses | 97,000 | 109,125 | 121,250 | 121,250 | 121,250 | 569,875 | |||
| Contribution margin | 127,000 | 142,875 | 158,750 | 158,750 | 158,750 | 746,125 | |||
| Fixed operational expenses | 37,900 | 37,900 | 37,900 | 37,900 | 37,900 | 189,500 | 246,480 | ||
| Owner salary expense | 80,000 | 80,000 | 80,000 | 80,000 | 80,000 | 400,000 | |||
| Owner resource rental expense | 0 | 0 | 0 | 0 | 0 | 0 | -22,480 | ||
| Interest expense | 16,860 | 16,860 | 16,860 | 16,860 | 16,860 | 84,300 | |||
| Start-up expense | 8,000 | 0 | 0 | 0 | 0 | 8,000 | |||
| Depreciation expense | 6,720 | 6,720 | 6,720 | 6,720 | 6,720 | 33,600 | |||
| Net Income before Taxes : This number is the focus of many outsiders because it helps them predict the future profitability of the business. | -22,480 | 1,395 | 17,270 | 17,270 | 17,270 | 30,725 | |||
| Tax expense | 0 | 0 | 0 | 3,364 | 4,318 | 7,681 | |||
| Net Income after taxes | -22,480 | 1,395 | 17,270 | 13,906 | 12,953 | 23,044 | |||
| Balance Sheets as at the end of : Balance Sheet is the fundamental accounting statement. It is based on the accounting equation that source of funds (liabilities plus owner's equity) has to balance the use of funds (assets). |
: Given the importance of the income number for outsiders, GAAP is careful not to overstate this number. As such, they have rules that are meant to slow down the recognition of revenues. |
: This number is the focus of many outsiders because it helps them predict the future profitability of the business. | Y1 | Y2 | Y3 | Y4 | Y5 | ||
| Use of Funds | |||||||||
| Cash | 2,240 | 355 | 24,345 | 34,880 | 50,000 | ||||
| Other current assets | 0 | 0 | 0 | 0 | 0 | ||||
| Purchase cost of long-term assets | 42,000 | 42,000 | 42,000 | 42,000 | 42,000 | ||||
| Less Accumulated depreciation | 6,720 | 13,440 | 20,160 | 26,880 | 33,600 | ||||
| Long-term assets | 35,280 | 28,560 | 21,840 | 15,120 | 0 | ||||
| Total Assets | 37,520 | 28,915 | 46,185 | 50,000 | 50,000 | ||||
| Source of Funds | |||||||||
| Current liabilities | 10,000 | 0 | 0 | 0 | 0 | ||||
| Long-term liabilities | 42,000 | 42,000 | 42,000 | 42,000 | 42,000 | ||||
| Contributed capital | 8,000 | 8,000 | 8,000 | 8,000 | 8,000 | ||||
| Earnings | -22,480 | 1,395 | 17,270 | 13,906 | 12,953 | ||||
| Less Dividends | 0 | 0 | 0 | 10,091 | 12,953 | ||||
| Retained earnings | -22,480 | -21,085 | -3,815 | 0 | 0 | ||||
| Total Liabilities + Owner's Equity | 37,520 | 28,915 | 46,185 | 50,000 | 50,000 | ||||
CH12
| CH 12: Transaction Analysis | ||||||||||||||||||||||||||||||||||||
| Transactions: | ||||||||||||||||||||||||||||||||||||
| Financing activities | ||||||||||||||||||||||||||||||||||||
| 1 | Owners contributed capital to the business | 8,000 | ||||||||||||||||||||||||||||||||||
| 2 | Creditors loaned money | 42,000 | ||||||||||||||||||||||||||||||||||
| Investment activities | ||||||||||||||||||||||||||||||||||||
| 3 | Invested in equipment (start-up costs) | 42,000 : Find the correct amount of CH 5C. |
||||||||||||||||||||||||||||||||||
| 4 | Spent on other start-up expenses | 8,000 | ||||||||||||||||||||||||||||||||||
| Operational activities | ||||||||||||||||||||||||||||||||||||
| 5 | Paid for variable operational costs on credit | 97,000 | ||||||||||||||||||||||||||||||||||
| 6 | Paid for fixed operational costs on credit | 37,900 : Find the correct amount of CH 5C. |
||||||||||||||||||||||||||||||||||
| 7 | Offered product/service & collected money | 224,000 | ||||||||||||||||||||||||||||||||||
| 8 | Paid-off credit card bill for variable costs | 97,000 | ||||||||||||||||||||||||||||||||||
| 9 | Paid-off credit card bill for fixed costs | 37,900 | ||||||||||||||||||||||||||||||||||
| 10 | Paid-off interest expense | 16,860 | ||||||||||||||||||||||||||||||||||
| 11 | Paid-off tax expenses | 0 | ||||||||||||||||||||||||||||||||||
| 12 | Distributed dividends | 0 | ||||||||||||||||||||||||||||||||||
| 13 | Owner salary paid | 80,000 | ||||||||||||||||||||||||||||||||||
| 14 | Owner resource rent paid | 0 | ||||||||||||||||||||||||||||||||||
| Adjusting entries | ||||||||||||||||||||||||||||||||||||
| 15 : This is another example of the Matching Principle in Action. In order to prevent the overstatement of income, it says that part of the cost of generating revenue was the use of long-term assets which, as a result of being used, are losing value. As such, GAAP requires that the loss in value over the useful life of the long-term asset be spread across the periods that the asset is planning to be used: (1500-300) /(5 x 12) = $20 per operating cycle. | Depreciation expense | 6,720 | ||||||||||||||||||||||||||||||||||
| Transaction Analysis | ||||||||||||||||||||||||||||||||||||
| Use of Funds | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | 14 | 15 | Total $ | ||||||||||||||||||||
| CF from operations | -8,000 | 224,000 | -97,000 | -37,900 | -16,860 | 0 | -80,000 | 0 | -15,760 : Cash flow statement simply restates these flow of cash which changed the cash balance of the business. |
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| CF from investments | -42,000 | 0 | -42,000 : Cash flow statement simply restates these flow of cash which changed the cash balance of the business. |
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| CF from financing | 8,000 | 42,000 | 0 | 50,000 : Cash flow statement simply restates these flow of cash which changed the cash balance of the business. |
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| Cash | -7,760 : The amount of cash the business has at the end of a period gets reflected in the (end-of-period) balance sheet. How the firm moved from the previous period-balance to this period's balance is reflected in the cash flow statement. |
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| Other current assets | 0 : Cash flow statement simply restates these flow of cash which changed the cash balance of the business. |
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| Long-term assets | 42,000 | 0 | -6,720 | 35,280 : Cash flow statement simply restates these flow of cash which changed the cash balance of the business. |
||||||||||||||||||||||||||||||||
| Total Assets | 27,520 | |||||||||||||||||||||||||||||||||||
| Source of Funds | ||||||||||||||||||||||||||||||||||||
| Current liabilities | 97,000 | 37,900 | -97,000 | -37,900 | 0 : Cash flow statement simply restates these flow of cash which changed the cash balance of the business. |
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| Long-term liabilities | 42,000 | 42,000 : Cash flow statement simply restates these flow of cash which changed the cash balance of the business. |
||||||||||||||||||||||||||||||||||
| Contributed capital | 8,000 | 8,000 : Cash flow statement simply restates these flow of cash which changed the cash balance of the business. |
||||||||||||||||||||||||||||||||||
| Earnings | -8,000 | -97,000 | -37,900 | 224,000 | -16,860 | 0 | -80,000 | 0 | -6,720 | -22,480 : Cash flow statement simply restates these flow of cash which changed the cash balance of the business. |
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| Dividends : Dividend payments require a Dividend policy in addition to meeting GAAP rules. GAAP: You cannot pay dividends exceeding the retained earnings. Dividend policy of MIT: Before paying dividends, the business must ensure that their ending cash will equal or exceed the initial- working-capital amount. | 0 | 0 : Cash flow statement simply restates these flow of cash which changed the cash balance of the business. |
||||||||||||||||||||||||||||||||||
| Retained Earnings | -22,480 : The amount of cash the business has at the end of a period gets reflected in the (end-of-period) balance sheet. How the firm moved from the previous period-balance to this period's balance is reflected in the cash flow statement. |
|||||||||||||||||||||||||||||||||||
| Total Liabilities plus Owner's Equity | 27,520 : Cash flow statement simply restates these flow of cash which changed the cash balance of the business. |
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| FIN STs for the first year | ||||||||||||||||||||||||||||||||||||
| Balance Sheets as at the end of : Balance Sheet is the fundamental accounting statement. It is based on the accounting equation that source of funds (liabilities plus owner's equity) has to balance the use of funds (assets). | Y1 | |||||||||||||||||||||||||||||||||||
| Use of Funds | ||||||||||||||||||||||||||||||||||||
| Cash | -7,760 | |||||||||||||||||||||||||||||||||||
| Other current assets | 0 | |||||||||||||||||||||||||||||||||||
| Purchase cost of long-term assets | 42,000 | |||||||||||||||||||||||||||||||||||
| Less Accumulated depreciation | -6,720 | |||||||||||||||||||||||||||||||||||
| Long-term assets | 35,280 | |||||||||||||||||||||||||||||||||||
| Total Assets | 27,520 : This number must equal cell B52 in CH 9. |
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|
: The amount of cash the business has at the end of a period gets reflected in the (end-of-period) balance sheet. How the firm moved from the previous period-balance to this period's balance is reflected in the cash flow statement. |
: Cash flow statement simply restates these flow of cash which changed the cash balance of the business. | Source of Funds | ||||||||||||||||||||||||||||||||||
| Current liabilities | 0 : These liabilities are arising from the obligation to pay rent and salary to the owners for the use of their resources and time. |
|||||||||||||||||||||||||||||||||||
|
: Find the correct amount of CH 5C. | Long-term liabilities | 42,000 | ||||||||||||||||||||||||||||||||||
| Contributed capital | 8,000 | |||||||||||||||||||||||||||||||||||
| Earnings | -22,480 | |||||||||||||||||||||||||||||||||||
| Less Dividends | 0 | |||||||||||||||||||||||||||||||||||
| Retained earnings | -22,480 | |||||||||||||||||||||||||||||||||||
| Total Liabilities + Owner's Equity | 27,520 : This number must equal cell C70 above. |
|||||||||||||||||||||||||||||||||||
|
: Cash flow statement simply restates these flow of cash which changed the cash balance of the business. |
: Cash flow statement simply restates these flow of cash which changed the cash balance of the business. | Income Statements for : Income Statement goes after the economic income earned by a business. As such, this number becomes a useful predictor of a firm's future profitability. |
: Cash flow statement simply restates these flow of cash which changed the cash balance of the business. | Y1 | ||||||||||||||||||||||||||||||||
| Revenues : Given the importance of the income number for outsiders, GAAP is careful not to overstate this number. As such, they have rules that are meant to slow down the recognition of revenues. |
: Find the correct amount of CH 5C. |
: The amount of cash the business has at the end of a period gets reflected in the (end-of-period) balance sheet. How the firm moved from the previous period-balance to this period's balance is reflected in the cash flow statement. |
: Dividend payments require a Dividend policy in addition to meeting GAAP rules. GAAP: You cannot pay dividends exceeding the retained earnings. Dividend policy of MIT: Before paying dividends, the business must ensure that their ending cash will equal or exceed the initial- working-capital amount. |
: Cash flow statement simply restates these flow of cash which changed the cash balance of the business. |
: Cash flow statement simply restates these flow of cash which changed the cash balance of the business. |
: This is another example of the Matching Principle in Action. In order to prevent the overstatement of income, it says that part of the cost of generating revenue was the use of long-term assets which, as a result of being used, are losing value. As such, GAAP requires that the loss in value over the useful life of the long-term asset be spread across the periods that the asset is planning to be used: (1500-300) /(5 x 12) = $20 per operating cycle. | 224,000 | |||||||||||||||||||||||||||||
| Variable operational expenses | -97,000 | |||||||||||||||||||||||||||||||||||
| Contribution margin | 127,000 | |||||||||||||||||||||||||||||||||||
| Fixed operational expenses | -37,900 | |||||||||||||||||||||||||||||||||||
| Owner salary expense | -80,000 | |||||||||||||||||||||||||||||||||||
| Owner resource rental expense | 0 | |||||||||||||||||||||||||||||||||||
| Interest expense | -16,860 | |||||||||||||||||||||||||||||||||||
| Start-up expense | -8,000 | |||||||||||||||||||||||||||||||||||
| Depreciation expense | -6,720 | |||||||||||||||||||||||||||||||||||
| Earnings before taxes : This number is the focus of many outsiders because it helps them predict the future profitability of the business. |
: Balance Sheet is the fundamental accounting statement. It is based on the accounting equation that source of funds (liabilities plus owner's equity) has to balance the use of funds (assets). |
: Cash flow statement simply restates these flow of cash which changed the cash balance of the business. |
: Cash flow statement simply restates these flow of cash which changed the cash balance of the business. | -22,480 | ||||||||||||||||||||||||||||||||
| Tax expense | 0 | |||||||||||||||||||||||||||||||||||
| Net Income (after taxes) | -22,480 | |||||||||||||||||||||||||||||||||||
| Cash Flow Statements for | Y1 | |||||||||||||||||||||||||||||||||||
| Cash collections from sales | 224,000 | |||||||||||||||||||||||||||||||||||
| Cash payments for variable operational costs | -97,000 | |||||||||||||||||||||||||||||||||||
| Cash payments for fixed operational costs | -37,900 | |||||||||||||||||||||||||||||||||||
| Cash payments for interest expense | -16,860 | |||||||||||||||||||||||||||||||||||
| Cash payments for tax expense | 0 | |||||||||||||||||||||||||||||||||||
| Cash payments for start-up expenses | -8,000 | |||||||||||||||||||||||||||||||||||
| Cash flow from operations | 64,240 | |||||||||||||||||||||||||||||||||||
| Cash collections from sale of assets | 0 | |||||||||||||||||||||||||||||||||||
| Cash investment in LT assets | -42,000 | |||||||||||||||||||||||||||||||||||
| Cash flow from investments | -42,000 | |||||||||||||||||||||||||||||||||||
| Cash contributions by owners | 8,000 | |||||||||||||||||||||||||||||||||||
| Cash paid as dividends | 0 | |||||||||||||||||||||||||||||||||||
| Cash borrowed as long-term debts | 42,000 | |||||||||||||||||||||||||||||||||||
| Cash paid to settle long-term debts | ||||||||||||||||||||||||||||||||||||
| Cash flow from financing | 50,000 | |||||||||||||||||||||||||||||||||||
| Net cash flow | 72,240 | |||||||||||||||||||||||||||||||||||
| Ending cash | -7,760 | |||||||||||||||||||||||||||||||||||
CH13
| CH 13: Return on Investment (ROI) : This is a measure similar to IRR, which can easily be calculated from the Financial Statements. |
||||||||
| Over five years | Initial Investment | Start-up Costs | Annualized Sales | Annualized Earnings | ||||
| 8,000 | IM : IM is a measure of financial leverage. | 50,000 | TO : TO is a measure of productivity of assets (or start-up costs). | 263,200.00 | PM : PM is a measure of the profitability of sales. | 4,608.75 | ROI | |
| 6.25 | 5.26 | 1.75% | 57.61% | |||||
| For the fifth year | Initial Investment | Start-up Costs | Annualized Sales | Annualized Earnings | ||||
|
: This is the Owner's Equity at the beginning of the fifth year or at the end of fourth year. | IM |
: This is the amount of Assets the organization owns at the beginning of the fifth year or at the end of fourth year. | TO | PM | ROI | |||
| ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | |||||
