Description
To complement your prior analysis, this week's interviews should focus on the Financials, with the interviewees being those with insights on the below questions. Your insights and plans in this competition chapter should also be informed by your primary research and secondary research.
The Financials chapter of the business plan to be authored this week should address:
- An explanation of your five-year proforma model. What are your key assumptions? Are there comparables or industry benchmarks?
- When will you be cash flow positive? What is the core cost of your business?
- What are your assumptions about market size and market penetration rate in a 24-month time frame?
- What if costs run higher by 20% or revenue comes in more slowly and/or 20% below projections? What could you do from an operating perspective to keep the business going?
- How much funding do you need to raise to run for 24 months under your assumptions? How much do you need if you have no revenue for 24 months?
- How big can this business get in 5 years? How big can it get ultimately? Are there similarly sized companies in your industry?
For this Financials chapter, a 2-3 page single-spaced length is appropriate. Tables, graphics, and related visual tools to efficiently communicate key information is encouraged.
Be sure to support your analysis and decisions with research and references. References may be included in APA format.
Explanation & Answer
Find attached, feel free to seek edits.
Running head: FINANCIALS OF THE BUSINESS
Financials of the Business
Student’s Name
Institutional Affiliation
1
2
FINANCIALS OF THE BUSINESS
Introduction
From the prior evaluations, it is clear that our business will involve the provision of the
auto parts of vehicles to the Ghanaian residents. Apart from the provision of the auto parts, our
business will also be offering delivery services of the auto parts and provision of the information
on how the products offered should be used. We expect that our business will generate good cash
flow since we have already established our target market, and we anticipate the demand for our
services and products to increase significantly. Therefore it is imperative to focus on our
financials and depict whether our business will be moving towards a positive direction.
The Explanation of the Five Year Pro Forma Model
The inception of the five-year pro forma model will help us in the projecting of our cash
flows, profits and losses that we expect after undertaking our business in a five-year duration.
The pro forma model of our projection will include; the cash flow projection, the income
statement and the balance sheet. The primary rationale for projecting our income statement for
the next five years is that through the projection, we will have an in-depth understanding of our
income in the next five years. The projection of the cash flows would help us to depict the cash
flows that we will be expecting from our five years of operations. For the balance sheet, the fiveyear projection will help us to articulate the assets and liabilities that are expected in the five
years of the course of our operations.
The Income Statement Projection
In Millions
2020
2021
2022
2023
2024
3
FINANCIALS OF THE BUSINESS
Revenues
60,000
70,000
80,000
90,000
100,000
The cost of
(15,000)
(14,500)
(14,000)
(13,500)
(13,000)
45,000
55,500
66,000
76,500
87,000
6,000
5,500
5,000
4,500
4,000
4,000
3,500
3,000
2,500
2,000
Administrative 4,500
4,000
3,500
3,000
2,500
14,500
13,000
11,500
10,500
8,500
400
400
400
400
400
30,100
42,100
54,100
65,600
78,100
revenue
Gross Profit
Operating
Expenses
Sales and
marketing
Product
development
expenses
expenses
Total
Operating
Expenses
Interest
expense
Net Income
Balance Sheet Projection
2020
2021
2022
2023
2024
4
FINANCIALS OF THE BUSINESS
ASSETS
Current
Assets
Cash
15,000
18,000
21,000
24,000
27,000
Accounts
12,000
16,000
2...