Description
Complete Part 5 of the Strategic Plan assignment according to the directions in the Part 5: Financials section of the “Strategic Plan” resource. (SEE BELOW)
Part 5: Financials (Topic 6)
A projected financial statement analysis seeks to forecast the impact of various implementation decisions. The pro forma financial statement can be part of the risk analysis of strategic plan. The goal of this assignment is to ensure your strategic plan is viable financially. In other words, does it create value for the firm?
Consider the cost structure and revenue streams for your strategic initiative plan. Research and data collected so far and will likely change once your product or service is commercialized. Each statement should address financial components of features, expenses, and sales of your product or service. It is typical for net income to be negative at this point. Do not assume that you have sales at this point unless you have sold your product or service.
Research the following if your plan is entrepreneurial:
- Balance sheet
- Income statement
- Statement of cash flow
- Fixed and variable expenses
- Startup expenses
- Breakeven analysis
Research the following if your plan is a market expansion plan for an existing organization, or a mergers and acquisitions plan:
- Balance sheet
- Income statement
- Statement of cash flow
- Fixed and variable expenses
- A projected budget
- Breakeven analysis
Complete the “Projected Financial Statement Analysis (Pro Forma 3-Year Financial Plan(ATTACHED)” including the “Questions” tab, “12 Month P& L" tab, “Year 1” tab, "Year 2 P&L” tab, and “Year 3 P&L” tab. The first year is monthly and the second and third year are presented quarterly. Please note the questions in the “Questions” tab may be answered at different points in completing the Profit and Loss information.
This assignment uses a rubric(ATTACHED). Please review the rubric prior to beginning the assignment to become familiar with the expectations for successful completion.
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Projected Financial Statment Analysis (3-Year Financial Plan).
Questions
Response
What is the vital financial information needed to
determine the viability of your plan ?
The vital financial information needed
to determine whether or not the plan is
viable are the cash flow of the three
different years. As observed in the
following worksheets, the company has
a final positive net profit.
What ratios will you use to determine if the proposed The financial ratios I would calculate
are the internal rate of return (IRR)
plan is a success?
and the net present value (NPV). The
plan will be a success if the IRR is
higher than the current interest rate
and the NPV is positive
What other, nonfinancial, information did you use to Other nonfinancial information
necessary to put the plan together
put your plan together?
includes the situation of the market
and the evaluation of the available
resources
Consider the assumptions made when completing
Part 3. What assumptions are made? List the
assumptions that you used to formulate this plan.
Benchmarking will play a critical role in
enlightening the business’
management on the existing loopholes
in its operations
Additional considerations
Projected Financial Statment Analysis (3-Year Financial Plan).
Discuss the financial results from your Pro Forma
projections. Include the net income results, breakeven According to the financial anlaysis
analysis, and required expenses to commercialize your carried out, the expected net income
are of $17463 for the first year,
product or service.
$19520 for the second, and $20175 for
the third. This positive net income
demonstrates that the business is able
of operating above break-even point,
as the required expenses are lower
than the estimated gross profit. Taking
into account that the monthly revenue
obtained from sales is of approximately
$50,000, the monthly variable costs
are of approximately $25000 and the
monthly fixed costs of approximately
$24000 since the revenue exceeds the
total costs
Explain how you would determine your pricing model.
What seems most appropriate for your business and
I would determine the pricing model
industry in which you will compete?
Identify your cost structure. Is your business model
cost-driven or value driven? Justify your selection.
such that the company breaks even. In
this regard, the price should be high
enough to compensate for both the
variable and fixed costs of the products
sold. Additionally, I should focus on the
price charged by the main competitors
for similar products. From this point of
view, a contribution margin based
pricing model seems to be the most
appropriate for the business
While one of the primary goals is to
move towards a value driven model,
the business is currently cost driven
considering how price has been set to
match the contribution margin costs as
much as possible
Projected Financial Statment Analysis (3-Year Financial Plan).
Review your decision for a revenue model. Based on
the financial statements, will this model generate a
profit? Provide evidence to prove it.
Where are you getting capital to meet your strategic
initiative? What terms will be most likely deemed
acceptable?
Did you have to reevaluate (go back) why?
According to the financial statements
prepared, the revenue model for the
business provides a profit. In this
regard, the annual net profit achieved
ranges between $17,000 and $20,000
in the following three years
The necessary capital to meet the
strategic initiative can be raised
directly through the operation of the
company. Alternatively, I could apply
for a bank loan and repay it with the
profit generated from the operations.
I had to reevaluate my previous
designed financial plan and the pricing
model to make sure that it was able of
generating profit
Profit and Loss Statement
Instructions
Give careful thought to the headings.
Expand the sales income and expenses area if your business has distinct categories (e.g. a restaurant may have food sales and beverage sales listed separately and cost of sa
One
Two
Three
Four
Five
Six
Seven
Eight
Month
Income
Sales
Sale of goods/services
Sundry Income (e.g. Commission
earned, frachise fees etc.)
Total Sales
Less Discounts/Commissions
Sales Discounts given
Sales Commissions paid
Total Discounts/ Commissions
Total Net Income
Cost of Sales
Opening Stock
Stock Purchased
Stock Deteriorated
Less Closing Stock
Total Cost of Sales
Gross Profit
Expenses
General & Administrative
Bank charges
Credit card commission
Consultant fees
Office Supplies
License fees
Business insurance
Total General & Administrative
$ 50.000,00
$ 49.600,00
$ 49.700,00
$ 49.800,00
$ 50....