Final Budget Proposal Presentation Home

cash flows for a bank valuation
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Principles of Microeconomics
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Final Budget Proposal Presentation Home

Section Title Subsection Title Page Number

1.0

Executive Summary

3

2.0

Sales Forecast

4

2.1

Sales Forecast

4

2.2

Methods and Assumptions

4

3.0

Capital Expenditure Budget

5

4.0

Investment Analysis

6

4.1

Cash Flows

7

4.2

NPV Analysis

8

4.3

Rate of Return Calculations

8

4.4

Payback Period Calculations

8

5.0

Pro Forma Financial Statements

9

5.1

Pro Forma Income Statement

9

5.2

Pro Forma Balance Sheet

10

5.3

Pro Forma Cash Budget

11

6.0

Works Cited

11

7.0

Appendices

7.1

Appendix 1: [description]

7.2

Appendix 2: [description]

1.0 Executive Summary

The business selected for startup is Wireless World – Wireless Device Retail store, only of the most high tech of its type in the region. The business will be offering a wide range of unique wireless products, which are rare and are consumer focused, as the technology and the performance delivered by these devices is the ultimate reason a class of customers are attracted toward the stores which are dealing in such products. The business will be mainly operating through flagship stores in the big shopping malls, where such customer traffic is attracted to these products.

As the business will be in startup phase the budget will help the business is achieving the profitability as well help in analyzing the sales and cash flow volume, as that will support the planning of cash flows of business.

The budget will be mainly consistent of the initial investment the business owner will be required to place, the NPV projections states that the business will be able to be valued at $364,308.48, along with handsome payback period of 1.38years, and IRR of 58%.

2.0 Sales Forecast

Briefly introduce the sales forecast section.

2.1 Sales Forecast

The 5 years sales plan is mentioned below which mainly includes the business growth in sales, consistently throughout the 5 years, this comprise 5% straight growth throughout, and a price inflation adjustment of 2% each year, assuming the product demand would remain steady.

The main assumption behind the fact that product demand would remain steady is that the manufacturing businesses bring on a new product each year and they attract a specific customer base, that customer base would keep on increasing every year.

Moreover, there would be another revenue stream which is servicing of the sold / similar products, which is assumed that there would be 15% of sales volume each year which would be serviced, that could be company customer or walk in customer. The servicing price would also increase as per inflation adjustment.

The sales volume and servicing volume along with prices is assumed to be on average basis throughout the year.

2.2 Methods and Assumptions

The sales forecast is mainly based over the following assumptions, and the detailed working is annexed below.

1. There would be a standard increase in sales volume each year by 5%.

2. There would be a standard price inflation adjustment each year by 2%.

3. Each year there would be 15% of the sales volume, in servicing cliental, this can be company customer or walk in customer.

4. The sales, servicing, and prices are assumed on average basis throughout the year, keeping in sight the specific products demand.

5. Sales is assumed to remain in growth for all 5 years, as these are the unique products, having loyal customers base, which would keep on increasing.

3.0 Capital Expenditure Budget

There are number of assumptions involved while calculating the capital expenditure incurred, which is necessary for business before it begins the operations, to generate revenue.

The most important assumptions are enlisted below:

1. Assuming the filling fees is constant, and all the optional certificates will be opted as well.

2. There would not be any business insurance until the business commence operations.

3. No employee would be hired until the business starts operations.

4. The business loan will be charged at 3.50%.

4.0 Investment Analysis

The business proposal of wireless world, seems to be a real star idea of the business startup, as this business is dealing with unique products and the unique customers, keeping the discount factor of 12%, the business projection has reported a huge NPV, IRR, and payback, which reflects that the business is highly recommended to be proceeded with, to ensure the business proposal is worthy, all the necessary assumptions are made, and the necessary costs related to start up are accounted for in below 3 sub heads.

4.1 Cash flows

The above prepared is the total cash flow model the business is predicted to have over the period of 5 years, the main substance here is to notice the loan from owner, which is spread over the 10 years business term, and there is continuous growth in prices, sales, and expenses for the upcoming 5 years.

4.2 NPV Analysis

The NPV reflects business proposal will be generating enough profits, if evaluated in today date, that the business is worth to be started or not, and the NPV is deeply positive, which states that the project should be taken.

4.3 Rate of Return

The IRR calculated for the project is 58%, which reflects that the return has to be below 58%, otherwise the project NPV will become zero.

4.4 Payback Period

The payback period calculation, reflects that as the business is having deep cash flows, if would only take first few operational month of the business, to recover the initial investment, as the inflow of customers and sales volume is expected to be higher, the payback period of the business is 1.35 years.

5.0 Pro forma Financial Statements

In this section the business 5 years forecast financial performance is portrayed, this includes the income statement projection, balance sheet and cash flows projection.

5.1 Pro Forma Income Statement

The income statement projection reflects the business total sales from both streams, the important assumption in this model is the tax rate, which is assumed to be at 30% payable annually.

The cost of sales is comprised of the credit card fees and inventory cost, while the salaries and benefits got all values related to salaries and health care facilities.

5.2 Pro Forma Balance Sheets

The cash in hand is exactly the initial investment provided by loan, the prepaid insurance is referred to the business insurance, depreciation is calculated at straight line method, over 10 years useful life.

The retained earnings is placed here after deducting 150,000 owner withdrawals.

5.3 Pro Forma Cash Budget

The cash flow represents the total 5 years cash flows and the cash management the business will be doing, the business will only require the initial investment from the owner at the time of commencement of business.

6.0 Works Cited

squareup. (n.d.). How to start a retail business. Retrieved from squareup: https://squareup.com/guides/start-retail-business

7.0 Appendices

NOTE: Start this section at the top of a new page.

This section of the budget proposal is where you’ll attach all of the supporting materials that you’ve referenced in the preparation of your plan and that is too detailed or extensive to be included in the body of the report. Use this page to separate the appendices from the text in the body of your report. Make certain that you update the table of contents to include the title of each exhibit in the appendix and its page number.

7.1 Appendix 1: [put a description here]

7.2 Appendix 1: [put a description here]

7.3 Appendix 1: [put a description here]

12

DescriptionInvestment

Filling Fees160

Renovation25,000

Initial Inventory20,000

Total Cost45,160

Initial Investment from owner45,160

Interest payable @ 3.50%46,741

Total CAPITAL EXPENDITURE45,160

DescriptionYear 0Year 1Year 2Year 3Year 4Year 5

Sales – Products- 500,000.00 535,500.00 573,520.50 614,240.46 657,851.53

Sales – Services- 7,500.00 8,032.50 8,602.81 9,213.61 9,867.77

Filling Fees160.00 – – – – –

Renovation25,000.00 – – – – –

Furniture, Fixture and Equipments30,000 – – – – –

Rent- 20,000.00 21,000.00 22,050.00 23,152.50 24,310.13

Advertisement- 5,000.00 5,000.00 5,000.00 5,000.00 5,000.00

Business Insurance- 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00

Utilities- 7,000.00 7,350.00 7,717.50 8,103.38 8,508.54

Salary – Manager & Asst. Manager- 150,000.00 165,000.00 181,500.00 199,650.00 219,615.00

Salaries – Employees- 75,000.00 82,500.00 90,750.00 99,825.00 109,807.50

Health and other benefits- 30,000.00 33,000.00 36,300.00 39,930.00 43,923.00

Credit card company share- 12,687.50 13,588.31 14,553.08 15,586.35 16,692.98

Inventory Requirements20,000.00 27,000.00 36,450.00 49,207.50 66,430.13 89,680.67

Depreciation- 3,000.00 6,000.00 9,000.00 12,000.00 15,000.00

Total Cost75,160.00 330,687.50 370,888.31 417,078.08 470,677.35 533,537.82

Initial Investment from owner52,160.00 – – – – –

Interest payable @ 3.50%- 5,398.50 5,398.50 5,398.50 5,398.50 5,398.50

Cash flows(202,480.00) 171,414.00 167,245.69 159,646.72 147,378.21 128,782.98

Cash inflow

Cash outflow

DescriptionYear 0Year 1Year 2Year 3Year 4Year 5

Cash flows(202,480.00) 171,414.00 167,245.69 159,646.72 147,378.21 128,782.98

Discount Factor @ 12%10.8930.7970.7120.6360.567

PV of Cash flows(202,480.00) 153,072.70 133,294.81 113,668.47 93,732.54 73,019.95

NPV =364,308.48

Revenues:Year 1Year 2Year 3Year 4Year 5

Sales – Product500,000 535,500 573,521 614,240 657,852

Sales – Services7,500 8,033 8,603 9,214 9,868

Total Revenue507,500 543,533 582,123 623,454 667,719

Expenses:

Cost of Sales39,688 50,038 63,761 82,016 106,374

Rent20,000 21,000 22,050 23,153 24,310

Advertisement5,000 5,000 5,000 5,000 5,000

Business Insurance1,000 1,000 1,000 1,000 1,000

Utilities7,000 7,350 7,718 8,103 8,509

Salaries & Benefits255,000 280,500 308,550 339,405 373,346

Depreciation3,000 6,000 9,000 12,000 15,000

Interest expense5,399 5,399 5,399 5,399 5,399

336,086 376,287 422,477 476,076 538,936

Operating Income171,414 167,246 159,647 147,378 128,783

Tax @ 30%51,424 50,174 47,894 44,213 38,635

Net Income119,990 117,072 111,753 103,165 90,148

Projected for the year ending 20xx

Income Statement

Wireless World

Assets:Year 1Year 2Year 3Year 4Year 5

Cash$12,150$13,032$5,000$4,000$6,000

Prepaid Insurance1,000 1,000 1,000 1,000 1,000

Supplies27,000 36,450 49,208 66,430 89,681

Equipment30,000 30,000 30,000 30,000 30,000

Less: Accum. Depr.

(3,000) (6,000) (9,000) (12,000) (15,000)

Total Assets$67,150$74,482$76,208$89,430$111,681

Liabilities and Stockholders’ Equity

Liabilities:

Accounts Payable$5,000$5,250$12,295$34,105$69,373

Income Taxes Payable- – – – –

Total Liabilities5,0005,25012,29534,10569,373

Stockholders’ Equity:

Common Stock52,160 52,160 52,160 52,160 52,160

Retained Earnings9,990 17,072 11,753 3,165 (9,852)

Total Stockholders’ Equity62,15069,23263,91355,32542,308

Total Liabilities &

Stockholders’ Equity

$67,150$74,482$76,208$89,430$111,681

December 20xx

Wireless World

Balance Sheet

DescriptionYear 0Year 1Year 2Year 3Year 4Year 5

Cash inflow

Sales – Products- 500,000.00 535,500.00 573,520.50 614,240.46 657,851.53

Sales – Services- 7,500.00 8,032.50 8,602.81 9,213.61 9,867.77

Total Cash inflow- 507,500.00 543,532.50 582,123.31 623,454.06 667,719.30

Cash outflow

Filling Fees160.00 – – – – –

Renovation25,000.00 – – – – –

Furniture, Fixture and Equipments30,000 – – – – –

Rent- 20,000.00 21,000.00 22,050.00 23,152.50 24,310.13

Advertisement- 5,000.00 5,000.00 5,000.00 5,000.00 5,000.00

Business Insurance- 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00

Utilities- 7,000.00 7,350.00 7,717.50 8,103.38 8,508.54

Salary – Manager & Asst. Manager- 150,000.00 165,000.00 181,500.00 199,650.00 219,615.00

Salaries – Employees- 75,000.00 82,500.00 90,750.00 99,825.00 109,807.50

Health and other benefits- 30,000.00 33,000.00 36,300.00 39,930.00 43,923.00

Credit card company share- 12,875.00 13,789.13 14,768.15 15,816.69 16,939.68

Inventory Requirements20,000.00 27,000.00 36,450.00 49,207.50 66,430.13 89,680.67

Depreciation- 3,000.00 6,000.00 9,000.00 12,000.00 15,000.00

Interest payable @ 3.50%- 5,398.50 5,398.50 5,398.50 5,398.50 5,398.50

Total Cash outflow75,160.00 327,875.00 365,089.13 408,293.15 458,907.69 518,784.51

Net Cash flow(75,160.00) 179,625.00 178,443.38 173,830.15 164,546.37 148,934.79

Cash borrowing75,160.00 – – – – –

Repayment- 7,516.00 7,516.00 7,516.00 7,516.00 7,516.00

Cash flows- 187,141.00 185,959.38 181,346.15 172,062.37 156,450.79

Year 1Year 2Year 3Year 4Year 5

Sales – Products500,000 535,500 573,521 614,240 657,852

Sales – Services7,500 8,033 8,603 9,214 9,868

Products – VolumeYear 1Year 2Year 3Year 4Year 5

Sales – units500.00 525.00 551.25 578.81 607.75

Avg. Price / unit1,000.00 1,020.00 1,040.40 1,061.21 1,082.43

Services – VolumeYear 1Year 2Year 3Year 4Year 5

Service units75.00 78.75 82.69 86.82 91.16

Avg. Price / Service100.00 102.00 104.04 106.12 108.24

Sales – ( $ )Year 1Year 2Year 3Year 4Year 5

Sales – Product ( $ )500,000 535,500 573,521 614,240 657,852

Sales – Services ( $ )7,500 8,033 8,603 9,214 9,868

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