Scoodrivezy Financial Plan and Cash Flow Statement Analysis Paper Read professor feedback, fix 1-3 year Cash Flow Statement (3 tabulars highlighted in YELL

Scoodrivezy Financial Plan and Cash Flow Statement Analysis Paper Read professor feedback, fix 1-3 year Cash Flow Statement (3 tabulars highlighted in YELLOW). Please use professional Cash Follow Statement structure in Excel file to fix it. (MS – 4) Breakeven point by using breakeven calculator . Please using the tabular in Excel file. (MS – 4) Running head: Scoodrivezy
Scoodrivezy Financial Plan
Feedback from professor:
Hi,
The numbers, when provided, seemed consistent.
At times, the writing could have benefited from proof reading,
e.g. missing articles, spelling errors, syntax errors.
What happened to your assets and fixed assets in your section?
In your projected cash flow you have placed parentheses around
your profit after interest and tax line. The numbers offered are
also identical? Does that mean you are projecting a loss of
approximately 10K per month throughout 2020?
You would have to sell a lot of scooters (1500) to break even.
Using your pro formas, when do you expect to reach the BE
point?
I am not sure of how the expenses listed within the critical
success factors delineate actual critical to success factors?
1
Scoodrivezy
6.1.Overview
Financial plan has been developed based on assumptions regarding the prices, revenues, direct
and indirect costs. The projections are modelled on pessimistic and optimistic scenarios assisted
probability tools to guide in obtaining a realistic estimate. The calculation was carried out on
spreadsheets which were later transferred to the respective pages.
Assumptions:
•
Initial budget/capital of $2,631,290
•
No property and equipment purchased during the five years
•
Price per unit
•
Price constant
•
Inventory and production costs are a percentage of revenues
2
Scoodrivezy
3
6.1.Proforma Income Statements
SCOODRIVEZY
Projected Income
Statement
2020
$
2021
$
2022
$
2023
$
2024
$
1,250,00
0
1,437,50
0
1,725,00
0
2,156,25
0
2,803,12
5
Income
Revenue
Production Costs:Direct
Costs
575,000
690,000
862,500
1,121,25
0
750,000
862,500
1,035,00
0
1,293,75
0
1,681,87
5
900
–
–
–
–
Administrtaion
175,000
201,250
241,500
301,875
392,438
Salaries and wages
62,500
71,875
86,250
107,813
140,156
Rent & leases
560,000
560,000
560,000
560,000
560,000
Marketing
93,750
107,813
129,375
161,719
210,234
Research & Development
60,000
60,000
60,000
60,000
60,000
Gross Profit
500,000
Expenses
Startup cost
Interest Expense
–
Total Expenses
952,150
1,000,93
8
1,077,12
5
1,191,40
6
1,362,82
8
Earnings before Tax
(202,150
)
(138,438
)
(42,125)
102,344
319,047
Corporate Tax @ 40%
(80,860)
(55,375)
(16,850)
40,938
127,619
Scoodrivezy
Earnings after Tax and
Interest
4
(121,290
)
Table 1. Projected Income Statements
(83,063)
(25,275)
61,406
191,428
Scoodrivezy
5
6.2 Proforma Balance Sheets
SCOODRIVE
ZY
Projected
Balance Sheet
2020
$
2021
$
2022
$
2023
$
2024
$
–
–
–
–
–
Cash
Accounts
Receivable
Prepaid
Expense
1,500,000
1,349,438
1,220,663
1,126,819
1,085,372
250,000
287,500
345,000
431,250
560,625
560,000
560,000
560,000
560,000
560,000
Inventory
250,000
287,500
345,000
431,250
560,625
Total Currentt
Assets
2,560,000
2,484,438
2,470,663
2,549,319
2,766,622
Total Assets
2,560,000
2,484,438
2,470,663
2,549,319
2,766,622
2,631,290
2,510,000
2,426,938
2,401,663
2,463,069
(121,290)
(83,063)
(25,275)
61,406
191,428
2,510,000
2,426,938
2,401,663
2,463,069
2,654,497
–
–
–
–
–
Assets
Fixed Assets
Property, plant
& equipment
Current Assets
Shareholder’s
equity
Equity capital
Retained
earnings
Shareholder’s
equity
Liabilities
Longterm debt
Current
Liabilities
Scoodrivezy
Accounts
Payable
Accrued
Expense
Total
Liabilities
Total
shareholder’s
equity and
liabilities
6
50,000
57,500
69,000
86,250
112,125
50,000
57,500
69,000
86,250
112,125
2,560,000
2,484,438
2,470,663
2,549,319
2,766,622
–
Table 2. Projected Balance Sheets
Scoodrivezy
7
6.2.Proforma Cash Flow Statements
SCOODRIVE
ZY
Projected
Cashflow
Statements
2020
Jan
$
Feb
$
Mar
$
Apr
$
May
$
Jun
$
Jul
$
Aug
$
Sep
$
Oct
$
Nov
$
Dec
$
(10,108)
(10,108)
(10,108)
(10,10
8)
(10,10
8)
(10,10
8)
(10,10
8)
(10,10
8)
(10,10
8)
(10,10
8)
(10,10
8)
(10,10
8)
Depreciation
Less:
–
–
–
–
–
–
–
–
–
–
–
–
Capital gains
–
–
–
–
–
–
–
–
–
–
–
–
(20,83
3)
(20,83
3)
(20,83
3)
(20,83
3)
(20,83
3)
(20,83
3)
(20,83
3)
(20,83
3)
CASHFLOW
FROM
OPERATING
ACTIVITIES
Profit after
interest and
tax
Add back:
Decrease(incre
ase) inventory
Decrease(incre
ase) accounts
receivable
Decrease(incre
ase)prepaymen
ts
(20,833)
(20,833)
(20,833)
(20,83
3)
(20,833)
(20,833)
(20,833)
(20,83
3)
(20,83
3)
(20,83
3)
(20,83
3)
(20,83
3)
(20,83
3)
(20,83
3)
(20,83
3)
(20,83
3)
(46,667)
(46,667)
(46,667)
(46,66
7)
(46,66
7)
(46,66
7)
(46,66
7)
(46,66
7)
(46,66
7)
(46,66
7)
(46,66
7)
(46,66
7)
Scoodrivezy
Increase(decrea
se) accounts
payable
8
4,167
4,167
4,167
4,167
4,167
4,167
4,167
4,167
4,167
4,167
4,167
4,167
(94,27
4)
(94,27
4)
(94,27
4)
(94,27
4)
(94,27
4)
(94,27
4)
(94,27
4)
(94,27
4)
Net cashflow
from
operating
activities
(94,274)
(94,274)
(94,274)
(94,27
4)
CASHFLOW
FROM
INVESTING
ACTIVITIES
Additions of
property, plant
and equipment
–
–
–
–
–
–
–
–
–
–
–
–
Net cashflow
from investing
activities
–
–
–
–
–
–
–
–
–
–
–
–
CASHFLOW
FROM
FINANCING
ACTIVITIES
Proceeds from
capital
contributed
–
–
–
–
–
–
–
–
–
–
–
–
Drawings
–
–
–
–
–
–
–
–
–
–
–
–
Scoodrivezy
9
Payment of
loan
–
–
–
–
–
–
–
–
–
–
–
–
Net cashflow
from financing
activities
–
–
–
–
–
–
–
–
–
–
–
–
(94,27
4)
(94,27
4)
(94,27
4)
(94,27
4)
(94,27
4)
(94,27
4)
(94,27
4)
(94,27
4)
NET
INCREASE/D
ECREASE IN
CASH
Cash at the
beginning of
the period
Cash at the end
of the period
(94,274)
(94,274)
(94,274)
(94,27
4)
219,274
219,274
219,274
219,27
4
219,27
4
219,27
4
219,27
4
219,27
4
219,27
4
219,27
4
219,27
4
219,27
4
125,000
125,00
0
125,00
0
125,00
0
125,00
0
125,00
0
125,00
0
125,00
0
125,00
0
125,00
0
125,000
125,000
Table 3. Year 1 Projected Cash Flow Statement
Scoodrivezy
SCOODRIV
EZY
Projected
Cashflow
Statements
10
2021
Jan
$
Feb
$
Mar
$
(6,922)
(6,922)
(6,922)
Depreciation
Less:
–
–
–
–
–
–
–
–
–
Capital gains
–
–
–
–
–
–
–
–
–
(3,125)
(3,125)
(3,125)
–
1
2
(3,125)
(3,125)
(3,125)
CASHFLOW
FROM
OPERATIN
G
ACTIVITIES
Profit after
interest and
tax
Add back:
Decrease(incr
ease)
inventory
Decrease(incr
ease) accounts
receivable
Decrease(incr
ease)prepaym
ents
Apr
$
May
$
Jun
$
Jul
$
Aug
$
Sep
$
Oct
$
Nov
$
Dec
$
(6,922
)
(6,922
)
–
–
–
–
–
–
(3,125
)
(3,125
)
10
11
(3,125
)
(3,125
)
(6,922) (6,922) (6,922) (6,922) (6,922) (6,922) (6,922)
(3,125) (3,125) (3,125) (3,125) (3,125) (3,125) (3,125)
3
4
5
6
7
8
9
(3,125) (3,125) (3,125) (3,125) (3,125) (3,125) (3,125)
Scoodrivezy
Increase(decre
ase) accounts
payable
11
625
625
625
625
625
625
625
625
625
625
625
625
(12,54
7)
(12,54
7)
(12,54
7)
(12,54
7)
(12,54
7)
(12,54
7)
(12,54
7)
(12,54
7)
Net cashflow
from
operating
activities
(12,547)
(12,547)
(12,547)
(12,54
7)
CASHFLOW
FROM
INVESTING
ACTIVITIES
Additions of
property, plant
and equipment
–
–
–
–
–
–
–
–
–
–
–
–
Net cashflow
from investing
activities
–
–
–
–
–
–
–
–
–
–
–
–
CASHFLOW
FROM
FINANCING
ACTIVITIES
Proceeds from
capital
contributed
–
–
–
–
–
–
–
–
–
–
–
–
Drawings
–
–
–
–
–
–
–
–
–
–
–
–
Scoodrivezy
12
Payment of
loan
–
–
–
–
–
–
–
–
–
–
–
–
Net cashflow
from
financing
activities
–
–
–
–
–
–
–
–
–
–
–
–
(12,547)
(12,547)
(12,547)
(12,54
7)
(12,54
7)
(12,54
7)
(12,54
7)
(12,54
7)
(12,54
7)
(12,54
7)
(12,54
7)
(12,54
7)
125,00
0
125,00
0
125,00
0
125,00
0
125,00
0
125,00
0
125,00 125,00
0
0
112,45
3
112,45
3
112,45
3
112,45
3
112,45
3
112,45
3
112,45 112,45
3
3
NET
INCREASE/
DECREASE
IN CASH
Cash at the
beginning of
the period
Cash at the
end of the
period
125,000
125,000
125,000
125,00
0
112,453
112,453
112,453
112,45
3
Table 4. Year 2 Projected Cash Flow Statement
Scoodrivezy
SCOODRIV
EZY
Projected
Cashflow
Statements
13
2022
Jan
$
Feb
$
Mar
$
(2,106)
(2,106)
(2,106)
Depreciation
Less:
–
–
–
–
–
–
–
–
–
Capital gains
–
–
–
–
–
–
–
–
–
(4,792)
(4,792)
(4,792)
–
1
2
(4,792)
(4,792)
(4,792)
CASHFLOW
FROM
OPERATIN
G
ACTIVITIES
Profit after
interest and
tax
Add back:
Decrease(incr
ease)
inventory
Decrease(incr
ease) accounts
receivable
Decrease(incr
ease)prepaym
ents
Apr
$
May
$
Jun
$
Jul
$
Aug
$
Sep
$
Oct
$
Nov
$
Dec
$
(2,106
)
(2,106
)
–
–
–
–
–
–
(4,792
)
(4,792
)
10
11
(4,792
)
(4,792
)
(2,106) (2,106) (2,106) (2,106) (2,106) (2,106) (2,106)
(4,792) (4,792) (4,792) (4,792) (4,792) (4,792) (4,792)
3
4
5
6
7
8
9
(4,792) (4,792) (4,792) (4,792) (4,792) (4,792) (4,792)
Scoodrivezy
Increase(decre
ase) accounts
payable
14
958
958
958
958
958
958
958
958
958
958
958
958
(10,73
1)
(10,73
1)
(10,73
1)
(10,73
1)
(10,73
1)
(10,73
1)
(10,73
1)
(10,73
1)
Net cashflow
from
operating
activities
(10,731)
(10,731)
(10,731)
(10,73
1)
CASHFLOW
FROM
INVESTING
ACTIVITIES
Additions of
property, plant
and equipment
–
–
–
–
–
–
–
–
–
–
–
–
Net cashflow
from investing
activities
–
–
–
–
–
–
–
–
–
–
–
–
CASHFLOW
FROM
FINANCING
ACTIVITIES
Proceeds from
capital
contributed
–
–
–
–
–
–
–
–
–
–
–
–
Drawings
–
–
–
–
–
–
–
–
–
–
–
–
Scoodrivezy
15
Payment of
loan
–
–
–
–
–
–
–
–
–
–
–
–
Net cashflow
from
financing
activities
–
–
–
–
–
–
–
–
–
–
–
–
(10,731)
(10,731)
(10,731)
(10,73
1)
(10,73
1)
(10,73
1)
(10,73
1)
(10,73
1)
(10,73
1)
(10,73
1)
(10,73
1)
(10,73
1)
112,45
3
112,45
3
112,45
3
112,45
3
112,45
3
112,45
3
112,45 112,45
3
3
101,72
2
101,72
2
101,72
2
101,72
2
101,72
2
101,72
2
101,72 101,72
2
2
NET
INCREASE/
DECREASE
IN CASH
Cash at the
beginning of
the period
Cash at the
end of the
period
112,453
112,453
112,453
112,45
3
101,722
101,722
101,722
101,72
2
Table 5. Year 3 Projected Cash flow Statement
Scoodrivezy
16
6.4 Investment Analysis
Scoodrivezy is a viable investment going by the projected financial statements. The
company will need a capital $2,631,290. However, this is significantly high considering
the cash balance in the next five years. This makes the company liquid enough to pay its
current liabilities. This is usually an attraction factor for potential investors and banks who
want to put funds into the business. This will come in handy when the company wants to
scale up after 5 years. The business will most likely make losses for the first 3 years before
making its first after tax profit of $ 61,406 in its fourth year. The cash balance will be able
to cushion the company during its year of losses.
The company’s profits are fundamentally driven by sales which ultimately affects the
balance sheet. In the short run the net asset value will decrease. The company fortunes will
definitely change when the company starts building its retained earnings. Increased
earnings will mean increased asset value of the firm. As per the projections, the company’s
total assets will have increased from $ 2,560,000 in year one to 2,766,622.
Scoodrivezy
17
6.5 Projected Financial Ratios and Industry Standard Ratios
Quick Ratio =
(cash+accounts
receivable)/current
liabilities
35
28
23
18
15
Current Ratio = current
assets/current liabilities
51
43
36
30
25
A/c receivable turnover=
net sales/(average a/c
receivable)
5
5
4
4
10
Asset turnover= net
sales/(average total
assets)
1
1
1
1
1
Inventory turnover =
Cost of goods
sold/average inventory
4
2
2
2
2
Table 6. Projected Financial Ratios
– Liquidity ratios are consistently increasing.
– Current ratios and quick ratios are above industry averages of 2.5 and 2.0. This is
positive
Scoodrivezy
18
6.6 Break-Even Analysis
Figure 1. Break-Even Analysis
– Average selling price per unit = Ksh
Average
cost per
unit
Units
Average
selling
price per
unit
0
500
1250
100
500
1250
200
500
1250
300
500
1250
400
500
1250
500
500
1250
600
500
1250
700
500
1250
800
500
1250
900
500
1250
1000
500
1250
Total
fixed
costs
1,120,
000
1,120,
000
1,120,
000
1,120,
000
1,120,
000
1,120,
000
1,120,
000
1,120,
000
1,120,
000
1,120,
000
1,120,
000
Total
variable
costs
(column 1
x column
2)
Total
costs
(column
4+
column
5)
0
50000
100000
150000
200000
250000
300000
350000
400000
450000
500000
1,120,00
0
1,170,00
0
1,220,00
0
1,270,00
0
1,320,00
0
1,370,00
0
1,420,00
0
1,470,00
0
1,520,00
0
1,570,00
0
1,620,00
0
Sales (column 1 x
column 3)
0
125000
250000
375000
500000
625000
750000
875000
1000000
1125000
1250000
Scoodrivezy
19
1100
500
1250
1200
500
1250
1300
500
1250
1400
500
1250
1500
500
1250
1600
500
1250
1700
500
1250
1800
500
1250
1900
500
1250
2000
500
1250
Table 7. Break-Even Analysis
1,120,
000
1,120,
000
1,120,
000
1,120,
000
1,120,
000
1,120,
000
1,120,
000
1,120,
000
1,120,
000
1,120,
000
550000
600000
650000
700000
750000
800000
850000
900000
950000
1000000
1,670,00
0
1,720,00
0
1,770,00
0
1,820,00
0
1,870,00
0
1,920,00
0
1,970,00
0
2,020,00
0
2,070,00
0
2,120,00
0
1375000
1500000
1625000
1750000
1875000
2000000
2125000
2250000
2375000
2500000
Scoodrivezy
20
– Break-even is normally expressed in terms of when the break-even point is hit (year,
month), how many units of sales represent break-even, and what dollar value of sales
represents the break-even point.
Breakeven Analysis
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000
Total costs (column 4 + column 5)
2000
1900
1800
1700
1600
1500
1400
1300
1200
1100
1000
900
800
700
600
500
400
300
200
100
0
0
Sales (column 1 x column 3)
The breakeven is the point at which the sales and total cost curves intersect as shown
above. At this point total sales equals total cost meaning that the company does neither
makes profit nor loss. The diagram at the intersection, notice that the units sold at that
point is 1500 and the sales value $ 1,875,000. Scoodrivezy starts making money after
selling 1500 units of electric walkers in a year. So long as sales are below 1500 the
company will make losses. That’s the break-even point. It’s projected that the company
will start making profits in year 4 when sales are above the BEP sales units.
Scoodrivezy
21
6.7 Critical Success Factors
Optimistic Projections
SCOODRIVEZY
Projected Income
Statement
2020
$
2021
$
2022
$
2023
$
2024
$
1,500,00
0
1,725,00
0
2,070,00
0
2,587,50
0
3,363,75
0
Income
Revenue
Production Costs:Direct
Costs
500,000
575,000
690,000
862,500
1,121,25
0
Gross Profit
1,000,00
0
1,150,00
0
1,380,00
0
1,725,00
0
2,242,50
0
900
–
–
–
–
Administrtaion
210,000
241,500
289,800
362,250
470,925
Salaries and wages
75,000
86,250
103,500
129,375
168,188
Rent & leases
560,000
560,000
560,000
560,000
560,000
Marketing
112,500
129,375
155,250
194,063
252,281
Research & Development
60,000
60,000
60,000
60,000
60,000
1,077,12
5
1,168,55
0
1,305,68
8
1,511,39
4
Expenses
Startup cost
Interest Expense
–
Total Expenses
1,018,40
0
Scoodrivezy
22
Earnings before Tax
(18,400)
72,875
211,450
419,313
731,106
Corporate Tax @ 40%
(7,360)
29,150
84,580
167,725
292,443
Earnings after Tax and
Interest
(11,040)
43,725
126,870
251,588
438,664
2020
$
2021
$
2022
$
2023
$
2024
$
1,250,00
0
1,437,50
0
1,725,00
0
2,156,25
0
2,803,12
5
Most Likely Projections
SCOODRIVEZY
Projected Income
Statement
Income
Revenue
Production Costs:Direct
Costs
575,000
690,000
862,500
1,121,25
0
750,000
862,500
1,035,00
0
1,293,75
0
1,681,87
5
900
–
–
–
–
Administrtaion
175,000
201,250
241,500
301,875
392,438
Salaries and wages
62,500
71,875
86,250
107,813
140,156
Rent & leases
560,000
560,000
560,000
560,000
560,000
Gross Profit
500,000
Expenses
Startup cost
Scoodrivezy
23
Marketing
93,750
107,813
129,375
161,719
210,234
Research & Development
60,000
60,000
60,000
60,000
60,000
1,077,12
5
1,191,40
6
1,362,82
8
Interest Expense
–
Total Expenses
952,150
1,000,93
8
Earnings before Tax
(202,150
)
(138,438
)
(42,125)
102,344
319,047
Corporate Tax @ 40%
(80,860)
(55,375)
(16,850)
40,938
127,619
Earnings after Tax and
Interest
(121,290
)
(83,063)
(25,275)
61,406
191,428
2020
$
2021
$
2022
$
2023
$
2024
$
1,000,00
0
1,150,00
0
1,380,00
0
1,725,00
0
2,242,50
0

862,500
1,121,25
0
Projections
SCOODRIVEZY
Projected Income
Statement
Income
Revenue
Production Costs:Direct
Costs
500,000
575,000
690,000
Scoodrivezy
24
500,000
575,000
690,000
862,500
1,121,25
0
900
–
–
–
–
Administrtaion
140,000
161,000
193,200
241,500
313,950
Salaries and wages
50,000
57,500
69,000
86,250
112,125
Rent & leases
560,000
560,000
560,000
560,000
560,000
Marketing
75,000
86,250
103,500
129,375
168,188
Research & Development
60,000
60,000
60,000
60,000
60,000
1,214,26
3
Gross Profit
Expenses
Startup cost
Interest Expense
–
Total Expenses
885,900
924,750
985,700
1,077,12
5
Earnings before Tax
(385,900
)
(349,750
)
(295,700
)
(214,625
)
(93,013)
Corporate Tax @ 40%
(154,360
)
(139,900
)
(118,280
)
(85,850)
(37,205)
Earnings after Tax and
Interest
(231,540
)
(209,850
)
(177,420
)
(128,775
)
(55,808)
Scoodrivezy
25
CRITICAL FACTORS:
Sales: This is the most fundamental factor driving profits. Optimistic estimates puts sales
at 1.2X of Most Likely projections.
Marketing: Increased investments in the marketing department increases the sales which
ultimately increases profits. The reverse is true.
Research and Development: Value proposition which drives sales is dependent on the
Research and Development cost. Increased cost in this department means greater value
through creativity and innovations which ultimately drives sales up.
UNIT
Units Sold
Price
TOTAL
$1.00
$0.90
$0.80
Revenue
Variable Expenses
Contribution Margin
Fixed Expenses
Profit
BE in Units
UNITS
20
$0.60 30
$0.50 40
50
$0.40
60
$0.30 70
$0.20 80
REVENUE
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.70
FIXED
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.10
$0.00
20
30
40
REVENUE
TOTAL
EXPENSES
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
PROFIT
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
50
60
40
REVENUE
TOTAL EXPENSES
70
80
Last revised 5/2016. See revision notes on last tab.
Step 1 – Enter info about your company in yellow shaded boxes below.
Preparer Name
Company Name
Starting Month
Starting Year
Step 2 – Read the following instructions
This Microsoft Excel Workbook is designed to provide those starting a business or
already running a business with information that will allow them to make a “go
/no-go” decision. It will help a potential entrepreneur project operating profit,
develop a projected income statement, balance sheet and cash flow forecast.
It is designed for a wide variety of users, from those who have little or no
accounting or Excel experience to those who may be well versed in finance,
accounting and the use of Microsoft Excel.
The workbook contains a number of worksheets, each documented two ways.
Extensive directions and guidance for a particular page or on a specific accounting
topic are found in blue boxes (like this one) on pages that are not selfexplanatory.
Color-Coding:
Enter Data Here
Adjust as Needed
Want a guide? Visit our
website:
score.org/startyourbusiness
The second way this workbook is documented is using Excel comments in a given
cell. Comments are normally hidden from sight. If you see a red triangle in the
upper right corner of a cell, you can hover your mouse over the triangle to see
the note. As your mouse moves away from the triangle, the comment will
disappear.
Comments will have a beige background. Each comment may have a specific
direction for tha…
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