Chat with us, powered by LiveChat The purpose of this assignment is to build and defend financial projections for your business idea. This includes estimating units sold, revenue, and costs for the first 3 years (12 Quarters) | EssayAbode

## 23 Nov The purpose of this assignment is to build and defend financial projections for your business idea. This includes estimating units sold, revenue, and costs for the first 3 years (12 Quarters)

The purpose of this assignment is to build and defend financial projections for your business idea. This includes estimating units sold, revenue, and costs for the first 3 years (12 Quarters) of the business.

Part 1

Build a pro forma Excel sheet estimating revenue and all operating cost items of the business for each of the first 3 years (12 quarters) of operation. Review the pro forma examples provided in the attachments. Pro forma estimates should be based on researched information and rational assumptions.

APA style is required, and solid academic writing is expected.

Part 2

Write a 750-1,000-word summary of your pro forma spreadsheet. Include the following items:

1. Describe how you developed the pro forma projected expenses and operating costs.
2. Explain your revenue estimates, variable costs, fixed costs, margin, and how your arrived at your figures.

While APA style is required for the body of this assignment, solid academic writing is expected, and documentation of sources should be presented using APA formatting guidelines.

General Requirements

Together, the Excel spreadsheet and summary should define and defend financial projections for your business idea as if you were presenting to key stakeholders. Submit both the pro forma Excel spreadsheet and the Word document.

## Sheet1

 PRO FORMA EXAMPLE GENERIC – Numbers mean nothing – project specific Group Entered Variables Calculated data is unshaded Revenue Basis Cost Basis Calculated Gross Profit Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10 Q11 Q12 VARIABLES (GREEN) Number of Product Units: 1 3 5 20 100 140 180 240 300 350 400 500 Material Cost/Unit: \$50 \$50 \$50 \$50 \$40 \$40 \$40 \$40 \$40 \$40 \$40 \$40 Manufacturing Cost/Unit: \$25 \$25 \$25 \$25 \$20 \$20 \$20 \$20 \$20 \$20 \$20 \$20 Operating Cost/Unit: \$10 \$10 \$10 \$10 \$8 \$8 \$8 \$8 \$8 \$8 \$8 \$8 Maintenance Cost/Unit: \$10 \$10 \$10 \$10 \$8 \$8 \$8 \$8 \$8 \$8 \$8 \$8 Org/OH (Founders) Staffing (full time equivalents – FTE) 2 3 3 3 4 4 4 4 4 4 4 4 Consultants (App Dev, SW – FTE) 0.5 0.5 0.5 0.5 0 0 0 0 0 0 0 0 Selling Price/Unit: \$200 \$200 \$200 \$200 \$220 \$220 \$220 \$220 \$240 \$240 \$240 \$240 Org/OH (Founders) Staffing Cost (\$/day) \$100 \$100 \$100 \$100 \$110 \$110 \$110 \$110 \$110 \$110 \$110 \$110 Consultants Cost (\$/day) \$150 \$150 \$150 \$150 \$150 \$150 \$150 \$150 \$150 \$150 \$150 \$150 Product Revenue: \$200 \$600 \$1,000 \$4,000 \$22,000 \$30,800 \$39,600 \$52,800 \$72,000 \$84,000 \$96,000 \$120,000 Website Revenue: \$0 \$500 \$500 \$500 \$500 \$500 \$500 \$750 \$750 \$750 \$1,000 \$1,000 Licensing Revenue: \$0 \$0 \$0 \$0 \$0 \$0 \$0 \$0 \$1,000 \$2,000 \$5,000 \$10,000 Advertising/Other Revenue: \$0 \$0 \$0 \$0 \$0 \$0 \$0 \$0 \$500 \$750 \$1,000 \$2,000 Year 1 Year 2 Year 3 Item Basis Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10 Q11 Q12 TOTAL REVENUE: \$200 \$1,100 \$1,500 \$4,500 \$22,500 \$31,300 \$40,100 \$53,550 \$74,250 \$87,500 \$103,000 \$133,000 VARIABLE COSTS Materials \$50 \$150 \$250 \$1,000 \$4,000 \$5,600 \$7,200 \$9,600 \$12,000 \$14,000 \$16,000 \$20,000 Manufacturing \$25 \$75 \$125 \$500 \$2,000 \$2,800 \$3,600 \$4,800 \$6,000 \$7,000 \$8,000 \$10,000 Operating Labor \$10 \$30 \$50 \$200 \$800 \$1,120 \$1,440 \$1,920 \$2,400 \$2,800 \$3,200 \$4,000 Maintenance \$10 \$30 \$50 \$200 \$800 \$1,120 \$1,440 \$1,920 \$2,400 \$2,800 \$3,200 \$4,000 Legal/Acctg – \$/quarter \$1,000 \$1,000 \$1,000 \$1,000 \$1,000 \$1,000 \$1,000 \$1,000 \$1,000 \$1,000 \$1,000 \$1,000 IT, Website, Application and other Outreach-Sales-Advertising recurring costs \$1,000 \$1,000 \$1,000 \$1,000 \$1,000 \$1,000 \$1,000 \$1,000 \$1,000 \$1,000 \$1,000 \$1,000 Organizational/Overhead (Founders) See above \$12,990 \$19,485 \$19,485 \$19,485 \$28,578 \$28,578 \$28,578 \$28,578 \$28,578 \$28,578 \$28,578 \$28,578 Expenses (% of Operating Labor and Org/OH) 10% \$1,300 \$1,952 \$1,954 \$1,969 \$2,938 \$2,970 \$3,002 \$3,050 \$3,098 \$3,138 \$3,178 \$3,258 Financing Costs Typical 2% one time points/fees for equity and debt needs, plus 6-8% interest on debt – DEVELOP WITH FUNDING STRATEGY TOTAL VARIABLE COSTS \$14,385 \$23,722 \$23,914 \$25,354 \$41,116 \$44,188 \$47,260 \$51,868 \$56,476 \$60,316 \$64,156 \$71,836 FIXED COSTS Intellectual Property (Q2 one time cost) \$15,000 \$15,000 Permits/Regulatory (Q2 one time) \$500 \$500 Company Formation/Financial Structure \$2,000 \$2,000 IT, Website, Advertising and Application Platform Costs \$20,000 \$20,000 Consultants See above \$4,871 \$4,871 \$4,871 \$4,871 \$0 \$0 \$0 \$0 \$0 \$0 \$0 \$0 TOTAL FIXED COSTS \$6,871 \$40,371 \$4,871 \$4,871 \$0 \$0 \$0 \$0 \$0 \$0 \$0 \$0 TOTAL COSTS \$21,256 \$64,093 \$28,785 \$30,225 \$41,116 \$44,188 \$47,260 \$51,868 \$56,476 \$60,316 \$64,156 \$71,836 GROSS PROFIT (EBITDA) (\$21,056) (\$62,993) (\$27,285) (\$25,725) (\$18,616) (\$12,888) (\$7,160) \$1,682 \$17,774 \$27,184 \$38,844 \$61,164 Cash Needs: (\$21,056) (\$62,993) (\$27,285) (\$25,725) (\$18,616) (\$12,888) (\$7,160) \$0 \$0 \$0 \$0 \$0 Cumulative Cash Needs (for Funding Strategy): (\$21,056) (\$84,049) (\$111,334) (\$137,059) (\$155,674) (\$168,562) (\$175,722) (\$175,722) (\$175,722) (\$175,722) (\$175,722) (\$175,722) LOW TECH/MKT VALUATION – Multiple of Annual EBITDA Year 3 6 \$869,801 Note: Simple approach – more sophisticated techniques for valuation are available HIGH TECH/MKT VALUATION – High Multiple of Annual EBITDA Year 3 10 \$1,449,668

Revenue Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10 Q11 Q12 200 1100 1500 4500 22500 31300 40100 53550 74250 87500 103000 133000 Cost of Sales Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10 Q11 Q12 21256.25 64092.75 28784.75 30224.75 41115.800000000003 44187.8 47259.8 51867.8 56475.8 60315.8 64155.8 71835.8 Gross Profit Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10 Q11 Q12 -21056.25 -62992.75 -27284.75 -25724.75 -18615.800000000003 -12887.800000000003 -7159.8000000000029 1682.1999999999971 17774.199999999997 27184.199999999997 38844.199999999997 61164.2 Cumulative Cash Needs Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10 Q11 Q12 -21056.25 -84049 -111333.75 -137058.5 -155674.29999999999 -168562.09999999998 -175721.89999999997 -175721.89999999997 -175721.89999999997 -175721.89999999997 -175721.89999999997 -175721.89999999997

Breakeven

Investment Needed

## Sheet3

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