Economics of Business & Financial Analysis - Finance Assignment Help

Assignment Task

Your first assignment consists of 3 parts

1. In a single Excel Workbook, create a start-up budget, pro-forma income and expense statement, and a pro-forma cash flow statement for your new business venture.
a. Start-Up Budget - how much money will it take to open your doors on day 1, as well as a budget projection for the first three months of operation when you may not have enough revenue to support yourself
b. Income and Expense Statement – presented monthly for the first year, then annually for the next three years of operation
c. Cash Flow Statement – presented quarterly for the first year, then annually for the next three years of operation

2. In a single Word Document,
a. for EACH statement create at least two paragraphs that contains a list of key assumptions that support the numbers in the statements (explain how you derived your numbers) and a summary of the statements that highlights key points of interest to prospective investors (e.g., when the business becomes profitable, how much invested capital it requires, where the capital will come from).

Business Plan: Financial Statements

The financial statements (or the "economics of the business") are one of the most closely scrutinized sections of any business plan and the most difficult aspects of the business plan as required in MGMT 4380. This should give you a good head start for that course.Investors sometimes go from the executive summary straight to the financial statements to judge the merit of a business plan, so your plan must address the financial issues of cash flow, start-up capital, and profit.

Summary and Analysis

After your financial statements are created, you are to write up a summary of these statements (at least one paragraph per statement) that highlights key points of interest to prospective investors (e.g., when the business becomes profitable, how much invested capital it requires, where the capital will come from). Also include a list of key assumptions that support the numbers in the statements (e.g., pricing decisions, economic data from the region, assumed increases in profits or costs, calculated demand, opportunity costs).Finally, you should include a table of key financial ratios and/or supplemental charts or graphs as appropriate. Table 8.4 (pg. 289) of the ENTREPRENEURSHIP textbook contains a comprehensive list of ratios, but a few of the most important in assessing business plans are:

Task

1-Debt-to-equity ratio: Long-term liabilities/Owner's equity
2-Net profit margin: Net profit/Gross revenue on sales
3-Return on investment: Net profit/Total asset

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