Finance Financial Projections for Touch My Knuckles Essay

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Finance

Financial Projections for Touch My Knuckles

Touch My Knuckles, a firm selling mixed martial arts appeal, including shirts, fleeces, hats and sweatshirts will provide a great potential for investment. The aim of this paper is to look at the financial statements for the first three years of operating, including start-up costs, cash flow, income statement and balance sheet. Following the financial analysis consideration will be given to the way in which the may be raised an issue of capital structure.

Financial Statements

The following financial statements indicate potential of the business. The financing being requested in $248,560, this can been calculated with reference to the start up costs, less the available capital, with an allowance of the operating loss that will be made in the first month.

The start up costs are relativity modest due to the use of outsource suppliers who will send the goods directly to the wholesale purchasers. The total start up costs are $275,000.

Table 1; Start up costs

Premise (lease)

25,000

Office equipment and furniture

22,000

Computer equipment

18,000

Opening inventory

150,000

Legal costs

25,000

Pre-start up operating costs

20,000

Launch marketing

15,000 Total

275,000

The cash flow for the first year is shown in table 2 below.

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This shows that the first month will operate at a deficit, but after this there will be an operating profit each month with a cash surplus. The firm will break even in month 12.

Table 2; Fist Year Cash Flow

Start up period

Jan

Feb

Mar

Apr

May

Jun

Jul

Start up costs

275,000

Sales

10,000

30,000

35,000

46,000

49,000

57,000

63,000

Cost of goods sold

2,000

6,000

7,000

9,200

9,800

11,400

12,600

Payroll

3,000

9,000

10,500

13,800

14,700

17,100

18,900

Payroll taxes etc.

1,080

1,260

1,656

1,764

2,052

2,268

Sales and marketing

3,000

3,000

2,000

2,000

1,800

1,800

1,800

Rent

Insurance

2,000

Utilities

Total outflow

11,560

19,880

21,560

27,856

28,864

33,152

36,768

Net inflow/outflow

-1,560

10,120

13,440

18,144

20,136

23,848

26,232

Accumulative total

-275,000

-276,560

-266,440

-253,000

-234,856

-214,720

-190,872

-164,640

Aug

Sept

Oct

Nov

Dec

Total

Start up costs

Sales

67,000

70,000

78,000

82,000

90,000

677,000

Cost of goods sold

13,400

14,000

15,600

16,400

18,000

135,400

Payroll

20,100

21,000

23,400

24,600

27,000

203,100

Payroll taxes etc.

2,412

2,520

2,808

2,952

3,240

24,372

Sales and marketing

2,000

2,000

2,000

2,000

2,000

25,400

Rent

9,600

Insurance

2,000

Utilities

1,600

Total.....

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