Business Planning: Revenue Expectancy, Cost of Goods Sold, and Profit and Loss Assumptions

This business planning document outlines revenue expectancy, cost of goods sold, and profit and loss assumptions for a startup. It includes a summary statement, balance sheet, and cash flow projections.

Running head: BUSINESS PLANNING
BUSINESS PLANNING
Name of Student
Name of University
Author note

2BUSINESS PLANNING
Important Assumptions
1. Year-one revenue expectancy
Item 1 Item 2 Item 3 Item 4
Number of units sold annually 750 0 0 0
Average sales price per unit $47.00 $0.00 $0.00 $0.00
Annual revenue per product $35,250 $0 $0 $0
Total year 1 revenue $35,250
2. Year 1 cost of goods sold
Item 1 Item 2 Item 3 Item 4
Expected gross margin per product 15.00% 0.00% 0.00% 0.00%
Annual cost of goods sold per product $5,288 $0 $0 $0
Total year 1 cost of goods sold $5,288
3. Annual maintenance, repair, and overhaul
Factor (%) on capital equipment 0%
4. Number of years for straight-line depreciation 5
5. Annual tax rate 30%
6. If long-term debt is being used to finance
operations, enter the total loan value.
110,
000
Startup costs
Organic Food
Sources of Capital
Owners' Investment (name & % ownership)
Your name & % ownership $
250,000
Other Investor
-
Other Investor
-
Other Investor
-
Total Investment $
250,000

3BUSINESS PLANNING
Bank Loans
Bank 1 $
10,000
Bank 2
10,000
Bank 3
-
Bank 4
-
Total Bank Loans $
20,000
Other Loans
Source 1 $
65,000
Source 2
25,000
Total Other Loans $
90,000
Summary Statement
Sources of Capital
Owners' and Other Investments $
250,000
Bank Loans
20,000
Other Loans
90,000
Total Source of Funds $
360,000
Startup Expenses
Bldgs / Real Estate $
28,750
Leasehold Improvements
10,000
Capital Equipment
62,500
Location / Admin Expenses
10,000
Opening Inventory
-
Advertising / Promo Expenses
6,000
Other Expenses
50,000
Total Startup Expenses $
887,250

4BUSINESS PLANNING
Break even Costs
Fixed Expenses
Fixed Expenses
Bldgs / Real Estate $
28,750
Leasehold Improvements
10,000
Capital Equipment
62,500
Location / Admin Expenses
10,000
Opening Inventory
-
Advertising / Promo Expenses
6,000
Other Expenses
50,000
Total Fixed Expenses $
167,250
Variable
Expenses
Inventory or Materials 0.0
Direct labor (includes payroll taxes) 0.0
Other expenses 0.0
Other expenses 0.0
Salaries (includes payroll taxes) 0.0
Supplies 0.0
Total Variable Expenses 0%
Breakeven Sales level = 167250

5BUSINESS PLANNING
Profit and loss account
Year 1 Year 2 Year 3 Year 4 Year 5
Annual cumulative price (revenue) increase - 35.00% 35.00% 35.00% 35.00%
Annual cumulative inflation (expense) increase - 2.00% 4.00% 6.00% 8.00%
Interest rate on ending cash balance 0.50% 0.50% 0.50% 0.50% 0.50%
Year 1 Year 2 Year 3 Year 4 Year 5
Gross revenue $35,250 $47,588 $64,243 $86,728 $117,083
Cost of goods sold $5,288 $5,393 $5,609 $5,946 $6,421
Gross margin $29,963 $42,194 $58,634 $80,783 $110,662
Other revenue [source] $0 $0 $0 $0 $0
Interest income $0 $0 $0 $0 $0
Total revenue $29,963 $42,194 $58,634 $80,783 $110,662
Operating expenses
Sales and marketing $6,000 $6,120 $6,365 $6,747 $7,286
Payroll and payroll taxes $50,000 $51,000 $53,040 $56,222 $60,720
Depreciation $20,250 $20,655 $21,060 $21,465 $21,870
Maintenance, repair, and overhaul $0 $0 $0 $0 $0
Total operating expenses $76,250 $77,775 $80,465 $84,434 $89,877
Operating income ($46,288) ($35,581) ($21,831) ($3,651) $20,785
Interest expense on long-term debt $0 $0 $0 $0 $0
Operating income before other items ($46,288) ($35,581) ($21,831) ($3,651) $20,785
Loss (gain) on sale of assets $0 $0 $0 $0 $0
Other unusual expenses (income) $0 $0 $0 $0 $0
Earnings before taxes ($46,288) ($35,581) ($21,831) ($3,651) $20,785
Taxes on income 30% $0 $0 $0 $0 $6,236
Net income (loss) ($46,288) ($35,581) ($21,831) ($3,651) $14,550
Year-by-year profit and loss assumptions

6BUSINESS PLANNING
Balance Sheet
Assets Initial balance Year 1 Year 2 Year 3 Year 4 Year 5
Cash and short-term investments $0 ($69,750) ($29,095) $11,965 $53,430 $89,064
Accounts receivable 0 0 0 0 0 0
Total inventory 0 0 0 0 0 0
Prepaid expenses 0 0 0 0 0 0
Deferred income tax 0 0 0 0 0 0
Other current assets 0 0 0 0 0 0
Total current assets $0 ($69,750) ($29,095) $11,965 $53,430 $89,064
Buildings $28,750 $28,750 $28,750 $28,750 $28,750 $28,750
Land 0 0 0 0 0 0
Capital improvements 10,000$ 10,000 10,000 10,000 10,000 10,000
Machinery and equipment 62,500$ 62,500 62,500 62,500 62,500 62,500
Less: Accumulated depreciation expense 0 20,250 40,905 61,965 83,430 105,300
Net property/equipment $101,250 $81,000 $60,345 $39,285 $17,820 ($4,050)
Goodwill $0 $0 $0 $0 $0 $0
Deferred income tax 0 0 0 0 0 0
Long-term investments 0 0 0 0 0 0
Deposits 0 0 0 0 0 0
Other long-term assets 0 0 0 0 0 0
Total assets $101,250 $11,250 $31,250 $51,250 $71,250 $85,014
Liabilities Initial balance Year 1 Year 2 Year 3 Year 4 Year 5
Accounts payable $65,000 $65,000 $65,000 $65,000 $65,000 $65,000
Accrued expenses 0 0 0 0 0 0
Notes payable/short-term debt 0 0 0 0 0 0
Capital leases 0 0 0 0 0 0
Other current liabilities 0 0 0 0 0 0
Total current liabilities $65,000 $65,000 $65,000 $65,000 $65,000 $65,000
Long-term debt from loan payment calculator 110,000 $0 $0 $0 $0 $0
Other long-term debt $0 $0 $0 $0 $0 $0
Total debt $175,000 $65,000 $65,000 $65,000 $65,000 $65,000
Other liabilities 0 0 0 0 0 0
Total liabilities $175,000 $65,000 $65,000 $65,000 $65,000 $65,000
Equity Initial balance Year 1 Year 2 Year 3 Year 4 Year 5
Owner's equity (common) $50,000 $50,000 $50,000 $50,000 $50,000 $50,000
Paid-in capital 0 0 0 0 0 0
Preferred equity 0 0 0 0 0 0
Retained earnings 0 0 0 0 0 0
Total equity $50,000 $50,000 $50,000 $50,000 $50,000 $50,000
Total liabilities and equity $225,000 $115,000 $115,000 $115,000 $115,000 $115,000

7BUSINESS PLANNING
Cash flow
Year 1 Year 2 Year 3 Year 4 Year 5 Total
Operating activities
Net income $0 $0 $0 $0 $0 $0
Depreciation $20,250 $20,655 $21,060 $21,465 $21,870 $105,300
Accounts receivable $0 $0 $0 $0 $0 $0
Inventories $0 $0 $0 $0 $0 $0
Accounts payable $0 $0 $0 $0 $0 $0
Amortization 10,000 10,000 $10,000 $10,000 $10,000 $50,000
Other liabilities 5,000 5,000 $5,000 $5,000 $5,000 $25,000
Other operating cash flow items 0 0 $0 $0 $0 $0
Total operating activities $35,250 $35,655 $36,060 $36,465 $36,870 $180,300
$0
Investing activities $0
Capital expenditures $0 $0 $0 $0 $0 $0
Acquisition of business 0 0 0 0 0 $0
Sale of fixed assets $0 $0 $0 $0 ($6,236) ($6,236)
Other investing cash flow items 0 0 0 0 0 $0
Total investing activities $0 $0 $0 $0 ($6,236) ($6,236)
Financing activities
Long-term debt/financing ($110,000) $0 $0 $0 $0 ($110,000)
Preferred stock 0 0 0 0 0 0
Total cash dividends paid 5,000 5,000 5,000 5,000 5,000 25,000
Common stock 0 0 0 0 0 0
Other financing cash flow items 0 0 0 0 0 0
Total financing activities ($105,000) $5,000 $5,000 $5,000 $5,000 ($85,000)
Cumulative cash flow ($69,750) $40,655 $41,060 $41,465 $35,634 $89,064
Beginning cash balance $0 ($69,750) ($29,095) $11,965 $53,430
Ending cash balance ($69,750) ($29,095) $11,965 $53,430 $89,064