Business Plan - Financial Analysis of the Business

Running head: BUSINESS PLAN
BUSINESS PLAN
Name of the University
Name of the student
Author notes

1
BUSINESS PLAN
Executive summary
The aim of the report is to make an assessment of the business of uncle Isaac who wants to
start a new business. The report contains a detail of the various assumptions that uncle Isaac
wants to make to prepare the projected income statement, cash flows and balance sheet to get
an idea about the financial viability of the project. The report concludes with the
recommendation to Isaac about the possible modifications that he should do to make his
business a successful project.

2
BUSINESS PLAN
Introduction
The financial analysis of the business of Isaac has been done to evaluate the viability
of doing the business. In addition to that the estimation of the need of investment to start the
business has been made to give uncle Isaac an estimation of the projected investment that he
has to make to start the business. The break-even analysis of the business is also made in
order to evaluate the margin of sales that the business has to made in order to attain a no
profit or no loss position in the initial stage of the business. Further the analysis of the income
statement, balance sheet and the discounted cashflow statement has been made to assess the
estimated financial strength of the business.
Discussion
In the initial stage the analysis of the estimated Profit and loss statement of the
business of uncle Isaac is made to interpret the financial viability of the proposed business.
Profit and loss statement analysis
From the above profit and loss statement after the end of the first financial year. The
above profit and loss statement indicate that at the end of the first operational year the
business will give an after-tax net profit of CAD 22524.00. the profit generation of the
business can be adversely affected by the increase in the cost of material. To promote the
business uncle Isaac decided to choose social media for which the cost of marketing is
comparatively high than the other expenses (Berbegal-Mirabent Gil-Doménech and Alegre
2016). The conversion rate used to convert the currency from euro to CAD is 1.46.

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BUSINESS PLAN
The first-year targeted profit is met as the demand for chocolate is high in Canada.
The initial demand is expected to be 750 kg per month but in the initial month the sales is
estimated top be 50 kg and the estimated figure is gradually achieved at the later stage of the
business. The average selling price is estimated to be 160 per kg and that can fluctuate in the
future based on the demand of the chocolate. The total operating expenses is predicted to be
CAD 112480.00, and the tax rate is assumed to be 25%. Uncle Isaac can achieve the
estimated profit by setting an effective strategy of cost control and by following the
assumptions that are made in the given calculations. The only concern for uncle Isaac is the
increase of the material cost which can adversely affect the profit margin in the future
(Schenkel and Karlsson 2016).