Financial Projections of Electric Vehicle Charging Station

This article provides financial projections for an electric vehicle charging station, including specifying business capital requirements, conducting break-even analysis for sales, assessing risks and rewards, and anticipating financial returns.

Running head: FINANCIAL PROJECTIONS FOR ELECTRIC VEHICLE CHARGING
STATION
Financial Projections of Electric Vehicle Charging Station
Name of the University:
Name of the Student:
Authors Note:

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FINANCIAL PROJECTIONS FOR ELECTRIC VEHICLE CHARGING STATION
Table of Contents
1. Financial Projections..............................................................................................................2
1.1. Specifying Business Capital Requirements....................................................................2
1.2. Providing Financial Projections in Professional Ways...................................................5
1.3. Conducting Break-Even Analysis for Sales..................................................................10
1.4. Assessing Risks and Rewards.......................................................................................11
1.5. Anticipating Financial Returns.....................................................................................13
References................................................................................................................................15

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FINANCIAL PROJECTIONS FOR ELECTRIC VEHICLE CHARGING STATION
1. Financial Projections
1.1. Specifying Business Capital Requirements
Summary Statement
Sources of Capital
Owners' and Other Investments $ 5,037,700
Bank Loans 5,000
Other Loans 110,000
Total Source of Funds $ 5,152,700
Startup Expenses
Bldgs / Real Estate $ 70,500
Leasehold Improvements 22,000
Capital Equipment 67,000
Location / Admin Expenses 76,000
Opening Inventory -
Advertising / Promo Expenses 5,600
Other Expenses 475,000
Total Startup Expenses $ 11,021,500
Startup Expenses
Buildings / Real Estate
Purchase $ 50,000

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FINANCIAL PROJECTIONS FOR ELECTRIC VEHICLE CHARGING STATION
lease 20,000
Remodeling -
Other 500
Total Buildings and R / E $ 70,500
Leasehold Improvements
Item 1 $ 5,500
Item 2 $ 5,500
Item 3 $ 5,500
Item 4 $ 5,500
Total L / H Improvements $ 22,000
Capital Equipment List
Charging stations $ 55,000
Equipment $ 1,500
Fixtures $ 1,500
car manufacturing machinery $ 6,500
Other $ 2,500
Total Capital Equipment $ 67,000
Location and Admin Expenses
Rental $ -
Utility Deposits 5,500
Legal and Accounting Fees 4,500
Prepaid Insurance 55,000

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FINANCIAL PROJECTIONS FOR ELECTRIC VEHICLE CHARGING STATION
Pre-opening Salaries 5,500
Other 5,500
Total Location and Admin Expenses $ 76,000
Opening Inventory
Equipment sales $ 3,560
Charging stations $ 2,060
Parking area $ 2,460
System $ 2,660
Office rental $ 2,960
Total Inventory $ 13,700
Advertising and Promotional Expenses
Advertising $ 1,400
Signage $ 1,500
Printing $ 1,200
Travel & Entertainment $ 1,500
Other / Additional categories -
Total Adv and Promo expenses $ 5,600
Payroll and payroll taxes
Salary $ 450,000
Wages 25,000
Total Payroll and payroll taxes $ 475,000

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FINANCIAL PROJECTIONS FOR ELECTRIC VEHICLE CHARGING STATION
1.2. Providing Financial Projections in Professional Ways
Year 1 Year 2 Year 3
Gross revenue $2,360,000 $2,407,200 $2,503,488
Cost of goods sold $236,000 $240,720 $250,349
Gross margin $2,124,000 $2,166,480 $2,253,139
Other revenue [source] $1,245,643 $1,450,090 $2,005,000
Interest income $0 $0 $0
Total revenue $3,369,643 $3,616,570 $4,258,139
Operating expenses
Sales and marketing
$
5,600 $5,712 $5,940
Payroll and payroll taxes $475,000 $484,500 $503,880
Depreciation $31,900 $32,538 $33,176
Maintenance, repair, and overhaul $0 $0 $0
Total operating expenses $512,500 $522,750 $542,996
Operating income $2,857,143 $3,093,820 $3,715,143
Interest expense on long-term debt $897 $716 $526

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FINANCIAL PROJECTIONS FOR ELECTRIC VEHICLE CHARGING STATION
Operating income before other items $2,856,246 $3,093,104 $3,714,616
Loss (gain) on sale of assets $0 $0 $0
Other unusual expenses (income) $0 $0 $0
Earnings before taxes $2,856,246 $3,093,104 $3,714,616
Taxes on income 30% $856,874 $927,931 $1,114,385
Net income (loss) $1,999,372 $2,165,172 $2,600,231
Table 1: Profit and Loss Statement
Assets Initial
balance
Year 1 Year 2 Year 3
Cash and short-term
investments
$0 $193,781 $503,518 $3,197,704
Accounts receivable 0 2,000 2,000 2,000
Total inventory 0 2,500 2,500 2,500
Prepaid expenses 0 2,600 2,600 2,600
Deferred income tax 0 2,800 2,800 2,800
Other current assets 0 2,850 2,850 2,850
Total current assets $0 $206,531 $516,268 $3,210,454
Buildings $70,500 $70,500 $70,500 $70,500

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FINANCIAL PROJECTIONS FOR ELECTRIC VEHICLE CHARGING STATION
Land 0 0 0 0
Capital improvements $
22,000
22,000 22,000 22,000
Machinery and
equipment
$
67,000
67,000 67,000 67,000
Less: Accumulated
depreciation expense
9,233 41,133 73,671 106,847
Net
property/equipment
$150,267 $118,367 $85,829 $52,653
Goodwill $0 $0 $0 $0
Deferred income tax 0 0 0 0
Long-term investments 0 0 0 0
Deposits 0 0 0 0
Other long-term assets 0 0 0 0
Total assets $150,267 $324,898 $602,097 $3,263,107
Liabilities Initial
balance
Year 1 Year 2 Year 3
Accounts payable $65,000 $65,000 $65,000 $65,000
Accrued expenses 0 0 0 0
Notes payable/short-
term debt
0 0 0 0
Capital leases 0 0 0 0
Other current
liabilities
0 0 0 0
Total current liabilities $65,000 $65,000 $65,000 $65,000

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FINANCIAL PROJECTIONS FOR ELECTRIC VEHICLE CHARGING STATION
Long-term debt from
loan payment
calculator
115,000
$16,381 $12,580 $8,590
Other long-term debt $0 $0 $0 $0
Total debt $180,000 $81,381 $77,580 $73,590
Other liabilities 0 0 0 0
Total liabilities $180,000 $81,381 $77,580 $73,590
Equity Initial
balance
Year 1 Year 2 Year 3
Owner's equity
(common)
$50,000 $50,000 $50,000 $50,000
Paid-in capital 0 0 0 0
Preferred equity 0 0 0 0
Retained earnings 0 0 0 0
Total equity $50,000 $50,000 $50,000 $50,000
Total liabilities and
equity
$230,000 $131,381 $127,580 $123,590
Table 2: Balance Sheet Statement
Year 1 Year 2 Year 3 Total
Operating activities

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FINANCIAL PROJECTIONS FOR ELECTRIC VEHICLE CHARGING STATION
Net income $200,000 $216,000 $2,600,000 $3,016,000
Depreciation $31,900 $32,538 $33,176 $97,614
Accounts receivable ($2,000) $0 $0 ($2,000)
Inventories ($2,500) $0 $0 ($2,500)
Accounts payable $0 $0 $0 $0
Amortization 5,000 5,000 $5,000 $15,000
Other liabilities 25,000 25,000 $25,000 $75,000
Other operating cash flow
items 0 0 $0 $0
Total operating activities $257,400 $278,538 $2,663,176 $3,199,114
$0
Investing activities $0
Capital expenditures $0 $0 $0 $0
Acquisition of business 15,000 15,000 15,000 $45,000
Sale of fixed assets $10,000 $10,000 $10,000 $30,000
Other investing cash flow
items 0 0 0 $0
Total investing activities $25,000 $25,000 $25,000 $75,000
$0
Financing activities $0
Long-term debt/financing ($98,619) ($3,800) ($3,990) ($106,410)
Preferred stock 0 0 0 $0
Total cash dividends paid 5,000 5,000 5,000 $15,000
Common stock 0 0 0 $0
Other financing cash flow 5,000 5,000 5,000 $15,000

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FINANCIAL PROJECTIONS FOR ELECTRIC VEHICLE CHARGING STATION
items
Total financing activities ($88,619) $6,200 $6,010 ($76,410)
$0
Cumulative cash flow $193,781 $309,738 $2,694,186 $3,197,704
Beginning cash balance $0 $193,781 $503,518
Ending cash balance $193,781 $503,518 $3,197,704
1.3. Conducting Break-Even Analysis for Sales
Fixed Expenses
Fixed Expenses
Inventory or Materials 22,800,000
office rental 70,000
Charging parking rental 148,500
Advertising 200,000
Salaries (includes payroll taxes) 450,000
System 60,000
Depreciation 27,000
Total Fixed Expenses $ 23,755,500
Variable Expenses
Utility 39,000
Operation and maintenance 41,000
Total Variable Expenses 80000
Breakeven Sales level = -29732

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FINANCIAL PROJECTIONS FOR ELECTRIC VEHICLE CHARGING STATION
1.4. Assessing Risks and Rewards
The risks that can be faced by this new business must be given a thoughtful consideration
in order to analyze the likely costs and advantages. The company needs t realize the areas in
which risks can take place so that it can be easy for the entrepreneur to determine the
potential rewards that can make the risks worth taking (Baker 2014). Certain risks that can be
faced by the new “Electric vehicle charging station” company are explained under:
 There can be increased rate of business failure. This can be because of the rising
difficulty in testing the new business idea without trading.
 Financial risks can take place in the startup of this new business that can lead to huge
loss of this company (Calabrò 2017). In order to deal with this risk the business
requires to get involved in careful planning, developing an effective cash reserve
along with developing an effective contingency budgeting along with taking decision
to deal with it.
 Another major risk can take place in case the consumer response is aggressive.
Moreover, another risk is regarding the fact that it is easy to underestimate the effort
along with persistence that is required to be successful (Ciftci and Darrough 2015).
 Poor market research ad implementation of the unrealistic plan can result in poor
catering to consumer demand. In such scenario, the business will not be able to catch
up with competitor’s response such as drastic price cuts and increased promotional
activities.
 Risks can also take place in the company’s new business because of poor execution of
its effective ideas (Gordon et al. 2017). This can take place because of wrong people
and poor management, a rapid or extremely slow growth along with failure to manage
all the company’s cash flows.

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FINANCIAL PROJECTIONS FOR ELECTRIC VEHICLE CHARGING STATION
 External shocks can also pose a major risk to the company’s business that can take
place from economic change such as oil price fluctuations and credit crunch. Certain
uncontrollable risks can also take place from legal, social along with technological
changes (Hatch et al. 2017).
Based on analyzing the above risks that can be experienced by this new business, certain
rewards have been identified that can be attained in accepting such risks in the business. Such
rewards are deemed to be in the financial and non-financial form. Such financial rewards are
deemed to be in the form of profits, dividends and capital growth along with non-financial
rewards including satisfaction, control and contribution. Such rewards those are anticipated to
be attained by the new business are explained under:
 Reward of increased revenue and profitability is deemed to be attained by this new
business through selling electric vehicles charging stations because of low interest
rates and dropping oil prices. To attain such growth the company’s automakers and
suppliers might deal with risk of overbuilding inventories and the rush to address the
demand. However, by dealing with such risks the company will be able to attain high
sales growth.
 Attaining competitive advantages through technology and innovation will be possible
for this new business in accepting the probable risks faced by the company (Hopp et
al. 2018). The business will be able to attain the competitive advantages over its major
rivals through transforming its electronic vehicle charging station services to offer
services to the self-driving cars. It will also be able to attain innovation rewards as the
“Department of Labor” is offering grants to such companies in developing changing
engines that can promote fuel efficiency by 40% those are not running on hydrogen
fuels or batteries (Narasimhan 2016).

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FINANCIAL PROJECTIONS FOR ELECTRIC VEHICLE CHARGING STATION
 International expansion is observed to be an important reward that can be attained by
this new business as it can expand to other nations that can further increase its
production rates and can add more capacity.
 Another advantageous return that is deemed to be attained by this new business is
attaining of highly skilled workforce. The company can motivate all its existing
employees that can promote the company’s business through dealing with challenging
circumstances in the future years (Wang and Lin 2016).
 Financial reward is one of the major gains that will be attained by this new business in
case it accepts all its risks identified above. In the upcoming years of its business, the
company can attain a constant cash flow that can further facilitate in business
expansion strategies.
 Status and brand reputation of the company can be enhanced in the long run that can
serve as major non-financial rewards such as improved level of authority,
responsibility, recognition along with salary (Wang and Lin 2016). Attaining
increased brand recognition facilities in increasing self-esteem along with
psychological needs of all its employees that ca further motivate them towards hard
work (Wang and Lin 2016).
1.5. Anticipating Financial Returns
From investing in this business of electric vehicle charging station, the business is
intended to attain a healthy financial return in the future years. The company is also
anticipated to attain an efficient sales return with which it can be able to cover all its initially
invested costs within a short span of time (Bobryshev et al. 2014). Due to a continuous
growth in its cash flow the business is deemed to attain savings in its operations costs through
focusing on a single product market. The operating income that is anticipated to be attained
by this new company in its equipment sales is $ 23, 700, 000 each year and charging station

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FINANCIAL PROJECTIONS FOR ELECTRIC VEHICLE CHARGING STATION
is estimated to be $ 2,582,798 each year. From analysing the estimated cost and operation income
the business is anticipated to attain its break even in the first year of its operation (Bostwick, Krieger
and Lambert 2016). The net profit that is anticipated by the business to attain in its first year of
business operation is 2,000,000, in the second year $ 2160000 and $ 260000.

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FINANCIAL PROJECTIONS FOR ELECTRIC VEHICLE CHARGING STATION
References
Baker, C.R., 2014. Commentary on “Trends in statistically based quarterly cash-flow
prediction models”. In Accounting forum (Vol. 38, No. 2, pp. 152-154). Elsevier.
Bobryshev, A.N., Uryadova, T.N., Lyubenkova, E.P., Yakovenko, V.S. and Alekseeva, O.A.,
2014. Analytical and management approaches to modeling of the accounting balance
sheet. Life Science Journal, 11(8), pp.502-506.
Bostwick, E.D., Krieger, K. and Lambert, S.L., 2016. Relevance of goodwill impairments to
cash flow prediction and forecasting. Journal of Accounting, Auditing & Finance, 31(3),
pp.339-364.
Calabrò, F., 2017, July. Local communities and management of cultural heritage of the inner
areas. An application of break-even analysis. In International Conference on Computational
Science and Its Applications (pp. 516-531). Springer, Cham.
Ciftci, M. and Darrough, M., 2015. What Explains the Valuation Difference between
Intangible‐intensive Profit and Loss Firms?. Journal of Business Finance &
Accounting, 42(1-2), pp.138-166.
Gordon, E.A., Henry, E., Jorgensen, B.N. and Linthicum, C.L., 2017. Flexibility in cash-flow
classification under IFRS: determinants and consequences. Review of Accounting
Studies, 22(2), pp.839-872.
Hatch, M.D., Daniels, S.D., Glerum, K.M. and Higgins, L.D., 2017. The cost-effectiveness of
vancomycin for preventing infections following shoulder arthroplasty: a break even
analysis. Journal of Shoulder and Elbow Surgery, 26(5), pp.e144-e145.

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FINANCIAL PROJECTIONS FOR ELECTRIC VEHICLE CHARGING STATION
Hopp, C., Greene, F.J., Honig, B., Karlsson, T. and Samuelsson, M., 2018. Revisiting the
influence of institutional forces on the written business plan: a replication study. Management
Review Quarterly, pp.1-38.
Narasimhan, C., 2016. Break-even Analysis. TC, 2, p.R3.
Wang, C.Y. and Lin, M.Y., 2016, November. Prediction of accrual expenses in balance sheet
using decision trees and linear regression. In Technologies and Applications of Artificial
Intelligence (TAAI), 2016 Conference on (pp. 73-77). IEEE.