FINC610 - Financial Plan: StayCozzy Manufacturing Private Ltd, 2019

This assignment provides a comprehensive financial plan for StayCozzy Manufacturing Private Ltd, a startup clothing manufacturing company. It includes monthly sales forecasts, revenue projections of $350,000 per annum, and expense analysis covering cost of goods sold, salaries, general expenses, and depreciation. A breakeven analysis determines a minimum sales quantity of 5284 units, while ROI is projected at 13.57%. The plan incorporates debt financing at 40% with a 10% interest rate and equity financing at 60%. Cash flow forecasts and a balance sheet projecting total assets of $718,750 are also presented, demonstrating the company's sound financial position and potential for covering fixed costs.

Running head: FINANCIAL MODELLING
Financial Modelling
Name of the Student:
Name of the University:
Author’s Note:

1FINANCIAL MODELLING
Table of Contents
Introduction......................................................................................................................................2
Discussion........................................................................................................................................2
Financial Forecasting...................................................................................................................2
Conclusion.......................................................................................................................................5
References........................................................................................................................................6

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Introduction
The assignment deals with the development of financial business plan for the below start-
up company which will be in the manufacturing business. The name of the company will be
StayCozzy Manufacturing Private Ltd where the company will be manufacturing clothes and the
financial plan for the company will be designed. The financial plan for the company will be
prepared on a monthly plan where the sales forecast for the company will be planned where the
output and the per-price selling unit of the goods was planned (Ward 2016).
Discussion
Financial Forecasting
The financial plan for the company was designed in such a manner where the total
expenses for the company and the revenue was forecasted for the company. The classification of
the expenses and revenue for the company was done by analysing and taking the various
expenses and the sources of income, which the company can earn from the same (Stewart 2017).
Revenue: The revenue for the company will be around $350,000 on a per annum basis and the
monthly sales for the company would be around $29,167. The expected number of Output Sales
quantity would be around 1000 units and the selling price of the product would be around
$29.167. The total monthly sales for the company would be around $29,167 and the same is
expected to remain the same for around 12 months (Burns and Dewhurst 2016). The growth of
the revenue after assessing the market condition and the growth of the business factor is assessed
to grow at a rate of about 5% per annum. The increase and the consistency of the sales in the
field of the total sales will be helping the company in generating a higher income source for the
business (Lee et al. 2015).

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Expenses: The expenses for the company will primarily for the cost of sales or the raw material
prices, which the company will be using for the manufacturing of the goods. The cost of goods
sold for the company would be around 50% of the total sales amount, which the company will be
making. Salary And Wages, General Expenses for the company and the depreciation of the fixed
assets of the company will be the primary general expenses for the company (McKeever 2016).
The company will also be spending some amount on the Market Surveys and Researching for the
product manufacturing which were well accounted in the income statement of the company.
Depreciation: Depreciation of the fixed assets will be done on a straight-line basis and the rate
of depreciation for the fixed assets of the company will be around 20%. The depreciation would
be charged on the income statement of the company and the same would also be providing a tax
shield for the company in the form of reduced effective tax rate (Bentil and Yeomans 2016).
Tax Rate: The tax rate taken for the financial forecasting of the company was around 20% and
the same has been used for taxing the profits of the company by about 20%. The annual profit
earned by the company will be taxed at the rate of 20%.
Breakeven Analysis: The breakeven analysis is a quantitative assessment tool helping the
company and individual identify the minimum number of quantity that needs to be sold by the
company for recovering there fixed amount of expenses. It is essential that a company sell a
minimum quantity of goods so that it is able to well cover the expenses of the company and stay
profitable in the long-run. The breakeven analysis for the company for the company by taking
the total fixed costs of the company. The total fixed costs for the company would be around
108,850 and the total sales unit for the company is expected to be around 12,000 units. The
selling price of the unit would be around 29.67, which makes the breakeven quantity for the

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company to be around 5284 is the minimum or the breakeven quantity which the company needs
to sell for the purpose of staying in the long-term in the business (Stone et al. 2016).
Return on Investment: The return on investment will be calculated for the equity shareholders
of the company where the same will be computed with the help of the net profitability of the
company. The net profit earned by the company will be divided by the equity shareholders of the
company. The return on investment for the company should be sustainable so that the business
and the company can earn well in the long-run. The return on investment for the company will be
calculated by taking the net profit of the company, which is around 52,920 and the total equity
share capital of the company would be around 390,000. The return on investment for the
company would be around 13.57%.
Debt Financing: The Company would be financing the operating and he investing activities of
the company with the help of the equity and debt sources for the company. It is essential that the
debt and equity sources of the company should be in a proportionate or appropriate size so that
the company is well able to utilize the same. The weightage given to the equity source for the
company would be around 60% and on the other hand, side the debt would be given a weightage
of around 40%. The debt financing would be done by the company where the company would be
paying a 10% interest on the amount borrowed by the company. The interest paid by the comp
any would be helping the company in getting a tax shield on the interest paid by the company
making the effective cost of the debt to be lower.
Cash Flow Forecast: The cash flow forecasting was done for the company on a monthly basis
where the transactions done by the company would be forecasted on a monthly basis. In the first
year of operation it is expected that the operations and the level of activity for the company to
remain at a sustainable rate (Cramer 2017).

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Fixed Assets: The fixed assets of the company would be equipment’s, plant and machinery
where the operations of the company will be carried on and the office building and Workshop
Unit. The total investment in the first year in the fixed assets of the company would be around
155,000 out of which the company will be spending majority of the proportion in the workshop
unit and the plant and machinery of the company. It is essential to account for the fall in the
productivity and obsolence of the equipment’s used by the company and for the same reason the
fixed assets of the company will be depreciated at a rate of 20% (McKenzie 2015).
Balance Sheet: The balance sheet of the company shows the financial position of the company
for a financial period of time by including all the current assets and non-current assets and
liabilities of the company, the balance sheet for the company was prepared giving a total of
718,750 for the company. The company is having a sound financial current ratio, which makes
good for the company to manage the current liabilities of the company.
Conclusion
It is essential for every financials that the start-up should provide a financially sustainable
plan for the company. The financials of the company designed for the company is planned in
such a manner where it is expected that the company is expected to cover all of the fixed and
overhead cost of the company in the financial year. The return on investment for the equity
shareholders of the company was around 13% specifying that the total return for the company
shareholder’s is financially well stable and balanced. The financial position of the company was
also planned by drawing up the balance sheet for the company for the financial year end.

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References
Bentil, J. and Yeomans, J., 2016. Technical and financial analysis for the implementation of a
sustainable poultry farm in Takoradi, Ghana (No. PG 59 2016).
Burns, P. and Dewhurst, J. eds., 2016. Small business and entrepreneurship. Macmillan
International Higher Education.
Cramer, J., 2017. Corporate Social Responsibility and Globalisation: an action plan for business.
Routledge.
Lee, Y.K., Kim, S.H., Seo, M.K. and Hight, S.K., 2015. Market orientation and business
performance: Evidence from franchising industry. International Journal of Hospitality
Management, 44, pp.28-37.
McKeever, M., 2016. How to write a business plan. Nolo.
McKenzie, D., 2015. Identifying and spurring high-growth entrepreneurship: experimental
evidence from a business plan competition. The World Bank.
Stewart, K.E., 2017. The Business of Dentistry: A Financial Plan.
Stone, A.B., Grant, M.C., Roda, C.P., Hobson, D., Pawlik, T., Wu, C.L. and Wick, E.C., 2016.
Implementation costs of an enhanced recovery after surgery program in the United States: a
financial model and sensitivity analysis based on experiences at a quaternary academic medical
center. Journal of the American College of Surgeons, 222(3), pp.219-225.
Ward, J., 2016. Keeping the family business healthy: How to plan for continuing growth,
profitability, and family leadership. Springer.