Financial Report: Funds Sources, Uses, and Break-Even Analysis Review

This report discusses the sources and uses of funds, focusing on venture capital and debt finance as major sources for a business plan. It highlights the importance of financial assumptions, including project cash flows, for developing a one-year plan for a cafe business. The report also explains break-even analysis, differentiating between variable and fixed costs, and how it helps in determining sales value and volume for understanding business profitability. The analysis references dynamic business modeling and the impact of solar incentives on photovoltaic systems. Desklib provides a platform to explore more solved assignments and study resources.

Sources and use of funds
Venture capital and debt are two of the major sources of finance which will be used for the
current business plan. Venture Capital is the source of finance in which external investor will
invest in the current business plan and in return profits will be shared with the investor in
accordance to their finance amount. Debt finance is a source of finance in which debt will be
taken from financial institution for business. This will then be used in acquiring assets of the firm
and to initiate the future operation which is planned under current business plan.
Plan assumptions
The financial assumptions are considered as a critical component for the business plan which includes
project cash flows. For opening this cafe business, a year plan needs to be developed by the management
team. The opening balance of cash includes income from operations and other activities (Cosenz &
Noto, 2018). This entire cost need to deduct the operational expenses. In addition to that, the marketing
expenses and administrative and selling expenses are part of these actual expenses. The maintenance
expenses also need to deduct from the opening balance cash to analyse the actual closing balance of the
cost.
Break-even analysis
The break-even analysis is known as a technique used for managing accounts or production. There are
two types of cost identified in the break-even analysis. Those are variable and fixed. The variable
indicates the production cost which changes according to the production output. However, the fixed cost
is not related to the volume of production (Lee, Hong, Koo & Kim, 2018). The total fixed and variable
cost is generally compared with the sales revenue. It helps in determining the sales value and level of
sales volume which is helpful for understanding the loss or profit of the business.

References
Cosenz, F., & Noto, G. (2018). A dynamic business modelling approach to design and
experiment new business venture strategies. Long Range Planning, 51(1), 127-140.
Lee, M., Hong, T., Koo, C., & Kim, C. J. (2018). A break-even analysis and impact analysis of
residential solar photovoltaic systems considering state solar incentives. Technological and
Economic Development of Economy, 24(2), 358-382.