Wi-Tribe: Startup Costs, Financial Statements, and Investment Needs

This report presents a comprehensive financial analysis of Wi-Tribe, a startup aiming to provide high-speed internet services through application development. It begins with a detailed breakdown of startup costs, including registrations, equipment, and operational expenses. The report then provides projected cash flow statements for 2018 and 2019, outlining inflows from sales and application downloads, and outflows for various expenses. An income statement is presented for the same period, detailing net sales, cost of sales, operating expenses, and net income, along with working notes for calculations. The balance sheet showcases assets, liabilities, and equity for both years, providing a snapshot of the company's financial position. The report also includes a break-even point analysis, examining sales mix and contribution margins. Finally, it discusses investment needs, categorizing them into basic contingency funds, term insurance, and short and long-term goals, along with a projected revenue forecast for the following years. The report emphasizes the importance of financial planning, cost control, and competitive advantage in ensuring the success of the Wi-Tribe business venture.

ORGANIZATIONAL
CREATIVITY AND
INNOVATION

TABLE OF CONTENTS
START UP COSTING...............................................................................................................1
EXPECTED CASH FLOW STATEMENT...............................................................................1
INCOME STATEMENT...........................................................................................................2
BALANCE SHEET...................................................................................................................3
BREAK EVEN POINT..............................................................................................................5
INVESTMENT NEEDS............................................................................................................6
REFERENCES...........................................................................................................................7

START UP COSTING
Start-up Costing for Wi-Tribe - 2017
START-UP COSTS Cost ($) EQUIPMENT/
CAPITAL COSTS Cost ($)
Registrations Business purchase price $20,000
Business name $82 Franchise fees $25,000
Licenses $500 Start-up capital $50,000
Plant & equipment
Domain names $77 Vehicles $4,000
Trademarks/designs/patents $1,200 Computer equipment $5,692
Computer software $3,100
Phones $249
Accountant fees $135 Fax machine $600
Solicitor fees $5,000 Security system $1,613
Rental lease cost (Rent
advance/deposit) $23,040 Office equipment
Utility connections & bonds
(Electricity, gas, water) $878 Furniture $3,500
Phone connection $3,588 Shop fit out $6,500
Internet connection $659
Computer software $3,100
Training $6,000
Wages $7,023
Insurance
Building and contents $11,871
Vehicle $1,200
Professional indemnity $440
Product liability $2,500
Business assets $5,692
Business revenue $40,110
Printing $200
Stationery & office supplies $459
Marketing & advertising $2,500
Designing of application $4,000
Total start-up costs $120,254 Total equipment/capital
costs $120,254
EXPECTED CASH FLOW STATEMENT
Expected cash flow 2018 2019
Bank loan $ 50,000.00 $ 80,000.00
1

Cash inflow
Sales $ 48,132.00 $ 72,198.00
Downloading of applications $ 60,000.00 $ 90,000.00
Trade receivables $ 25,000.00 $ 29,000.00
Other income $ 12,000.00 $ 25,000.00
Total cash inflow $145,132.00 $216,198.00
Cash outflow
Purchase of computer $ 5,692.00 $ 6,368.00
Web hosting $ 154.80 $ 154.80
Domain registration $ 18.00 $ 18.00
Accountant fees $ 140.00 $ 150.00
Solicitor fees $ 5,000.00 $ 5,500.00
Advertising and Marketing $ 2,500.00 $ 3,000.00
Bank fees and charges $ 500.00 $ 600.00
Interest paid $ 36,000.00 $ 57,600.00
Utilities $ 878.00 $ 878.00
Telephone $ 500.00 $ 550.00
Lease payments $ 2,000.00 $ 3,000.00
Rent and rates $ 22,944.00 $ 22,944.00
Motor vehicle $ 4,000.00 $ 4,500.00
Repairs and maintenance $ 1,200.00 $ 1,500.00
Stationery and printing $ 200.00 $ 350.00
Licensing $ 500.00 $ 500.00
Insurance $ 16,010.56 $ 16,010.56
Income tax $ 4,500.00 $ 5,500.00
Wages $ 7,023.36 $ 7,023.36
Total cash outflow $109,760.72 $136,146.72
Net cash balance $ 35,371.28 $ 80,051.28
Closing balance $ 85,371.28 $160,051.28
INCOME STATEMENT
Income statement of Wi-Tribe
For two years 2018 and 2019
Particulars 2018 2019
Net sales $48,132.00 $72,198.00
Cost of sales $ 8,692.00 $10,868.00
GP $39,440.00 $61,330.00
Operating expenses
Selling expenses $ 2,500.00 $ 2,000.00
Depreciation $ 853.80 $ 955.20
Total Operating expenses $ 3,353.80 $ 2,955.20
Operating income $36,086.20 $58,374.80
Other income $12,000.00 $25,000.00
Interest income $ 2,500.00 $ 3,200.00
Interest Expense $36,000.00 $57,600.00
EBIT $14,586.20 $28,974.80
2

Income taxes $ 4,500.00 $ 5,500.00
Net income $10,086.20 $23,474.80
Number of shares $20,000.00 $25,000.00
EPS $ 0.50 $ 0.94
Working notes
Calculation of cost of Sales
Particulars 2018 2019
Opening stock $ 5,000.00 $ 8,000.00
Purchase $ 5,692.00 $ 6,368.00
Closing stock $ 2,000.00 $ 3,500.00
Cost of sales $ 8,692.00 $10,868.00
One of the medium to showcase the good efforts applies by an entity in achieving all
the targets in a stipulated time period in the form of higher profits. Profitability shows the
hard work of an entity in attracting all the customers towards its entity (Narasimhan, 2017).
Advertising and marketing expenses incurred by the firm is important weapon in generating
higher profits. Marketing skills of marketing manager of WI-TRIBE converts potential user
into regular and loyal customers mark good impression on all the external users of the
markets.
Some assumptions added flavour in preparing income statements are supporting
factors in determining the actual position of the concern. Depreciation charged on the
purchase of computer at the rate of 15% for both the year 2018 and 2019 (Visvanathan,
2017).
BALANCE SHEET
Particulars 2018 2019
Assets
Current assets
Cash and cash equivalents $ 85,371.28 $145,611.68
Accounts receivable $ 25,000.00 $ 29,000.00
Inventories $ 8,692.00 $ 10,868.00
Total current assets $119,063.28 $185,479.68
Non-current assets
Vehicle $ 4,000.00 $ 4,500.00
Computer Equipment $ 5,692.00 $ 6,368.00
Less Depreciation $ 853.80 $ 955.20
Net computer equipment $ 4,838.20 $ 5,412.80
Computer software $ 3,100.00 $ 3,100.00
Security systems $ 1,613.00 $ 1,613.00
3

Phones $ 249.00 $ 249.00
Fax machine $ 600.00 $ 650.00
Furniture $ 3,500.00 $ 3,000.00
Shop fit out $ 2,500.00 $ 2,000.00
Total non-current assets $ 26,946.00 $ 27,848.00
Total assets $146,009.28 $213,327.68
Liabilities and equity
Current liabilities
Accounts payable 25000 40000
Total current liabilities 25000 40000
Long term liabilities
Bank loan 50000 80000
Total 50000 80000
Equity
Common stock 71009.28 $ 93,327.68
Equity 71009.28 93327.68
Equity and liabilities 146009.28 $213,327.68
One aspect of standard financial statement used in analyzing the financial position of
an enterprise. Financial position identifies with the help of positional Statement in
ascertaining the financial position of the business concern at different point of time as an
individual prepare this statements twice or once in a financial year (Öztürk, 2017). It can be
renowned as a financial track to keep watch on all the positive and negative side of the firm
in the form of assets and liabilities. Assets show the income received by the business concern
evaluates on various parameters and on another hand, liabilities depicts all the obligations of
the business concern.
A current financial statement is for Wi-tribe entities, who initiate their new business
of providing high speed internet service through the development of applications. The
business idea of this new business is to start an application to provide data extracted from the
website to facilitate all the users (Kim, Schmidgall & Damitio, 2017). There are different
competitors in the market who operates similar kinds of business to give the tough fight to
WI-TRIBE business. A balance sheet of this entity targets all the costs and incomes involved
in an entity. Identifying all the costs is essential to control the expenses to increase the
potential of an entity. On the contrary to this, assets and income received by the firm is
identifies with the help of balance sheets to compensate higher costs and expenses incurred in
a firm.
4

BREAK EVEN POINT
Sa
les
Mi
x
Uni
t
Sal
es
Pri
ce
Sal
es
Pri
ce
(S
M)
Unit
Vari
able
Cost
s
Vari
able
Cost
(SM
)
Contri
bution
Margi
n
Contri
bution
Margi
n
(SM)
B
E
P
Sales
reven
ue
1 Month Unlimited
subscription
30
%
$18
0.0
0
$54
.00
$10
0.00
$30.
00 $80.00 $24.00
1,
20
0
$
28,800
.00
Monthly paid
subscription and time
per hour
5
%
$27
0.0
0
$13
.50
$15
0.00
$7.5
0
$120.0
0 $6.00
20
0
$
1,200.
00
1 Week unlimited
15
%
$90
.00
$13
.50
$50.
00
$7.5
0 $40.00 $6.00
60
0
$
3,600.
00
1 year subscription
unlimited
45
%
$36
0.0
0
$16
2.0
0
$20
0.00
$90.
00
$160.0
0 $72.00
1,
80
0
$129,6
00.00
CSG Package for 1
year
5
%
$54
0.0
0
$27
.00
$30
0.00
$15.
00
$240.0
0 $12.00
20
0
$2,400
.00
Total
10
0
%
$54
0.0
0
$81
.00
$30
0.00
$45.
00
$240.0
0 $36.00
4,
00
0
$
33,600
.00
Mar
kup
80.0
0%
Unique concept used by an entity to know its current as well as future position to
survive in the external market called as breakeven point method. Compatibility of business
intelligence has tested by an individual by determining this point to ensure its longer survival.
According to this concept, a sales unit produced by the firm surpasses this level to earn the
desired profit within a stipulated time period (Kim, Jang, Gao, Kim, Chung & Bang, 2017).
It is a journey of exploring ways to boost the overall profitability by determining
desired profits per unit. Formula of the break-even point depicts the importance of fixed costs
and contribution margin. These two factors play an integral role in reaching the desired
destination of ascertaining the break-even point higher than the actual sales units to show the
profit part.
5

Fixed costs total used in calculating the break-even point and contribution margin will
be calculated per unit. Variable costs has deducted from the overall sales revenue to ascertain
the amount of contribution margin per unit. Variable costs changes according to the changes
takes places in the entire units produced by the firm in a financial year.
Two kinds of costs incurred in an entity are fixed and variable costs that can be
controllable or non-controllable. These two costs fluctuate with the overall production in a
business entity. Fixed cost is not under the control of the venture as it remains the same in
both zero as well as higher production of the business enterprise.
Nowadays, competition has increased in the market will eliminate on initial stage by
identifying the strength of the firm. This measure has used by the firm to identify the capacity
of the enterprise after achieving the actual breakeven point. This concept shows the
maximum amount of profit earned by an entity in the future by considering all the factors for
the betterment of the business concern. Sustainable competitive advantage can attain by the
corporation by emphasizing on important aspects of the business concern.
Operating business without earning the profit is waste of time and energy of an entity
owner as profit element is an integral aspect of the business. The efficiency of the business
reflects in changing profit of the business concern. Alteration in the selling price will induce
the entire business profits. With the help of higher profit, an image of an entity can get
increase in front of all the external users by grabbing their attention towards the business.
Their positive response towards an entity will be beneficial for the firm in achieving all the
targets within a stipulated deadline offer by the customers (Morano & Tajani, 2017).
INVESTMENT NEEDS
After analyzing the financial position of WI-TRIBE, investment needs of the firm has
categorized into four levels. Four stages of determining the investment needs include basic
contingency funds, term insurance, future long-term goals and future short term goals.
Personal savings of an entity owner comes under this category to meet the future
uncertainty which, in turn, increases the income potential of the firm. In today’s world,
protection of the wealth of an individual is requiring to beat all the competitors. Term
insurance protects the income of the firm by segregates their obligations into three categories
of short term, medium term, and long-term. Higher expenses incurred in an entity needs to
6

control and improve the condition of the business. Subletting use by the firm to compensate
the higher expenses in the form of rent of an enterprise.
Funding of business
WI-TRIBE needs finance to meet their uncertain needs of an enterprise as without
finance, the existence of the business is not possible. Through crowd funding, small
proportions of finance will raise from large number of people to meet all the desired needs of
the business. This practice has used by an entrepreneur who intends to start their business on
their own. Donation based crowd funding use by firm under which; large number proof
individuals collectively raise money for charitable trusts to support the social cause.
Worth of the current business of WI-TRIBE will determine on the overall sales and the
revenue generated by an entity. An income statement shows 50% increase in sales from
2018-2019 which is use as an increasing trend till the passage of 5 years.
Particulars 2018 2019 2020 2021 2022
Total
Revenue 48132 72198 108297 162446 243668 634740.8
2018 2019 2020 2021 2022 Total
0
5000
10000
15000
20000
25000
30000
35000
Revenue in Next 5 years
Revenue
7

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REFERENCES
Kim, M., Schmidgall, R. S., & Damitio, J. W. (2017). Key Managerial Accounting Skills for
Lodging Industry Managers: The Third Phase of a Repeated Cross-Sectional
Study. International Journal of Hospitality & Tourism Administration. 18(1). 23-40.
Kim, S., Jang, H., Gao, R., Kim, C., Chung, Y., & Bang, S. (2017). Break-Even Point
Analysis of Sodium-Cooled Fast Reactor Capital Investment Cost Comparing the Direct
Disposal Option and Pyro-Sodium-Cooled Fast Reactor Nuclear Fuel Cycle Option in
Korea. Sustainability. 9(9). 1518.
Morano, P., & Tajani, F. (2017). The break-even analysis applied to urban renewal
investments: A model to evaluate the share of social housing financially sustainable for
private investors. Habitat International. 59. 10-20.
Narasimhan, M. S. (2017). Income Statement.
Öztürk, C. (2017). The role and current status of IFRS in the completion of national
accounting rules–Evidence from Turkey. Accounting in Europe, 1-9.
Visvanathan, G. (2017). Intangible assets on the balance sheet and audit fees. International
Journal of Disclosure and Governance. 14(3). 241-250.
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