SOL-ASGN04S.YesChef Sugg solution.

xlsx

The following information explains some of the underlying assumptions of the business that is modelled in the assignment

Briefly describe what is the basic product or service offered by the business
the business will produce and sell "meal kits" to the public. It will also sell cookware and utensils
The business will offer cooking lessons in the evenings as needed
The business will offer team building events to local businesses
Does the business need a fixed place of operation (production, sales, office, storefront). Briefly describe.
Needs a retail storefront and production facility. This will be one location initially. The first location will have a large
production facility to ensure that it can support multiple retail locatoins
A small office area is necessary
the production area will need stoves, prep tables, refrigeration area, dishwashing, freezer area, dry goods room etc.

Has significant work already been done to develop the idea and has cash been spent on this. Describe briefly.
Purchased some used equipment, supplies and small wares
Legal and accounting advice was paid for
did some work on uniforms, business cards

Who are the main funding sources (assignment requires you to have personal investment, Futurpreneur, BDC and one other
source). If you don't need other sources, complete the case as if you would raise money from these sources.
FP - $10,000 max. BDC $30,000 max Two friends $10,000 each at 6% loans int. payable monthly
Remainder self financed

Briefly explain the important pieces (assets, skills, locations, etc.) of the business that will be needed to make it viable?
in addition to the facilities noted above, sales and marketing needed to raise customer awareness
need to have two experienced cooks at first to allow me time to do the marketing and purchasing and menu dev.

Are there estimates of how much it will cost to provide the products/services to customers
(rules of thumb -e.g. no more than 30% of sales in restaurant should be food cost - note this is an EXAMPLE only)
Food cost estimated at 35% and for cookware also. We would find it difficult to lower the food cost
Food cost for lessons and for team building would be lower, say 20 - 25% due to higher markups and value for th
educational service offered.

Any other information relevant to this exercise?

My background is marketing and sales with recent cooking experience.

I have family funding that will help raise the required amounts.

You can make this whatever size you want, but 1/2 to 1 page is MORE than adequate for this purpose. Do NOT give
me a full business and marketing plan.

Marking Key
Does the description indicate the student understands what the assignment requires? 2
Does the description indicate the student understands the keys to sucessfully operating this business? 2
Are the above areas completed in a reasonable manner 1
Total 5

My Business Background
MGMT4042 SOL-ASGN04S.YesChef Sugg solution.xlsx

A B C D E F G H I
1
2 Past Purchases - Items already bought for the business
Item Cost Type of purchase - Start-up Life- Expense Yr Expense Yr
3 Expense or Asset Assets span 1 2
4 Oven $ 550 Assets $ 550 5 $ 110 $ 110
5 Smallwares $ 426 Assets $ 426 5 $ 85 $ 85
6 Towels $ 30 Expense $ - 1 $ 30
7 Knife Set $ 450 Assets $ 450 10 $ 45 $ 45
8 Business cards $ 60 Expense $ - 1 $ 60
9 Consulting services $ 400 Expense $ - 1 $ 400
10 Uniform Design $ 250 Assets $ 250 1 $ 250
11 Racks and Sheet pans $ 500 Assets $ 500 8 $ 63 $ 63
12 First Month Rent $ 1,500 Expense $ - 1 $ 1,500
13 Last Month Rent $ 1,500 Assets $ 1,500 0
14 $ - Expense $ - 0
15 $ - Expense $ - 0
16 $ - Expense $ - 0
17 $ - Expense $ - 0
18 $ - Expense $ - 0
19 $ - Expense $ - 0
20 $ - Expense $ - 0
21 $ - Expense $ - 0
22 $ - Expense $ - 0
23 $ - Expense $ - 0
24 $ - Expense $ - 0
25 Total
$ Cost
5,666 Assets $ 3,676 $ 2,543 $ 303
26 Assets - should have a life-span matching that asset's useful life
27 Expenses should have a life of 1, meaning they will be expensed in year 1.
28 Land or Rent deposits will not be expensed in the foreseeable future (unless the intent is to terminate within the 2 years). Use 0.
29
30
31 Marking key
32 Reasonable number of items (at least 5) with dollar amounts 2
33 Evidence of business-specific items added by student 3
34 All allocated to Assets or Expense appropriately? Lifespan for all items (Exp =1) and reasonable? 2
35 Does the plan provide for adequate cashflow? 3
36 10

Past Purchases Page 1 of 1

MGMT4042 SOL-ASGN04S.YesChef Sugg solution.xlsx

A B C D E F G H I J K L M

1 Start-up Costs
2
First Month of Futurpreneur Loan i.e.
June 2017
3 04/14 is April 2014
4
Funding Sources Owner Will Futurpreneur BDC Loan Other Other
Contribute Loan Funding Funding Funding JS Funding
5 AJ
6 Amount $81,396 $10,000 $30,000 $10,000 $10,000
7
8
Other
Owner Will Futurpreneur BDC Loan Other Balance Lifespan Year 1 Acctg Yr 2+ Acctg
Start-up Item Cost of Item Funding
Contribute Loan Funding Funding Funding JS Check (Yrs) Expense Expense
9 AJ
10 Lease - Leasehold Improvements
11 Architect's drawings 900 900 0 0 1 $ 900 $ -
12 Building improvement costs 24,000 24,000 0 5 $ 4,800 $ 4,800
13 Legal fees to review documents 5,000 5,000 0 1 $ 5,000 $ -
14 Other 0 1 $ - $ -
15 General Start-up Costs
16 Business Insurance (paid monthly) 125 125 0 1 $ 125 $ -
17 Business License - Incorp 500 500 0 0 $ - $ -
18 Equipment & Fixtures 67,000 35,000 6,000 6,000 10,000 10,000 0 10 $ 6,700 $ 6,700
19 Office Furniture (desk, filing cabinet) 845 845 0 10 $ 85 $ 85
20 Computer, printer, fax machine 1,750 1,750 0 5 $ 350 $ 350
21 Accounting System - POS system 600 600 0 1 $ 600 $ -
22 Accounting Consultation to set up books 1,000 1,000 0 1 $ 1,000 $ -
23 Legal fees to review contracts 1,500 1,500 0 1 $ 1,500 $ -
24 Website 2,500 2,500 0 1 $ 2,500 $ -
25 Other (Insert any new rows here) 0 1 $ - $ -
26 Other 0 1 $ - $ -
27 Past Purchases - Assets 3,676 3,676 0 N/A $ 2,543 $ 303
28 START-UP COST SUBTOTALS 109,396 53,396 6,000 30,000 10,000 10,000 $ 26,102 $ 12,237
29 Starting Inventory (resale products)
30 Food for Meal Kits 2,500 2,500 0 0 $ - $ -
31 Food for Cooking Lessons 1,500 1,500 0 0 $ - $ -
32 Team building 0 0 0 $ - $ -
33 Resale cookware 3,000 3,000 0 0 $ - $ -
34 INVENTORY / STOCK SUBTOTALS $7,000 $3,000 $4,000 $0 $0 $0 $ - $ -
35 TOTAL START-UP COSTS
36 START-UP & INVENTORY SUBTOTALS $116,396 $56,396 $10,000 $30,000 $10,000 $10,000 $ 26,102 $ 12,237
37 Available Cash in the Bank
38 Working Funds Provided $25,000 $25,000 $0 $0 $0 $0
39 TOTALS $141,396 $81,396 $10,000 $30,000 $10,000 $10,000 $ 26,102 $ 12,237
40 Percentage Contributions by funding source 100% 58% 7% 21% 7% 7% 100%
41
42
43 Marking Key Points
44 Indicates funding from Owner, Futurpreneur BDC and one more 3
45 Has included a reasonable number of items (min. 10) of startup costs, some of which are3 student entered
46 Start up costs are truly startup costs 3
47 Start up costs have reasonable lifespans 3
48 The startup costs and funding are matched 3
49 15

STEP 1 - Start Up Costs Page 1 of 1

MGMT4042 SOL-ASGN04S.YesChef Sugg solution.xlsx

A B C D E F G H I J K L M N O P Q
1 Cash Flow Forecast - Year 1
2 Month 1 2 3 4 5 6 7 8 9 10 11 12 Total
3 Sales Assumptions
4 Meal Kits - monthly sales 100 100 120 120 150 150 200 300 320 350 360 370 2,640
5 Cooking Classes - # student sessions 2 8 8 23 28 28 14 36 36 36 42 42 303
6 Corporate Events - # participants in month 10 10 20
7 Cookware sales 15 15 15 20 20 20 30 30 30 32 32 32 291
8 Cash from Sales Avg Price/U % of sales
9 Meal Kits - monthly sales $ 8.00 $ 800 $ 800 $ 960 $ 960 $ 1,200 $ 1,200 $ 1,600 $ 2,400 $ 2,560 $ 2,800 $ 2,880 $ 2,960 $21,120 34%
10 Cooking Classes - # student sessions $ 75.00 $ 150 $ 600 $ 600 $ 1,725 $ 2,100 $ 2,100 $ 1,050 $ 2,700 $ 2,700 $ 2,700 $ 3,150 $ 3,150 $22,725 36%
11 Corporate Events - # participants in month $ 225.00 $ - $ - $ - $ - $ - $ - $ 2,250 $ - $ - $ 2,250 $ - $ - $4,500 7%
12 Cookware sales $ 50.00 $ 750 $ 750 $ 750 $ 1,000 $ 1,000 $ 1,000 $ 1,500 $ 1,500 $ 1,500 $ 1,600 $ 1,600 $ 1,600 $14,550 23%
13 Total Cash Sales $ 1,700 $ 2,150 $ 2,310 $ 3,685 $ 4,300 $ 4,300 $ 6,400 $ 6,600 $ 6,760 $ 9,350 $ 7,630 $ 7,710 $62,895 100%
14 Funding Sources
15 Owner Will Contribute 81,396 $81,396
16 Futurpreneur Loan Funding 10,000 $10,000
17 BDC Loan Funding 30,000 $30,000
18 Other Funding 1 10,000 $10,000
19 Other Funding 2 10,000 $10,000
20 New Funding 20,000 $20,000
21 Total Other Cash Inflow 141,396 0 0 0 0 0 0 20,000 0 0 0 0 $161,396
22 (A) TOTAL CASH INFLOW 143,096 2,150 2,310 3,685 4,300 4,300 6,400 26,600 6,760 9,350 7,630 7,710 $224,291
23 Cash Outflow % of sales
24 Variable Costs % of sales
25 Meal Kits - monthly sales 35% $ 280 $ 280 $ 336 $ 336 $ 420 $ 420 $ 560 $ 840 $ 896 $ 980 $ 1,008 $ 1,036 $7,392 12%
26 Cooking Classes - # student sessions 25% $ 38 $ 150 $ 150 $ 431 $ 525 $ 525 $ 263 $ 675 $ 675 $ 675 $ 788 $ 788 $5,681 9%
27 Corporate Events - # participants in month 20% $ - $ - $ - $ - $ - $ - $ 450 $ - $ - $ 450 $ - $ - $900 1%
28 Cookware sales 35% $ 263 $ 263 $ 263 $ 350 $ 350 $ 350 $ 525 $ 525 $ 525 $ 560 $ 560 $ 560 $5,093 8%
29 Credit card transaction fee (% of sales) 2% 34 43 46 74 86 86 128 132 135 187 153 154 $1,258 2%
30 Packaging (% of sales) 3% 51 65 69 111 129 129 192 198 203 281 229 231 $1,887 3%
31 Royalties or Commissions (% of Sales) 0% - - - - - - - - - - - - $0 0%
32 Other 0% $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $0 0%
33 (B) TOTAL VARIABLE COSTS $ 665 $ 800 $ 864 $ 1,302 $ 1,510 $ 1,510 $ 2,118 $ 2,370 $ 2,434 $ 3,133 $ 2,737 $ 2,769 $22,211 35%
34 General Expenses % of Sales
35 1st Owner's draw/salary 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 $12,000 19%
36 2nd Owner's draw/salary, if necessary $0 0%
37 Employee/contractor wages 1,725 1,725 1,725 1,725 1,725 1,725 1,725 3,450 3,450 3,450 3,450 3,450 $29,325 47%
38 Legal fees 750 200 200 200 $1,350 2%
39 Accounting services 500 500 $1,000 2%
40 Advertising and promotion 500 500 500 500 500 150 150 150 150 150 150 150 $3,550 6%
41 Commercial Rent 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 $16,500 26%
42 TMI (Taxes Maintenance Insurance) 300 300 300 300 300 300 300 300 300 300 300 300 $3,600 6%
43 Utilities 265 265 265 265 265 265 265 265 265 265 265 265 $3,180 5%
44 Business Insurance 125 125 125 125 125 125 125 125 125 125 125 $1,375 2%
45 Bank Charges 30 30 30 30 30 30 30 30 30 30 30 30 $360 1%
46 Office supplies & postage 75 75 75 75 75 75 75 75 75 75 75 75 $900 1%
47 Telephone & Internet 250 250 250 250 250 250 250 250 250 250 250 250 $3,000 5%
48 Alarm System 35 35 35 35 35 35 35 35 35 35 35 35 $420 1%
49 Subscriptions & Memberships 65 65 65 65 65 65 65 65 65 65 65 65 $780 1%
50 Training $0 0%
51 Reimbursement of Automobile Expenses 60 60 60 60 60 60 60 60 60 60 60 60 $720 1%
52 (C) TOTAL GENERAL EXPENSES $ 5,055 $ 5,930 $ 5,930 $ 6,130 $ 5,930 $ 5,580 $ 5,780 $ 7,305 $ 7,805 $ 7,505 $ 7,805 $ 7,305 $78,060 124%
53 Other disbursements
54 TOTAL Start-up Costs 116,396 $116,396
55 Futurpreneur Loan Funding - Int Pmt + $15 mthly fee - - - - - - - - - - - - $0 0%
56 Futurpreneur Loan Funding - Principal Payment - - - - - - - - - - - - $0
57 BDC Loan Funding - Interest Payment - - - - - - - - - - - - $0 0%
58 BDC Loan Funding - Principal Payment - - - - - - - - - - - - $0
59 Other Funding 1 and 2 - Interest Payment 100 100 100 100 100 100 100 100 100 100 100 100 $1,200 2%
60 Other Funding 1 and 2 - Principal Payment 2,000 $2,000
61 Other $0
62 (D) TOTAL OTHER DISBURSEMENTS $ 116,496 $ 100 $ 100 $ 100 $ 100 $ 100 $ 100 $ 100 $ 100 $ 100 $ 100 $ 2,100 $119,596
63 (E) TOTAL CASH OUTFLOW (B+C+D) $ 122,216 $ 6,830 $ 6,894 $ 7,532 $ 7,540 $ 7,190 $ 7,998 $ 9,775 $ 10,339 $ 10,738 $ 10,642 $ 12,174 $219,867
64
65 (F) NET CASH-FLOW (A-E) $ 20,880 $ (4,680) $ (4,584) $ (3,847) $ (3,240) $ (2,890) $ (1,598) $ 16,825 $ (3,579) $ (1,388) $ (3,012) $ (4,464) $4,425
66
67 (G) CASH FROM PREVIOUS PERIOD $ - $ 20,880 $ 16,200 $ 11,616 $ 7,770 $ 4,530 $ 1,640 $ 42 $ 16,867 $ 13,288 $ 11,901 $ 8,889 $0
68
69 (H) CUMULATIVE CASH-FLOW (F+G) $20,880 $16,200 $11,616 $7,770 $4,530 $1,640 $42 $16,867 $13,288 $11,901 $8,889 $4,425 $4,425
70 (F) Net cash flow is composed of:
71 Operating Cash Flow - from Sales and Expenses -$4,020 -$4,580 -$4,484 -$3,747 -$3,140 -$2,790 -$1,498 -$3,075 -$3,479 -$1,288 -$2,912 -$2,364 -$37,376
72 Financing and Investing Cash Flows $24,900 -$100 -$100 -$100 -$100 -$100 -$100 $19,900 -$100 -$100 -$100 -$2,100 $41,800
73
74 Commentary:
75 Does your cash flow dip into negatives? Yes / No If Yes, how are you going to solve it? Didn't raise enough money to start
76 Option 1 - ask our bank for a line of credit. This would be OK for overdrafts up to $5,000, according to our bank manager.
77 Issues Our operations are not breaking even yet. We will need financing to cover this shortfall this year and next . Amount required now: $ 15,000
78 Our activities should break even in year 2 with improved sales
79 Marking key
80 Are unit sales indicated by month for the year? Is there a pattern of growth? 2
81 Cash expenses indicated based on fixed and variable splits. New variable costs entered specific to business? 2
82 Variable costs calculated by % of sales appear reasonable 2
83 Fixed costs indicated on each month - do they reflect Cash Flow v. Exp.? 2
84 Does the cashflow include business-specific expenditures? 2
85 Does the student's analysis indicate an understanding of operating cash flow? 5
86 Does the analysis show insight into the issues raised by the cash flow? 5
87 20

STEP 2 - Cashflow - Yr1 Page 1 of 1

MGMT4042 SOL-ASGN04S.YesChef Sugg solution.xlsx

A B C D E F G H I J K L M N O P Q
1 Cash Flow Forecast - Year 2
2 Month Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Total
3 Sales Assumptions 13 14 15 16 17 18 19 20 21 22 23 24
4 Meal Kits - monthly sales 400 450 550 550 600 650 700 750 800 900 1,000 1,100 8,450
5 Cooking Classes - # student sessions 42 12 12 36 48 48 24 48 48 48 60 60 486
6 Corporate Events - # participants in month 20 25 30 75
7 Cookware sales 35 35 40 40 50 50 50 60 60 60 60 65 605
8 Cash from Sales Avg Price/U % of sales
9 Meal Kits - monthly sales $ 8.40 $ 3,360 $ 3,780 $ 4,620 $ 4,620 $ 5,040 $ 5,460 $ 5,880 $ 6,300 $ 6,720 $ 7,560 $ 8,400 $ 9,240 $70,980 47%
10 Cooking Classes - # student sessions $ 65.00 $ 2,730 $ 780 $ 780 $ 2,340 $ 3,120 $ 3,120 $ 1,560 $ 3,120 $ 3,120 $ 3,120 $ 3,900 $ 3,900 $31,590 21%
11 Corporate Events - # participants in month $ 250.00 $ - $ - $ - $ - $ 5,000 $ - $ - $ 6,250 $ - $ - $ - $ 7,500 $18,750 12%
12 Cookware sales $ 50.00 $ 1,750 $ 1,750 $ 2,000 $ 2,000 $ 2,500 $ 2,500 $ 2,500 $ 3,000 $ 3,000 $ 3,000 $ 3,000 $ 3,250 $30,250 20%
13 Total Cash Sales $ 7,840 $ 6,310 $ 7,400 $ 8,960 $ 15,660 $ 11,080 $ 9,940 $ 18,670 $ 12,840 $ 13,680 $ 15,300 $ 23,890 $151,570 100%
14 Owner's Investment
15 New Investments Required 15,000 $15,000
16 $0
17 Total Other Cash Inflow 0 15,000 0 0 0 0 0 0 0 0 0 0 $15,000
18 (A) TOTAL CASH INFLOW 7,840 21,310 7,400 8,960 15,660 11,080 9,940 18,670 12,840 13,680 15,300 23,890 $166,570
19 CASH OUTFLOW
20 Variable Expenses % of sales
21 Meal Kits - monthly sales 30.0% $ 1,008 $ 1,134 $ 1,386 $ 1,386 $ 1,512 $ 1,638 $ 1,764 $ 1,890 $ 2,016 $ 2,268 $ 2,520 $ 2,772 $21,294 14%
22 Cooking Classes - # student sessions 20.0% $ 546 $ 156 $ 156 $ 468 $ 624 $ 624 $ 312 $ 624 $ 624 $ 624 $ 780 $ 780 $6,318 4%
23 Corporate Events - # participants in month 25.0% $ - $ - $ - $ - $ 1,250 $ - $ - $ 1,563 $ - $ - $ - $ 1,875 $4,688 3%
24 Cookware sales 35.0% $ 613 $ 613 $ 700 $ 700 $ 875 $ 875 $ 875 $ 1,050 $ 1,050 $ 1,050 $ 1,050 $ 1,138 $10,588 7%
25 Credit card transaction fee (% of sales) 2.0% 157 126 148 179 313 222 199 373 257 274 306 478 $3,031 2%
26 Packaging (% of sales) 3.0% 235 189 222 269 470 332 298 560 385 410 459 717 $4,547 3%
27 Royalties or Commissions (% of Sales) 0% - - - - - - - - - - - - $0 0%
28 Other 0% - - - - - - - - - - - - $0 0%
29 (B) TOTAL VARIABLE COSTS $ 2,559 $ 2,218 $ 2,612 $ 3,002 $ 5,044 $ 3,691 $ 3,448 $ 6,060 $ 4,332 $ 4,626 $ 5,115 $ 7,759 $50,466 33%
30 Fixed Expenses % of Sales
31 1st Owner's draw/salary 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 $18,000 12%
32 2nd Owner's draw/salary, if necessary $0 0%
33 Employee/contractor wages 3,750 3,750 3,750 3,750 3,750 3,750 3,750 3,750 3,750 3,750 3,750 3,750 $45,000 30%
34 Legal fees 750 200 200 200 $1,350 1%
35 Accounting services 500 500 $1,000 1%
36 Advertising and promotion 125 125 500 500 125 125 125 125 125 125 125 125 $2,250 1%
37 Commercial Rent 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 $18,000 12%
38 TMI (Taxes Maintenance Insurance) $0 0%
39 Utilities 265 265 265 265 265 265 265 265 265 265 265 265 $3,180 2%
40 Business Insurance - 2,400 $2,400 2%
41 Bank Charges 30 30 30 30 30 30 30 30 30 30 30 30 $360 0%
42 Office supplies & postage 75 75 75 75 75 75 75 75 75 75 75 75 $900 1%
43 Telephone & Internet 250 250 250 250 250 250 250 250 250 250 250 250 $3,000 2%
44 Alarm System 35 35 35 35 35 35 35 35 35 35 35 35 $420 0%
45 Subscriptions & Memberships 65 65 65 65 65 65 65 65 65 65 65 65 $780 1%
46 Training $0 0%
47 Reimbursement of Automobile Expenses 60 60 60 60 60 60 60 60 60 60 60 60 $720 0%
48 (C) TOTAL GENERAL EXPENSES $ 8,405 $ 7,655 $ 8,030 $ 8,230 $ 7,655 $ 7,655 $ 7,855 $ 7,655 $ 8,155 $ 7,855 $ 8,155 $ 10,055 $97,360 64%
49 Financing and Investing Costs
50 Start-up Costs $0 0%
51 Futurpreneur Loan Funding - Int Pmt + $15 mthly fee 63 63 63 63 63 63 63 63 63 63 63 63 $750 0%
52 Futurpreneur Loan Funding - Principal Payment - 208 208 208 208 208 208 208 208 208 208 208 $2,292
53 BDC Loan Funding - Interest Payment 243 243 243 243 243 243 243 243 243 243 243 243 $2,910 2%
54 BDC Loan Funding - Principal Payment - 625 625 625 625 625 625 625 625 625 625 625 $6,875
55 Other Funding 1 and 2 - Interest Payment 90 90 90 90 90 90 90 90 90 90 90 90 $1,080 1%
56 Other Funding 1 and 2 - Principal Payment 2,000 $2,000
57 Repayment of other loans or purchases of assets $0
58 (D) TOTAL FINANCING/INVESTING COSTS $ 395 $ 1,228 $ 1,228 $ 1,228 $ 1,228 $ 1,228 $ 1,228 $ 1,228 $ 1,228 $ 1,228 $ 1,228 $ 3,228 $ 15,907
59 (E) TOTAL CASH OUTFLOW (B+C+D) $ 11,359 $ 11,101 $ 11,870 $ 12,460 $ 13,927 $ 12,574 $ 12,531 $ 14,943 $ 13,715 $ 13,709 $ 14,498 $ 21,042 $ 163,732 108%
60
61 (F) NET CASH-FLOW (A-E) $ (3,519) $ 10,209 $ (4,470) $ (3,500) $ 1,733 $ (1,494) $ (2,591) $ 3,727 $ (875) $ (29) $ 802 $ 2,848 $2,838 2%
62
63 (G) CASH FROM PREVIOUS PERIOD $ 4,425 $ 906 $ 11,115 $ 6,644 $ 3,144 $ 4,877 $ 3,382 $ 791 $ 4,518 $ 3,642 $ 3,613 $ 4,415 $4,425 3%
64
65 (H) CUMULATIVE CASH-FLOW (F+G) $ 906 $ 11,115 $ 6,644 $ 3,144 $ 4,877 $ 3,382 $ 791 $ 4,518 $ 3,642 $ 3,613 $ 4,415 $ 7,262 $7,262 5%
66
67 (F) Net cash flow is composed of:
68 Operating Cash Flow - from Sales-Expenses $ (3,124) $ (3,563) $ (3,242) $ (2,272) $ 2,961 $ (266) $ (1,363) $ 4,955 $ 353 $ 1,199 $ 2,030 $ 6,076 $3,745 2%
69 Financing and Investing Cash Flows $ (395) $ 13,772 $ (1,228) $ (1,228) $ (1,228) $ (1,228) $ (1,228) $ (1,228) $ (1,228) $ (1,228) $ (1,228) $ (3,228) ($907) -1%
70
71 Commentary:
72 Does your cash flow dip into negatives? Yes / No If Yes, how are you going to solve it?
73 Our operating cash flow is positive and the business is generating profits, but not quite enough to cover our financing costs
74 Another $15000 financing is needed early in the year
75
76 Marking key
77 Unit sales indicated by month for the year 1
78 Does year 2 indicate any new conditions (rising sales, rising costs) 1
79 Variable costs calculated by % of sales 1
80 (F) Net cash flow is composed of: 1
81 Is the owner being paid? 1
82 Does the student's analysis indicate an insights into the second year of operation 5
83 Does the analysis show insight into the issues raised by the cash flow? 5
84 15

STEP 3 - Cashflow - Yr2 Page 1 of 1

MGMT4042 SOL-ASGN04S.YesChef Sugg solution.xlsx

A B C D E F G
1
2 Projected Income Statement Vertical Analysis
3 Year 1 Year 2 Year 1 Year 2
4 Revenues
5 Sales
6 Meal Kits - monthly sales 21,120 70,980 33.6% 46.8%
7 Cooking Classes - # student sessions 22,725 31,590 36.1% 20.8%
8 Corporate Events - # participants in month 4,500 18,750 7.2% 12.4%
9 Cookware sales 14,550 30,250 23.1% 20.0%
10 (A) Total Sales $62,895 $151,570 * 100.0% 100.0%
11 Variable Costs
12 Meal Kits - monthly sales 7,392 21,294 11.8% 14.0%
13 Cooking Classes - # student sessions 5,681 6,318 9.0% 4.2%
14 Corporate Events - # participants in month 900 4,688 1.4% 3.1%
15 Cookware sales 5,093 10,588 8.1% 7.0%
16 Credit card transaction fee (% of sales) 1,258 3,031 2.0% 2.0%
17 Packaging (% of sales) 1,887 4,547 3.0% 3.0%
18 Royalties or Commissions (% of Sales) 0 0 0.0% 0.0%
19 (B) Total Variable Costs $22,211 $50,466 * 35.3% 33.3%
20 (C) CONTRIBUTION MARGIN (A-B) $40,685 $101,105 64.7% 66.7%
21 Fixed Expenses
22 General Expenses
23 Owner's Draws/salaries 12,000 18,000 19.1% 11.9%
24 Employee/contractor wages 29,325 45,000 46.6% 29.7%
25 Legal fees 1,350 1,350 2.1% 0.9%
26 Accounting services 1,000 1,000 1.6% 0.7%
27 Advertising and promotion 3,550 2,250 5.6% 1.5%
28 Commercial Rent 16,500 18,000 26.2% 11.9%
29 TMI (Taxes Maintenance Insurance) 3,600 0 5.7% 0.0%
30 Utilities 3,180 3,180 5.1% 2.1%
31 Business Insurance 1,375 2,400 2.2% 1.6%
32 Bank Charges 360 360 0.6% 0.2%
33 Office supplies & postage 900 900 1.4% 0.6%
34 Telephone & Internet 3,000 3,000 4.8% 2.0%
35 Alarm System 420 420 0.7% 0.3%
36 Subscriptions & Memberships 780 780 1.2% 0.5%
37 Training 0 0 0.0% 0.0%
38 Reimbursement of Automobile Expenses 720 720 1.1% 0.5%
39 0.0% 0.0%
40 0.0% 0.0%
41 0.0% 0.0%
42 0.0% 0.0%
43 0.0% 0.0%
44 (D) TOTAL GENERAL EXPENSES $78,060 $97,360 * 124.1% 64.2%
45 Other Non-Operating (Financing Expenses)
46 Depreciation of Start up Costs 26,102 12,237 ** 41.5% 8.1%
47 Futurpreneur Loan Funding - Int Pmt + $15 mthly fee 0 1,500 * 0.0% 1.0%
48 BDC Loan Funding - Interest Payment 0 5,820 * 0.0% 3.8%
49 Other Funding 1 and 2 - Interest Payment 1,200 1,080 * 1.9% 0.7%
50 Other 0.0% 0.0%
51 (E) TOTAL FINANCING EXPENSES $27,302 $20,637 43.4% 13.6%
52 (F) TOTAL EXPENSES (D+E) $105,362 $117,997 167.5% 77.8%
53
54 NET PROFIT BEFORE TAX (C-F) -$64,678 -$16,893 -102.8% -11.1%
55 Income Tax (est. 15% ON) $0 $0 0.0% 0.0%
56 NET PROFIT AFTER TAX -$64,678 -$16,893 -102.8% -11.1%
57
58 * should match Step 2 and 3 - the amounts appear in the total column
59 ** should match Step 1 Year 1 and Year 2 Accounting Expense (table at right)
Comment: What does the income statement & vertical analysis tell you about your profitability?. What are the pros&
60 cons?
61 The income statements are a cause for concern as the losses over two years are very large. Our fixed expenses are very
62 high, particularly in the area of rent and property. The question is whether we can generate enough sales quickly enough
63 to justify the investment. The variable costs are high. Should investigate if it's possible to reduce food costs by 5 points.
64 The second year indicates a decent chance at breaking even. This would occur at around $177,000 sales, but this assumes
65 only an $18,000 salary for the owner.
66 At what level of sales will the operation break even, based on Year 1 forecasts?
67 Fixed Costs Yr 1 Fixed Y2
68 Sales 100%
69 Variable Costs 35.3%
70 Contribution Margin 64.7% $105,362 $117,997
71 64.7% 64.7%
72 Break Even (Profit = 0) $162,882 $182,414
73 Require Annual Profit $36,000 $36,000
74 Required Sales = $304,244 $336,412
75 64.7% 64.7%
76 True break even with minimum profit $470,338 $520,066
77
78 Marking Key
79 Does the analysis match the income statement information? 5
80 Does the analysis indicate understanding of othe interaction of S, VC and FC 5
81 Was there an attempt to explain the results (positive or negative)? 5
82 Was a break even analysis attempted? Are the sales requirements reasonable? 5 bonus
83 15

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MGMT4042 SOL-ASGN04S.YesChef Sugg solution.xlsx

A B C D E F
1 Financial Review
Summarize your financial performance in
Integrate your findings into your projection for next year's financial plan.
2 comparison to your original plan.
3
4 As at: Current year's Next year's Year to Year Chg
Forecasted Next year to
5 Jun-17 Actual (end) Plan Plan Variance Plan Current Act
6 Balance sheet
7 Cash $ 4,425 $ 1,000 $ 3,425 $ 7,262 64.1%
8 Receivables - 500 (500) 2,500 N/A
9 Inventory 2,250 2,000 250 3,000 33.3%
10 Total current assets 6,675 3,500 3,175 12,762 91.2%
11 Long-term Assets -
12 Property, Plant, Equip 83,294 85,000 (1,706) 71,057 -14.7%
13 Other assets - N/A
14 Total assets $ 89,968 $ 88,500 $ 1,468 $ 83,819 -6.8%
15
16 Current liabilities $ 500 $ 500 $ - $ 1,000 100.0%
17 Long term liabilities 60,000 $ 48,000 12,000 48,833 -18.6%
18 Equity 29,468 40,000 (10,532) 33,986 15.3%
19 Total liabilities and equity $ 89,968 $ 88,500 $ 1,468 $ 83,819 -6.8%
20
21 Income statement
22 Sales Revenue $ 62,895 $ 72,000 $ (9,105) $ 151,570 141.0%
23 Variable Costs 22,211 24,000 1,790 50,466 127.2%
24 Contribution Margin 40,685 48,000 (7,316) 101,105 148.5%
25 Operating Expenses
26 Op Expenses excl. Depreciation 78,060 70,000 (8,060) 97,360 24.7%
27 Depreciation 26,102 25,000 (1,102) 12,237 -53.1%
28 Operating Income (EBIT) (63,478) (47,000) (16,478) (8,493) 86.6%
29 Interest/financing fees 1,200 1,200 - 4,740 295.0%
30 Income Before Tax (EBT) (64,678) (48,200) (16,478) (13,233) 79.5%
31 Income Taxes (15% of positive EBT) - - - - N/A
32 Net income $ (64,678) $ (48,200) $ (16,478) $ (13,233) 79.5%
33
34 Net cash flow from operations (see notes) $ (44,750) $ (26,200) $ (18,550) $ (6,583) 85.3%
35
36 Financial ratios Forecast Act Plan Potential Questions Next Year Plan

- Are your products properly

Gross (contribution) margin 64.7% 66.7% priced to cover your operating 66.7% Profitability
costs?
37
- Does the business make an
Operating Margin -100.9% -65.3% adequate return before financing -5.6% Profitability
38 costs and taxes?
- Is this an adequate &
Net margin -102.8% -66.9% sustainable amount of -8.7% Profitability
39 profitability?
- Are your shareholders
receiving an adequate return on
Return on Equity -439.0% -241.0% -41.7% Profitability
their investment in the
40 company?
- Are the assets generating a
Return on Assets -141.1% -106.2% -15.2% Efficiency
41 reasonable level of sales?
- Are your collecting your
Average Collection Period* 0.00 20.28 29.20 Efficiency
42 revenues in a timely manner?
Average Days in Inventory 18.49 15.21 - Is the turnover too high or low? 18.08 Efficiency
43
- Does your business have
Current Ratio 13.35 7.00 enough liquidity to cover your 12.76 Liquidity
44 short term liabilities?
- Does your business have
enough cash to meet any short
Quick ratio 8.85 3.00 9.76 Liquidity
term liabilities that may be due
45 soon?
- Does the business use debt
responsibly to enhance
Debt to Equity Ratio 2.05 1.21 1.47 Leverage
shareholder wealth or does it
46 borrow excessively?
47 Financial Comment on the results that you see above
48 Commentary What actions should management prioritize?

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MGMT4042 SOL-ASGN04S.YesChef Sugg solution.xlsx

A B C D E F
Horizontal analysis reveals… the assets are lower than expected due to a much lower cash balance that is predicted (i.e., it is negative). This is from
higher expenses than originally estimated. New funding that might be needed to replace the cash is not included in the amounts yet. The income
statement shows growth in all areas, except depreciation - representing the past purchases. Variable costs are growing slower than sales
49
Budget to actual analysis reveals…our main budgeting problems were that we underestimated sales and fixed expenses and our income was off by
$15,000 <U> from budget. This explains about most of the variance in equity. The remainder is from a purchasing slightly fewer assets than originally
anticipated. Almost all our planning was overly optimistic, even our variable costs were a little optimistic. Cash flow from operations was slightly better
50 than forecast, but this reflects the implied cash flow from our ovedraft in cash.
Analysis of profitability ratios reveals…We expected losses in our first two years as the business gets established. Our gross contribution margin at
65% seemed to be adequate and on-plan, but given our high fixed costs, this indicates we need to generate more contribution. The increase for next
year to 67% is in the right direction, but not enough to cover all our fixed costs. The operating and net margins are still negative next year, which
indicates we aren't selling enough to cover the costs. We should examine the costs to see if % of variable can be reduced or if we can avoid some of
the fixed costs. Sales still low, so we should not cut marketing, but maybe evaluate effectiveness
51
Analysis of efficiency ratios reveals…Return on assets is negative. We have lost a lot of money compared to our asset investments. This looks to
improve in the upcoming year. Our receivables are not a big concern. The credit side of our business is not material and we have collections
according to plan. The inventory turnover at around 18 days seems reasonable for a foodservice operation (check Industry Canada?). We use our
fresh foods much more quickly than 18 days, but there are also a lot of dry goods that last much longer. We should investigate whether there is a lot
of food being thrown out.
52
Analysis of liquidity ratios reveals…a huge deficit. We need to find some additional funding in a hurry to ensure that we don't run out of cash as
implied in the schedule. Action is needed NOW so this does not come to pass. The problem here is that we didn't budget for enough start up funding.
The busienss appears to turn cash flow positive in year 2, so rasing another $30,000 is the best bet.
53
Analysis of leverage ratios reveals… I might have to consider equity financing - the debt to equity figures will be a disincentive to loans from traditional
lenders and having even more debt will put the company at higher risk of default if I cannot pay the interest.

54
55 Notes: -the current year is the first year of operations, so all asset, liability and equity accounts began the year at a zero balance.
56 - Net Cash Flow is Net Income plus Depreciation plus a decrease in working capital during the year. A decrease in working capital occurs when Current Assests minus
57 Current Liabilities is less than at the beginning of the period. (If working capital increased in the year, deduct the amount of the change).
58 * Based only on corporate sales
59
60 Marking Key
61 Were missing items entered (A/R, Inventory, Current and long term debt?) 2
62 Does the analysis of horizontal analysis indicate proper calculations and meaningful discussion 2
63 Does the analysis of budget to actuals indicate proper calculations and meaningful discussion 2
64 Does the analysis of profitablility ratios indicate proper calculations and meaningful discussion 3
65 Does the analysis of efficiency ratios indicate proper calculations and meaningful discussion 2
66 Does the analysis of liquidity ratios indicate proper calculations and meaningful discussion 2
67 Does the analysis of leverage ratios indicate proper calculations and meaningful discussion 2
68 Were unusual or problematic items identified and discussed? 6
69 Are action items indicated? 3
70 24

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