Finance Financial Projections for Touch My Knuckles

Finance Financial Projections for Touch My Knuckles Touch My Knuckles, a firm selling mixed martial arts appeal, including shirts, fleeces, hats and sweatshirts will provide a great potential for investment. The aim of this paper is to look at the financial statements for the first three years of operating, including start-up costs, cash flow, income statement and balance sheet. Following the financial analysis consideration will be given to the way in which the may be raised an issue of capital structure.

Financial Statements The following financial statements indicate potential of the business. The financing being requested in $248,560, this can been calculated with reference to the start up costs, less the available capital, with an allowance of the operating loss that will be made in the first month. The start up costs are relativity modest due to the use of outsource suppliers who will send the goods directly to the wholesale purchasers. The total start up costs are $275,000.

Table 1; Start up costs Premise (lease) 25,000 Office equipment and furniture 22,000 Computer equipment 18,000 Opening inventory 150,000 Legal costs 25,000 Pre-start up operating costs 20,000 Launch marketing 15,000 Total 275,000 The cash flow for the first year is shown in table 2 below. This shows that the first month will operate at a deficit, but after this there will be an operating profit each month with a cash surplus. The firm will break even in month 12.

Table 2; Fist Year Cash Flow Start up period Jan Feb Mar Apr May Jun Jul Start up costs 275,000 Sales 10,000 30,000 35,000 46,000 49,000 57,000 63,000 Cost of goods sold 2,000 6,000 7,000 9,200 9,800 11,400 12,600 Payroll 3,000 9,000 10,500 13,800 14,700 17,100 18,900 Payroll taxes etc. 1,080 1,260 1,656 1,764 2,052 2,268 Sales and marketing 3,000 3,000 2,000 2,000 1,800 1,800 1,800 Rent Insurance 2,000 Utilities Total outflow 11,560 19,880 21,560 27,856 28,864 33,152 36,768 Net inflow/outflow -1,560 10,120 13,440 18,144 20,136 23,848 26,232 Accumulative total -275,000 -276,560 -266,440 -253,000 -234,856 -214,720 -190,872 -164,640 Aug Sept Oct Nov Dec Total Start up costs Sales 67,000 70,000 78,000 82,000 90,000 677,000 Cost of goods sold 13,400 14,000 15,600 16,400 18,000 135,400 Payroll 20,100 21,000 23,400 24,600 27,000 203,100 Payroll taxes etc.

2,412 2,520 2,808 2,952 3,240 24,372 Sales and marketing 2,000 2,000 2,000 2,000 2,000 25,400 Rent 9,600 Insurance 2,000 Utilities 1,600 Total outflow 38,712 40,320 45,008 46,752 51,040 401,472 Net inflow/outflow 28,288 29,680 32,992 35,248 38,960 275,528 Accumulative total -136,352 -106,672 -73,680 -38,432 The first year breakdown is presented in the first three years which show the way in which the firm will grown based on current sales projections, It is expected that sales will increase by 25% per annum in the first few years, and as sales increase the direct costs will decrease slightly with the firms ability to gain from the economies of scale.

The payroll is projected at 30% of sales, including all commissions, on top of this there are the payroll taxes and other fees, which are assumed to be 12% of the payroll costs. It is assumed that inflation is 5% for.