[solved] Week 10 Group Financial valuation - Revenue Forecasts

One member is to post the Team Work Planfor next Week 11 in the group assignment folder
by Thursday of this week.
W10 Group financial valuation with draft Business Plan
Due November 19 at 11:59 PM
Strategy Project: Financial Valuation (6% of course grade)
Resources:

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Week 1: September 11 -
17
Week 2: September 18 -
24
Week 3: September 25 -
October 1
Week 4: October 2 - 8
Week 5: October 9 - 15
Week 6: October 16 -
22
Week 7: October 23 -
29
Week 8: October 30-
November 5
Week 9: November 6 -
12
Week 10: November 13
- 19
week 11: November 20
- 26
Week 12: November 27
- December 3
Course Resources
Course Evaluation

Income statement tutorial: http://www.baruch.cuny.edu/tutorials/statements/
Guidelines for Income Statement
Calculating cost of goods sold:http://ezproxy.umuc.edu/login?url=http://search.ebscohost.com/login.aspx?
direct=true&db=bth&AN=26758860&site=eds-live&scope=site
Assignment overview: The team will produce a simple income statement for just one year of
operation, showing projected income and expenses for your proposed business plan.. The above
Guidelines for Income Statement shows a sample template with a single column for one year of
operation .However, the team is expected to develop an income statement forecast for this Business
Plan, with two columns: one for START UP COSTS (show as year 0, with no revenue and can be for
any length of time required for market entry up to first sale) and one column for REVENUE and
OPERATING COSTS for the company's first year of operation (first year of operation begins with
first sale). The projected income statement should be only to the level of EBIT (Earnings Before
Interest and Taxes).
The team will submit the current draft of your business plan, up to and including the financials in
section 16. Submitting the full draft of the business plan will allow faculty to check that costs of
implementing all requirements of the strategy are captured in the financial plan.
Assignment Objectives
Your draft Business Plan to date has already identified the major cost drivers for the recommended
entry strategy, except for Cost of Goods Sold, which will be developed for this financial plan.. The
major costs already identified are costs of the organizational structure (people costs in section 14), and
of the the marketing plan (Section 15). This is the time to review the plan to consider other
expenditures that might be necessary to implement your proposed entry strategy.
The team has developed its revenue projections, citing all assumptions underlying the team’s
estimations.
A balance sheet is not required, but the team will separately identify any capital investments required
in your proposed strategy (e.g., equipment, purchased real estate, expanded plant facilities).
Assignment Requirements/format.
Introduction. After the statement of purpose, the Introduction to this paper is the draft business
plan, up to section 16 (which you will develop in the body of this paper).
The income statement should be developed in Step One, showing the revenue and categories of
expense. In Step Two, the Income statement items and capital expenses are to be described/explained in

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Step One: Create the income statement.
Show start up costs as first column: These are all costs that must be expended in order to start up the
business (before the first sale is completed) and should already be identified in your business plan.
These are people costs from the organization chart in Section 14, including any contracted expenses,
such as legal and translator support; and from your marketing plan these would be new marketing
materials, prototypes or product modifications (Section 15); as well as any other expenses, such as
travel, that must also be incurred before revenue is generated.. Show these in a year 0 column on
your income statement.
Show Year of Operations as Second Column:
Costs of good sold (COGS) line item. Estimate these per unit production costs for the product or
service you are selling. These are variable costs, with the total line item based upon the number
of units produced and sold.
If it is a professional service, or a product or project that requires professional services to
design or deliver to the customer, those people costs would be Costs of Goods sold.
Manufacturing costs belong here if it is a product. .
Explain total dollar amount as per unit cost x the number of units to be sold
If the units are not to be sold, but must be produced for marketing purposes (e.g., for
showrooms, marketing give- away's), they belong in the line item for marketing expenses;
not as COGS (and can either be start-up expenses or operational expenses, depending on
when they were to be incurred, as noted in your Marketing Plan (Section 15)
Operational Expense line items: These line items reflect the annual costs of running the business
after the start up period is completed. These are on-going expenses that start with the first sale,
but are likely to be incurred whether or not any additional units are actually sold. They cover
people costs for all the business functions (e.g., strategic oversight, marketing, sales, human
resources, legal, finance, technical support), as reflected in your organizational chart in Section
14; and marketing expenses (including materials, distribution, sales incentives/rewards), as
reflected in your marketing plan..
Consider other administrative/office expenses, such as telecommunications, rent, supplies
and equipment (non-capital),
Specify all assumptions made in developing these line item estimates, and label them so it
is clear which expenses are in each line item. .
You will need to include any expenses associated with monitoring the progress of your strategic
plan, which you will specify in your Balanced Scorecard (BSC) (e.g., any surveys,focus groups,
employee training, employee benefits/rewards). Leave a space for those expenses in your income

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statement until you have identified them fully in your Balanced Scorecard (next week's
assignment).
If you have already identified the people costs of monitoring or employee training by
showing those responsibilities in some positions in your organization chart, you don't need
to include them as a separate line item on your income statement; however, your BSC
should specify where you have accounted for those costs (how much and which headcount,
as reflected in which line item).

The team will separately identify capital investments required in your proposal (e.g., equipment,
purchased real estate, expanded plant facilities). The costs of this capital should be identified, but the
interest paid on capital investment need not be included in your income statement, and you need not
consider depreciation of the capital goods in your income statement. Please enter a footnote at the
bottom of the income statement that shows capital costs, as these balance sheet items would not be part
of the calculation of earnings (EBIT).
Include revenue forecasts, based on the market share estimates and recommended pricing shown
in the Section 15 marketing plan. Show both projected units sold and unit price on the income
statement.
Total costs of the plan will be compared to the potential revenue, to develop an income statement
showing EBIT (Earnings Before Interest and Taxes).
Step Two: Write the formal paper.
Introduction: Submit the complete Draft Business Plan through section 15.
The body of this financial analysis should be approximately 5-10 pages, including the income
statement.
Structure the body of this analysis as:
1. REVENUE Forecast and assumptions (e.g., market share x proposed unit price)
2. COST forecasts and assumptions (e.g., how COGS has been developed; as well as any
administrative/ operational expenses not previously identified in the organizational chart or marketing
plan)
3. FINANCIAL results
4. Conclusions
In your concluding paragraphs, specify whether this is a financially viable entry strategy; under
what assumptions the team might consider this project to be financially viable.
Where are the major risk factors in your projections and assumptions? Which factors must be
monitored most closely in the Balanced Scorecard in order to limit risk? (and be sure those
critical risk factors are included in next week's BSC)

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5. Include
Title page with name of every contributing member
Approximately a 3 page Executive Summary that summarizes the entire paper
Table of contents
*The body of the paper should have page numbers, starting with page one.
Reference list, including proper APA format for all in-text citations.

One member is to post this assignment in group assignment folder by the end of Week 10 and title it
“Business Plan and Financial Projections.”

For now: You have completed your business plan, except for the Balanced Scorecard that will track
the success of the strategic actions you have recommended in your plan.
Looking forward: You will develop the Balanced Scorecard for your client to use in tracking the
most critical components of this strategy, and add any monitoring costs into your income statement
projections if they are not already there (in people costs)..