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This financial model is designed to enable entrepreneurs and students project the financial results of
their ventures for a five-year period. As with all models there are certain simplifying assumptions that
have been made. Each of the assumption spreadsheets has an accompanying Comments box
(denoted by a cell with small red triangle in the upper right corner) that provides suggestions on how
to complete the spreadsheet and the underlying assumptions to the model.
You will notice that the cells in the spreadsheet are color-coded. This has been done to assist you in
entering data, creating or changing formulae, or deleting data, formulae and links.
In the Green and Blue shaded cells, data and formulas may changed, moved or deleted. The current
calculations are for illustration only -- you will need to tailor these spreadsheets to fit your plan.
In the Yellow shaded cells data and formulas may be changed, but not deleted.
DO NOT delete the Purple shaded cells -- they link one spreadsheet with others.
All other spreadsheets are to be used for calculating the underlying assumptions of the 7 principal
spreadsheets:
These assumption spreadsheets are linked to each other and to the 7 principal spreadsheets. When
you make a change in one of the spreadsheets, the impact is automatically recalculated for all other
spreadsheets.
When doing financial projections, it is easy to get lost in the trees and lose the sense of what is reality.
Most errors can be identified if you continuously ask yourself “Does this result make sense?” The
COMPS spreadsheet, where you look at peer companies, can be particularly helpful as a reality test.
There is an example in the model with which you can experiment. When you are ready to start your
own projections, clear all the numbers in the green shaded cells, and then you can begin to enter new
numbers. Enter the name of your company in the first cell of the COMPS spreadsheet. Before you
begin, make a copy of the model on a separate disk.
This original version of the model has been used since the mid-1980’s. It has undergone numerous
revisions over that period. Since 1998, students in the Business Plan Preparation course at the
University of Colorado have used it to prepare their business plans. We have appreciated their
suggestions for improvements and would encourage all users to send us comments and suggestions.
XYZ Company
Peer Company Comparisons
Select Best
Company A Company B Company C Comparison Projections
Ratios Year 1
Accounts Receivable % of Rev 10.0% 10.0% 8.3%
Inventory % of Rev 15.0% 15.0% 8.3%
Accounts Payable % of Rev 8.0% 8.0% 8.7%
Working Capital % of Rev 16.0% 16.0% 7.9%
Net Fixed Assets % of Rev 9.0% 9.0% 23.7%
Current Ratio 2.3 2.3 4.2
Debt to Capital (LT Debt + Equity) 1.2 1.2 0.00
Profitability
Gross Profit % of Rev 30.0% 30.0% -11.7%
Sales & Marketing % of Rev 30.0% 22.9%
Research & Development % of Rev 30.0% 14.9%
General & Administration % of Rev 30.0% 17.2%
Operating Expenses % of Rev 40.0% 17.0% 55.0%
Earnings from Operations % of Rev 12.0% 12.0% -66.7%
EBIT % of Rev 12.0% 12.0% -71.2%
Depreciation % of Rev 3.0% 3.0% 4.3%
EBITDA % of Rev 14.0% 14.0% -66.9%
Net Earnings % of Rev 5.0% 5.0% -71.2%
Returns
Return on Assets 12.0% 12.0% -74.1%
Return on Equity 15.0% 15.0% -90.4%
Return on Capital (LT Debt + Equity) 15.0% 15.0% -90.4%
Growth
Revenue Growth Rate - CAGR: 15.0% 15.0%
Net Earnings Growth Rate - CAGR: 12.0% 12.0%
04/18/2009
13:58:10
Notes
Projections
Year 2 Year 3 Year 4 Year 5
8.3% 8.3% 8.3% 8.3%
8.3% 6.7% 6.7% 6.7%
8.7% 8.7% 8.7% 8.7%
7.9% 6.3% 6.3% 6.3%
11.5% 9.3% 7.3% 5.5%
2.0 2.0 1.9 2.1
0.32 0.18 0.10 0.04
Average Revenue
by Month 83,333 437,500 812,500 1,354,167 2,166,667
by Quarter 250,000 1,312,500 2,437,500 4,062,500 6,500,000
04/18/2009
XYZ Company Notes
13:58:11
Cost of Revenues
Years 1 to 5
($)
Year 1 Year 2 Year 3 Year 4 Year 5
Cost of Revenue
Product A
Material Costs per Unit 15.00 14.00 11.00 10.00 9.00
Subcontact Costs per Unit 10.00 10.00 7.00 6.50 6.00
Total Direct Costs per Unit 25.00 24.00 18.00 16.50 15.00
Unit Sales 20,000 75,000 150,000 250,000 400,000
Total Direct Costs 500,000 1,800,000 2,700,000 4,125,000 6,000,000
Labor Costs 69,000 227,700 552,000 864,000 1,200,000
Total Direct Costs 569,000 2,027,700 3,252,000 4,989,000 7,200,000
Service B
Service Personnel Costs 120,750 212,750 480,000 1,500,000 2,750,000
Other Expenses
Salary Expenses 276,000 690,000 990,000 1,410,000 2,000,000
Depreciation 36,714 91,714 137,429 190,286 243,143
Facility costs (rent, energy) 50,000 200,000 300,000 300,000 450,000
System Costs 25,000 100,000 150,000 300,000 350,000
Income
(Item…) 0
(Item…)
(Item…)
Total 0 0 0 0 0
Start-up expenses
Legal 25,000
Relocation 20,000
(Item…)
Total 45,000 0 0 0 0
Total Extraordinary Income/(Expense) (45,000) 0 0 0 0
Income Tax (Rate Federal & State) 0.40 0.40 0.40 0.40 0.40
Capital Expenditures
Computers, Software & Office Equipment 20,000 100,000 200,000 250,000 350,000
Plant & Equipment 250,000 350,000 250,000 300,000 300,000
Other 10,000 50,000 100,000 100,000 100,000
Total Capital Expenditures 0 280,000 500,000 550,000 650,000 750,000
% of Revenue 28.0% 9.5% 5.6% 4.0% 2.9%
Depreciation Computers, Sofware & Office Equipment (allocated to General & Administrative Expenses)
Depreciation Rate: Years 1 3 3 3 3 3
Year 0 0 0 0 0 0
Year 1 6,667 6,667 6,667 0 0
Year 2 33,333 33,333 33,333 0
Year 3 66,667 66,667 66,667
Year 4 83,333 83,333
Year 5 116,667
Total Depreciation 6,667 40,000 106,667 183,333 266,667
Accounts Receivable
% of Revenue 8.3% 8.3% 8.3% 8.3% 8.3%
Days Outstanding 30 30 30 30 30
Accounts Receivable 149,400 627,480 913,000 1,577,000 2,656,000
(Increase)/Decrease from Prev. Period (149,400) (478,080) (285,520) (664,000) (1,079,000)
Inventory
% of Revenue 8.3% 8.3% 6.7% 6.7% 6.7%
Inventory Turns 12 12 15 15 15
Inventory Days 30 30 24 24 24
Inventory 149,400 627,480 737,000 1,273,000 2,144,000
(Increase)/Decrease from Prev. Period (149,400) (478,080) (109,520) (536,000) (871,000)
Debt
Short Term Debt 100,000
Increase / (Decrease) Previous Period 0 0 0 100,000 (100,000)
Total Equity & Debt 1,500,000 1,500,000 2,500,000 2,400,000 2,400,000 2,200,000
Interest
Interest Rate
Short Term Debt 9.0% 9.0% 9.0% 9.0% 9.0%
Long Term Debt 12.0% 12.0% 12.0% 12.0% 12.0%
Interest Expense
Short Term Debt 0 0 0 9,000 0
Long Term Debt 0 60,000 48,000 36,000 24,000
Total Interest 0 60,000 48,000 45,000 24,000
Interest Income
Interest Rate 4.0% 4.0% 4.0% 4.0% 4.0%
Interest Income 0 0 0 0 10,000
Retained Earnings
Net Income (712,131) (218,064) 704,515 1,002,741 2,252,034
Dividends 50,000
Increase / (Decrease) Retained Earnings (712,131) (218,064) 704,515 1,002,741 2,202,034
Beginning Retained Earnings 0 (712,131) (930,195) (225,681) 777,060
Ending Retained Earnings (712,131) (930,195) (225,681) 777,060 2,979,094
04/18/2009
XYZ Company 13:58:19
Income Statement
Years 1 to 5
($)
Year 1 Year 2 Year 3 Year 4 Year 5
OPERATING EXPENSES
Sales & Marketing 229,000 997,750 1,805,400 2,911,500 4,676,000
Research & Development 149,000 413,000 702,550 1,241,500 1,752,000
General and Administration 171,667 465,150 790,107 1,191,933 1,771,467
Total Operating Expenses 549,667 1,875,900 3,298,057 5,344,933 8,199,467
% of Revenues 55% 36% 34% 33% 32%
EARNINGS BEFORE INTEREST & TAXES (712,131) (158,064) 752,515 1,565,781 3,767,390
ASSETS
CURRENT ASSETS
Cash 1,500,000 408,170 367,660 570,510 792,870
Accounts Receivable 149,400 627,480 913,000 1,577,000
Inventories 149,400 627,480 737,000 1,273,000
Other Current Assets 18,000 75,600 110,000 190,000
Total Current Assets 1,500,000 724,970 1,698,220 2,330,510 3,832,870
PROPERTY & EQUIPMENT 0 236,619 604,905 910,810 1,187,190
TOTAL ASSETS 1,500,000 961,589 2,303,125 3,241,319 5,020,060
STOCKHOLDERS' EQUITY
CommonStock 500,000 500,000 500,000 500,000 500,000
Preferred Stock 1,000,000 1,000,000 1,500,000 1,500,000 1,500,000
Retained Earnings (712,131) (930,195) (225,681) 777,060
Total Equity 1,500,000 787,869 1,069,805 1,774,319 2,777,060
TOTAL LIABILITIES & EQUITY 1,500,000 961,589 2,303,125 3,241,319 5,020,060
04/18/2009
13:58:19
Year 5
1,735,714
2,656,000
2,144,000
320,000
6,855,714
1,427,381
8,283,094
0
2,784,000
320,000
100,000
3,204,000
100,000
500,000
1,500,000
2,979,094
4,979,094
8,283,094
04/18/2009
XYZ Company 13:58:19
Cash Flow Statememt
Years 1 to 5
($)
Year 1 Year 2 Year 3 Year 4
OPERATING ACTIVITIES
Net Earnings (712,131) (218,064) 704,515 1,002,741
Depreciation 43,381 131,714 244,095 373,619
Working Capital Changes
(Increase)/Decrease Accounts Receivable (149,400) (478,080) (285,520) (664,000)
(Increase)/Decrease Inventories (149,400) (478,080) (109,520) (536,000)
(Increase)/Decrease Other Current Assets (18,000) (57,600) (34,400) (80,000)
Increase/(Decrease) Accts Pay & Accrd Expenses 155,720 502,000 299,280 696,000
Increase/(Decrease) Other Current Liab 18,000 57,600 34,400 80,000
Net Cash Provided/(Used) by Operating Activities (811,830) (540,510) 852,850 872,360
INVESTING ACTIVITIES
Property & Equipment (280,000) (500,000) (550,000) (650,000)
Other
Net Cash Used in Investing Activities (280,000) (500,000) (550,000) (650,000)
FINANCING ACTIVITIES
Increase/(Decrease) Short Term Debt 0 0 0 100,000
Increase/(Decrease) Curr. Portion LTD 0 100,000 0 0
Increase/(Decrease) Long Term Debt 0 400,000 (100,000) (100,000)
Increase/(Decrease) Common Stock 0 0 0 0
Increase/(Decrease) Preferred Stock 0 500,000 0 0
Dividends Declared 0 0 0 0
Net Cash Provided / (Used) by Financing 0 1,000,000 (100,000) 0
Year 5
2,252,034
509,810
(1,079,000)
(871,000)
(130,000)
1,131,000
130,000
1,942,844
(750,000)
(750,000)
(100,000)
0
(100,000)
0
0
(50,000)
(250,000)
942,844
792,870
1,735,714
04/18/2009
13:58:19
Cost of Revenue
Variable 729,750 2,450,450 4,122,000 7,139,000 10,990,000
Fixed 387,714 1,081,714 1,577,429 2,200,286 3,043,143
Total 1,117,464 3,532,164 5,699,429 9,339,286 14,033,143
Operating Expenses
Variable 160,000 840,000 1,560,000 2,600,000 4,160,000
Fixed 389,667 1,035,900 1,738,057 2,744,933 4,039,467
Total 549,667 1,875,900 3,298,057 5,344,933 8,199,467
XYZ Company
Income Statement Year 1
Year 1 by Months Total Annual
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 12 Months Projection
NET REVENUES 0 0 0 50,000 80,000 100,000 100,000 120,000 150,000 120,000 130,000 150,000 1,000,000 1,000,000
COST OF REVENUE 0 0 0 55,873 89,397 111,746 111,746 134,096 167,620 134,096 145,270 167,620 1,117,464 1,117,464
GROSS PROFIT 0 0 0 (5,873) (9,397) (11,746) (11,746) (14,096) (17,620) (14,096) (15,270) (17,620) (117,464) (117,464)
OPERATING EXPENSES
Sales & Marketing 0 0 0 11,450 18,320 22,900 22,900 27,480 34,350 27,480 29,770 34,350 229,000 229,000
Research & Development 0 0 0 7,450 11,920 14,900 14,900 17,880 22,350 17,880 19,370 22,350 149,000 149,000
General and Administration 0 0 0 8,583 13,733 17,167 17,167 20,600 25,750 20,600 22,317 25,750 171,667 171,667
Total Operating Expenses 0 0 0 27,483 43,973 54,967 54,967 65,960 82,450 65,960 71,457 82,450 549,667 549,667
EARNINGS FROM OPERATIONS 0 0 0 (33,357) (53,370) (66,713) (66,713) (80,056) (100,070) (80,056) (86,727) (100,070) (667,131) (667,131)
EARNINGS BEFORE INTEREST & TAXES (25,000) (20,000) 0 (33,357) (53,370) (66,713) (66,713) (80,056) (100,070) (80,056) (86,727) (100,070) (712,131) (712,131)
NET EARNINGS BEFORE TAXES (25,000) (20,000) 0 (33,357) (53,370) (66,713) (66,713) (80,056) (100,070) (80,056) (86,727) (100,070) (712,131) (712,131)
TAXES 0 0 0 0 0 0 0 0 0 0 0 0 0 0
NET EARNINGS (25,000) (20,000) 0 (33,357) (53,370) (66,713) (66,713) (80,056) (100,070) (80,056) (86,727) (100,070) (712,131) (712,131)
XYZ Company
Income Statement Year 2
Year 2 by Months Total Annual
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 12 Months Projection
NET REVENUES 262,500 262,500 367,500 315,000 367,500 367,500 420,000 525,000 525,000 577,500 630,000 630,000 5,250,000 5,250,000
COST OF REVENUE 176,608 176,608 247,252 211,930 247,252 247,252 282,573 353,216 353,216 388,538 423,860 423,860 3,532,164 3,532,164
GROSS PROFIT 85,892 85,892 120,249 103,070 120,249 120,249 137,427 171,784 171,784 188,962 206,140 206,140 1,717,836 1,717,836
OPERATING EXPENSES
Sales & Marketing 49,888 49,888 69,843 59,865 69,843 69,843 79,820 99,775 99,775 109,753 119,730 119,730 997,750 997,750
Research & Development 20,650 20,650 28,910 24,780 28,910 28,910 33,040 41,300 41,300 45,430 49,560 49,560 413,000 413,000
General and Administration 23,258 23,258 32,561 27,909 32,561 32,561 37,212 46,515 46,515 51,167 55,818 55,818 465,150 465,150
Total Operating Expenses 93,795 93,795 131,313 112,554 131,313 131,313 150,072 187,590 187,590 206,349 225,108 225,108 1,875,900 1,875,900
EARNINGS FROM OPERATIONS (7,903) (7,903) (11,065) (9,484) (11,065) (11,065) (12,645) (15,806) (15,806) (17,387) (18,968) (18,968) (158,064) (158,064)
EARNINGS BEFORE INTEREST & TAXES (7,903) (7,903) (11,065) (9,484) (11,065) (11,065) (12,645) (15,806) (15,806) (17,387) (18,968) (18,968) (158,064) (158,064)
INTEREST INCOME / (EXPENSE) (5,000) (5,000) (5,000) (5,000) (5,000) (5,000) (5,000) (5,000) (5,000) (5,000) (5,000) (5,000) (60,000) (60,000)
NET EARNINGS BEFORE TAXES (12,903) (12,903) (16,065) (14,484) (16,065) (16,065) (17,645) (20,806) (20,806) (22,387) (23,968) (23,968) (218,064) (218,064)
TAXES 0 0 0 0 0 0 0 0 0 0 0 0 0 0
NET EARNINGS (12,903) (12,903) (16,065) (14,484) (16,065) (16,065) (17,645) (20,806) (20,806) (22,387) (23,968) (23,968) (218,064) (218,064)
XYZ Company
Income Statement Year 3 Year 4 Year 5
Years 3, 4 & 5 by Quarters Annual Annual Annual
Year 3 Year 4 Year 5 Projection Projection Projection
1st Qtr 2nd Qrtr 3rd Qrtr 4th Qrtr Total 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Total 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Total
NET REVENUES 2,000,000 2,500,000 2,500,000 2,750,000 9,750,000 3,000,000 4,000,000 4,500,000 4,750,000 16,250,000 5,000,000 6,000,000 7,000,000 8,000,000 26,000,000 9,750,000 16,250,000 26,000,000
0 0 0
COST OF REVENUE 1,169,114 1,461,392 1,461,392 1,607,531 5,699,429 1,724,176 2,298,901 2,586,264 2,729,945 9,339,286 2,698,681 3,238,418 3,778,154 4,317,890 14,033,143 5,699,429 9,339,286 14,033,143
GROSS PROFIT 830,886 1,038,608 1,038,608 1,142,469 4,050,571 1,275,824 1,701,099 1,913,736 2,020,055 6,910,714 2,301,319 2,761,582 3,221,846 3,682,110 11,966,857 4,050,571 6,910,714 11,966,857
OPERATING EXPENSES
Sales & Marketing 370,338 462,923 462,923 509,215 1,805,400 537,508 716,677 806,262 851,054 2,911,500 899,231 1,079,077 1,258,923 1,438,769 4,676,000 1,805,400 2,911,500 4,676,000
Research & Development 144,113 180,141 180,141 198,155 702,550 229,200 305,600 343,800 362,900 1,241,500 336,923 404,308 471,692 539,077 1,752,000 702,550 1,241,500 1,752,000
General and Administration 162,073 202,591 202,591 222,851 790,107 220,049 293,399 330,074 348,411 1,191,933 340,667 408,800 476,933 545,067 1,771,467 790,107 1,191,933 1,771,467
Total Operating Expenses 676,524 845,656 845,656 930,221 3,298,057 986,757 1,315,676 1,480,135 1,562,365 5,344,933 1,576,821 1,892,185 2,207,549 2,522,913 8,199,467 3,298,057 5,344,933 8,199,467
EARNINGS FROM OPERATIONS 154,362 192,953 192,953 212,248 752,515 289,067 385,423 433,601 457,690 1,565,781 724,498 869,398 1,014,297 1,159,197 3,767,390 752,515 1,565,781 3,767,390
EARNINGS BEFORE INTEREST & TAXES 154,362 192,953 192,953 212,248 752,515 289,067 385,423 433,601 457,690 1,565,781 724,498 869,398 1,014,297 1,159,197 3,767,390 752,515 1,565,781 3,767,390
INTEREST INCOME / (EXPENSE) (12,000) (12,000) (12,000) (12,000) (48,000) (11,250) (11,250) (11,250) (11,250) (45,000) (3,500) (3,500) (3,500) (3,500) (14,000) (48,000) (45,000) (14,000)
NET EARNINGS BEFORE TAXES 142,362 180,953 180,953 200,248 704,515 277,817 374,173 422,351 446,440 1,520,781 720,998 865,898 1,010,797 1,155,697 3,753,390 704,515 1,520,781 3,753,390
TAXES 0 0 0 0 0 (94,636) (127,459) (143,870) (152,076) (518,040) (288,399) (346,359) (404,319) (462,279) (1,501,356) 0 (518,040) (1,501,356)
NET EARNINGS 142,362 180,953 180,953 200,248 704,515 183,181 246,714 278,481 294,364 1,002,741 432,599 519,539 606,478 693,418 2,252,034 704,515 1,002,741 2,252,034
Do Not Delete
Calculation Area
Tax Loss Carry Forward
Interest Income/(Expense)
Tax Loss Carry Forward
Cumulative Net Earning Before Taxes Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Year 1 (25,000) (45,000) (45,000) (78,357) (131,727) (198,440) (265,153) (345,209) (445,279) (525,334) (612,061) (712,131)
Year 2 (725,034) (737,938) (754,002) (768,486) (784,550) (800,615) (818,260) (839,066) (859,873) (882,260) (906,228) (930,195)
XYZ Company
Cash Flow Statement Year 1
Year 1 by Months Estimated Annual
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Year 1 Projection
OPERATING ACTIVITIES
Net Earnings (25,000) (20,000) 0 (33,357) (53,370) (66,713) (66,713) (80,056) (100,070) (80,056) (86,727) (100,070) (712,131) (712,131)
Depreciation 3,615 3,615 3,615 3,615 3,615 3,615 3,615 3,615 3,615 3,615 3,615 3,615 43,381 43,381
Working Capital Changes
(Increase)/Decrease Accounts Receivable 0 0 0 (49,800) (29,880) (19,920) 0 (19,920) (29,880) 29,880 (9,960) (19,920) (149,400) (149,400)
(Increase)/Decrease Inventories 0 0 0 (49,800) (29,880) (19,920) 0 (19,920) (29,880) 29,880 (9,960) (19,920) (149,400) (149,400)
(Increase)/Decrease Other Current Assets 0 0 0 (6,000) (3,600) (2,400) 0 (2,400) (3,600) 3,600 (1,200) (2,400) (18,000) (18,000)
Increase/(Decrease) Accts Pay & Accrd Expenses 0 0 31 49,969 32,200 21,320 880 20,000 30,880 (28,680) 8,680 20,440 155,720 155,720
Increase/(Decrease) Other Current Liab 0 0 0 6,000 3,600 2,400 0 2,400 3,600 (3,600) 1,200 2,400 18,000 18,000
Net Cash Provided/(Used) by Operating Activities (21,385) (16,385) 3,646 (79,373) (77,315) (81,618) (62,218) (96,281) (125,335) (45,361) (94,352) (115,855) (811,830) (811,830)
INVESTING ACTIVITIES
Property & Equipment (50,000) (100,000) (50,000) (40,000) 0 0 (40,000) 0 0 0 0 0 (280,000) (280,000)
Other 0 0
Net Cash Used in Investing Activities (50,000) (100,000) (50,000) (40,000) 0 0 (40,000) 0 0 0 0 0 (280,000) (280,000)
FINANCING ACTIVITIES
Increase/(Decrease) Short Term Debt 0 0 0 0
Increase/(Decrease) Curr. Portion LTD 0 0 0 0
Increase/(Decrease) Long Term Debt 0 0 0 0
Increase/(Decrease) Common Stock 0 0 0 0
Increase/(Decrease) Preferred Stock 0 0 0 0
Dividends Declared 0 0 0
Net Cash Provided / (Used) by Financing 0 0 0 0 0 0 0 0 0 0 0 0 0 0
INCREASE/(DECREASE) IN CASH (71,385) (116,385) (46,354) (119,373) (77,315) (81,618) (102,218) (96,281) (125,335) (45,361) (94,352) (115,855) (1,091,830) (1,091,830)
CASH AT BEGINNING OF PERIOD 1,500,000 1,428,615 1,312,230 1,265,877 1,146,504 1,069,188 987,570 885,352 789,072 663,737 618,376 524,024 1,500,000
CASH AT END OF PERIOD 1,428,615 1,312,230 1,265,877 1,146,504 1,069,188 987,570 885,352 789,072 663,737 618,376 524,024 408,170 408,170
XYZ Company
Cash Flow Statement Year 2
Year 2 by Months Estimated Annual
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Year 2 Projection
OPERATING ACTIVITIES
Net Earnings (12,903) (12,903) (16,065) (14,484) (16,065) (16,065) (17,645) (20,806) (20,806) (22,387) (23,968) (23,968) (218,064) (218,064)
Depreciation 10,976 10,976 10,976 10,976 10,976 10,976 10,976 10,976 10,976 10,976 10,976 10,976 131,714 131,714
Working Capital Changes 0
(Increase)/Decrease Accounts Receivable (112,050) 0 (104,580) 52,290 (52,290) 0 (52,290) (104,580) 0 (52,290) (52,290) 0 (478,080) (478,080)
(Increase)/Decrease Inventories (112,050) 0 (104,580) 52,290 (52,290) 0 (52,290) (104,580) 0 (52,290) (52,290) 0 (478,080) (478,080)
(Increase)/Decrease Other Current Assets (13,500) 0 (12,600) 6,300 (6,300) 0 (6,300) (12,600) 0 (6,300) (6,300) 0 (57,600) (57,600)
Increase/(Decrease) Accts Pay & Accrd Expenses (149,120) (6,600) 31 331,139 50,190 2,310 52,500 107,310 4,620 52,500 54,810 2,310 502,000 502,000
Increase/(Decrease) Other Current Liab 13,500 0 12,600 (6,300) 6,300 0 6,300 12,600 0 6,300 6,300 0 57,600 57,600
Net Cash Provided/(Used) by Operating Activities (375,147) (8,527) (214,217) 432,211 (59,478) (2,778) (58,749) (111,680) (5,210) (63,491) (62,762) (10,682) (540,510) (540,510)
0
INVESTING ACTIVITIES 0
Property & Equipment (100,000) (100,000) 0 0 0 (100,000) 0 0 (100,000) 0 0 (100,000) (500,000) (500,000)
Other 0 0
Net Cash Used in Investing Activities (100,000) (100,000) 0 0 0 (100,000) 0 0 (100,000) 0 0 (100,000) (500,000) (500,000)
0
FINANCING ACTIVITIES 0
Increase/(Decrease) Short Term Debt 0 0 0 0
Increase/(Decrease) Curr. Portion LTD 100,000 0 100,000 100,000
Increase/(Decrease) Long Term Debt 400,000 0 400,000 400,000
Increase/(Decrease) Common Stock 0 0 0 0
Increase/(Decrease) Preferred Stock 500,000 0 500,000 500,000
Dividends Declared 0 0 0
Net Cash Provided / (Used) by Financing 1,000,000 0 0 0 0 0 0 0 0 0 0 0 1,000,000 1,000,000
0
INCREASE/(DECREASE) IN CASH 524,853 (108,527) (214,217) 432,211 (59,478) (102,778) (58,749) (111,680) (105,210) (63,491) (62,762) (110,682) (40,510) (40,510)
CASH AT BEGINNING OF PERIOD 408,170 933,023 824,496 610,279 1,042,490 983,012 880,233 821,484 709,804 604,594 541,103 478,341 408,170
CASH AT END OF PERIOD 933,023 824,496 610,279 1,042,490 983,012 880,233 821,484 709,804 604,594 541,103 478,341 367,660 367,660
XYZ Company
Cash Flow Statement Year 3 Year 4 Year 5
Years 3, 4 & 5 by Quarters Annual Annual Annual
Year 3 Year 4 Year 5 Projection Projection Projection
1st Qtr 2nd Qrtr 3rd Qrtr 4th Qrtr Total 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Total 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Total
OPERATING ACTIVITIES
Net Earnings 142,362 180,953 180,953 200,248 704,515 183,181 246,714 278,481 294,364 1,002,741 432,599 519,539 606,478 693,418 2,252,034 704,515 1,002,741 2,252,034
Depreciation 61,024 61,024 61,024 61,024 244,095 93,405 93,405 93,405 93,405 373,619 127,452 127,452 127,452 127,452 509,810 244,095 373,619 509,810
Working Capital Changes
(Increase)/Decrease Accounts Receivable (36,520) (166,000) 0 (83,000) (285,520) (83,000) (332,000) (166,000) (83,000) (664,000) (83,000) (332,000) (332,000) (332,000) (1,079,000) (285,520) (664,000) (1,079,000)
(Increase)/Decrease Inventories 91,480 (134,000) 0 (67,000) (109,520) (67,000) (268,000) (134,000) (67,000) (536,000) (67,000) (268,000) (268,000) (268,000) (871,000) (109,520) (536,000) (871,000)
(Increase)/Decrease Other Current Assets (4,400) (20,000) 0 (10,000) (34,400) (10,000) (40,000) (20,000) (10,000) (80,000) (10,000) (40,000) (40,000) (40,000) (130,000) (34,400) (80,000) (130,000)
Increase/(Decrease) Accts Pay & Accrd Expenses 38,280 174,000 0 87,000 299,280 87,000 348,000 174,000 87,000 696,000 87,000 348,000 348,000 348,000 1,131,000 299,280 696,000 1,131,000
Increase/(Decrease) Other Current Liab 4,400 20,000 0 10,000 34,400 10,000 40,000 20,000 10,000 80,000 10,000 40,000 40,000 40,000 130,000 34,400 80,000 130,000
Net Cash Provided/(Used) by Operating Activities 296,626 115,976 241,976 198,272 852,850 213,586 88,119 245,886 324,769 872,360 497,051 394,991 481,931 568,871 1,942,844 852,850 872,360 1,942,844
INVESTING ACTIVITIES
Property & Equipment (100,000) (200,000) (100,000) (150,000) (550,000) (200,000) (200,000) (100,000) (150,000) (650,000) (200,000) (200,000) (200,000) (150,000) (750,000) (550,000) (650,000) (750,000)
Other 0 0 0 0 0
Net Cash Used in Investing Activities (100,000) (200,000) (100,000) (150,000) (550,000) (200,000) (200,000) (100,000) (150,000) (650,000) (200,000) (200,000) (200,000) (150,000) (750,000) (550,000) (650,000) (750,000)
FINANCING ACTIVITIES
Increase/(Decrease) Short Term Debt 0 0 0 100,000 0 100,000 0 (100,000) (100,000) 0 100,000 (100,000)
Increase/(Decrease) Curr. Portion LTD 0 0 0 0 0 0 0 0 0 0 0 0
Increase/(Decrease) Long Term Debt 0 (100,000) (100,000) 0 (100,000) (100,000) 0 (100,000) (100,000) (100,000) (100,000) (100,000)
Increase/(Decrease) Common Stock 0 0 0 0 0 0 0 0 0 0 0 0
Increase/(Decrease) Preferred Stock 0 0 0 0 Err:508 Err:508 0 0 0 0 0 0
Dividends Declared 0 0 0 0 (50,000) (50,000) 0 0 (50,000)
Net Cash Provided / (Used) by Financing 0 0 0 (100,000) (100,000) 100,000 0 0 Err:508 Err:508 0 0 0 (250,000) (250,000) (100,000) 0 (250,000)
INCREASE/(DECREASE) IN CASH 196,626 (84,024) 141,976 (51,728) 202,850 113,586 (111,881) 145,886 Err:508 Err:508 297,051 194,991 281,931 168,871 942,844 202,850 222,360 942,844
CASH AT BEGINNING OF PERIOD 367,660 564,286 480,262 622,238 570,510 684,096 572,215 718,101 Err:508 Err:508 Err:508 Err:508 367,660 570,510 792,870
CASH AT END OF PERIOD 564,286 480,262 622,238 570,510 684,096 572,215 718,101 Err:508 Err:508 Err:508 Err:508 Err:508 570,510 792,870 1,735,714
04/18/2009
XYZ Company 13:58:23
Summary
Years 1 to 5
Growth
Revenue Growth Rate - CAGR: 425% 86% 67% 60%
Net Earnings Growth Rate - CAGR: Nil Nil 42.3% 124.6%
Ratios
Current Ratio 4.2 2.0 2.0 1.9 2.1
Debt to Capital (LT Debt + Equity) 0.0 0.3 0.2 0.1 0.0
Profitability
Gross Profit % -11.7% 32.7% 41.5% 42.5% 46.0%
Operating Expenses % 55.0% 35.7% 33.8% 32.9% 31.5%
Net Earnings % -71.2% -4.2% 7.2% 6.2% 8.7%
Returns
Return on Assets -74.1% -9.5% 21.7% 20.0% 27.2%
Return on Equity -90.4% -20.4% 39.7% 36.1% 45.2%
Return on Capital (LT Debt + Equity) -90.4% -13.9% 32.4% 32.6% 43.5%
04/18/2009
13:58:25
Assumptions: REF
www.bantinsom.com
Investor required IRR 60% A
P/E ratio at IPO or acquisition 15 B
Initial investment $1,500,000 C FV(A,C) G/F IRR(D,G)
REF D E F G H I J K
Market Required Future Investor's Investor's Investor's Investor's
Valuation Calculation Year Net Income Capitalization Value (Investor) Share Return ROI IRR
Calculation Income Stmt B*E FV(F,D) C/G F*H I/C IRR(I,C,D)
Liquidity Event in Year 1 1 (712,131) ($10,681,967) $2,400,000 100.0% $0 0% #N/A
Liquidity Event in Year 2 2 (218,064) ($3,270,964) $3,840,000 100.0% $0 0% #N/A
Liquidity Event in Year 3 3 704,515 $10,567,721 $6,144,000 58.1% $6,144,000 410% 60%
Liquidity Event in Year 4 4 1,002,741 $15,041,112 $9,830,400 65.4% $9,830,400 655% 60%
Liquidity Event in Year 5 5 2,252,034 $33,780,514 $15,728,640 46.6% $15,728,640 1049% 60%
Negotiation Workspace
Investor's Investor's Investor's Investor's
Year Share Return ROI IRR
1 25.0% $0 0% #N/A
2 25.0% $0 0% #N/A
3 25.0% $2,641,930 176% 21%
4 25.0% $3,760,278 251% 26%
5 40.0% $13,512,206 901% 55%
04/18/2009
13:58:27
www.bantinsom.com
($1,500,000)
($1,500,000)
($1,500,000)
($1,500,000)
($1,500,000)
04/18/2009
13:58:30
www.bantinsom.com
$0
$0 $0
$0 $0 $2,641,930
$0 $0 $0 $3,760,278
$0 $0 $0 $0 $13,512,206
04/18/2009
13:58:30
Calculations
Market Capitalization at IPO $33,780,514 H B*C