Financial Management of Cool Moose Creamery

Table of Contents

Introduction2

Analysis of the Information of Cool Moose Creamery2

Business Plan2

Gathering Relevant Information2

Financial Assessment of the Business Plan3

Free Cash flows10

Creating a Business Plan10

Assessment of the Possible Purchase of a New Single-Head Soft-Serve Ice Cream Machine for the Restaurant12

Qualitative Issues12

Calculation of Return on Investment and Payback Period13

Financial Management of Cool Moose Creamery

Introduction

The study is related to financial management which particularly focuses on Cool Moose Creamery. The study is divided in two parts; the first part of the study assesses the feasibility of owning a franchise of a relatively unknown franchisor, Cool Moose Creamery by developing a business plan to obtain a loan from a financial institution. In relation to this, it is important for Cool Moose Creamery to develop business plan based on the financial assessment, as it will guide the company in managing the business activities that will facilitate in making reasonable decisions based on financial analysis, thus having better control over business processes. However, the second part assesses the impact of the introduction of a soft-serve ice cream machine for the restaurant.

Analysis of the Information of Cool Moose Creamery

Business Plan

Cool Moose Creamery must gather all relevant data, make financial projections, and estimate the free cash flows in order to determine whether the company can pay the monthly installment of the bank loan. Then, the business plan can be developed for Cool Moose Creamery and the bank to determine if it is a feasible investment.

Gathering Relevant Information

A business plan has to be comprehensive enough to satisfy the bank, or any other financial institute such as the U.S. Small Business Administration (SBA), that Cool Moose are capable of repaying the principal and interest payments. To obtain a bank loan, it is important that the company should first gather all the relevant financial information such as

Personal Financial Statements and Tax Returns

All the partners must present three years of financial statements and tax returns to be eligible for a loan.

Franchisor's Disclosure Document

This document was provided to us by Mr. Pernatinos, the franchisor, before the company began investing in the Cool Moose Creamery franchise. It contains such vital information as the franchisor's background information which helps us understand the associated risks and costs, the business background which contains the litigation history of the franchise-whether it has been sued or has sued one of the other franchisees, the recent bankruptcy history of Mr. Pernatinos, initial and ongoing costs, restrictions imposed by the franchisor, trainings provided by the franchisor, current and former franchisees, and the termination agreement.

The franchisor's disclosure document will help us prepare a list of all start-up costs such as the flat upfront franchisor's fee, franchisor's product purchases, machinery, fixtures and fittings, cost of leasing machinery, shop rent, and legal costs of starting a business.

Financial Assessment of the Business Plan

With the help of all available information, it is imperative and essential to project the earnings and expenses with the help of pro forma financial statements. Therefore, sales-driven financial model where Cool Moose Creamery will estimate the Sales ...