FINANCIAL ACCOUNTING

Financial Accounting

Financial Accounting

The following sections will outline the important financial assumptions, key financial indicators, break-even analysis, profit and loss, cash flow, and the balance sheet that will facilitate to take final decision for this merger.

Important Assumptions

The following table best features some of the significant economic assumptions for agency Space Solutions.

General Assumptions

Year 1

Year 2

Year 3

Plan Month

1

2

3

Current Interest Rate

10.00%

10.00%

10.00%

Long-term Interest Rate

10.00%

10.00%

10.00%

Tax Rate

30.00%

30.00%

30.00%

Other

0

0

0

Break-even Analysis

The Break-even table and chart below indicate the monthly income needed to break even.

Break-even Analysis

Monthly Revenue Break-even

$3,576

Assumptions:

Average Percent Variable Cost

0%

Estimated Monthly Fixed Cost

$3,576

Projected Profit and Loss

The following table will show projected profit and loss.

Pro Forma gain and Loss

Year 1

Year 2

Year 3

Sales

$57,770

$80,000

$100,000

Direct Cost of Sales

$0

$0

$0

Other Production Expenses

$0

$0

$0

Total Cost of Sales

$0

$0

$0

Gross Margin

$57,770

$80,000

$100,000

Gross Margin %

100.00%

100.00%

100.00%

Expenses

Payroll

$35,000

$56,000

$65,000

Sales and Marketing and Other Expenses

$2,660

$3,200

$4,150

Depreciation

$0

$0

$0

Leased Equipment

$0

$0

$0

Utilities

$0

$0

$0

Insurance

$0

$0

$0

Rent

$0

$0

$0

Payroll Taxes

$5,250

$8,400

$9,750

Other

$0

$0

$0

Total Operating Expenses

$42,910

$67,600

$78,900

Profit Before Interest and Taxes

$14,860

$12,400

$21,100

EBITDA

$14,860

$12,400

$21,100

Interest Expense

$0

$0

$0

Taxes Incurred

$4,458

$3,720

$6,330

Net Profit

$10,402

$8,680

$14,770

Net Profit/Sales

18.01%

10.85%

14.77%

Projected Cash Flow

The following journal and table shows estimated cash flow.

Pro Forma Cash Flow

Year 1

Year 2

Year 3

Cash Received

Cash from Operations

Cash Sales

$31,774

$44,000

$55,000

Cash from Receivables

$18,069

$32,950

$42,256

Subtotal Cash from Operations

$49,843

$76,950

$97,256

Additional Cash Received

Sales levy, VAT, HST/GST Received

$0

$0

$0

New Current Borrowing

$0

$0

$0

New Other Liabilities (interest-free)

$0

$0

$0

New Long-term Liabilities

$0

$0

$0

Sales of Other non-fixed Assets

$0

$0

$0

Sales of Long-term Assets

$0

$0

$0

New Investment Received

$0

$0

$0

Subtotal Cash Received

$49,843

$76,950

$97,256

Expenditures

Year 1

Year 2

Year 3

Expenditures from Operations

Cash Spending

$35,000

$56,000

$65,000

Bill Payments

$10,257

$16,172

$19,826

Subtotal Spent on Operations

$45,257

$72,172

$84,826

Additional Cash Spent

Sales levy, VAT, HST/GST Paid Out

$0

$0

$0

Principal Repayment of short term Borrowing

$0

$0

$0

Other Liabilities Principal Repayment

$0

$0

$0

Long-term Liabilities Principal Repayment

$0

$0

$0

Purchase Other Current Assets

$0

$0

$0

Purchase Long-term Assets

$0

$0

$0

Dividends

$0

$0

$0

Subtotal Cash Spent

$45,257

$72,172

$84,826

Net Cash Flow

$4,586

$4,778

$12,429

Cash Balance

$11,286

$16,064

$28,493

Projected Balance Sheet

The following table displays the projected balance sheet.

Pro Forma Balance Sheet

Year 1

Year 2

Year 3

Assets

Current Assets

Cash

$11,286

$16,064

$28,493

Accounts Receivable

$7,927

$10,977

$13,722

Other Current Assets

$2,000

$2,000

$2,000

Total Current Assets

$21,213

$29,041

$44,215

Long-term Assets

Long-term Assets

$0

$0

$0

Accumulated Depreciation

$0

$0

$0

Total Long-term Assets

$0

$0

$0

Total Assets

$21,213

$29,041

$44,215

Liabilities and Capital

Year 1

Year 2

Year 3

Current Liabilities

Accounts Payable

$2,111

$1,259

$1,663

Current Borrowing

$0

$0

$0

Other Current Liabilities

$0

$0

$0

Subtotal Current Liabilities

$2,111

$1,259

$1,663

Long-term Liabilities

$0

$0

$0

Total Liabilities

$2,111

$1,259

$1,663

Paid-in Capital

$12,000

$12,000

$12,000

Retained Earnings

($3,300)

$7,102

$15,782

Earnings

$10,402

$8,680

$14,770

Total Capital

$19,102

$27,782

$42,552

Total Liabilities and Capital

$21,213

$29,041

$44,215

Net Worth

$19,102

$27,782

$42,552

Business Ratios

The following table summaries some of the more significant ratios from the Management conferring Services industry. The final pillar, commerce Profile, details exact ratios founded on the ...