Financial Plan: The Disney Shop - Coursework Example

FINANCIAL PLAN – THE DISNEY SHOP Executive summary: The underlying business plan is based on the activities of The Disney Shop, a retail store that will offer a set of consumer products related with the Disney Family. The paper has discussed the operational and financial activities of the business. The company is aiming to bring a source of happiness in the life of the people and a source of joy for the young members of the family with the colorful and exciting products of the company. With this vision, The Disney Shop sets its objective to attract its customers by introducing a variety of products and services accessories associated with Disney Family. Further, the company aims to bring promotional campaigns and discounted offerings to capture the wide segment of its target market. The 2. Evaluation of the market for the proposed enterprise For the inception of any business, the market plays an important role (Cravens, and Piercy, 2008). The state chosen for starting a business is the Iowa, and the city that has been chosen is Des Moines. It is the capital city of the state and largely populated. The population of the city is urban with the estimated median income of $41,813. The place has been chosen because the cost of carrying business is approximately 17% less, and the cost of energy is 22% less as compared to other states of US. The basic target market for the company is children as The Disney Shop will offer the products that will be served to the kids. However, since the children are not directly in the buying position, the target market also involves the adult that will be in the buying position of the offered products of the company. Estimation of the Population Year Figures Population estimation 2012 206,688 Individuals below 5 years 2010 7.90% Individuals below 18 years 2010 24.80% Individuals 65 years old and above 2010 11.00% Individuals over 18 and under 65 years 2010 56.30% Individuals (Female) 2010 51.10% With the facts and figures mentioned in the above-presented table, the target market of The Disney Shop includes all individuals of the city. However, the purchasing power and buying capacity of each class will be different according to the difference in income levels and needs. Overall in the United States of America the size and volume of the toy market is approximately $20 billion. The industry has to provide around 250,000 employment opportunities (Statista, 2013). The important ingredient to survive in industry is to be innovative and to gain a competitive edge over the other players of the industry. 3. Operational plan: The company will follow and implement a comprehensive operational plan. The process is channelized into several segments that include marketing, selling, human resources, and finance. For the financial operations, detailed three-year plan has been discussed below. For the marketing side of the company, the company will focus on the Four Ps of marketing that includes Product, Price, Place and Promotion (Kotler, Armstrong, Wong, and Saunders, 2008; Fill, 2009). The company will have seven different types of product line; each product line will have a different set of items. These items will carry different price range. The prices of the products are starting from $1 up to $1000. This will serve different budget level of the target market. The selling strategy of the company will base on providing the customers a good quality and variety of products with competitive prices. In order to enter in the market, a new consumer business should adopt and practice the penetrating strategy with the help of its competitive prices (De Wit, & Meyer, 2004). With that the company is aiming focus on the marketing and advertising activities of the product offerings, for this purpose the company is aiming to facilitate its potential customers and the entire target market with the different promotional campaigns with the discounted offer. The company has allocated a fixed amount of 3% of sales to serve the purpose. 4. Sustainability of the business and corporate social responsibility of the proposed enterprise: In order to maintain and keep the sustainability of the business, the company must aim to align its operations with the global environmental target along with a long-term objectives of the company (Haberberg, and Rieple, 2008). In order to do that, the company is aiming to adopt and inculcate the process of evaluation at every step of the business operations. This will ensure the quality of the products and service provided by the company and customer satisfaction. This approach of the company will be focusing on engaging the internal partners of the business, in due course the company is aiming to employ assessments for sustainability of the suppliers. For the corporate social responsibilities, The Disney Shop will join hands with the Walt Disney, and it is aiming take part in the corporate social responsibility measures taken by Walt Disney. The Walt Disney Company is considered a leader in the corporate social responsibility. The Disney Shop will be together with the company in well-being of the environment, the community and establishing the standards of the labor class. Further, The Disney Shop will facilitate the program of environmental education by the Walt Disney Company. It has been also in the consideration by the company to provide the products of the company to different philanthropy organizations to bring the happiness in the life of special and underprivileged children in different regions across the word (Business Review, 2013). 5. Financial projections: The below present financial plan will represent the empirical picture of the business of The Disney Shop for the coming three years. The below presented table reflects the details of initial investment required by the company. The Disney Shop Start Up Cost   The Disney Shop Total Assets     Disneys License for the company $ 125,000 $ 125,000 Cash Register $ 600 $ 600 Telecommunication Accessories $ 500 $ 500 Information Technology (Software & Applications) $ 400 $ 400 Cost of Legal obligations for store opening $ 300 $ 300 Close Circuit TV Cameras $ 500 $ 500 Furniture for the shop $ 30,000 $ 30,000 Cash at the Bank (equal to 3X of monthly expenses) $ 12,787 $ 12,787 Total Asset $ 170,087 $ 170,087 a. Marginal costing model with break even analysis b. c. The Disney Shop d. Break Even Analysis e. Months f. January g. February h. March i. April j. May k. June l. July m. August n. September o. October p. November q. December r. Revenue of the Company s. $ 217,137 t. $ 218,154 u. $ 219,177 v. $ 220,206 w. $ 221,241 x. $ 222,281 y. $ 223,328 z. $ 224,380 aa. $ 225,438 ab. $ 226,502 ac. $ 227,573 ad. $ 228,649 ae. Units (total) af. $ 2,755 ag. $ 2,774 ah. $ 2,793 ai. $ 2,812 aj. $ 2,831 ak. $ 2,851 al. $ 2,870 am. $ 2,890 an. $ 2,910 ao. $ 2,930 ap. $ 2,950 aq. $ 2,971 ar. Variable Cost as.   at.   au.   av.   aw.   ax.   ay.   az.   ba.   bb.   bc.   bd.   be. Cost of Goods Sold bf. $ 89,541 bg. $ 89,960 bh. $ 90,382 bi. $ 90,807 bj. $ 91,233 bk. $ 91,662 bl. $ 92,094 bm. $ 92,528 bn. $ 92,964 bo. $ 93,403 bp. $ 93,844 bq. $ 94,288 br. Fixed Cost bs.   bt.   bu.   bv.   bw.   bx.   by.   bz.   ca.   cb.   cc.   cd.   ce. Total Operating Cost along with Interest Expense cf. $ 128,686 cg. $ 128,686 ch. $ 128,686 ci. $ 128,686 cj. $ 128,686 ck. $ 128,686 cl. $ 128,686 cm. $ 128,686 cn. $ 128,686 co. $ 128,686 cp. $ 128,686 cq. $ 128,686 cr. Contribution Margin cs.   ct.   cu.   cv.   cw.   cx.   cy.   cz.   da.   db.   dc.   dd.   de. Sales - Variable Cost df. $ 127,596 dg. $ 128,194 dh. $ 128,795 di. $ 129,399 dj. $ 130,007 dk. $ 130,619 dl. $ 131,234 dm. $ 131,852 dn. $ 132,474 do. $ 133,099 dp. $ 133,728 dq. $ 134,361 dr. Per Unit Contribution Margin ds. $ 46 dt. $ 46 du. $ 46 dv. $ 46 dw. $ 46 dx. $ 46 dy. $ 46 dz. $ 46 ea. $ 46 eb. $ 45 ec. $ 45 ed. $ 45 ee. Units Break Even ef.   eg.   eh.   ei.   ej.   ek.   el.   em.   en.   eo.   ep.   eq.   er. Fixed Expenses / Per Unit Contribution Margin es. $ 2,779 et. $ 2,785 eu. $ 2,791 ev. $ 2,797 ew. $ 2,803 ex. $ 2,809 ey. $ 2,815 ez. $ 2,821 fa. $ 2,827 fb. $ 2,833 fc. $ 2,839 fd. $ 2,845 fe. Variance in Estimated and Calculated Breakeven (in Units) ff.   fg.   fh.   fi.   fj.   fk.   fl.   fm.   fn.   fo.   fp.   fq.   fr. Break Even in Units fs. $ 2,779 ft. $ 2,785 fu. $ 2,791 fv. $ 2,797 fw. $ 2,803 fx. $ 2,809 fy. $ 2,815 fz. $ 2,821 ga. $ 2,827 gb. $ 2,833 gc. $ 2,839 gd. $ 2,845 ge. Forecasted Sales in Units gf. $ 2,755 gg. $ 2,774 gh. $ 2,793 gi. $ 2,812 gj. $ 2,831 gk. $ 2,851 gl. $ 2,870 gm. $ 2,890 gn. $ 2,910 go. $ 2,930 gp. $ 2,950 gq. $ 2,971 gr. Break Even Variance gs. $ (24) gt. $ (11) gu. $ 2 gv. $ 16 gw. $ 29 gx. $ 42 gy. $ 56 gz. $ 69 ha. $ 83 hb. $ 97 hc. $ 111 hd. $ 125 he. hf. Sales forecast hg. The Disney Shop is bringing seven different product lines, having variety of products the average prices of each product line along with the estimated unit sales for the first month of the business inception is given below. The industry is expected to grow by 1.18% yearly whereas the company is assumed to grow by 5.29% yearly on an average. Each product line of the company is expected to grow at a different rate. Hence, the overall sales of the company are growing in respect with the industry and its assumed growth. hh. PRICING CATEGORY hi. Price on Average hj. Unit Sales Estimation January hk. Annual Growth of the Company hl. Product Line 1 hm. $ 10.50 hn. 735 ho. 10.00% hp. Product Line 2 hq. $ 35.01 hr. 675 hs. 8.00% ht. Product Line 3 hu. $ 75.01 hv. 525 hw. 7.00% hx. Product Line 4 hy. $ 112.51 hz. 335 ia. 5.00% ib. Product Line 5 ic. $ 150.01 id. 250 ie. 3.50% if. Product Line 6 ig. $ 200.01 ih. 160 ii. 2.00% ij. Product Line 7 ik. $ 612.50 il. 75 im. 1.50% in. Total Products Units io. ip. 2,755.00 iq. 5.29% ir. Average Prices of all the Products is. $ 170.79 it.   iu.   iv. iw. Yearly sales forecast of The Disney Shop is presented below: ix. Sales Forecast iy. Year 1 iz. Year 2 ja. Year 3 jb. Pricing Category jc.   jd.   je.   jf. Product Line 1 jg. 97,506 jh. 108,983 ji. 121,812 jj. Product Line 2 jk. 295,780 jl. 324,105 jm. 355,142 jn. Product Line 3 jo. 490,656 jp. 532,331 jq. 577,546 jr. Product Line 4 js. 465,303 jt. 494,888 ju. 526,353 jv. Product Line 5 jw. 459,794 jx. 481,780 jy. 504,818 jz. Product Line 6 ka. 389,656 kb. 402,230 kc. 415,209 kd. Product Line 7 ke. 558,072 kf. 573,213 kg. 588,765 kh. Total ki. 2,756,768 kj. 2,917,530 kk. 3,089,645 kl. km. Cash budget – 3 years monthly statements: kn. ko. Below presented is the detailed cash budget of the company for 36 months kp. kq. Year 1 kr. ks. Cash Budget kt. Year 0 ku. January kv. February kw. March kx. April ky. May kz. June la. July lb. August lc. September ld. October le. November lf. December lg. Year 1 lh. li. lj. lk. ll. lm. ln. lo. lp. lq. lr. ls. lt. lu. lv. lw. Initial inflow (Debt + Equity) lx. $ 170,087 ly. lz. ma. mb. mc. md. me. mf. mg. mh. mi. mj. mk. ml. Revenue of the company mm. mn. mo. mp. mq. mr. ms. mt. mu. mv. mw. mx. my. mz. na. Sales Revenue nb. $ - nc. $ 223,852 nd. $ 224,901 ne. $ 225,956 nf. $ 227,016 ng. $ 228,083 nh. $ 229,156 ni. $ 230,235 nj. $ 231,319 nk. $ 232,410 nl. $ 233,508 nm. $ 234,611 nn. $ 235,721 no. $ 2,756,768 np. Costs of Discounts and Promotions (3%) nq. $ - nr. $ (6,716) ns. $ (6,747) nt. $ (6,779) nu. $ (6,810) nv. $ (6,842) nw. $ (6,875) nx. $ (6,907) ny. $ (6,940) nz. $ (6,972) oa. $ (7,005) ob. $ (7,038) oc. $ (7,072) od. $ (82,703) oe. Net Revenue of. $ - og. $ 217,137 oh. $ 218,154 oi. $ 219,177 oj. $ 220,206 ok. $ 221,241 ol. $ 222,281 om. $ 223,328 on. $ 224,380 oo. $ 225,438 op. $ 226,502 oq. $ 227,573 or. $ 228,649 os. $ 2,674,065 ot. Total Inflow ou. $ 170,087 ov. $ 217,137 ow. $ 218,154 ox. $ 219,177 oy. $ 220,206 oz. $ 221,241 pa. $ 222,281 pb. $ 223,328 pc. $ 224,380 pd. $ 225,438 pe. $ 226,502 pf. $ 227,573 pg. $ 228,649 ph. $ 2,674,065 pi. pj. pk. pl. pm. pn. po. pp. pq. pr. ps. pt. pu. pv. pw. px. Outflows py. pz. qa. qb. qc. qd. qe. qf. qg. qh. qi. qj. qk. ql. qm. Initial Outflow qn. $ 157,300 qo. qp. qq. qr. qs. qt. qu. qv. qw. qx. qy. qz. ra. rb. Cost of goods Sold rc. rd. $ 89,541 re. $ 89,960 rf. $ 90,382 rg. $ 90,807 rh. $ 91,233 ri. $ 91,662 rj. $ 92,094 rk. $ 92,528 rl. $ 92,964 rm. $ 93,403 rn. $ 93,844 ro. $ 94,288 rp. $ 1,102,707 rq. Rent of the shop rr. $ - rs. $ 26,364 rt. $ 26,364 ru. $ 26,364 rv. $ 26,364 rw. $ 26,364 rx. $ 26,364 ry. $ 26,364 rz. $ 26,364 sa. $ 26,364 sb. $ 26,364 sc. $ 26,364 sd. $ 26,364 se. $ 316,368 sf. Salary Expense sg. $ - sh. $ 40,000 si. $ 40,000 sj. $ 40,000 sk. $ 40,000 sl. $ 40,000 sm. $ 40,000 sn. $ 40,000 so. $ 40,000 sp. $ 40,000 sq. $ 40,000 sr. $ 40,000 ss. $ 40,000 st. $ 480,000 su. Advertising Expense sv. $ - sw. $ 3,000 sx. $ 3,000 sy. $ 3,000 sz. $ 3,000 ta. $ 3,000 tb. $ 3,000 tc. $ 3,000 td. $ 3,000 te. $ 3,000 tf. $ 3,000 tg. $ 3,000 th. $ 3,000 ti. $ 36,000 tj. Social Media Marketing Services tk. $ - tl. $ 350 tm. $ 350 tn. $ 350 to. $ 350 tp. $ 350 tq. $ 350 tr. $ 350 ts. $ 350 tt. $ 350 tu. $ 350 tv. $ 350 tw. $ 350 tx. $ 4,200 ty. Utilities Expenditure tz. $ - ua. $ 15,000 ub. $ 15,000 uc. $ 15,000 ud. $ 15,000 ue. $ 15,000 uf. $ 15,000 ug. $ 15,000 uh. $ 15,000 ui. $ 15,000 uj. $ 15,000 uk. $ 15,000 ul. $ 15,000 um. $ 180,000 un. Transportation Expense uo. $ - up. $ 35,000 uq. $ 35,000 ur. $ 35,000 us. $ 35,000 ut. $ 35,000 uu. $ 35,000 uv. $ 35,000 uw. $ 35,000 ux. $ 35,000 uy. $ 35,000 uz. $ 35,000 va. $ 35,000 vb. $ 420,000 vc. Insurance Expense vd. $ - ve. $ 3,000 vf. $ 3,000 vg. $ 3,000 vh. $ 3,000 vi. $ 3,000 vj. $ 3,000 vk. $ 3,000 vl. $ 3,000 vm. $ 3,000 vn. $ 3,000 vo. $ 3,000 vp. $ 3,000 vq. $ 36,000 vr. Telecommunication Expense vs. $ - vt. $ 2,500 vu. $ 2,500 vv. $ 2,500 vw. $ 2,500 vx. $ 2,500 vy. $ 2,500 vz. $ 2,500 wa. $ 2,500 wb. $ 2,500 wc. $ 2,500 wd. $ 2,500 we. $ 2,500 wf. $ 30,000 wg. Other Miscellaneous Expense wh. $ - wi. $ 2,000 wj. $ 2,000 wk. $ 2,000 wl. $ 2,000 wm. $ 2,000 wn. $ 2,000 wo. $ 2,000 wp. $ 2,000 wq. $ 2,000 wr. $ 2,000 ws. $ 2,000 wt. $ 2,000 wu. $ 24,000 wv. ww. wx. wy. wz. xa. xb. xc. xd. xe. xf. xg. xh. xi. xj. xk. Total Outflows xl.   xm. $ 216,755 xn. $ 216,755 xo. $ 216,755 xp. $ 216,755 xq. $ 216,755 xr. $ 216,755 xs. $ 216,755 xt. $ 216,755 xu. $ 216,755 xv. $ 216,755 xw. $ 216,755 xx. $ 216,755 xy. $ 2,601,059 xz. Total Outflow ya. $ (157,300) yb. $ (216,755) yc. $ (217,174) yd. $ (217,596) ye. $ (218,021) yf. $ (218,447) yg. $ (218,876) yh. $ (219,308) yi. $ (219,742) yj. $ (220,178) yk. $ (220,617) yl. $ (221,058) ym. $ (221,502) yn. $ (2,786,575) yo. yp. yq. yr. ys. yt. yu. yv. yw. yx. yy. yz. za. zb. zc. zd. Net cash flows Surplus/ Deficit ze. $ 12,787 zf. $ 382 zg. $ 980 zh. $ 1,581 zi. $ 2,185 zj. $ 2,793 zk. $ 3,405 zl. $ 4,020 zm. $ 4,638 zn. $ 5,260 zo. $ 5,885 zp. $ 6,514 zq. $ 7,147 zr. $ (112,510) zs. Cash at the beginning zt. $ 170,087 zu. $ 12,787 zv. $ 13,169 zw. $ 14,148 zx. $ 15,729 zy. $ 17,914 zz. $ 20,708 aaa. $ 24,113 aab. $ 28,132 aac. $ 32,770 aad. $ 38,030 aae. $ 43,916 aaf. $ 50,430 aag. $ 170,087 aah. Cash at the end aai. $ 12,787 aaj. $ 13,169 aak. $ 14,148 aal. $ 15,729 aam. $ 17,914 aan. $ 20,708 aao. $ 24,113 aap. $ 28,132 aaq. $ 32,770 aar. $ 38,030 aas. $ 43,916 aat. $ 50,430 aau. $ 57,577 aav. $ 57,577 aaw. aax. Year 2 aay. Cash Budget aaz. January aba. February abb. March abc. April abd. May abe. June abf. July abg. August abh. September abi. October abj. November abk. December abl. Year 2 abm. abn. abo. abp. abq. abr. abs. abt. abu. abv. abw. abx. aby. abz. aca. Initial inflow (Debt + Equity) acb. acc. acd. ace. acf. acg. ach. aci. acj. ack. acl. acm. acn. aco. Revenue of the company acp. acq. acr. acs. act. acu. acv. acw. acx. acy. acz. ada. adb. adc. Sales Revenue add. $ 236,836 ade. $ 237,959 adf. $ 239,087 adg. $ 240,222 adh. $ 241,364 adi. $ 242,512 adj. $ 243,667 adk. $ 244,828 adl. $ 245,995 adm. $ 247,170 adn. $ 248,351 ado. $ 249,539 adp. $ 2,917,530 adq. Costs of Discounts and Promotions (3%) adr. $ (7,105) ads. $ (7,139) adt. $ (7,173) adu. $ (7,207) adv. $ (7,241) adw. $ (7,275) adx. $ (7,310) ady. $ (7,345) adz. $ (7,380) aea. $ (7,415) aeb. $ (7,451) aec. $ (7,486) aed. $ (87,526) aee. Net Revenue aef. $ 229,731 aeg. $ 230,820 aeh. $ 231,915 aei. $ 233,016 aej. $ 234,123 aek. $ 235,237 ael. $ 236,357 aem. $ 237,483 aen. $ 238,616 aeo. $ 239,755 aep. $ 240,901 aeq. $ 242,053 aer. $ 2,830,004 aes. Total Inflow aet. $ 229,731 aeu. $ 230,820 aev. $ 231,915 aew. $ 233,016 aex. $ 234,123 aey. $ 235,237 aez. $ 236,357 afa. $ 237,483 afb. $ 238,616 afc. $ 239,755 afd. $ 240,901 afe. $ 242,053 aff. $ 2,830,004 afg. afh. afi. afj. afk. afl. afm. afn. afo. afp. afq. afr. afs. aft. afu. Outflows afv. afw. afx. afy. afz. aga. agb. agc. agd. age. agf. agg. agh. agi. Initial Outflow agj. agk. agl. agm. agn. ago. agp. agq. agr. ags. agt. agu. agv. agw. Cost of goods Sold agx. $ 97,251 agy. $ 97,251 agz. $ 97,251 aha. $ 97,251 ahb. $ 97,251 ahc. $ 97,251 ahd. $ 97,251 ahe. $ 97,251 ahf. $ 97,251 ahg. $ 97,251 ahh. $ 97,251 ahi. $ 97,251 ahj. $ 1,167,012 ahk. Rent of the shop ahl. $ 26,891 ahm. $ 26,891 ahn. $ 26,891 aho. $ 26,891 ahp. $ 26,891 ahq. $ 26,891 ahr. $ 26,891 ahs. $ 26,891 aht. $ 26,891 ahu. $ 26,891 ahv. $ 26,891 ahw. $ 26,891 ahx. $ 322,695 ahy. Salary Expense ahz. $ 42,000 aia. $ 42,000 aib. $ 42,000 aic. $ 42,000 aid. $ 42,000 aie. $ 42,000 aif. $ 42,000 aig. $ 42,000 aih. $ 42,000 aii. $ 42,000 aij. $ 42,000 aik. $ 42,000 ail. $ 504,000 aim. Advertising Expense ain. $ 3,090 aio. $ 3,090 aip. $ 3,090 aiq. $ 3,090 air. $ 3,090 ais. $ 3,090 ait. $ 3,090 aiu. $ 3,090 aiv. $ 3,090 aiw. $ 3,090 aix. $ 3,090 aiy. $ 3,090 aiz. $ 37,080 aja. Social Media Marketing Services ajb. $ 354 ajc. $ 354 ajd. $ 354 aje. $ 354 ajf. $ 354 ajg. $ 354 ajh. $ 354 aji. $ 354 ajj. $ 354 ajk. $ 354 ajl. $ 354 ajm. $ 354 ajn. $ 4,242 ajo. Utilities Expenditure ajp. $ 15,300 ajq. $ 15,300 ajr. $ 15,300 ajs. $ 15,300 ajt. $ 15,300 aju. $ 15,300 ajv. $ 15,300 ajw. $ 15,300 ajx. $ 15,300 ajy. $ 15,300 ajz. $ 15,300 aka. $ 15,300 akb. $ 183,600 akc. Transportation Expense akd. $ 35,700 ake. $ 35,700 akf. $ 35,700 akg. $ 35,700 akh. $ 35,700 aki. $ 35,700 akj. $ 35,700 akk. $ 35,700 akl. $ 35,700 akm. $ 35,700 akn. $ 35,700 ako. $ 35,700 akp. $ 428,400 akq. Insurance Expense akr. $ 3,030 aks. $ 3,030 akt. $ 3,030 aku. $ 3,030 akv. $ 3,030 akw. $ 3,030 akx. $ 3,030 aky. $ 3,030 akz. $ 3,030 ala. $ 3,030 alb. $ 3,030 alc. $ 3,030 ald. $ 36,360 ale. Telecommunication Expense alf. $ 2,550 alg. $ 2,550 alh. $ 2,550 ali. $ 2,550 alj. $ 2,550 alk. $ 2,550 all. $ 2,550 alm. $ 2,550 aln. $ 2,550 alo. $ 2,550 alp. $ 2,550 alq. $ 2,550 alr. $ 30,600 als. Other Miscellaneous Expense alt. $ 2,020 alu. $ 2,020 alv. $ 2,020 alw. $ 2,020 alx. $ 2,020 aly. $ 2,020 alz. $ 2,020 ama. $ 2,020 amb. $ 2,020 amc. $ 2,020 amd. $ 2,020 ame. $ 2,020 amf. $ 24,240 amg. amh. ami. amj. amk. aml. amm. amn. amo. amp. amq. amr. ams. amt. amu. Total Outflows amv. $ 228,186 amw. $ 228,186 amx. $ 228,186 amy. $ 228,186 amz. $ 228,186 ana. $ 228,186 anb. $ 228,186 anc. $ 228,186 and. $ 228,186 ane. $ 228,186 anf. $ 228,186 ang. $ 228,186 anh. $ 2,738,229 ani. Total Outflow anj. $ (228,186) ank. $ (228,186) anl. $ (228,186) anm. $ (228,186) ann. $ (228,186) ano. $ (228,186) anp. $ (228,186) anq. $ (228,186) anr. $ (228,186) ans. $ (228,186) ant. $ (228,186) anu. $ (228,186) anv. $ (2,738,229) anw. anx. any. anz. aoa. aob. aoc. aod. aoe. aof. aog. aoh. aoi. aoj. aok. Net cash flows Surplus/ Deficit aol. $ 1,546 aom. $ 2,634 aon. $ 3,729 aoo. $ 4,830 aop. $ 5,937 aoq. $ 7,051 aor. $ 8,171 aos. $ 9,297 aot. $ 10,430 aou. $ 11,569 aov. $ 12,715 aow. $ 13,867 aox. $ 91,775 aoy. Cash at the beginning aoz. $ 57,577 apa. $ 59,122 apb. $ 61,756 apc. $ 65,485 apd. $ 70,315 ape. $ 76,252 apf. $ 83,303 apg. $ 91,474 aph. $ 100,771 api. $ 111,201 apj. $ 122,770 apk. $ 135,484 apl. $ 57,577 apm. Cash at the end apn. $ 59,122 apo. $ 61,756 app. $ 65,485 apq. $ 70,315 apr. $ 76,252 aps. $ 83,303 apt. $ 91,474 apu. $ 100,771 apv. $ 111,201 apw. $ 122,770 apx. $ 135,484 apy. $ 149,351 apz. $ 149,351 aqa. aqb. aqc. Year 3 aqd. Cash Budget aqe. January aqf. February aqg. March aqh. April aqi. May aqj. June aqk. July aql. August aqm. September aqn. October aqo. November aqp. December aqq. Year 3 aqr. aqs. aqt. aqu. aqv. aqw. aqx. aqy. aqz. ara. arb. arc. ard. are. arf. Initial inflow (Debt + Equity) arg. arh. ari. arj. ark. arl. arm. arn. aro. arp. arq. arr. ars. art. Revenue of the company aru. arv. arw. arx. ary. arz. asa. asb. asc. asd. ase. asf. asg. ash. Sales Revenue asi. $ 250,734 asj. $ 251,935 ask. $ 253,144 asl. $ 254,359 asm. $ 255,581 asn. $ 256,811 aso. $ 258,047 asp. $ 259,291 asq. $ 260,542 asr. $ 261,799 ass. $ 263,065 ast. $ 264,337 asu. $ 3,089,645 asv. Costs of Discounts and Promotions (3%) asw. $ (7,522) asx. $ (7,558) asy. $ (7,594) asz. $ (7,631) ata. $ (7,667) atb. $ (7,704) atc. $ (7,741) atd. $ (7,779) ate. $ (7,816) atf. $ (7,854) atg. $ (7,892) ath. $ (7,930) ati. $ (92,689) atj. Net Revenue atk. $ 243,212 atl. $ 244,377 atm. $ 245,549 atn. $ 246,728 ato. $ 247,914 atp. $ 249,106 atq. $ 250,306 atr. $ 251,512 ats. $ 252,725 att. $ 253,946 atu. $ 255,173 atv. $ 256,407 atw. $ 2,996,955 atx. Total Inflow aty. $ 243,212 atz. $ 244,377 aua. $ 245,549 aub. $ 246,728 auc. $ 247,914 aud. $ 249,106 aue. $ 250,306 auf. $ 251,512 aug. $ 252,725 auh. $ 253,946 aui. $ 255,173 auj. $ 256,407 auk. $ 2,996,955 aul. aum. aun. auo. aup. auq. aur. aus. aut. auu. auv. auw. aux. auy. auz. Outflows ava. avb. avc. avd. ave. avf. avg. avh. avi. avj. avk. avl. avm. avn. Initial Outflow avo. avp. avq. avr. avs. avt. avu. avv. avw. avx. avy. avz. awa. awb. Cost of goods Sold awc. $ 102,988 awd. $ 102,988 awe. $ 102,988 awf. $ 102,988 awg. $ 102,988 awh. $ 102,988 awi. $ 102,988 awj. $ 102,988 awk. $ 102,988 awl. $ 102,988 awm. $ 102,988 awn. $ 102,988 awo. $ 1,235,858 awp. Rent of the shop awq. $ 27,429 awr. $ 27,429 aws. $ 27,429 awt. $ 27,429 awu. $ 27,429 awv. $ 27,429 aww. $ 27,429 awx. $ 27,429 awy. $ 27,429 awz. $ 27,429 axa. $ 27,429 axb. $ 27,429 axc. $ 329,149 axd. Salary Expense axe. $ 44,100 axf. $ 44,100 axg. $ 44,100 axh. $ 44,100 axi. $ 44,100 axj. $ 44,100 axk. $ 44,100 axl. $ 44,100 axm. $ 44,100 axn. $ 44,100 axo. $ 44,100 axp. $ 44,100 axq. $ 529,200 axr. Advertising Expense axs. $ 3,183 axt. $ 3,183 axu. $ 3,183 axv. $ 3,183 axw. $ 3,183 axx. $ 3,183 axy. $ 3,183 axz. $ 3,183 aya. $ 3,183 ayb. $ 3,183 ayc. $ 3,183 ayd. $ 3,183 aye. $ 38,192 ayf. Social Media Marketing Services ayg. $ 357 ayh. $ 357 ayi. $ 357 ayj. $ 357 ayk. $ 357 ayl. $ 357 aym. $ 357 ayn. $ 357 ayo. $ 357 ayp. $ 357 ayq. $ 357 ayr. $ 357 ays. $ 4,284 ayt. Utilities Expenditure ayu. $ 15,606 ayv. $ 15,606 ayw. $ 15,606 ayx. $ 15,606 ayy. $ 15,606 ayz. $ 15,606 aza. $ 15,606 azb. $ 15,606 azc. $ 15,606 azd. $ 15,606 aze. $ 15,606 azf. $ 15,606 azg. $ 187,272 azh. Transportation Expense azi. $ 36,414 azj. $ 36,414 azk. $ 36,414 azl. $ 36,414 azm. $ 36,414 azn. $ 36,414 azo. $ 36,414 azp. $ 36,414 azq. $ 36,414 azr. $ 36,414 azs. $ 36,414 azt. $ 36,414 azu. $ 436,968 azv. Insurance Expense azw. $ 3,060 azx. $ 3,060 azy. $ 3,060 azz. $ 3,060 baa. $ 3,060 bab. $ 3,060 bac. $ 3,060 bad. $ 3,060 bae. $ 3,060 baf. $ 3,060 bag. $ 3,060 bah. $ 3,060 bai. $ 36,724 baj. Telecommunication Expense bak. $ 2,601 bal. $ 2,601 bam. $ 2,601 ban. $ 2,601 bao. $ 2,601 bap. $ 2,601 baq. $ 2,601 bar. $ 2,601 bas. $ 2,601 bat. $ 2,601 bau. $ 2,601 bav. $ 2,601 baw. $ 31,212 bax. Other Miscellaneous Expense bay. $ 2,040 baz. $ 2,040 bba. $ 2,040 bbb. $ 2,040 bbc. $ 2,040 bbd. $ 2,040 bbe. $ 2,040 bbf. $ 2,040 bbg. $ 2,040 bbh. $ 2,040 bbi. $ 2,040 bbj. $ 2,040 bbk. $ 24,482 bbl. bbm. bbn. bbo. bbp. bbq. bbr. bbs. bbt. bbu. bbv. bbw. bbx. bby. bbz. Total Outflows bca. $ 237,779 bcb. $ 237,779 bcc. $ 237,779 bcd. $ 237,779 bce. $ 237,779 bcf. $ 237,779 bcg. $ 237,779 bch. $ 237,779 bci. $ 237,779 bcj. $ 237,779 bck. $ 237,779 bcl. $ 237,779 bcm. $ 1,617,484 bcn. Total Outflow bco. $ (237,779) bcp. $ (237,779) bcq. $ (237,779) bcr. $ (237,779) bcs. $ (237,779) bct. $ (237,779) bcu. $ (237,779) bcv. $ (237,779) bcw. $ (237,779) bcx. $ (237,779) bcy. $ (237,779) bcz. $ (237,779) bda. $ (2,853,342) bdb. bdc. bdd. bde. bdf. bdg. bdh. bdi. bdj. bdk. bdl. bdm. bdn. bdo. bdp. Net cash flows Surplus/ Deficit bdq. $ 5,433 bdr. $ 6,599 bds. $ 7,771 bdt. $ 8,950 bdu. $ 10,135 bdv. $ 11,328 bdw. $ 12,527 bdx. $ 13,734 bdy. $ 14,947 bdz. $ 16,167 bea. $ 17,394 beb. $ 18,629 bec. $ 143,613 bed. Cash at the beginning bee. $ 149,351 bef. $ 154,785 beg. $ 161,383 beh. $ 169,154 bei. $ 178,104 bej. $ 188,239 bek. $ 199,567 bel. $ 212,095 bem. $ 225,828 ben. $ 240,775 beo. $ 256,942 bep. $ 274,336 beq. $ 149,351 ber. Cash at the end bes. $ 154,785 bet. $ 161,383 beu. $ 169,154 bev. $ 178,104 bew. $ 188,239 bex. $ 199,567 bey. $ 212,095 bez. $ 225,828 bfa. $ 240,775 bfb. $ 256,942 bfc. $ 274,336 bfd. $ 292,965 bfe. $ 292,965 bff. Income statements (profit and loss accounts): bfg. bfh. A three-year profit and loss statement of The Disney Shop is given below. The sales revenue of the company is based on the assumed growth of the company. The promotional discounts have been taken at 3% of the sales of the company. The tax rate is taken at 35%. The expenses of the company are raising each yearly at certain percentage. It has been assumed that the rent expense will increase by 2%, the salaries of the staff will be incremented by 5%. The company will put emphasis on the advertising and will increase the advertising at a 3% per year. The social media marketing expense will be increased by 1% each year, and the utility expense is expected to grow by 2%. With the growth of the company, it is expected that the transportation expense of The Disney Shop will rise by 2% in the upcoming years. The insurance expense will surge by 1%, with that the telecommunication expansion of the company is expected to increase by 2%. For other miscellaneous expenses, the company is assuming 1% rise every year. bfi. bfj. Monthly Profit and Loss bfk. Year 0 bfl. Year 1 bfm. Year 2 bfn. Year 3 bfo. REVENUE (Sales): bfp. bfq. bfr. bfs. bft. Sales Revenue bfu. bfv. $ 2,756,768 bfw. $ 2,917,530 bfx. $ 3,089,645 bfy. Costs of Discounts and Promotions (3%) bfz. bga. $ (82,703) bgb. $ (87,526) bgc. $ (92,689) bgd. Net Revenue bge. bgf. $ 2,674,065 bgg. $ 2,830,004 bgh. $ 2,996,955 bgi. bgj. bgk. bgl. bgm. bgn. Cost of Goods Sold (Disney’s (Royalty) bgo.   bgp. $ (1,102,707) bgq. $ (1,167,012) bgr. $ (1,235,858) bgs. bgt. bgu. bgv. bgw. bgx. Gross Profit bgy. bgz. $ 1,571,358 bha. $ 1,662,992 bhb. $ 1,761,098 bhc. bhd. bhe. bhf. bhg. bhh. OPERATING EXPENSES: bhi. bhj. bhk. bhl. bhm. Rent of the shop bhn. bho. $ 316,368 bhp. $ 322,695 bhq. $ 329,149 bhr. Salary Expense bhs. bht. $ 480,000 bhu. $ 504,000 bhv. $ 529,200 bhw. Advertising Expense bhx. bhy. $ 36,000 bhz. $ 37,080 bia. $ 38,192 bib. Social Media Marketing Services bic. bid. $ 4,200 bie. $ 4,242 bif. $ 4,284 big. Utilities Expenditure bih. bii. $ 180,000 bij. $ 183,600 bik. $ 187,272 bil. Transportation Expense bim. bin. $ 420,000 bio. $ 428,400 bip. $ 436,968 biq. Insurance Expense bir. bis. $ 36,000 bit. $ 36,360 biu. $ 36,724 biv. Telecommunication Expense biw. bix. $ 30,000 biy. $ 30,600 biz. $ 31,212 bja. Depreciation bjb. bjc. $ 7,850 bjd. $ 7,850 bje. $ 7,850 bjf. Other Miscellaneous Expense bjg. bjh. $ 24,000 bji. $ 24,240 bjj. $ 24,482 bjk. bjl. bjm. bjn. bjo. bjp. Total Operating Expenses: bjq.   bjr. $ (1,534,418) bjs. $ (1,579,067) bjt. $ (1,625,334) bju. Profit before Interest bjv. bjw. $ 36,940 bjx. $ 83,925 bjy. $ 135,763 bjz. Interest Expense bka. bkb. $ 17,665 bkc. $ 17,665 bkd. $ 17,665 bke. Profit after Interest and before Tax bkf. bkg. $ 27,125 bkh. $ 66,260 bki. $ 118,098 bkj. Preceding Loss Carry Forward bkk. bkl. bkm. $ 20,818 bkn. $ 56,600 bko. Profit Before Tax bkp.   bkq. $ 30,311 bkr. $ 87,077 bks. $ 61,498 bkt. Tax 35% bku. bkv. $ (9,494) bkw. $ (30,477) bkx. $ (21,524) bky. Net Profit (Loss) After Interest bkz. bla. $ 20,818 blb. $ 56,600 blc. $ 39,974 bld. Add: Depreciation ble. blf. $ 7,850 blg. $ 7,850 blh. $ 7,850 bli. Net Operating Cash Flows blj. $ (170,086.82) blk. $ 28,667.55 bll. $ 64,450.30 blm. $ 47,823.74 bln. NPV @ 5% for three years blo. ($40,965.83) blp. blq. blr. bls. NPV @ 5% for five years blt. $36,722.93 blu. blv. blw. blx. IRR for Five Years bly. 12% blz. bma. bmb. bmc. bmd. bme. Statements of financial position (balance sheets): bmf. A three-year projected balance sheet of the company is given below. In the financial position of the company, the amount of accounts payables is the presumed figures. Further, the variance in the cash stated in the table of initial requirement (start up cost) is different in balance sheet cash and it is the present status of the business of The Disney Shop after completing a whole year. bmg. bmh. The Disney Show bmi. Projected Balance Sheet bmj.   bmk. Year 1 bml. Year 2 bmm. Year 3 bmn. ASSETS: bmo.   bmp.   bmq.   bmr. Current Assets: bms.   bmt.   bmu.   bmv. **Cash bmw. $ 57,577 bmx. $ 149,351 bmy. $ 292,965 bmz. Accounts Receivable bna. $ - bnb. $ - bnc. $ - bnd. Total Current Assets bne. $ 57,577 bnf. $ 149,351 bng. $ 292,965 bnh.   bni.   bnj.   bnk.   bnl. Long Term Assets: bnm.   bnn.   bno.   bnp. Disneys License for the company bnq. $ 125,000 bnr. $ 125,000 bns. $ 125,000 bnt. Amortization @ 5% bnu. $ 6,250 bnv. $ 12,500 bnw. $ 18,750 bnx. Net License from Disney bny. $ 118,750 bnz. $ 112,500 boa. $ 106,250 bob. Cash Register boc. $ 600 bod. $ 600 boe. $ 600 bof. Depreciation @ 5% bog. $ 30 boh. $ 60 boi. $ 90 boj. Net of Cash Register bok. $ 570 bol. $ 540 bom. $ 510 bon. Information Technology (Software & Applications) boo. $ 400 bop. $ 400 boq. $ 400 bor. Depreciation @ 5% bos. $ 20 bot. $ 40 bou. $ 60 bov. Net of IT software bow. $ 380 box. $ 360 boy. $ 340 boz. Close Circuit TV Cameras bpa. $ 500 bpb. $ 500 bpc. $ 500 bpd. Depreciation @ 5% bpe. $ 25 bpf. $ 50 bpg. $ 75 bph. Net of CCTV Camera bpi. $ 475 bpj. $ 450 bpk. $ 425 bpl. Furniture for the shop bpm. $ 30,000 bpn. $ 30,000 bpo. $ 30,000 bpp. Depreciation @ 5% bpq. $ 1,500 bpr. $ 3,000 bps. $ 4,500 bpt. Net of Furniture bpu. $ 28,500 bpv. $ 27,000 bpw. $ 25,500 bpx. Telephone Set bpy. $ 500 bpz. $ 500 bqa. $ 500 bqb. Depreciation @ 5% bqc. $ 25 bqd. $ 50 bqe. $ 75 bqf. Net of Telephone set bqg. $ 475 bqh. $ 450 bqi. $ 425 bqj. Total Fixed Assets bqk. $ 149,150 bql. $ 141,300 bqm. $ 133,450 bqn.   bqo.   bqp.   bqq.   bqr. Total Assets bqs. $ 206,727 bqt. $ 290,651 bqu. $ 426,415 bqv.   bqw.   bqx.   bqy.   bqz. LIABILITIES: bra.   brb.   brc.   brd. Current Liabilities: bre.   brf.   brg.   brh. *Account payable bri. $ 33,488 brj. $ 78,477 brk. $ 191,932 brl. Total Current Liabilities brm. $ 33,488 brn. $ 78,477 bro. $ 191,932 brp. Long Term Liabilities: brq.   brr.   brs.   brt. Debt bru. $ 67,378 brv. $ 49,713 brw. $ 32,048 brx. Total Long Term Debt bry. $ 67,378 brz. $ 49,713 bsa. $ 32,048 bsb. Total Liabilities bsc. $ 100,866 bsd. $ 128,190 bse. $ 223,980 bsf.   bsg.   bsh.   bsi.   bsj. Owners Equity bsk. $ 85,043 bsl. $ 105,861 bsm. $ 162,461 bsn. Add: profit bso. $ 20,818 bsp. $ 56,600 bsq. $ 39,974 bsr. Total Capital bss. $ 105,861 bst. $ 162,461 bsu. $ 202,435 bsv.   bsw.   bsx.   bsy.   bsz. Total Liabilities and bta.   btb.   btc.   btd. Owners Equity bte. $ 206,727 btf. $ 290,651 btg. $ 426,415 bth. bti. Viability of the Project: btj. In order to check the viability of the proposed business, the technique of project appraisal has been used (Arnold, 2008). In doing so, the Net Present Value (NPV) has been calculated over the period of three years and five years. NPV shows the net present value of the project or business after discounting the future returns (McLaney, 2009; Pike, and  Neale, 2009). For three years, the NPV of the business is negative whereas over the duration of five years the company will be able to cover its cost and will be profitable. When NPV of a project is positive, then it should be accepted otherwise, it should be rejected (Gitman, 2003, McLaney). Another technique that has been used widely for project feasibility is the internal rate of return (IRR) (Ross, Westerfield, and Jordan, 2009). The IRR over the duration of five years is 12%, which states that when the cost of the business will rise by 12%, it would not be viable. btk. Conclusion: btl. The above presented thorough analysis of the inception of the business “The Disney Shop” reveals that the business have a potential to grow. However, to sustain in the market the company must have to compete vigorously in the industry. With the influencing marketing, advertising, and selling strategies the company can capture a certain position in the market. The financial projections made in this regards reflects that the company will be able to achieve the point of break in the first year of the business and it will turn out to be viable business on long term basis. btm. btn. References bto. Arnold, G. (2008). Corporate Financial Management, 4th Edition. Harlow: FT Prentice Hall. btp. Business Review. (2013). The Walt Disney Company - A Leader In Corporate Social Responsibility. Available from http://www.businessreviewusa.com/leadership/3827/The-Walt-Disney-Company-A-Leader-In-Corporate-Social-Responsibility [Accessed December 5, 2014] btq. Cravens, D.W. and Piercy, N.F. (2008). Strategic Marketing, 9th Edition. Cambridge: McGraw-Hill Publishing Co. btr. De Wit, B. & Meyer, R (2004). Strategy: Process, Content, Context, 3rd Edition. Andover Hants, Thomson Learning bts. Fill, C. (2009). Marketing Communications: Interactivity, Communities and Content (5th Ed.) London: FT Prentice Hall btt. Gitman, L. (2003). Principles of Managerial Finance. Addison-Wesley Publishing: Boston. btu. Haberberg, A., and Rieple, A. (2008). Strategic Management: Theory and application. New York: Oxford University Press. btv. Kotler P., Armstrong, G.,Wong, V. and Saunders, J. (2008). Principles of Marketing (5th European Ed.) London: FT Prentice Hall btw. McLaney, E. (2009). Business Finance: Theory and Practice, Pearson Education: New Jersey. btx. McLaney, E. (2011). Business Finance: Theory and Practice, 9th Edition. Harlow: FT Prentice Hall. bty. Pike, R., and  Neale, B. (2009). Corporate Finance and Investment: Decisions and Strategies. 6th Edition. Harlow: FT Prentice Hall. btz. Ross, S., Westerfield, R., and Jordan, B. (2009). Fundamentals Of Corporate Finance Standard Edition. New York, McGraw-Hill. bua. Statista. (2013). Toy industry: statistics and facts. Available from http://www.statista.com/topics/1108/toy-industry/ [Accessed December 5, 2014] bub. buc. Read More