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F I N A N C I A L P L A N AC M E I N C .
FIVE YEARS
LMP CONSULTING
SIDAN 1
17/09/2015
FINANCIAL PLAN.DOCX
C ON T E N T S
Contents ...................................................................................... 2
Five-Year Profit and Loss Projection..................................... 3
Assumptions Income statement.............................................. 3
Income statement ...................................................................... 4
Projected Balance Sheet ........................................................... 5
Assumptions Balance sheet...................................................... 5
Projected Cash Flow ................................................................. 6
Net present value analysis ........................................................ 7
Assumptions NPV .................................................................... 7
Execution of Calculation .......................................................... 7
Sensitivity analysis ..................................................................... 7
Results ......................................................................................... 9
Best case ...................................................................................... 9
Neutral case ................................................................................ 9
Worst case................................................................................... 9
Appendix................................................................................... 10
Calculation Printer................................................................... 10
Calculation Stacker .................................................................. 10
Calculation Printer Line.......................................................... 11
LMP CONSULTING
SIDAN 2
17/09/2015
FINANCIAL PLAN.DOCX
F I V E - Y E A R P RO F I T A N D L OS S P RO J E C T I O N
The plan consists of a five-year Profit & Loss, Balance sheet and Cash flow projection.
ASSUMPTIONS INCOME STATEMENT
Sales forecast
Sales Forecast
2006
(units)
t0
Printer
Stacker
Printer Line
Total products: 170 units
LMP CONSULTING
2007
2008
2009
2010
2011
t1
8
2
2
t2
12
2
4
t3
20
4
8
t4
30
4
12
t5
40
6
16
SIDAN 3
17/09/2015
FINANCIAL PLAN.DOCX
I N C O M E S TA T E M E N T
Income statement
2006
2007
2008
2009
2010
2011
t0
t1
t2
t3
t4
t5
Revenues:
Gross operating revenues
Spare parts revenues
Tech Serv Nordics
revenues
COGS machines
COGS Spare parts
COGS Tech Serv Nordics
Royalty
Gross Profit
Operating expenses
Administration
Depreciation
R&D
Sales and Marketing
Warranty costs
Net profit
Other revenues:
Sales of fixed assets
Total other revenues
Other expenses:
Other
Interest
Total other expenses
Profit before tax
Income tax
Profit after tax
LMP CONSULTING
0
0
0
8,998
346
370
13,995
883
528
25,161
1,848
607
36,570
3,250
698
49,150
5,134
803
0
0
0
0
0
-6,455
-173
-412
-126
2,548
-10,038
-441
-412
-196
4,318
-18,055
-924
-412
-336
7,889
-26,232
-1,625
-412
-504
11,745
-35,260
-2,567
-412
-784
16,064
0
0
0
0
0
0
-2,200
-170
-1,922
-2,800
-173
-4,717
-2,266
-170
-458
-2,799
-268
-1,643
-2,334
-170
-458
-5,032
-483
-588
-2,404
-170
-458
-7,314
-701
698
-2,476
-170
-458
-9,830
-942
2,188
0
0
0
0
0
0
0
0
0
0
0
-4,717
1,321
-3,396
0
0
0
-1,643
460
-1,183
0
0
0
-588
165
-423
0
0
0
698
-195
503
0
0
0
2,188
-613
1,576
SIDAN 4
17/09/2015
FINANCIAL PLAN.DOCX
P RO J E C T E D B A L A N C E S H E E T
Account receivables (debtors) is set to 5 % of Gross operating revenues and are assumed
to be paid in the period following the sales period
Inventory (stocks) is set to 6 % of Gross operating revenues
Accounts payable (creditors) is set to 50 % of the inventory valuation and shall be paid
in the period following the inventory period
The investment in the test equipment is done in year t0
All financing done by owners equity, no debt
Balance sheet
t0
Current assets (working capital):
Cash
Account receivable (debtors)
Inventory (stocks)
Total current assets
Fixed assets:
Gross plant and equipment
Accumulated depreciation
Net fixed assets
Total assets
Current liabilities (working capital):
Accounts payable (creditors)
Total current liabilities
Long-term liabilities and equity:
Debt
Equity:
Paid-in equity capital
Retained earnings
Total equity
Total long-term liabilities and equity
Total liabilities and equity
LMP CONSULTING
t1
t2
t3
t4
t5
148
0
0
148
152
0
540
692
540
450
840
1,830
303
700
1,510
2,512
75
1,258
2,194
3,527
873
1,828
2,949
5,651
852
0
852
1,000
852
-170
682
1,374
852
-341
511
2,341
852
-511
341
2,853
852
-682
170
3,698
852
-852
0
5,651
0
0
270
270
420
420
755
755
1,097
1,097
1,475
1,475
1,000
0
1,000
1,000
1,000
4,500
-3,396
1,104
1,104
1,374
6,500
-4,579
1,921
1,921
2,341
7,100
-5,002
2,098
2,098
2,853
7,100
-4,499
2,601
2,601
3,698
7,100
-2,924
4,176
4,176
5,651
SIDAN 5
17/09/2015
FINANCIAL PLAN.DOCX
P RO J E C T E D C A S H F L OW
follows as a result of the Profit and Loss Projection and the Projected Balance Sheet
t1
t2
t3
t4
t5
Total
Operating activities
Net income
Depreciation
Accounts receivable
Inventories
Accounts payable
Amortization
Other
Total operating activities
0
0
0
0
0
0
0
0
-4,717
170
0
-540
270
0
0
-4,816
-1,643
170
-450
-300
150
0
0
-2,072
-588
170
-250
-670
335
0
0
-1,002
698
170
-558
-685
342
0
0
-32
2,188
170
-570
-755
377
0
0
1,411
-4,061
852
-1,828
-2,949
1,475
0
0
-6,512
Investing activities
Capital expenditures
Acquisition of business
Sale of fixed assets
Interest
Total investing activities
-852
0
0
0
-852
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
-852
0
0
0
-852
1,321
460
165
-195
-613
1,137
0
0
0
1,000
0
0
0
0
3,500
0
0
0
0
2,000
0
0
0
0
600
0
0
0
0
0
0
0
0
0
0
0
0
0
0
7,100
0
1,000
3,500
2,000
600
7,100
148
388
-238
-227
798
873
0
148
148
152
152
540
540
303
303
75
75
873
Taxation
Total taxation
Financing activities
Long-term debt/financing
Preferred stock
Total cash dividends paid
Common stock
Other financing cash flow
items
Total financing activities
LMP CONSULTING
SIDAN 6
17/09/2015
FINANCIAL PLAN.DOCX
N E T P R E S E N T VA L U E A NA LY S I S
ASSUMPTIONS NPV
The principle for valuating an investments cash flows (e.g. a new product) is to include
all changes that impact cash flows in the company as a whole if it were to accept the
investment, and only these changes. This means, among other things, that in case of a
negative sales result in the model then a positive cash flow from taxes will occur as the
company's total cash flow related to taxes is assumed to be reduced by the same amount.
The principle further implies that employee costs for employees already employed before
the project starts will not be included in the model, only additional employees hired
specifically for the investment (the project) will have their costs included. Opportunity
costs such as cancelled revenue streams from alternative investments to the investment
project in question, if such alternatives exist, will be included as a cost, and so on.
Opportunity cost: Billing revenue from 1 designer and project manager per year = 11
months x (0.9 x (150h x 550kr + 75h x 700kr))
EXECUTION OF CALCULATION
The model is looking 5 years into the future. Even if intentions are to continue with
activities over several years thereafter, I choose to limit the NPV analysis to t5. Any cash
flows thereafter are ignored.
The Balance sheet is adjusted as follows: For each year, a dividend cash flow to the
equity owners (the share holders) is withdrawn in as large a size as possible without
affecting the basic conditions needed to carry out the investment. The final year, year t5,
the "Project Company" is liquidated as to withdraw the final cash flow to the equity
owners.
A discounted cash flow analysis is applied over these cash flows at an interest rate that
weighs in the needed return on investment given the assessed risk level of the project. I
set the discount rate to 10%.
SENSITIVITY ANALYSIS
Three scenarios are carried out in where the model is changed over five variables
1. Raw mtrl: Price changes in materials and components
2. Inflation
3. Cost reduction: Reductions in costs realized through other choice of components and
alternative design solutions, which are to be delivered in an ongoing cost reduction
project
4. Vol purch: Volume discounts on purchased modules. Current prices are based on
purchases one-by-one. It is reasonable to expect a reduction in price based on volume
purchases.
5. Price: Price level development in the price list. In the long run, adjustments are made for
inflation, material cost development and currency risk. The adjustment of the price
variable in the scenarios does not, however, take into account the Price elasticity of
demand, or what the market is willing to pay.
Factors that impact:
Material: Price changes in materials and components, Inflation, Volume discounts on
purchased modules, and the cost reduction project
Components: Inflation and the cost reduction project
Labor costs: Inflation
LMP CONSULTING
SIDAN 7
17/09/2015
FINANCIAL PLAN.DOCX
t0
t1
t2
t3
t4
t5
100
100
100
100
100
100
100
100
100
100
90
103
103
103
85
100
103
88
110
95
85
106
106
106
75
100
107
96
120
93
80
109
109
109
70
100
112
104
130
91
75
112
112
112
70
100
118
112
140
89
75
112
112
112
70
100
125
120
150
87
LMP CONSULTING
SIDAN 8
17/09/2015
FINANCIAL PLAN.DOCX
R E S U LT S
BEST CASE
t0
t1
t2
t5
4,461
8,536
-852
808
-373
-1,385
-2,632
-3,813
-852
-2,184
499
3,076
5,904
12,576
-1,337
-1,337
-1,337
-1,337
-1,337
-852
-3,521
-838
1,740
4,568
11,239
-852
-3,200
-692
1,307
3,120
6,979
t3
t4
t5
1,046
5,810
FCF
FCF*
rv*:
10.00%
Discounting
NPV (kkr)
872
t4
-2,992
t3
16,389
6,661
NEUTRAL CASE
t0
Operating cash flow
t1
0
t2
-3,791
-1,030
58
-852
1,034
168
-132
-497
-920
-852
-2,757
-862
-74
549
4,890
-1,337
-1,337
-1,337
-1,337
-1,337
-852
-4,094
-2,199
-1,411
-787
3,554
-852
-3,721
-1,817
-1,060
-538
2,207
FCF*
rv*:
10.00%
Discounting
NPV
-5,781
WORST CASE
t0
Operating cash flow
Fixed-asset cash flow
Less income tax
t1
t2
t3
t4
t5
-4,942
-2,498
-2,353
-2,223
1,955
-852
1,365
590
522
368
211
-852
-3,577
-1,908
-1,831
-1,855
2,165
-1,337
-1,337
-1,337
-1,337
-1,337
-852
-4,914
-3,245
-3,168
-3,192
829
-852
-4,467
-2,681
-2,380
-2,180
515
FCF
FCF*
rv*:
NPV
10.00%
Discounting
-12,045
Operating cash flow = Operating profit Less change in net working capital Plus overhead changes
LMP CONSULTING
SIDAN 9
17/09/2015
FINANCIAL PLAN.DOCX
APPENDIX
CALCULATION PRINTER
Printer
Base unit
Labor
16,910.00 kr
Material
117,557.00 kr
Top cover
El + kit+ cables
Conn. box
Testing
Cleaning
Packing
Sum
Components
Direct Cost
134,469.00 kr
268,936.00 kr
43,500.00 kr
43,500.00 kr
20,648.00 kr
67,971.00 kr
88,619.00 kr
488.00 kr
1,605.00 kr
2,093.00 kr
12,000.00 kr
12,000.00 kr
4,499.05
kr
4,499.05 kr
7,500.00 kr
427,147.05 kr
577,087.00 kr
26.0%
Infeed Belt
39,000.00 kr
39,000.00 kr
65,000.00 kr
40.0%
Outfeed Belt
39,000.00 kr
39,000.00 kr
65,000.00 kr
40.0%
325,545.00 kr
505,147.05 kr
707,087.00 kr
28.6%
Price
Margin
54,545.05 kr
125,057.00 kr
Margin
247,545.00 kr
SUM
54,545.05 kr
7,500.00 kr
Price
125,057.00 kr
CALCULATION STACKER
Stacker
Base unit
Labor
14,104.97 kr
Material
98,017.18 kr
Ladder
Top cover
El + kit+ cables
8,249.00 kr
Protective cover
Cleaning cover
Components
112,122.15 kr
Direct Cost
224,244.30 kr
2,405.00 kr
2,405.00 kr
39,743.00 kr
39,743.00 kr
27,156.00 kr
35,405.00 kr
16,488.00 kr
16,488.00 kr
7,644.00 kr
7,644.00 kr
Testing
9,600.00 kr
9,600.00 kr
Cleaning
4,499.05 kr
4,499.05 kr
Packing
Sum
7,500.00 kr
205,558.15 kr
347,528.35 kr
456,094.00 kr
23.8%
Infeed Belt
39,000.00 kr
39,000.00 kr
65,000.00 kr
40.0%
Outfeed Belt
39,000.00 kr
39,000.00 kr
65,000.00 kr
40.0%
283,558.15 kr
425,528.35 kr
586,094.00 kr
27.4%
SUM
LMP CONSULTING
36,453.02 kr
36,453.02 kr
105,517.18 kr
7,500.00 kr
105,517.18 kr
SIDAN 10
17/09/2015
FINANCIAL PLAN.DOCX
Labor
Material
Components
Direct Cost
38,046
110,057
247,545
395,648
22,354
90,517
205,558
318,429
Price
Margin
Added
1,225
1,225
49,770
49,770
-43,500
-43,500
-39,743
-39,743
-16,488
-16,488
-7,644
-7,644
Subtracted
Testing
21,600
21,600
Cleaning
9,000
9,000
Packing
Sum
15,000
91,000
215,574
Infeed Belt
Outfeed Belt
SUM
LMP CONSULTING
91,000
215,574
SIDAN 11
15,000
396,723
703,298
954,381 kr
26.3%
39,000
39,000
65,000
40.0%
39,000
39,000
65,000
40.0%
474,723
781,298
1,084,381 kr
27.9%
17/09/2015