After reviewing the product costing and pricing information, you suggest to Ritual that the next step should be to incorporate that information into financial projections. Based on conversations with Ritual, you know that they're interested in understanding how pricing will translate into net income and cash flow. Through these conversations, you gather the following about anticipated sales and expenses: You also discover that Elissa and Steve would like to try to take draws out of the company, starting at $500/ month each in Year 1, \$1,000/month each in Year 2, and \$2,000/month each in Year 3, assuming there is enough cash flow to do so. They are concerned about overestimating cash flow, so they have expressed their desire to be conservative with cash flow projections, but they also mention the value in understanding what cash flow would look like given different scenarios like different pricing or cost inputs, or varying amounts of product sales. They express their trust in your knowledge and skills to provide them with different possibilities depending on actual results. Their overall goal is to be prepared for varying situations to reduce uncertainty (and risk) as much as possible. 1. Provide three-year financial projections for Net Income and Net Cash Flow to Ritull. 2. Use scenario analysis to provide any additional scenarios that you believe would t : valuable to help reduce Ritual's uncertainty (risk) about the future. Additional Hints/Tips: The following hints/tips should help with the preparation of the memo: - You may ignore all tax consequences in the financial projections. - You may assume that no additional products will be added during the three-year projection period. - Inflation is a material part of every business. You may want to consider the impact of inflation in your projections in the form of potential increases in input costs and product pricing. - To easily perform scenario analysis, I encourage you to set up your spreadsheet to sllow you to change variables that will automatically populate your projections. It will save you a great' deal of time in the long run. - One of the primary goals of this assignment is to provide information that reduces uncertainty (risk) to Ritual Botanics. You may want to consider approaching this task by creating the m sst likely (or conservative, if you choose) outcome, then modifying it for different scenarios, such as best or worst cases (or whatever others you choose). - It is a given, but worth noting, that financial projections are simply educated guessis about the future. Keep in mind that absent a crystal ball, these projections are just our best guess abrut the future; however, they are guesses that also allow for the planning of best and worst case s enarios, which can very valuable for addressing future needs. - When dealing with scenario analysis, it can get complicated because there are mul iple variables that be changed, providing the opportunity for nearly endless scenarios. Make sure to k zep your analysis clear and easy to understand. Even if you have complicated projections, make sure to synthesize them such a way that they are easily presentable to Ritual. - This assignment is not asking for recommendations...yet. As you complete this as rignment, I encour you to start thinking about potential recommendations based on your projections. Your memo should be specific, succinct, professional, and answer all the required questiors. In addition, it should synthesize and present all information in a way that is easy to understand. The merio should be no m than one page, single-spaced (Times New Roman, 12 point). After reviewing the product costing and pricing information, you suggest to Ritual that the next step should be to incorporate that information into financial projections. Based on conversations with Ritual, you know that they're interested in understanding how pricing will translate into net income and cash flow. Through these conversations, you gather the following about anticipated sales and expenses: You also discover that Elissa and Steve would like to try to take draws out of the company, starting at $500/ month each in Year 1, \$1,000/month each in Year 2, and \$2,000/month each in Year 3, assuming there is enough cash flow to do so. They are concerned about overestimating cash flow, so they have expressed their desire to be conservative with cash flow projections, but they also mention the value in understanding what cash flow would look like given different scenarios like different pricing or cost inputs, or varying amounts of product sales. They express their trust in your knowledge and skills to provide them with different possibilities depending on actual results. Their overall goal is to be prepared for varying situations to reduce uncertainty (and risk) as much as possible. 1. Provide three-year financial projections for Net Income and Net Cash Flow to Ritull. 2. Use scenario analysis to provide any additional scenarios that you believe would t : valuable to help reduce Ritual's uncertainty (risk) about the future. Additional Hints/Tips: The following hints/tips should help with the preparation of the memo: - You may ignore all tax consequences in the financial projections. - You may assume that no additional products will be added during the three-year projection period. - Inflation is a material part of every business. You may want to consider the impact of inflation in your projections in the form of potential increases in input costs and product pricing. - To easily perform scenario analysis, I encourage you to set up your spreadsheet to sllow you to change variables that will automatically populate your projections. It will save you a great' deal of time in the long run. - One of the primary goals of this assignment is to provide information that reduces uncertainty (risk) to Ritual Botanics. You may want to consider approaching this task by creating the m sst likely (or conservative, if you choose) outcome, then modifying it for different scenarios, such as best or worst cases (or whatever others you choose). - It is a given, but worth noting, that financial projections are simply educated guessis about the future. Keep in mind that absent a crystal ball, these projections are just our best guess abrut the future; however, they are guesses that also allow for the planning of best and worst case s enarios, which can very valuable for addressing future needs. - When dealing with scenario analysis, it can get complicated because there are mul iple variables that be changed, providing the opportunity for nearly endless scenarios. Make sure to k zep your analysis clear and easy to understand. Even if you have complicated projections, make sure to synthesize them such a way that they are easily presentable to Ritual. - This assignment is not asking for recommendations...yet. As you complete this as rignment, I encour you to start thinking about potential recommendations based on your projections. Your memo should be specific, succinct, professional, and answer all the required questiors. In addition, it should synthesize and present all information in a way that is easy to understand. The merio should be no m than one page, single-spaced (Times New Roman, 12 point)