Case

You are working as a financial advisor for Mr$.$ Buzzi, who is a well$-$known investor. Today Mr$.$ Buzzi has explained to you a new business project that he has, and he wants you to prepare projected financial statements to have an idea of the profitability of the project.

Following we have the data that Mr$.$ Buzzi has delivered to you:

Sales: The expected sales are $500000$ units for the first year, and the sales growth is expected to be $100\%$ for the year $2,100\%$ for the year $3,120\%$ for the year $4$ and $130\%$ for the year $5.$

The sales price per unit is $9$ per unit for the first year, and the estimation is that the price would be growing at a $7\%$ every year.

Variable production cost: The recipe of the product explains that the cost will be of $6$ per unit on the first and second year, and will be growing at a $2\%$ year after year afterwards.

Production labor: The first year the plant needs $6$ technicians with a cost of $45000$ per person per year, $56$ production workers with an annual cost of $30\mathrm{.}000$ per employee per year, and $1$ manager with a cost of $92\mathrm{.}000$ per person per year. The next years the production labor will increase, due to the fact that the production of the plant will also be increasing. The year $2$ the cost will be $50\%$ higher than year $1,$ the year $3$ the cost will be $50\%$ higher than year $2,$ the year $4$ the cost will be $55\%$ higher than year $3$ and in year $5$ the cost will be $55\%$ higher than year $4.$

Investment: the required investment is $13\mathrm{.}500\mathrm{.}000,$ of which $10\mathrm{.}000\mathrm{.}000$ will be depreciated over a period of $10$ years and the rest will be depreciated over a period of $4$ years. No more investments will be required during the years $2$ until $5.$

Utilities expense: We expect a cost of $0\mathrm{.}20$ per unit on the first year, the expectation for the following years is to have a cost increase of $4\%$ year after year.

Maintenance: the maintenance will be outsourced, and we expect a cost of $0\mathrm{.}3$ per unit produced year after year.

General :HJand administration costs are expected to be $200\mathrm{.}000$ for the first year, $210000$ for the second year, and for the following years the cost should increase in line with the sales volume, having a cost increase of $0\mathrm{.}5\%$ of sales of the additional sales.

The days to collect accounts receivable are $90,$ the days to pay suppliers are $30.$

The company will need an inventory of $45$ days.

Mr$.$ Buzzi is ready to invest $8\mathrm{.}000\mathrm{.}000.$ The investments need to be paid upfront and the rest of money needed will come from a bank credit line, you should make your own estimation of the amount needed.

The tax rate is $25\%$ and the interest rate is $5\%.$

Mr$.$ Buzzi is requesting from you a proposal of Profit & loss account for the next $5$ years and a balance sheet for the same period.

A few weeks later, Mr Buzzi asks you to prepare a cash planning for the first year based on the following assumptions.

Consider that the raw materials will be purchased on the previous month $($starting in December$)$;

The raw materials inventory should be based on $45$ days of the next month sales.

Labor cost $($also G&A$)$ is paid divided between $12$ months, always at the end of the month.

Utilities and maintenance are paid every month depending on the consumption.

Income tax is paid on the month of march.

Interest expense is paid on the following month.