FEASIBILITY PART II: Practice Calculations

1)

Calculate monthly C.O.G.S. assuming a 30% mark-up and the following 6 month's sales figures:

a.

$4000, $4500, $5000, $6000, $7500, $7500.

b.

Repeat calculations assuming gross contribution margin of 40%.

2)

Assuming average monthly sales of $50,000 and average monthly C.O.G.S. of $30,000, calculate the

expected level of

a.

Receivables if average collection period is 55 days.

b.

Inventory if you plan on average 40 days on hand.

3)

Assuming annual sales of $250,000 and a 50% gross (contribution) margin, calculate the following

a.

Average collection period if ending receivables total $45,000

b.

Ending days-on-hand of inventory if ending inventory levels are $30,000

4)

Assuming opening equipment of $100,000 (to be depreciated at $2000/month) plus additional equipment

purchase of $50,000 (to be depreciated at $1000/month) in month 6, calculate year-end book value of

equipment. Record equipment at cost, accumulated depreciation, and book-value.

5)

Calculate B.V. of ending equipment assuming you started the year with $75,000 in equipment, purchased

$65,000 in new equipment during the year, and deducted $15,000 in depreciation.

6)

Calculate ending receivables assuming opening receivables were $150,000 and sales and collections for the

year were $600,000 and $580,000 respectively.

7)

Calculate amount collected if sales were $500,000, and opening and ending receivables were $120,000 and

$110,000 respectively.

8)

Calculate ending inventory assuming opening inventory was $40,000 and purchases and COGS were

$300,000 and $280,000 respectively.

9)

Calculate ending equity if opening paid in capital was $100,000 and retaining earnings were $55,000, but

during the year recorded an after-tax profit of $35,000 and paid dividends of $20,000. Record ending paid-in

capital, retained earnings and total equity separately.

10)

Calculate year- ending loan balance if you started the year with a $120,000 loan (monthly payments $2000

principal + $500 interest) and a new loan of $20,000 in month 8 to be repaid at $500 principal + $200 interest

per month starting the month after the advance).

a.

For the above, calculate annual expense.

b.

For the above calculate total cash-in and total cash-out. Record the break-down necessary for

completion of cash flow forecasts.

QUIZ:

Match the business to the most likely number for each of the following:

c.

Antique Shop and Used Car dealer and Convenience store with average inventory days-on-hand of

7 , 180 and 30 days respectively.

d.

40-tonne press, delivery van and computer hard-ware with annual depreciation rates of 33%, 20%

and 10% respectively.

e.

Propane-powered fork-lift, delivery van and receivables with amount of bank financing of 25%,

65%, and 75% loan-to-value ratios.

f.

Retail clothing store in a mall, commercial printing operation, and down-town office space with

rental rates of $10/sq.ft, $25/sq.ft and $50/sq.ft.

g.

Small market newspaper ad, small market 30-second radio spot, and one page national magazine

ad, and 1 month of prime bill-board space with the following costs: $500, $30 000, $3 000, and

$60