Forecasting Cash Flow and Burn Rate

1. Create a Cash Flow Forecast on Excel using the following assumptions: Forecast duration: Years 0 through 5, then Exit Unit Sales: Sell 2000 units your first year and increase 30% per year Price: $100/unit first year and increase 5% per year COGS: Calculate based on a 75% Gross Profit Margin NOTE: to complete the Operating Expense section, break it into two lines: Payroll and Other Payroll: Start with 2 employees in year 0 paid $50,000 each; add 1 employee with every additional year, at same pay Other Operating Expenses: $75,000 per year starting year 0, no change over the 5 years Capital Expenditures: $30,000 every other year starting year 0. Assume you pay in cash, no credit NOTE: to complete the Working Capital section, break it into 1 line for each of the 4 components Increase in Accounts Receivable: Based on giving customers 60 days of credit Increase in Inventory: Based on keeping 3 months of Inventory on hand Increase in Accounts Payable: Based on your vendors giving you 30 days of credit Increase in Accrued Payroll: Based on paying your employees every other week Exit Sell company for 5x Year 5 EBITDA