Need some help on my Finance HW on Forecasting.

Forecasting:

The lemonade stand Scarlet founded her freshman year is thriving, and is now looking to expand into new markets. After looking at her desired growth trajectory (and remembering what she learned from her Finance for Entrepreneurs class), she realizes that she will need external financing in order to make her dream come true. Scarlet realizes that her investors will want to see the businesss revenue projections for 2017.

Project sales for Scarlets business using the 5 methods we discussed in class, and given the information below. Please fill out this table in the accompanying Excel file (HW 6) so I can see how you calculated your answers. For Historical Sales, take an average of the year-over-year growth from 2014-2015, and 2015-2016.

Given information:

Here are historical results for the past few years:

	2016	2015	2014
Revenue	20,000	15,000	10,000

Scarlets friend Jackie Blackbeard at Seton Hall was able to grow her iced tea business 20% per year.

Scarlet believes that she will capture 5% market share in New Brunswicks $500,000 beverage market next year.

Scarlet won the coveted exclusive contract to supply lemonade for all football games in 2017. This should be at least 5x as profitable as her basketball contract, which accounted for about of her sales last year. Scarlet believes that football will drive approximately of all her sales next year.

Scarlet expects to sell 10,000 glasses of lemonade next year for $3.00 each.

a. Fill out the table below within Excel (see the accompanying Excel sheet

	2017 Sales Forecast	Calculations/Assumptions
Historical Sales	FILL THIS OUT IN THE ACCOMPANYING EXCEL WORKBOOK
Competitor Analysis
Market Size/Share
Existing Sales/Contracts
Specific Figures

Which do you think is the most appropriate method to use, and why?

Scarlets 2017 has come and gone, and her financial statements look like those attached in the accompanying Excel Workbook (tab labeled Fin Stmts).

Using a Percentage of Sales method from 2017 results and the Given Information below, derive the 2018 Pro Forma (forecast) Income Statement and Balance Sheet (i.e. fill in the 2018 cells with the appropriate amounts).

Is there a plug needed? If so, how much is it? What does it tell you about Scarlets forecasted 2018 financial projections and what could Scarlet do to remedy the situation?

Based on Scarlets 2017 & 2016 financials, what is her businesss Sustainable Growth Rate (SGR)?

Given Information:

Scarlet believes that her 2018 Revenue figure will be 12% higher than her 2017 Revenue.

She estimates that her SG&A will go up by $1,000 from 2016-2017 since she plans on getting a part-time employee.

She doesnt intend to pay any dividends for 2018.

For her Balance Sheet forecasted items she uses only 2017 results, rather than taking an average of the results (average of the % of sales) from 2016 and 2017.

Scarlet assumes Interest Expense, Curr Portion of LT Debt, and Bank Loan Payable will remain the same in 2018 as they were in 2017.

Scarlet plans on issuing $1,000 of (new) Common Stock in 2018.

Scarlet determines that she will need to spend $3,700 for a new Lemon Press machine, which will be her entire CAPEX for 2018. We will assume depreciation will be $200 for this item for 2018, and the yearly depreciation/amortization expense for the rest of Scarlets PPE will remain the same as it was in 2017 (and assume no asset sales were made in 2017).

Intangibles and Goodwill will remain unchanged in 2018.

She is not planning on disposing of any of her assets (i.e. no asset sales).

Income Statement				Balance Sheet
	2018	2017
Sales / Revenue		41,600		Assets					Liabilities and Stockholders' Equity
Cost of Goods Sold (COGS)		24,960		Current Assets:	2018	2017	2016		Current Liabilities:	2018	2017	2016
Gross Profit		16,640		Cash	?	2,500	5,495		A/P	?	1,100	300
Selling, General & Administrative (SG&A)		12,940		A/R	?	800	1,300		Deferred Revenue	?	700	1,000
Operating Profit		3,700		Inventory	?	2,900	1,600		Curr Portion of LT Debt	?	2,200	5,300
Interest Expense		2,000		Prepaid Rent	?	2,200	1,800		Wages Payable	?	2,600	4,600
Income Before Taxes		1,700		Prepaid Insurance	?	1,400	1,900		Tot Curr Liab	?	6,600	11,200
Income Tax Expense		595		Tot Curr Assets	?	9,800	12,095
Net Income		1,105							LT Liab
				LT Assets					Bank Loan Payable	?	5,500	3,300
				PPE, Gross	?	9,500	5,500		Tot Liab	?	12,100	14,500
				Accumul Depr	?	2,800	2,000
Assume No Dividends Paid				PPE, Net	?	6,700	3,500		Stockholders' Equity	?
									Common Stock	?	3,300	1,100
				Intangibles	?	3,000	3,000		Retained Earnings	?	5,100	3,995
				Goodwill	?	1,000	1,000		Total Stockholders' Equity	?	8,400	5,095
				Total Assets	?	20,500	19,595		Total Liab + Stockholders' Equity	?	20,500	19,595
							2a.		PLUG (if necessary):
									What it tells you:
							2b.		Sustainable Growth Rate (SGR):

3a.					Project 1	Project 2	Project 3
Cost of Debt:				Initial Cost
% of Debt:				Payments per yr
Tax Rate:				# of Years
				Final pmt (FV)
Cost of Equity:									Which Project is the best?
% of Equity:			3b.	Payback Period
WACC			3c.	NPV
			3f. (opt)	IRR
			3d.	Answer:
			3e.	Answer: