Part A

Please produce a cash flow projection using an excel spreadsheet based on the following information:

• The company is commencing operation on June 1, 2023
• Employees will be hired and paid starting May 1, 2023
  • Wages are $5200/per month for 3 employees
• Leasehold improvements will be done during May 2023
  • Leasehold improvements total $28,000 and are paid on completion
• Rent will commence on June 1, 2023
  • Rent is $3000 per month
• Utilities start on May 1, 2023 and are a fixed cost
  • Utilities are $400 per month
• Insurance is paid monthly
  • Insurance cost $200 per month
• Legal fees for incorporation are paid in May
  • Legal fees $2300
• Accounting fees are paid in May for start up advise
  • Accounting Fees $500
• After the first month of operation, the company buys 1.5 times the inventory that it sold in the previous month. The mark-up of the business is 50%

All of the above are cash expenditures that must be paid in the month incurred

Cash In

• Sales in the first month are $5000 (cash)and grow by 50%/month for the first four months and 10%/ month for the next 3 months before remaining level
• After the first month, half of the sales are cash and half are credit paid in 30 days (all debts are paid) This means that cash appears 30 days after the sale.

Part B:

If this is a start-up company, how much cash would be required to get the company started and to a positive cash balance?

• Please explain your answer

Part C:

Please product an income statement for this business for one year of operation.

Assume it is an ongoing concern

Assume leasehold improvements are amortized over 5 years