QUESTION ONE Part A The following table contains financial information from the business plan of a new venture that makes a portable device that uses laser technology for measuring distances with great precision, LaserGolf, Inc. The information in the table is in thousands of dollars. Month 12 18 24 30 36 42 48 54 60 2$ 2$ 2$ 2$ Sales ($000s) 12,000 100 500 1,000 2,500 5,000 10,000 15,000 2$ 2$ 2$ (500) Profit ($000s) Cash Flow ($000s) (200) 2$ (1,000) (300) (200) 700 2,000 100 300 2,500 3,500 2$ (500) 2$ 2$ 2$ (2,000) (1,000) (100) 3,000 (500) 300 1,000 2,000 Assume that the amounts highlighted in the table are cumulative. a) Using this information how might you propose to identify the stages of new venture development? b) How much cash is the venture expected to need in total? c) How would you suggest staging or planning for the infusions of cash? Why? d) What kinds of investors are best suited for investing at the various stages of development? e) What would you suggest as useful milestones for evaluating progress? Part B Develop the Year 1 financial forecast (income statement, balance sheet and statement of cash flows) for Bennis Co. Revenue is projected at $800,000, with a gross margin of 34%. Operating expenses (including depreciation) total 20% of revenue and taxes are estimated at 35% of pre-tax income. Bennis wants to maintain a cash balance of 3% of their cost of goods sold. Accounts receivable are 10% of sales and inventory turnover is forecast at 9 times. Fixed assets of $500,000 with a useful life of 10 years will be needed to start the venture. Accounts payable days are forecast to be 30. If Bennis will be all-equity financed, calculate the required initial investment by the entrepreneur. QUESTION ONE Part A The following table contains financial information from the business plan of a new venture that makes a portable device that uses laser technology for measuring distances with great precision, LaserGolf, Inc. The information in the table is in thousands of dollars. Month 12 18 24 30 36 42 48 54 60 2$ 2$ 2$ 2$ Sales ($000s) 12,000 100 500 1,000 2,500 5,000 10,000 15,000 2$ 2$ 2$ (500) Profit ($000s) Cash Flow ($000s) (200) 2$ (1,000) (300) (200) 700 2,000 100 300 2,500 3,500 2$ (500) 2$ 2$ 2$ (2,000) (1,000) (100) 3,000 (500) 300 1,000 2,000 Assume that the amounts highlighted in the table are cumulative. a) Using this information how might you propose to identify the stages of new venture development? b) How much cash is the venture expected to need in total? c) How would you suggest staging or planning for the infusions of cash? Why? d) What kinds of investors are best suited for investing at the various stages of development? e) What would you suggest as useful milestones for evaluating progress? Part B Develop the Year 1 financial forecast (income statement, balance sheet and statement of cash flows) for Bennis Co. Revenue is projected at $800,000, with a gross margin of 34%. Operating expenses (including depreciation) total 20% of revenue and taxes are estimated at 35% of pre-tax income. Bennis wants to maintain a cash balance of 3% of their cost of goods sold. Accounts receivable are 10% of sales and inventory turnover is forecast at 9 times. Fixed assets of $500,000 with a useful life of 10 years will be needed to start the venture. Accounts payable days are forecast to be 30. If Bennis will be all-equity financed, calculate the required initial investment by the entrepreneur
