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Financial Plan - Assumptions - 2

Tuesday, November 30, 2004
There is a slight change since yesterday. I will not fill the Assumption table in yesterday's post. Instead, I will discuss what each variable means. This way table is more meaningful, rather than mere numbers.

Variables_Used_for_AssumptionUnits_UsedExplanation_of_Variables

Average Monthly Sales

US $000s

Here you can enter net sales value.

Desired average finished inventory

% of Sales

Does not apply to Service / Distribution business. For Manufacturing business, this variable is % of sales.

Cost of materials/goods

As % Sales

This value is set to zero for Service business and for Distribution it refers to the purchases/inventory for resale.

Target materials/goods inventory

US $000s

This value is set to zero for Service business and for Distribution it refers to the purchases/inventory for resale.

Average monthly direct costs

US $000s

It is set to zero for for Distribution business

Average monthly overhead expenses

US $000s

Interest and Depreciation is not included

Opening total cost of fixed assets

US $000s

This is cost as on start date of projection

Accumulated opening depreciation

US $000s

This is the value on the start date of projections

Average depreciation rate

% p.a.

This is approximated weighted average rate of all fixed assets

Planned capital expenditure for year

US $000s

Equipment purchases for the year

Interest rate for cash balances

% p.a.

This is approximated weighted average rate

Interest rate for all debt/notes

% p.a.

This is approximated weighted average rate

Opening cash balance (deficit)

US $000s

If business is started with line of credit, then this number is negative

Opening longterm debt/notes

US $000s

Total value of all long-term debt/loans/notes

Net change in longterm debt/notes in yr

US $000s

Use appropriate sign for increase or decrease in the value

Opening accounts receivable

US $000s

As of projection start date. Do not include expected bad debts

Opening accounts payable

US $000s

As of projection start date. Also include all other planned payments

Average credit given on sales

Days Sales

Use estimates with consideration of cash sales

Average credit taken for materials /goods

Days Sales

Estimate should include suppliers who do not give credit

Expected federal/state tax rate

%

Use Effective rate

Planned dividend for year

US $000s

Include declared dividends only

Opening number of shares

000s

Issued shares only

Proceeds of new stock issues

US $000s

Proceeds should be net of all fund raising costs

Number of new shares issued

000s

Add this number to opening number of shares
11/30/2004 10:11:00 PM :: ::
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