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Table of Contents
1.0
2.0
3.0
4.0
5.0
6.0
7.0
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1
1.1
Objecti
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2.2
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Mark
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4.1
Mar
ketSeg
men
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et
Seg
men
t
Stra
tegy
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4.3
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stry
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5.1
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petit
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Sale
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Man
age
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Sum
mary
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Fina
ncial
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7.1
Imp
orta
ntAss
ump
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7.3
Proj
ecte
d
Profi
t
and
Loss
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7.4
Proj
ecte
d
Cas
h
Flow
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13
7.5
Projecte
d
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Katarina Bakery
1.0 Executive Summary
Katarina Bakery is a new organic bakery specializing in gluten, wheat and dairy free
products. Within the last three years there has been significant increases in demand for these
bakery products. This can be explained to a large degree by the fact that up until recently
lots of people have had food allergies that have been undiagnosed. It has been only in the lastfew years that medical doctors have begun to diagnosis food allergies correctly. What was
once an unknown problem that affected so many people with no recourse has become a
manageable ailment that is easily dealt with through modification of diets. This is very positive
for both those people that are affected as well as bakeries such as Katarina that specialize
in these products.
The Products
Katarina offers a wide range of exciting products. The first group is spelt breads, muffins,
and pastries. Spelt is used as there are far fewer people that are allergic to this grain. Yeast
allergies are also common and Katarina offers a menu of yeast free breads. Dairy free
muffins and pastries are offered for vegans. Lastly, egg free breads, muffins, and pastries are
offered.
Customers
Katarina will focus on three distinct customer segments. The first group is the Allergy
group. This segment is growing at 15% a year with 32,000 potential customers. The second
niche is the Doctor group. This segment is also growing at 15% with 14,200 potential people.
The last group is the Dieters group. This segment is typically making modifications to their diet
based on their desire to lose weight. This niche also is growing at 15% with 48,000 possible
customers.
Management Team
Recognizing the importance of human capital, Katarina has assembled a strongmanagement team. The team is led by Anna David. Anna comes to Katarina with 10
years of banking experience. In addition to her industry specific experience, Anna has had 2
years of management experience. Laura Thomas brings financial skills to Katarina after a
15 year CPA career. Beatrice Chonjo will lead the marketing efforts having participated in her
own PR firm. Lastly, Enna Chonjo will be on the team as an assistant baker with over five
years of experience.
Katarina is an exciting opportunity that combines, fresh baked goods with spelt, yeast free,
dairy free, and egg free products, addressing the recent need for these new products. Demand
for these products is expected to grow exponentially as medical doctors become more and
more aware of food allergies the population is afflicted with. Profitability is forecasted to occur by
month three. Profits of $806 and $47,000 will be generated in years one and three
respectively. Through a combination of a strong management team, a solid business model,and exciting, market demanded products will allow Katarina to quickly gain market
penetration and cash richness.
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Katarina Bakery
Highlights
$400,000
$350,000
$300,000
$250,000
$200,000
$150,000
$100,000
$50,000
$02010/ 2011 2013
1.1 Objectives
1. To establish a working storefront for Katarina bakery.
2.
3.
1.2 Mission
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Katarina Bakery
2.1 Company Ownership
Currently Katarina Bakery is a sole proprietorship owned by Catherine Chonjo. Eventually, as
the company becomes established, Katarina Bakery will apply to be incorporated.
2.2 Start-up Summary
The primary expense to establish the Katarina Bakery is the mortgage loan estimated at
$175,000 to purchase the vacant space on Julius Nyerere street. The building was previously
used as a bakery and we plan to buy the used equipment along with the space. This cost is
also calculated into the loan estimate. Catherine Chonjo intends to invest $7,500 of her savings t
cover the other cost of start-up.
These costs include:
•
••
•
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In
sur
an
ce.
Ba
ke
ry
ac
cess
ori
es,i.e
.
pa
pe
r
ba
gs,
car
to
ns,
etc
.
Start-up
$200,000
$180
,000
$160
,000
$140
,000
$120
,000
$100
,000
$80,0
00
$60,0
00
$40,0
00
$20,0
00
$0
Expenses Assets
Investment Loans
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Katarina Bakery
Table: Start-up
Start-up
Requirements
Start-up Expenses
LegalStationery etc.BrochuresConsultantsInsuranceMortgageResearch and developmentBakery IngredientsOther Total Start-up Expenses
Start-up Assets Needed
Cash Balance on Starting DateOther Current AssetsTotal Current Assets
Long-term AssetsTotal AssetsTotal Requirements
Funding
Investment
UntitledDonna SharpOther Total Investment
Current Liabilities
Accounts PayableCurrent BorrowingOther Current Liabilities
Current Liabilities
Long-term Liabilities
Total Liabilities
Loss at Start-up
Total CapitalTotal Capital and Liabilities
3.0 Products
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,500
$0$7,500
$0$7,500
$0$0
$12,000$12,000
$173,000$185,000
($5,408)
Katarina Bakery provides non-gluten baked goods and pastries to diet-conscious and
wheat-allergic consumers. Special considerations are made for all common food allergies such
as dairy, yeast, wheat, and eggs.
Example of goods:
Spelt breads, muffins and pastries
Spelt flour is the most common wheat-alternative flour as it has the same characteristics as
wheat which provides similar taste, consistency and behaviors creating goods that are just as
good as any wheat baked good.
Yeast-free breads
Many people have an allergy to yeast, or have been warned by their doctors not to eat it. We
provide a line of yeast-free breads.
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Katarina Bakery
Dairy-free muffins and pastries
Most breads do not require any dairy products, so they are not a consideration. Muffins and
pastries most often require butter. To avoid this, we use a soy substitute.
Egg-free breads, muffins and pastries
Eggs are most common in muffins and pastries. Applesauce can be used as a substitute as it
provides the same amount of moisture that is required.
4.0 Market Analysis Summary
Our target market includes people who are health conscious and/or have common food
allergies. This is a niche market since most bakeries do not cater to these needs with the
exception of high-fiber diets.
4.1 Market Segmentation
Our target market consists of three groups:
The Allergy GroupAccording to Health Magazine, one out of five people suffer from a common food allergy,
however many bakeries do not cater to their needs.
The Doctor Diet GroupFor health reasons, many people are warned off certain foods by their doctors because of high
cholesterol and blood pressure. Many people aged 50+ are going on special diets to
prevent heart disease.
The Diet Craze Group
According to Self Magazine, the year 2000 saw 20 new diet fads that discouraged certain foodssuch as wheat and dairy. The bestselling book on the New York Time list for health was the "
Blood Type Diet " which encourages readers to eat only non-gluten flours such as spelt, and to
avoid dairy. While this target market is quite large, it is ever fluctuating since most people who
diet yo-yo between different diets (Self Magazine September 2000).
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Katarina Bakery
Market Analysis (Pie)
The Allergy Group
The Doctor Group
The Dieters Group
Table: Market Analysis
Market AnalysisPotential CustomersThe Allergy GroupThe Doctor GroupThe Dieters GroupTotal
Growth15%15%15%
15.00%
201032,00019,20048,00099,200
201136,80022,08055,200
114,080
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4.2 Target Market Segment Strategy
In our target market, we will mainly focus on the "allergy group" since they are the most
prevalent and steady of customers. We expect that the "doctor diet group" and the '"diet
craze" group will make up a smaller portion of our customers. We have not listed "regular
customers" as a target group since the customers who do not fit into any of our groups are too
varied to segment. We are specifically filling the needs of the "allergy group" so we expect the
most business from this group.
4.3 Industry Analysis
Katarina bakery competes in the Food Services Industry. In addition to competing with
other organic and non-wheat bakeries, it competes with all restaurants, delis, bakeries and
supermarkets for a share of its customers' food dollar. Katarina is most concerned with
competitors who differentiate their products and services with a healthy, organic focus.
Because this group is so large, Katarina has chosen to limit its analysis to other gluten-free
bakeries.
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Katarina Bakery
4.3.1 Competition and Buying Patterns
Currently there are two bakeries in town that provide non-wheat goods.
Great Harvest Bread Company
Strengths: Makes spelt bread, muffins and cookies every Monday, Wednesday and Friday. Well-
established bakery in town. Sells breads in local grocery stores.
Weaknesses: Does not provide a wide selection of non-wheat goods. Furthermore the texture
and flavor of their spelt goods is very dense and flavorless. They use whole spelt bread which
makes a denser, crumby consistency bread. We use white spelt in our spelt breads and other
goods which has a texture and flavor similar to wheat.
The Sweet Life Patisserie
Strengths: Makes spelt bread, muffins and brownies every day. Will make custom-ordered non-
gluten cakes.
Weaknesses: Does not produce a wide selection or large quantity of non-wheat goods. Their
main focus is wheat goods.
5.0 Strategy and Implementation Summary
Our strategy focuses on serving a niche market with quality goods. We are determined to
become a part of the community—an establishment that becomes as much of the community
as a church or local grocery store. To achieve these goals, we will provide the following:
• Friendly, neighborhood-feel atmosphere.
• Quality baked goods for everyone to enjoy at a fair price.• Special diet menus in relation to the advice of local healthcare providers.
5.1 Competitive Edge
Our competitive edge is our quality of goods. We use only organic flours of the highest quality
that create incredible non-gluten goods that can't be matched anywhere else in town. We also
focus mainly on non-gluten goods. The other bakeries in town focus on wheat goods and
sometimes, as an afterthought, use alternative flours.
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Katarina Bakery
5.2 Sales Strategy
Our strategy focuses on building a customer base by providing good customer experience.
With the addition of the coffee bar and lunch menu, we hope to have customers
make the bakery their one-stop destination for breakfast or lunch. When we
open the outdoor patio, more and more customers will make the bakery a destination for theirlunches more often since the atmosphere will be so pleasing.
We would also like to work closely with local doctors and elder care homes to bring in
customers with health problems. We are already in negotiations with Dr. Good's office to
insure referrals to the bakery for his patients.
5.2.1 Sales Forecast
Our sales forecast assumes the following changes:
• Bread sales in the summer months will be slightly higher since more people will behaving BBQs and picnics requiring items such as hamburger and hotdog buns.
• Bread and pastry sales will be higher in November and December because of the food-
oriented holidays.
• Coffee sales will be higher in winter months, and for summer months sales of sodas
and iced beverages will increase.
Sales Monthly
$30,000
$25,000
$20,000
$15,000
$10,000
$5,000
$0
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es
Lunch Items (Soups & Sandwiches)
Pastries/Sweets
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Katarina Bakery
Table: Sales Forecast
Sales ForecastSalesBreadsCoffee/BeveragesLunch Items (Soups & Sandwiches)
Pastries/SweetsTotal Sales
Direct Cost of Sales
BreadsCoffee/BeveragesLunch Items (Soups & Sandwiches)Pastries/SweetsSubtotal Direct Cost of Sales
5.3 Milestones
2010$75,900$36,400$80,000
$59,400$251,700
2010
$22,770$10,920$32,000$23,760$89,450
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The table below displays the milestones that Katarina Bakery would like to accomplish in
the first three years. Emphasis in the first year will be on advertising to make the Katarina
Bakery an established business in town.
Table: Milestones
MilestonesMilestoneFirst Advertising Campaign
Full-Service Coffee Bar
IntegrationEstablishing a Lunch Menu
Outdoor Cafe SeatingTotals
6.0 Management Summary
Start Date12/1/11
2/1/12
3/1/12
5/1/12
End Date3/1/12
02/29/12
3/30/12
9/30/12
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Department
Catherine Chonjo is the founder of Katarina Bakery. She brings to the bakery her experience as
an entrepreneur. As a teenager she helped her parents
at the family's general store, both in sales and marketing. For her last two years at her
family's store, she was the general employee manager. Her duties at the bakery will include
employee hiring and training, head baker and store management.
Anna David has run her own successful CPA consulting firm for 15 years. Her duties will
include the bookkeeping, inventory management and stock fulfillment.
Beatrice Chonjo runs her own PR company and will be assisting the Katarina Bakery in its
marketing campaigns on a part-time basis.
Laura Thomas has worked as a baker for over five years and will be the assistant baker. Herresponsibilities will also include the management of the bakery shopping list.
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Katarina Bakery
6.1 Personnel Plan
Once the bakery becomes established and the cash flow is steady, we would like to hire one
person for counter help and another assistant baker.
The table below illustrates the needs of the current employees, plus the integration of twomore employees within three months of operation. The new hiring's will coincide with the
opening of a lunch menu and coffee bar which will most certainly require more help.
Table: Personnel
Personnel Plan2010
Catherine Chonjo - Head Baker $24,000Anna David $21,000Beatrice Chonjo - Part-time $9,000Counter Help - Full Time $18,000Assistant Baker - Part time $9,000Laura Thomas - Bookkeeper $24,000
Total People 6Total Payroll $105,000
7.0 Financial Plan
2011$26,400$23,100
$9,900$19,800
$9,900$26,400
6$115,500
The following sections will outline important financial assumptions.
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7.1 Important Assumptions
The current economic climate appears to be breaking out of the recession. However, we
do not believe that if the country does enter a recession again that our business will be undulyaffected. Since our products are ones that help contribute to and maintain good health, we
believe that people will continue to buy our products over traditional wheat bread. We are
operating in a niche market, and in addition, the price of our breads and sweets although
slightly higher than traditional bakeries they are not positioned as expensive, luxury items.
Table: General Assumptions
General Assumptions2010
Plan Month 1Current Interest Rate 9.00%Long-term Interest Rate 8.50%Tax Rate 25.00%Other 0.00%Calculated TotalsPayroll Expense $105,000New Accounts Payable $234,422
20112
9.00%8.50%
25.00%0.00%
$115,500
$280,168
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Katarina Bakery
7.2 Break-even Analysis
Our Break-Even Analysis assumes that our average per-unit revenue is $3.00. Our lowest
price for any good would be $0.75 (cookies) and our highest would be $5.50 (sandwiches), so
$3.00 is a fair estimate of the average per-unit revenue.
The running costs of production are fairly low since we manufacture all of our goods at a low
cost to us. Here are the items included in the average per-unit variable cost:
•
•
••
•
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t
an
d
bu
tte
r.
Pa
yr
oll.
Mortg
ag
e.Uti
liti
es.
The Break-Even Analysis as it appears below indicates that the break-even point will be
attainable each month.
Break-even Analysis
$15,000
$10,000
$5,000
$0
($5,000)
($10,000)
($15,000)
$0 $6,000 $11,000
Monthly break-even point
Break-even point = where line intersects with 0
Table: Break-even Analysis
Break-even Analysis:Monthly Units Break-evenMonthly Revenue Break-even
Assumptions:
Average Per-Unit RevenueAverage Per-Unit Variable CostEstimated Monthly Fixed Cost
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Katarina Bakery
7.3 Projected Profit and Loss
The following table shows the projected profit and loss for Katarina Bakery.Table: Profit and Loss
Pro Forma Profit and Loss
2010Sales $251,700Direct Costs of Goods $89,450Production Payroll $0Other $0
------------Cost of Goods Sold $89,450Gross Margin $162,250Gross Margin % 64.46%Expenses:Payroll $105,000Sales and Marketing and Other Expenses $13,040Depreciation $3,492Utilities $519Insurance $1,800Mortgage $10,800
Payroll Taxes $12,600Other $0
------------Total Operating Expenses $147,251Profit Before Interest and Taxes $14,999Interest Expense $13,924Taxes Incurred $269Net Profit $806Net Profit/Sales 0.32%Include Negative Taxes TRUE TRUE
2011$324,000$115,200
$0$0
------------$115,200$208,800
64.44%
$115,500
$14,640$3,492
$600$2,400
$15,096
$13,860$0
------------$165,588
$43,212$13,249
$7,491$22,472
6.94%TRUE
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7,050
$16,640$3,492
$800$2,800
$15,096$15,246
$0------------$181,124
$76,876$13,219$15,914$47,74311.94%
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Katarina Bakery
7.4 Projected Cash Flow
The following chart illustrates a healthy cash balance for the first three years, enabling the
company to grow through reinvestment.
Cash
$12,000
$10,000
$8,000
$6,000
$4,000
Net Cash Flow$2,000
Cash Balance$0
($2,000)
($4,000)
($6,000)
($8,000)
Jan Feb Mar Apr May Jun
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Katarina Bakery
7.5 Projected Balance Sheet
The following table represents the financial position of the Katarina Bakery at the end of
each of the three upcoming fiscal years.Table: Balance Sheet
Pro Forma Balance Sheet
Assets
Current AssetsCashOther Current AssetsTotal Current AssetsLong-term AssetsLong-term AssetsAccumulated DepreciationTotal Long-term AssetsTotal Assets
Liabilities and Capital
Accounts Payable
Current BorrowingOther Current LiabilitiesSubtotal Current Liabilities
Long-term Liabilities
Total Liabilities
Paid-in Capital
Retained EarningsEarningsTotal CapitalTotal Liabilities and CapitalNet Worth
2010$11,967
$0$11,967
$175,000
$3,492$171,508$183,475
2002$11,825
($12,000)$12,000$11,825
$168,752
$180,577
$7,500
($5,408)$806
$2,898$183,475
$2,898
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Appendix
Appendix Table: Sales Forecast
Sales Forecast
SalesBreadsCoffee/BeveragesLunch Items (Soups & Sandwiches)Pastries/SweetsTotal Sales
Direct Cost of Sales
BreadsCoffee/BeveragesLunch Items (Soups & Sandwiches)
Pastries/SweetsSubtotal Direct Cost of Sales
Jan$3,000
$0$0
$2,000$5,000
Jan
$900$0$0
$800$1,700
Feb$4,800$3,500
$0$4,600
$12,900
Feb
$1,440$1,050
$0
$1,840$4,330
Mar $6,000$3,500$8,000$5,000
$22,500
Mar
$1,800$1,050$3,200
$2,000$8,050
Apr $6,000$3,000$8,000$5,000
$22,000
Apr
$1,800$900
$3,200
$2,000$7,900
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Appendix
Appendix Table: Personnel
Personnel Plan
JanDonna Sharp - Head Baker $2,000Lucy Hamilton $1,750Tara Juniper-Reid - Part-time $750Counter Help - Full Time $1,500Assistant Baker - Part time $750Donovan Hamilton - Bookkeeper $2,000Total People 6Total Payroll $8,750
Feb$2,000$1,750
$750$1,500
$750$2,000
6$8,750
Mar $2,000$1,750
$750$1,500
$750$2,000
6$8,750
Apr $2,000$1,750
$750$1,500
$750$2,000
6$8,750
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Appendix
Appendix Table: General Assumptions
General Assumptions
JanPlan Month 1Current Interest Rate 9.00%Long-term Interest Rate 8.50%Tax Rate 25.00%Other 0.00%Calculated TotalsPayroll Expense $8,750New Accounts Payable $12,593
Feb2
9.00%8.50%
25.00%0.00%
$8,750
$16,139
Mar 3
9.00%8.50%
25.00%0.00%
$8,750
$20,802
Apr 4
9.00%8.50%
25.00%0.00%
$8,750
$19,837
9.8.
25.0.
$8
$20
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Appendix
Appendix Table: Profit and Loss
Pro Forma Profit and Loss
JanSales $5,000Direct Costs of Goods $1,700Production Payroll $0Other $0
------------Cost of Goods Sold $1,700Gross Margin $3,300Gross Margin % 66.00%Expenses:Payroll $8,750
Sales and Marketing and Other Expenses $1,820Depreciation $291Utilities $50Insurance $150Mortgage $900Payroll Taxes 12% $1,050Other $0
------------Total Operating Expenses $13,011Profit Before Interest and Taxes ($9,711)Interest Expense $1,215Taxes Incurred ($2,732)Net Profit ($8,195)Net Profit/Sales -163.90%Include Negative Taxes
Feb$12,900
$4,330$0$0
------------$4,330$8,570
66.43%
$8,750
$1,820$291
$50$150$900
$1,050$0
------------$13,011($4,441)
$1,205($1,412)($4,235)-32.83%
Mar $22,500
$8,050$0$0
------------$8,050
$14,45064.22%
$8,750
$1,820$291
$48$150$900
$1,050$0
------------$13,009
$1,441$1,195
$61$184
0.82%
Apr $22,000
$7,900$0$0
------------$7,900
$14,10064.09%
$8,750
$720$291
$45$150$900
$1,050$0
------------$11,906
$2,194$1,185
$252$756
3.44%
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Appendix
Appendix Table: Cash Flow
Pro Forma Cash Flow
Cash Received
Cash from Operations:Cash SalesCash from Receivables
Subtotal Cash from Operations
Additional Cash Received
Non Operating (Other) IncomeSales Tax, VAT, HST/GST Received 0.00%New Current Borrowing
New Other Liabilities (interest-free)New Long-term LiabilitiesSales of Other Current AssetsSales of Long-term AssetsNew Investment Received
Subtotal Cash Received
Expenditures
Expenditures from Operations:Cash SpendingPayment of Accounts Payable
Subtotal Spent on Operations
Additional Cash Spent
Non Operating (Other) ExpenseSales Tax, VAT, HST/GST Paid OutPrincipal Repayment of Current BorrowingOther Liabilities Principal RepaymentLong-term Liabilities Principal Repayment
Purchase Other Current AssetsPurchase Long-term AssetsDividends
Subtotal Cash Spent
Net Cash Flow
Cash Balance
Jan
$5,000$0
$5,000
$0$0$0$0
$0$0$0$0
$5,000
Jan
$310
$9,893$10,203
$0$0
$1,000$0
$354$0
$0$0
$11,557
($6,557)
$5,535
Feb
$12,900$0
$12,900
$0$0$0$0
$0$0$0$0
$12,900
Feb
$704
$12,712$13,416
$0$0
$1,000$0
$354$0
$0$0
$14,770
($1,870)
$3,664
Mar
$22,500$0
$22,500
$0$0$0$0
$0$0$0$0
$22,500
Mar
$1,222
$16,295$17,517
$0$0
$1,000$0
$354$0
$0$0
$18,871
$3,629
$7,293
A
$22,00$
$22,00
$$$$
$$$$
$22,00
A
$1,11
$20,77$21,88
$$
$1,00$
$35$
$$
$23,23
($1,23
$6,05
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Appendix
Appendix Table: Balance Sheet
Pro Forma Balance Sheet
Assets
Current AssetsCashOther Current AssetsTotal Current AssetsLong-term AssetsLong-term AssetsAccumulated DepreciationTotal Long-term AssetsTotal Assets
Liabilities and Capital
Accounts Payable
Current BorrowingOther Current LiabilitiesSubtotal Current Liabilities
Long-term Liabilities
Total Liabilities
Paid-in Capital
Retained EarningsEarningsTotal CapitalTotal Liabilities and CapitalNet Worth
StartingBalances
$12,092
$0
$12,092
$175,
000
$0
$175,000$187,092
$0 $0
$12,000$12,000
$173,
000
$185,000
$7,
500
($5,408)
$0
$2,092
$187,092
$2,092
Jan$5,535
$0$5,535
$175,000
$291$174,709$180,244
Jan$2,700
($1,000)$12,000$13,700
$172,646
$186,346
$7,500
($5,408)($8,195)($6,103)
$180,244($6,103)
Feb$3,664
$0$3,664
$175,000
$582$174,418$178,082
Feb$6,128
($2,000)$12,000$16,128
$172,292
$188,420
$7,500
($5,408)($12,430)($10,338)$178,082($10,338)
Mar $7,293
$0$7,293
$175,000
$873$174,127$181,420
Mar $10,636($3,000)$12,000$19,636
$171,938
$191,574
$7,500
($5,408)($12,245)($10,153)$181,420($10,153)