Free Samples BSBFIM501 Manage Budgets And Financial Plans
BSBFIM501 Manage Budgets And Financial Plans
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Course Code: BSBFIM501 University: Academies Australasia Polytechnic
Country: Australia
Questions:
You are required to provide the bank or other potential investors/stakeholders a set of up/startup costs and forecasted projected results for your new business or enterprise.
1. Prepare and write an executive summary of your business proposal that you can provide as a description and introduction to your business investors/stakeholders.
2. Create supporting financial templates to calculate start up costs and other budgeted financial projections/forecasts.
3. Write an assumptions document for presentation to the investors /stakeholders or bank.
4. Provide thoughts and calculations on your numbers presented
Answers:
Introduction To Business Investors Or Stakeholders
Vision Statement Of Adventure Travel And Tours Limited
The vision statement of Adventure Travel and Tours Limited is to become one of the well-known tourist resorts in Australia in the eyes of community, people and customer. The start-up tourist resort expects and demands the best that they desire to offer by keeping the service on top of the choice of valued local visitors and tourists (Renz 2016).
Mission Statement Of Adventure Travel And Tours Limited
The mission statement of Adventure Travel and Tours Limited is to offer superior hospitality experience and enhance guest’s maximum satisfaction. In addition, the start-up tourist resort believes in creation of positive work environment for attainment of results to satisfy guests, investors and employees. Adventure Travel and Tours Limited aims at satisfying the tourist and local visitors who actually travel for relaxation (Petty et al. 2015).
Goal Of Adventure Travel And Tours Limited
The goal of Adventure Travel and Tours Limited is to satisfy the need of valued customers and guests by conducting market research.
Objectives Of Adventure Travel And Tours Limited
To exceed in the customer expectations where the start-up company will provide access to luxury services to the valued customers in terms of tours, travels and resort
To maintain 90% occupancy rate at the time of peak periods
To hire experienced and hardworking staff members
Financial Plan
Basic Assumptions
BASIC ASSUMPTIONS:
Type of Business:
Company
Nature of Project:
Tours and Travels
Capital Structure:
Equity
50%
Non-Current Debts
50%
Types of Debts:
5 yr. Bonds at Par
0%
5 years Loan from Bank
100%
Required Rate of Return on Equity
10.00%
Interest Rate on Loan:
Bonds
0.00%
Loan from Bank
8.50%
Tax Rate
30%
Inflation Rate
0.00%
Mode of Sales:
Cash
100%
Credit
0%
Cash Collection Period
30 days
Mode of Purchase:
Cash
50%
Credit
50%
Cash Payment Period
60 days
Wages & Salary Payment
15th day on the following month
Electricity, Telephone & Internet payment
7th day on the following month
Other Operating Payments
Last day of the month
Insurance & Membership Fees
6 months’ Advance
Depreciation Method:
Building & Improvement
Straight Line Method
Furniture & Fittings
10% – Reducing Balance Method
Computer, Electrical Equipment & Other Accessories
30% – Reducing Balance Method
Kitchen Appliances, Cutleries & Cookeries
40% – Reducing Balance Method
Motor Vehicle
Straight Line Method
Explanation
Motor vehicle and building & improvement will be depreciated by using straight-line method
Computer, Electrical Equipment, Kitchen appliances, and furniture & Fittings will be depreciated by using reducing balance method
Mode of payment will be 50% of cash and 50% on credit
Loan from bank will taken at 8.50% (Madura 2014)
Start-Up Cost
Particulars
Amount
Residual Value
Non-Current Assets:
Land
$2,500,000
$0
Building & Improvement
$5,000,000
$1,500,000
Furniture & Fittings
$1,500,000
$450,000
Computer, Electrical Equipment & Other Accessories
$3,000,000
$0
Kitchen Appliances, Cutleries & Cookeries
$1,250,000
$0
Motor Vehicle
$1,000,000
$300,000
Preliminary Expenses:
Land Registration
$65,000
Business Registration
$125,000
License Fees
$50,000
Deposit for Electricity
$72,000
$72,000
Deposit for Telephone & Internet
$35,000
$35,000
Recruitment Cost
$125,000
Share Issuance Cost
$30,000
Other Miscellaneous Expenses
$200,000
Working Capital:
Purchase of Food, Drinks & Other Supplies
$2,250,000
Wages & Salaries
$500,000
Power & Fuel
$200,000
Promotion & Advertisement
$150,000
General Administrative Expenses
$300,000
$3,400,000
TOTAL START UP COST
$18,352,000
Capital Funding:
Equity Capital
$9,176,000
Loan From Bank
$9,176,000
TOTAL CAPITAL EMPLOYED
$18,352,000
Explanation
Total start-up cost that will be required for starting Adventure Tours and Travel Limited will be $18352000.
In case of capital funding, the start-up business will apply for loan from bank amounting to $9176000, equity capital amounting to $9176000 (Lasher 2013)
Depreciation And Amortization Schedule
DEPRECIATION & AMORTIZATION SCHEDULE:
Particulars
Opening Balance
Salvage Value
Estimated Life
Depreciation Rate
Period
Depreciation Amount
Closing Balance
(in Years)
Building & Improvements:
Year 1
$5,000,000
$1,500,000
25
1
$140,000
$4,860,000
Year 2
$4,860,000
$1,500,000
24
1
$140,000
$4,720,000
Year 3
$4,720,000
$1,500,000
23
1
$140,000
$4,580,000
Furniture & Fittings:
Year 1
$1,500,000
$450,000
12
10%
1
$150,000
$1,350,000
Year 2
$1,350,000
$450,000
11
10%
1
$135,000
$1,215,000
Year 3
$1,215,000
$450,000
10
10%
1
$121,500
$1,093,500
Computer, Electronic Equipment & Other Accessories:
Year 1
$3,000,000
$0
7
30%
1
$900,000
$2,100,000
Year 2
$2,100,000
$0
6
30%
1
$630,000
$1,470,000
Year 3
$1,470,000
$0
5
30%
1
$441,000
$1,029,000
Kitchen Appliances, Cutleries & Crookeries:
Year 1
$1,250,000
$0
5
40%
1
$500,000
$750,000
Year 2
$750,000
$0
4
40%
1
$300,000
$450,000
Year 3
$450,000
$0
3
40%
1
$180,000
$270,000
Motor Vehicle:
Year 1
$1,000,000
$300,000
10
1
$70,000
$930,000
Year 2
$930,000
$300,000
9
1
$70,000
$860,000
Year 3
$860,000
$300,000
8
1
$70,000
$790,000
Projected Room Bookings
PROJECTED ROOM BOOKINGS:
1st Year
2nd Year
3rd Year
Particulars
Qt.1
Qt.2
Qt.3
Qt.4
Qt.1
Qt.2
Qt.3
Qt.4
Qt.1
Qt.2
Qt.3
Qt.4
Nature Villa – Room Available
20
20
20
20
20
25
25
25
35
35
35
35
Occupancy Rate
50%
55%
60%
80%
80%
60%
70%
85%
87%
65%
67%
85%
Projected Booking – Nature Villa
900
990
1080
1440
1440
1350
1575
1913
2740.5
2047.5
2110.5
2677.5
Palm Cottage – Room Available
15
15
15
15
15
15
15
20
20
20
20
20
Occupancy Rate
60%
65%
67%
85%
85%
70%
72%
87%
88%
72%
74%
92%
Projected Booking – Palm Cottage
810
878
905
1148
1148
945
972
1566
1584
1296
1332
1656
Deluxe Suit – Room Available
3
3
3
3
3
3
3
3
5
5
5
5
Occupancy Rate
90%
75%
72%
92%
92%
75%
75%
94%
90%
78%
80%
92%
Projected Booking – Deluxe Suit
243
203
194
248
248
203
203
254
405
351
360
414
Projected Sales Revenue
PROJECTED SALES REVENUE:-
1st Year
2nd Year
3rd Year
Particulars
Qt.1
Qt.2
Qt.3
Qt.4
Qt.1
Qt.2
Qt.3
Qt.4
Qt.1
Qt.2
Qt.3
Qt.4
Nature Villa – Room Booking
900
990
1080
1440
1440
1350
1575
1912.5
2740.5
2047.5
2110.5
2677.5
Average Room Rent
$8,500
$8,500
$8,500
$8,500
$8,500
$8,500
$8,500
$8,500
$10,000
$10,000
$10,000
$10,000
Projected Room Rent – Nature Villa
$7,650,000
$8,415,000
$9,180,000
$12,240,000
$12,240,000
$11,475,000
$13,387,500
$16,256,250
$27,405,000
$20,475,000
$21,105,000
$26,775,000
Palm Cottage – Room Booking
810
878
905
1148
1148
945
972
1566
1584
1296
1332
1656
Average Room Rent
$12,000
$12,000
$12,000
$12,000
$12,000
$12,000
$12,000
$12,000
$13,000
$13,000
$13,000
$13,000
Projected Room Rent – Palm Cottage
$9,720,000
$10,530,000
$10,854,000
$13,770,000
$13,770,000
$11,340,000
$11,664,000
$18,792,000
$20,592,000
$16,848,000
$17,316,000
$21,528,000
Deluxe Suit – Room Booking
243
203
194
248
248
203
203
254
405
351
360
414
Average Room Rent
$15,000
$15,000
$15,000
$15,000
$15,000
$15,000
$15,000
$15,000
$17,500
$17,500
$17,500
$17,500
Projected Room Rent – Deluxe Suit
$3,645,000
$3,037,500
$2,916,000
$3,726,000
$3,726,000
$3,037,500
$3,037,500
$3,807,000
$7,087,500
$6,142,500
$6,300,000
$7,245,000
Average Guest per Room
2
2
2
2
2
2
2
2
2
2
2
2
Average Fooding & Drinking Charges per Guest
$4,000
$4,000
$4,000
$4,000
$4,000
$4,000
$4,000
$4,000
$4,500
$4,500
$4,500
$4,500
Total Revenue from Fooding & Drinking
$15,624,000
$16,560,000
$17,431,200
$22,687,200
$22,687,200
$19,980,000
$21,996,000
$29,858,400
$42,565,500
$33,250,500
$34,222,500
$42,727,500
Projected Expenses
PROJECTED EXPENSES:-
1st Year
2nd Year
3rd Year
Particulars
Qt.1
Qt.2
Qt.3
Qt.4
Qt.1
Qt.2
Qt.3
Qt.4
Qt.1
Qt.2
Qt.3
Qt.4
One-Time Start-Up Cost:
Land
$2,500,000
Building & Improvement
$5,000,000
Furniture & Fittings
$1,500,000
Computer, Electrical Equipment & Other Accessories
$3,000,000
Kitchen Appliances, Cutleries & Crookeries
$1,250,000
Motor Vehicle
$1,000,000
Land Registration
$65,000
Business Registration
$125,000
License Fees
$50,000
Deposit for Electricity
$72,000
Deposit for Telephone & Internet
$35,000
Recruitment Cost
$125,000
Share Issuance Cost
$30,000
Other Miscellaneous Expenses
$200,000
Fixed Operating Expenses:
Depreciation on Building & Improvement
$35,000
$35,000
$35,000
$35,000
$35,000
$35,000
$35,000
$35,000
$35,000
$35,000
$35,000
$35,000
Depreciation on Furniture & Fittings
$37,500
$37,500
$37,500
$37,500
$33,750
$33,750
$33,750
$33,750
$30,375
$30,375
$30,375
$30,375
Depreciation on Computer, Electronic Equipment & Other Devices
$225,000
$225,000
$225,000
$225,000
$157,500
$157,500
$157,500
$157,500
$110,250
$110,250
$110,250
$110,250
Depreciation on Kitchen Appliances, Cutleries & Cookeries
$125,000
$125,000
$125,000
$125,000
$75,000
$75,000
$75,000
$75,000
$45,000
$45,000
$45,000
$45,000
Depreciation on Motor Vehicles
$17,500
$17,500
$17,500
$17,500
$17,500
$17,500
$17,500
$17,500
$17,500
$17,500
$17,500
$17,500
Wages & Salary to Permanent Staffs
$450,000
$1,000,000
$1,000,000
$1,000,000
$1,100,000
$1,100,000
$1,100,000
$1,100,000
$1,200,000
$1,200,000
$1,200,000
$1,200,000
Membership to Hotel Association
$2,000
$2,000
$2,000
$2,000
$2,000
$2,000
$2,000
$2,000
$2,500
$2,500
$2,500
$2,500
Insurance
$5,000
$5,000
$5,000
$5,000
$5,000
$5,000
$5,000
$5,000
$6,000
$6,000
$6,000
$6,000
Advertisement & Promotion
$50,000
$125,000
$50,000
$50,000
$62,500
$62,500
$62,500
$62,500
$68,750
$68,750
$68,750
$68,750
Variable Operating Expenses:
Cost of Fooding & Drinking
$5,468,400
$5,796,000
$6,100,920
$7,940,520
$7,940,520
$6,993,000
$7,698,600
$10,450,440
$14,897,925
$11,637,675
$11,977,875
$14,954,625
Wages to Temporary Staffs
$2,613,150
$2,755,125
$2,890,620
$3,755,520
$3,755,520
$3,290,625
$3,604,050
$4,928,603
$7,010,775
$5,498,325
$5,658,300
$7,050,150
Supplies Expenses
$4,324,050
$4,539,375
$4,749,840
$6,161,940
$6,161,940
$5,376,375
$5,863,050
$8,067,668
$11,455,088
$9,013,613
$9,274,838
$11,536,763
Electricity
$4,984,200
$5,224,500
$5,461,560
$7,081,560
$7,081,560
$6,169,500
$6,717,600
$9,263,970
$13,145,175
$10,355,625
$10,655,325
$13,245,975
Power & Fuel
$2,868,975
$3,033,563
$3,188,430
$4,146,480
$4,146,480
$3,643,313
$4,001,625
$5,450,141
$7,761,938
$6,074,213
$6,251,400
$7,797,825
Telephone & Internet
$498,420
$522,450
$546,156
$708,156
$708,156
$616,950
$671,760
$926,397
$1,314,518
$1,035,563
$1,065,533
$1,324,598
Cost of Tour
$317,363
$336,375
$354,071
$460,834
$553,001
$487,013
$536,153
$727,799
$1,106,703
$864,513
$889,785
$1,110,915
Cleaning Charges
$2,882,700
$3,026,250
$3,166,560
$4,107,960
$4,107,960
$3,584,250
$3,908,700
$5,378,445
$7,636,725
$6,009,075
$6,183,225
$7,691,175
Maintenance Charges
$4,324,050
$4,539,375
$4,749,840
$6,161,940
$6,161,940
$5,376,375
$5,863,050
$8,067,668
$11,455,088
$9,013,613
$9,274,838
$11,536,763
Special Discount on Corporate Booking
$525,375
$549,563
$573,750
$743,400
$743,400
$646,313
$702,225
$971,381
$1,377,113
$1,086,638
$1,118,025
$1,388,700
Commission to Travel Agencies
$210,150
$219,825
$229,500
$297,360
$297,360
$258,525
$280,890
$388,553
$550,845
$434,655
$447,210
$555,480
TOTAL EXPENSES
$44,915,833
$32,114,400
$33,508,247
$43,062,670
$43,146,087
$37,930,488
$41,335,953
$56,109,313
$79,227,266
$62,538,881
$64,311,728
$79,708,343
Explanation
The net cash flow from operating activities in the first quarter of initial year arrives at $13,716,158 and gradually increases till third quarter of final year as it arrives at $24,673,103 (Karadag 2015).
The net cash flow from investing activities in the first quarter of initial year arrives at ($14,952,000) and gradually decreases till third quarter of final year as it arrives at ($37,500,000). The negative figure in the investing activities signifies that Adventure Tours and Travels Limited need to purchase non-current assets such as machinery, equipment for the company.
The net cash flow from financing activities in the first quarter of initial year arrives at $18,157,010 and gradually decreases till third quarter of final year as it arrives at ($6,618,190). Adventure Tours and Travel limited will issue shares, take loan from bank in the initial years of operations (Brigham and Ehrhardt 2013).
Working Capital Management
Working Capital Management:
Particulars
Year 1
Year 2
Year 3
Quarter 1
Quarter 2
Quarter 3
Quarter 4
Quarter 1
Quarter 2
Quarter 3
Quarter 4
Quarter 1
Quarter 2
Quarter 3
Quarter 4
Current Assets:
Cash at Bank
$16,921,168
$24,611,521
$38,690,831
$51,471,289
$46,601,520
$56,775,403
$73,625,886
$91,899,874
$95,075,345
$111,624,260
$139,946,717
$120,501,630
Total Current Assets
$16,921,168
$24,611,521
$38,690,831
$51,471,289
$46,601,520
$56,775,403
$73,625,886
$91,899,874
$95,075,345
$111,624,260
$139,946,717
$120,501,630
Current Liabilities:
Current Liabilities:
Accounts Payable
$3,264,150
$3,445,125
$3,616,920
$4,700,820
$4,700,820
$4,123,125
$4,520,550
$6,172,703
$8,784,338
$6,883,763
$7,084,238
$8,830,463
Accrued Expenses:
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Salary to Staff
$1,021,050
$1,251,708
$1,296,873
$1,585,173
$1,618,507
$1,463,542
$1,568,017
$2,009,534
$2,736,925
$2,232,775
$2,286,100
$2,750,050
Electricity, Internet & Other Resources
$1,827,540
$1,915,650
$2,002,572
$2,596,572
$2,596,572
$2,262,150
$2,463,120
$3,396,789
$4,819,898
$3,797,063
$3,906,953
$4,856,858
Total Current Liabilities
$6,112,740
$6,612,483
$6,916,365
$8,882,565
$8,915,899
$7,848,817
$8,551,687
$11,579,026
$16,341,160
$12,913,600
$13,277,290
$16,437,370
Net Working Capital
$10,808,428
$17,999,038
$31,774,465
$42,588,724
$37,685,621
$48,926,587
$65,074,200
$80,320,848
$78,734,185
$98,710,660
$126,669,427
$104,064,260
Explanation
The start-up company working capital for first quarter arrives at $10808428 and last quarter of third year arrives at $104064260. By the end of third year, there will be enough working capital for the company so that they can easily meet the day-to-day working of business practices (Brigham and Daves 2014).
Break-Even Analysis
BREAK EVEN ANALYSIS:
Particulars
Year 1
Year 2
Year 3
Quarter 1
Quarter 2
Quarter 3
Quarter 4
Quarter 1
Quarter 2
Quarter 3
Quarter 4
Quarter 1
Quarter 2
Quarter 3
Quarter 4
Weighted Average Room Rent
$10,760
$10,395
$10,395
$10,395
$10,395
$10,174
$10,174
$10,365
$11,625
$11,625
$11,625
$11,625
Fooding & Drinking Charges per room
$8,000
$8,000
$8,000
$8,000
$8,000
$8,000
$8,000
$8,000
$9,000
$9,000
$9,000
$9,000
Total Revenue per Booking
$18,760
$18,395
$18,395
$18,395
$18,395
$18,174
$18,174
$18,365
$20,625
$20,625
$20,625
$20,625
Variable Expenses per Unit:
Cost of Fooding & Drinking
$2,800
$2,800
$2,800
$2,800
$2,800
$2,800
$2,800
$2,800
$3,150
$3,150
$3,150
$3,150
Wages to Temporary Staffs
$1,338
$1,331
$1,327
$1,324
$1,324
$1,318
$1,311
$1,321
$1,482
$1,488
$1,488
$1,485
Supplies Expenses
$2,214
$2,193
$2,180
$2,173
$2,173
$2,153
$2,132
$2,162
$2,422
$2,440
$2,439
$2,430
Electricity
$2,552
$2,524
$2,507
$2,497
$2,497
$2,470
$2,443
$2,482
$2,779
$2,803
$2,802
$2,790
Power & Fuel
$1,469
$1,465
$1,463
$1,462
$1,462
$1,459
$1,455
$1,460
$1,641
$1,644
$1,644
$1,643
Telephone & Internet
$255
$252
$251
$250
$250
$247
$244
$248
$278
$280
$280
$279
Cleaning Charges
$1,476
$1,462
$1,453
$1,449
$1,449
$1,435
$1,422
$1,441
$1,615
$1,626
$1,626
$1,620
Maintenance Charges
$2,214
$2,193
$2,180
$2,173
$2,173
$2,153
$2,132
$2,162
$2,422
$2,440
$2,439
$2,430
Special Discount on Corporate Booking
$269
$265
$263
$262
$262
$259
$255
$260
$291
$294
$294
$293
Commission to Travel Agencies
$108
$106
$105
$105
$105
$104
$102
$104
$116
$118
$118
$117
Total Variable Expenses per booking
$14,695
$14,592
$14,529
$14,494
$14,494
$14,396
$14,298
$14,440
$16,197
$16,283
$16,280
$16,236
Contribution Margin per Booking
$4,065
$3,802
$3,866
$3,900
$3,900
$3,778
$3,877
$3,925
$4,428
$4,342
$4,345
$4,389
Depreciation on Building & Improvement
$35,000
$35,000
$35,000
$35,000
$35,000
$35,000
$35,000
$35,000
$35,000
$35,000
$35,000
$35,000
Depreciation on Furniture & Fittings
$37,500
$37,500
$37,500
$37,500
$33,750
$33,750
$33,750
$33,750
$30,375
$30,375
$30,375
$30,375
Depreciation on Computer, Electronic Equipment & Other Devices
$225,000
$225,000
$225,000
$225,000
$157,500
$157,500
$157,500
$157,500
$110,250
$110,250
$110,250
$110,250
Depreciation on Kitchen Appliances, Cutleries & Crookeries
$125,000
$125,000
$125,000
$125,000
$75,000
$75,000
$75,000
$75,000
$45,000
$45,000
$45,000
$45,000
Depreciation on Motor Vehicles
$17,500
$17,500
$17,500
$17,500
$17,500
$17,500
$17,500
$17,500
$17,500
$17,500
$17,500
$17,500
Wages & Salary to Permanent Staffs
$450,000
$1,000,000
$1,000,000
$1,000,000
$1,100,000
$1,100,000
$1,100,000
$1,100,000
$1,200,000
$1,200,000
$1,200,000
$1,200,000
Membership to Hotel Association
$2,000
$2,000
$2,000
$2,000
$2,000
$2,000
$2,000
$2,000
$2,500
$2,500
$2,500
$2,500
Insurance
$5,000
$5,000
$5,000
$5,000
$5,000
$5,000
$5,000
$5,000
$6,000
$6,000
$6,000
$6,000
Advertisement & Promotion
$50,000
$125,000
$50,000
$50,000
$62,500
$62,500
$62,500
$62,500
$68,750
$68,750
$68,750
$68,750
Total Fixed Expenses
$947,000
$1,572,000
$1,497,000
$1,497,000
$1,488,250
$1,488,250
$1,488,250
$1,488,250
$1,515,375
$1,515,375
$1,515,375
$1,515,375
Break Even Sales (in Units)
233
413
387
384
382
394
384
379
342
349
349
345
Break Even Sales (in amount)
$4,370,175
$7,604,701
$7,123,278
$7,060,246
$7,018,979
$7,159,493
$6,977,070
$6,963,529
$7,058,901
$7,198,856
$7,194,049
$7,121,685
Outcome Results
The break-even sales in unit is at 233 for first quarter of operations and end up with 345 for the last quarter of third year of operations that is less than the projected sales generated from rooms occupancy (Arnold 2013)
The break-even sales in amount is even low than the projected sales generated from rooms occupancy
Explanation
The initial investment of the start-up tours and travel companies arrives at $18,352,000.
To attain success in the business, the start-up company NPV will arrive at $80,935,265 for the initial 3 years of business operations
Projected Ratio Analysis
RATIO ANALYSIS:
Particulars
Year 1
Year 2
Year 3
Quarter 1
Quarter 2
Quarter 3
Quarter 4
Quarter 1
Quarter 2
Quarter 3
Quarter 4
Quarter 1
Quarter 2
Quarter 3
Quarter 4
Total Revenue
$36,601,875
$38,510,438
$40,352,175
$52,388,775
$52,530,570
$45,935,438
$50,207,625
$68,861,959
$97,975,508
$76,959,383
$79,194,375
$98,595,900
Net Profit
$6,968,428
$6,750,610
$7,222,688
$9,874,515
$9,932,894
$8,456,273
$9,378,908
$13,529,037
$19,930,365
$15,312,150
$15,805,683
$20,081,268
Current Assets
$16,921,168
$24,611,521
$38,690,831
$51,471,289
$46,601,520
$56,775,403
$73,625,886
$91,899,874
$95,075,345
$111,624,260
$139,946,717
$120,501,630
Current Liabilities
$17,379,268
$19,904,195
$22,374,883
$27,303,437
$21,071,767
$22,541,566
$26,058,109
$33,144,159
$31,496,269
$32,662,354
$37,767,749
$40,529,009
Owner’s Equity
$9,176,000
$9,176,000
$9,176,000
$9,176,000
$9,176,000
$9,176,000
$9,176,000
$9,176,000
$9,176,000
$9,176,000
$9,176,000
$9,176,000
Net Profit Margin
19.04%
17.53%
17.90%
18.85%
18.91%
18.41%
18.68%
19.65%
20.34%
19.90%
19.96%
20.37%
Current Ratio
0.974
1.236
1.729
1.885
2.212
2.519
2.825
2.773
3.019
3.418
3.705
2.973
Return on Equity
0.759
0.736
0.787
1.076
1.082
0.922
1.022
1.474
2.172
1.669
1.723
2.188
Explanation
From the above projected ratio analysis figures, business investors and stakeholders will be informed about Adventure Tours and Travels Limited operations. The start-up tours and Travels Company will be achieving net profit margin at 19.04% in the first year of operations and end at 20.37% in the third year of operations. The current ratio will be at 0.97 in the initial stage of year and then it will lead to 2.97 where the company can easily meet the short-term obligations in the most appropriate way. Return on equity will be at 0.759 in the first year and 2.18 in the third year of operations for Adventure Tours and Travels Limited.
Reference List
Arnold, G., 2013. Corporate financial management. Pearson Higher Ed.
Brigham, E.F. and Daves, P.R., 2014. Intermediate Financial Management. Cengage Learning.
Brigham, E.F. and Ehrhardt, M.C., 2013. Financial management: Theory & practice. Cengage Learning.
Karadag, H., 2015. Financial management challenges in small and medium-sized enterprises: A strategic management approach. Emerging Markets Journal, 5(1), p.26.
Lasher, W.R., 2013. Practical financial management. Nelson Education.
Madura, J., 2014. International financial management. Nelson Education.
Petty, J.W., Titman, S., Keown, A.J., Martin, P., Martin, J.D. and Burrow, M., 2015. Financial management: Principles and applications. Pearson Higher Education AU.
Renz, D.O., 2016. The Jossey-Bass handbook of nonprofit leadership and management. John Wiley & Sons.
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