THE FINANCIAL STATEMENTS
KEY FINANCIAL INDICATORS
ACCOUNTING ISSUES
WHAT-IF ... SENSITIVITY MODELS
TIMING MATTERS
JUSTIFYING INVESTMENT
SCORECARDS AND VALUE MANAGEMENT

Scenario Inputs

Below is a summary of the scenario inputs and at the bottom of the page are links to download:

  • the scenario inputs (pdf)
  • a completed scenario (pdf)
  • the spreadsheet model (Excel)

The spreadsheet model will be used in the upcoming videos – no need to look at it yet!

The Scenario

Here are the input variables for our VOIP kit scenario:

  • Capital Transactions
    • our parent company will invest £200,000 (equity)
    • a loan draw-down of £100,000 (ie we can borrow any amount up to this figure) will be guaranteed by our parent company.
    • interest will be payable at 10% on any borrowing
    • equipment will cost £150,000
    • it will be straight-line depreciated over 7 years
  • Sales, Promotion and Expenses
    • the contribution margin will be 30%
    • the average order value will be £3,000
    • sales will be driven by marketing and it is estimated that on average, £200 of marketing spend will yield 1 order
    • monthly marketing spend is initially set at £10,000 per month
    • monthly overheads will be £8,000
  • Trading Cashflow
    • receipts from customers will be:
      • month 1 – 15%
      • month 2 – 55%
      • month 3 – 30%

[What this means is that for the sales made in month 1, 15% of customers will pay in month 1, 55% will pay in month 2 and 30% will pay in month 3. This pattern will be repeated through the year.]

  • COGS payments to suppliers
    • month 1 – 20%
    • month 2 – 70%
    • month 3 – 10%

[As with sales, we will pay our suppliers for goods received in month 1, months 1 to 3 as shown.]

  • Tax Rate – to be applied to Earnings Before Tax
  • Dividend Rate – the percentage of after tax profit that will be paid out as dividends

Below is a screenshot of the variables entered into the spreadsheet model.

Download Links