This case (found at the end of chapter 9) consists of the financial exhibits from the P’kolino case analyzed in a previous lesson. The P’kolino financials are pretty detailed; they should begin to acquaint the new entrepreneur with the sort of financial planning needed to get a substantial enterprise off the ground. Please pay special attention to the financial assumptions—numbers alone are just gobbledegook. They need to be based on real assumptions connecting projections to the real world.
Please answer the following questions in the discussion: How do the common-sized income sheet ratios compare to industry standards? Can you explain the variances in a way the makes the projections seem sound? How do the revenues per employee compare to industry standards? Again, can you explain the variances? Do the financial projections accurately capture all the expenses that are implied in the written plan (refer back to the previous case)? Is the proposed financing sufficient to cover the company’s cash flow needs? What happens if sales are not as high or quick to materialize as expected?
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