Reference no: EM132673774

FINANCIAL ANALYSIS

You will forecast sales and explore very basic financial building blocks.These basic calculations are central to providing focus and measuring financial progress and health. You will create all these numbers--and while there are no absolute right or wrong answers-try to be as practical and real-world as possible. Any business will have certain fixed cost expenses present that are not directly tied to units produced/sold. Businesses will also have certain variable cost expenses that are directly tied to units produced/sold. From these data, you can determine your break-even point in both units sold and dollars.

Referring to your small business venture, discuss and calculate the following:

1. Last week, you set a price for your product/service. Retrieve that to help calculate revenue. Next, decide how many sales (in units) you would make in a year (factoring in all decisions made so far--target market, competition, etc.).What is your gross revenue projection for the year? (unit price x units sold = revenue)

2. There are fixed costs to consider. Give some basic examples of fixed cost expense categories for a business such as yours. Estimate what the associated fixed cost expenses will be on an annual basis for your venture. What is this figure?

3. There are variable costs to consider. Give some basic examples of variable cost expense categories for a business such as yours. Estimate what the associated variable cost expenses will be on a per-unit produced/sold basis. Based on sales projections in #1 above, what then is the total variable cost expenses for the year?

4. Combine total fixed costs and total variable costs. This is your total expenses. What is this figure?

5. Figure your net profit from gross revenue minus total expenses. What is this figure?

6. What is your break-even point in dollars? What is your break-even point in units sold?