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Financial Modeling for the Social Sector

Assignment 5

Insert your work from previous assignment

Insert your assumptions and responses

Calculated by formula
Scenario 1

Scenario 2

Scenario 3

Scenario 4

METHOD A - IDENTIFYING PRICE POINT AND MARGINS - Variable Costs are known

(a)=

Variable Costs (per single transaction)


Cost items (i.e. cost for final delivery)
Cost items (i.e. packaging and label cost)
Cost items (i.e. cost for the loyalty award)
Cost items (Seed)
Cost items (Pesticides, weedscontrol)
Cost items (Fertilizer)
Cost items (if any)
Cost items (if any)
(b)= (c+d)/(e) Operational Unit's Whole Cost (per single transaction)
(c)
Total Running Cost (from Module 3)
Total Investment Cost (from Module 4)
(d)
(e)
Operational Unit's monthly customer transaction numbers at steady state (from Module 2)
(f)= (a+b)
Required Price Point at the target sales level
(f-a)/(f) Gross Margin (%) at that Price Point

47.50
2.00
8.00
1.50
9.00
12.00
15.00

40.50
2.50
6.00
2.00
8.00
10.00
12.00

9,120.33 15,025.50
22,228
20,696
5,133
9,355
3
2
9,167.83 15,066.00
99.5%
99.7%

60.00
3.00
10.00
5.00
10.00
15.00
17.00

49.00
5.00
6.00
8.00
8.00
10.00
12.00

34,369.00
24,716
9,653
1
34,429.00
99.8%

13,315.00
24,866
15,079
3
13,364.00
99.6%

Scenario 3

Scenario 4

How to use this template

1:
2:
3:
4:

Estimate the total variable costs of your product/service (per single transaction) by filling in the grey area
Complete (c), (d) and (e) by referring to your previous assignments
Evaluate the calculated 'Required price point at the target sales level' and see if it is realistic or not
Use the 'scenario' column to experiment what needs to be true to reach the ideal price point level that you expect your customer to tolerate
Is there any room for your variable costs to come down? Or do you need to revisit your work from previous assignments? Share your reflections below

REFLECTION

Scenario 1

Scenario 2

METHOD B - IDENTIFYING PRICE POINT AND MARGINS

(b)= (c+d)/(e) Operational Unit's Whole Cost (per single transaction)


(c)
Total Running Cost (from Module 3)
Total Investment Cost (from Module 4)
(d)
(e)
Operational Unit's monthly customer transaction numbers at steady state (from Module 2)
(Scenario 1)
Price Point
Gross Margin
Total Variable Costs (implied)

Lowest range
2.75
109%
-0.25

(Scenario 2)
Price Point
Gross Margin
Total Variable Costs (implied)

Lowest range
2.75
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(Scenario 3)
Price Point
Gross Margin
Total Variable Costs (implied)

Lowest range
5.00
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(Scenario 4)
Price Point
Gross Margin
Total Variable Costs (implied)

Lowest range
5.00
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3.75
80%
0.75

5.00
60%
2.00

3.00
7,192
1,820
3,000
Highest
6.45
47%
3.45

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range
8.00
38%
5.00

Highest range
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Highest range
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Highest range
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How to use this template

1:
2:
3:
4:

Complete (c), (d) and (e) by referring to your previous assignments


Select 5 separate price points within a range that you think your customer/beneficiary can accept and fill in the grey area
Evaluate the calculated gross margin and implied total variable costs' and see if it is realistic or not
Use the 'scenario' column to experiment what needs to be true to reach the ideal price point level that also seem realistic for your business
Do you need to adjust your price range to make sense? Or do you need to revisit your work from previous assignments? Share your reflections below

REFLECTION

All use, reproduction and distribution of this work is subject to a CC-BY-NC-ND license.

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Financial Modeling for the Social Sector


Assignment 4
-

Insert your work from previous assignment

Insert your assumptions and responses

Calculated by formula

INVESTMENT COSTS (per OPERATIONAL UNIT)


(1)= (e/f)
Start-up Working Capital Costs (per Month)
(a)
Operational Unit's monthly HR cost
(b)
Operational Unit's monthly General Operating cost
(a+b)
Operational Unit's Total Start-up Working Capital
(d)= (a+b)/2
Average Monthly Start-up Working Capital
(c)
Number of Months expected for a new operational unit to reach its steady-state
(e)= (c*d)
Total Start-up Working Capital Costs (during the start-up period)
(f)
Number of Months of investment/Loan Period
(2)= (m/f)
(g)
(h)
(k)= (g+h)
(i)
(j)
(l)= (i+j)
(m)= (k*l)
=(f)

Cost of Funds (per Month)


Operational Unit's total capital asset costs (Note: not depreciation cost)
Operational Unit's Start-up Working Capital costs (calculated as 'e' above)
Total Investment Funds required
Risk Free Rate (%)
Risk Premium (%)
Required Rate of Return/Rate on Investment (ROI)
Total Cost of Funds
Number of Months of investment/Loan Period

(3)= (n+o)/(1-p) - (n+o)


Tax Costs (per Month)
(n)= (e/f)
Operational Unit's Monthly Start-up Working Capital Costs (calculated as '1' above)
(o)= (m/f)
Operational Unit's Monthly Cost of Funds (calculated as '2' above)
(p)
Tax rate (%)
(A)= (1+2+3)
Investment Costs for Operational Unit
INVESTMENT COST (for HEAD OFFICE)
(4)= (E/f)
Start-up Working Capital (per Month)
(A)
Head Office's monthly HR cost
(B)
Head Office's monthly General Operating cost
(A+B)
Head Office's Total Start-up Working Capital
(D)= (A+B)/2
Average Monthly Start-up Working Capital
=(c)
Number of Months expected for a new operational unit to reach its steady-state
(E)= (c*D)
Total Start-up Working Capital required to reach steady-state
(5)= (M/f)
(G)
(H)
(K)= (G+H)
=(l)
(M)= (K*l)
=(f)

Cost of Funds (per Month)


Head Office's total capital asset costs (Note: not depreciation cost)
Head Office's Start-up Working Capital costs (calculated as 'E' above)
Total Investment Funds required
Required Rate of Return/Rate on Investment (ROI)
Total Cost of Funds
Number of Months of investment/Loan Period

(6)= (N+O)/(1-p) - (N+O) Tax Cost (per Month)


(N)= (E/f)
Head Office's Monthly Start-up Working Capital (calculated as '4' above)
(O)= (M/f)
Head Office's Monthly Cost of Funds (calculated as '5' above)
(B)= (4+5+6)
Investment Costs for Head Office
OPERATIONAL UNIT'S TOTAL INVESTMENT COST
(7)
Total number of Operational Units at steady state (use the figure from Assignment 3)
(C)= (B)/(7)
Allocated Head Office Cost (to each Operational Unit)
(A + C)
Total Investment Costs that each Operational Unit needs to cover

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Example

Scenario

Scenario

Scenario

865
5,265
1,226
6,491
3,246
16
51,928
60

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5,265
1,226
6,491
3,246

#DIV/0!
5,265
1,226
6,491
3,246

#DIV/0!
5,265
1,226
6,491
3,246

377
12,763
51,928
64,691

#DIV/0!
12,763
12,763

#DIV/0!
12,763
12,763

#DIV/0!
12,763
12,763

35%
22,642
60

0%
-

0%
-

0%
-

483
865
377
28%
1,726

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9,797
4,484
14,281
7,141
-

#DIV/0!
9,797
4,484
14,281
7,141
-

#DIV/0!
9,797
4,484
14,281
7,141
-

#DIV/0!
24,000
24,000
0%
-

#DIV/0!
24,000
24,000
0%
-

#DIV/0!
24,000
24,000
0%
-

1,054
1,904
806
3,765

#DIV/0!
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40
94
1,820

40
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40
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40
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1,904
9,797
4,484
14,281
7,141
16
114,248
806
24,000
114,248
138,248
35%
48,387
60

Financial Modeling for the Social Sector_x000D_Assignment 3

- Insert your work from previous assignment


- Insert your assumptions and responses
- Calculated by formula
RUNNING COST (per OPERATIONAL UNIT)
(1)
Human Resource Cost (per Month)
(c)
(a)
(b)
(d) = (a * b)
(c / d)

Scenario 1

Scenario 2

Scenario 3

Scenario 4

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Salesperson
Operational Unit's monthly customer transaction numbers at steady state
- Days available for salespeople for doing sales (per Month)
- The number of sales transactions performed each day
Number of sales transactions per salesperson (per Month) (=client load)

Number of salesperson required


- Wage and benefits (per Month per individual)
- Transportation allowance (per Month per individual)
- Phone allowance (per Month per individual)
- Other costs (per Month individual)

(sum)

HR cost for everyone in this position


(insert position)

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HR cost for everyone in this position

(insert position)
HR cost for everyone in this position

(insert position)
HR cost for everyone in this position

(insert position)
HR cost for everyone in this position
(insert position)
(2)

HR cost for everyone in this position


Capital Asset Depreciation Cost (per Month)
Capital asset #1

(e)

Number of units

(f)

Cost per unit

(g)
(h) = (e * f / g)

Useful lifespan for this capital asset (in month)


Depreciation cost on this capital asset
(insert capital asset)
Depreciation cost on this capital asset
(insert capital asset)
Depreciation cost on this capital asset
(insert capital asset)
Depreciation cost on this capital asset
(insert capital asset)
Depreciation cost on this capital asset

(3)

General Operating Costs (per Month)


General administration costs
Costs of selling or deliverying

(A) = (1+2+3)

Costs for marketing and advertising


Running Costs for Operational Unit

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Financial Modeling for the Social Sector_x000D_Assignment 3

RUNNING COST (for HEAD OFFICE)


(4)
Human Resource Costs (per Month)
Territory Manager
(k)
The entire population of the entire geography that the venture eventually aims to serve
(l)
Total population that can be reached by a single Operational Unit
(m) = (k / l)
Total Number of Operational Unit at steady state
(n)
- # of days per visit
(o)
- # of visits to each Operational Unit on average (per Month)
(p) = (n * o)
Number of days spent by a territory manager for a vist to a single Operational Unit
(q)
Days available for territory manager to visit Operational Units (per Month)
(r) = (m / (q/p))
Number of territory managers required
- Wage and benefits (per Month per individual)
- Transportation allowance (per Month per individual)
- Phone allowance (per Month per individual)
- Other costs (per Month individual)
(sum)
HR cost for everyone in this position
(insert position)
HR cost for everyone in this position
(insert position)
HR cost for everyone in this position
(insert position)
HR cost for everyone in this position
(insert position)
HR cost for everyone in this position
(insert position)
HR cost for everyone in this position
(5)
Capital Asset Depreciation Costs (per Month)
Capital asset #1
(s)
Number of units
(t)
Cost per unit
(u)
Useful lifespan for this capital asset (in month)
(s * t / u)
Depreciation cost on this capital asset
(insert capital asset)
Depreciation cost on this capital asset
(insert capital asset)
Depreciation cost on this capital asset
(insert capital asset)
Depreciation cost on this capital asset
(insert capital asset)
Depreciation cost on this capital asset
(6)
General Operating Costs (per Month)
General administration costs
Costs of selling or deliverying
Costs for marketing and advertising
(B) = (4+5+6) Running Costs for Head Office
OPERATIONAL UNIT'S TOTAL RUNNING COSTS
(7)
Total Number of Operational Units at steady state (see (m))
(C) = (B)/(7)
Allocated Head Office Running Cost (to each Operational Unit)
(A + C)
Total Running Costs that each Operational Unit needs to cover

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Reflections
What have you noticed from this exercise? If you have tried to scenario test suggested in the 'How to use the Template' document, please share your findings here

All use, reproduction and distribution of this work is subject to a CC-BY-NC-ND license.

#VALUE!

Financial Modeling for the Social Sector


Assignment 2

- Insert your assumptions and responses


- Calculated by formula
BOUNDING THE OPERATIONAL UNIT
(1)

Total population that can be reached by an Operational Unit

(2)

% of that population that are potential target of the operation

(3) = (1) x (2)

The size of the potential target market (Available Target Market)

(a)

Penetration rate (%) of the product/the service in the market

(b)

Market share (%) of your venture at steady state

(4) = (a) x (b)


(5) =(3) x (4)

Penetration rate of your venture at steady state


Operational Unit's customer/beneficiary base at steady state

(c)

The products intended frequency of use (per Month)

(d)

The product's average repurchase rate by consumers (per Month)

(e)

The size of the customer unit

(6) =(5) x (c) x (d) / (e)

Operational Unit's monthly customer transaction numbers at steady state

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Scenario 1

Scenario 2

Scenario 3

Scenario 4