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Instructions
Financial Projections Model
v6.8.3
This financial model is designed to enable entrepreneurs and students project the
financial results of their ventures for a five-year period. As with all models there are
certain simplifying assumptions that have been made. Each of the assumption
spreadsheets has an accompanying Comments box (denoted by a cell with small red
triangle in the upper right corner) that provides suggestions on how to complete the
spreadsheet and the underlying assumptions to the model.
You will notice that the cells in the spreadsheet are color-coded. This has been done to
assist you in entering data, creating or changing formulae, or deleting data, formulae
and links.
In the Green and Blue shaded cells, data and formulas may changed, moved or deleted.
The current calculations are for illustration only -- you will need to tailor these
spreadsheets to fit your plan.
In the Yellow shaded cells data and formulas may be changed, but not deleted.
DO NOT delete the Purple shaded cells -- they link one spreadsheet with others.
All other spreadsheets are to be used for calculating the underlying assumptions of the
7 principal spreadsheets:
These assumption spreadsheets are linked to each other and to the 7 principal
spreadsheets. When you make a change in one of the spreadsheets, the impact is
automatically recalculated for all other spreadsheets.
When doing financial projections, it is easy to get lost in the trees and lose the sense of
what is reality. Most errors can be identified if you continuously ask yourself “Does this
result make sense?” The COMPS spreadsheet, where you look at peer companies, can
be particularly helpful as a reality test.
There is an example in the model with which you can experiment. When you are ready
to start your own projections, clear all the numbers in the green shaded cells, and then
you can begin to enter new numbers. Enter the name of your company in the first cell of
the COMPS spreadsheet. Before you begin, make a copy of the model on a separate
disk.
This original version of the model has been used since the mid-1980’s. It has undergone
numerous revisions over that period. Since 1998, students in the Business Plan
Preparation course at the University of Colorado have used it to prepare their business
plans. We have appreciated their suggestions for improvements and would encourage
all users to send us comments and suggestions.
you can begin to enter new numbers. Enter the name of your company in the first cell of
the COMPS spreadsheet. Before you begin, make a copy of the model on a separate
disk.
02/24/2011
This original version of the model has been used since the mid-1980’s. It has undergone 14:28:40
numerous revisions over that period. Since 1998, students in the Business Plan
Preparation course at the University of Colorado have used it to prepare their business
plans. We have appreciated their suggestions for improvements and would encourage
all users to send us comments and suggestions.
Select Best
Company A
Company B
Company CComparison Projections
Ratios Year 1 Year 2 Year 3 Year 4 Year 5
Accounts Receivable % of Rev 10.0% 10.0% 8.3% 8.3% 8.3% 8.3% 8.3%
Inventory % of Rev 15.0% 15.0% 8.3% 8.3% 6.7% 6.7% 6.7%
Accounts Payable % of Rev 8.0% 8.0% 8.7% 8.7% 8.7% 8.7% 8.7%
Working Capital % of Rev 16.0% 16.0% 7.9% 7.9% 6.3% 6.3% 6.3%
Net Fixed Assets % of Rev 9.0% 9.0% 23.7% 11.5% 9.3% 7.3% 5.5%
Current Ratio 2.3 2.3 4.2 2.0 2.0 1.9 2.1
Debt to Capital (LT Debt + Equity) 1.2 1.2 0.00 0.32 0.18 0.10 0.04
Profitability
Gross Profit % of Rev 30.0% 30.0% -11.7% 32.7% 41.5% 42.5% 46.0%
Sales & Marketing % of Rev 30.0% 22.9% 19.0% 18.5% 17.9% 18.0%
Research & Development % of Rev 30.0% 14.9% 7.9% 7.2% 7.6% 6.7%
General & Administration % of Rev 30.0% 17.2% 8.9% 8.1% 7.3% 6.8%
Operating Expenses % of Rev 40.0% 17.0% 55.0% 35.7% 33.8% 32.9% 31.5%
Earnings from Operations % of Rev 12.0% 12.0% -66.7% -3.0% 7.7% 9.6% 14.5%
EBIT % of Rev 12.0% 12.0% -71.2% -3.0% 7.7% 9.6% 14.5%
Depreciation % of Rev 3.0% 3.0% 4.3% 2.5% 2.5% 2.3% 2.0%
EBITDA % of Rev 14.0% 14.0% -66.9% -0.5% 10.2% 11.9% 16.5%
Net Earnings % of Rev 5.0% 5.0% -71.2% -4.2% 7.2% 6.2% 8.7%
Returns
Return on Assets 12.0% 12.0% -74.1% -9.5% 21.7% 20.0% 27.2%
Return on Equity 15.0% 15.0% -90.4% -20.4% 39.7% 36.1% 45.2%
Return on Capital (LT Debt + Equity) 15.0% 15.0% -90.4% -13.9% 32.4% 32.6% 43.5%
Growth
Revenue Growth Rate - CAGR: 15.0% 15.0% 425.0% 85.7% 66.7% 60.0%
Net Earnings Growth Rate - CAGR: 12.0% 12.0% Negative Negative 42.3% 124.6%
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XYZ Company
Revenue Projections
Years 1 to 5
($)
Year 1 Year 2 Year 3 Year 4 Year 5
Product A
Number of Units 20000 75000 150000 250000 400000
Price per unit 50 50 45 45 40
Total 1000000 3750000 6750000 11250000 16000000
Service B
Number of Customers 50000 100000 200000 500000
Fee per Customer 30 30 25 20
Total 1500000 3000000 5000000 10000000
Average Revenue
by Month 83333 437500 812500 1354167 2166667
by Quarter 250000 1312500 2437500 4062500 6500000
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XYZ Company
Cost of Revenues
Years 1 to 5
($)
Year 1 Year 2 Year 3 Year 4 Year 5
Cost of Revenue
Product A
Material Costs per Unit 15.00 14.00 11.00 10.00 9.00
Subcontact Costs per Unit 10.00 10.00 7.00 6.50 6.00
Total Direct Costs per Unit 25.00 24.00 18.00 16.50 15.00
Unit Sales 20000 75000 150000 250000 400000
Total Direct Costs 500000 1800000 2700000 4125000 6000000
Labor Costs 69000 227700 552000 864000 1200000
Total Direct Costs 569000 2027700 3252000 4989000 7200000
Service B
Service Personnel Costs 120750 212750 480000 1500000 2750000
Other Expenses
Salary Expenses 276000 690000 990000 1410000 2000000
Depreciation 36714 91714 137429 190286 243143
Facility costs (rent, energy) 50000 200000 300000 300000 450000
System Costs 25000 100000 150000 300000 350000
XYZ Company
Operating Expenses
Years 1 to 5
($)
Year 1 Year 2 Year 3 Year 4 Year 5
XYZ Company
Personnel
Years 1 to 5
($)
Year 1 Year 2 Year 3 Year 4 Year 5
XYZ Company
Extraordinary Income & Expense
Years 1 to 5
($)
Year 1 Year 2 Year 3 Year 4 Year 5
Income
(Item…)
(Item…)
(Item…)
Total
Start-up expenses
Legal 25000
Relocation 20000
(Item…)
Total 45000
Total Extraordinary Income/(Expense) -45000
XYZ Company
Taxes
Years 1 to 5
($)
Year 1 Year 2 Year 3 Year 4 Year 5
Income Tax (Rate Federal & State) 0.40 0.40 0.40 0.40 0.40
XYZ Company
Property and Equipment
Years 1 to 5
($)
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
Purchased
Net Revenues Assets 1000000 5250000 9750000 16250000 26000000
Capital Expenditures
Computers, Software & Office Equipment 20000 100000 200000 250000 350000
Plant & Equipment 250000 350000 250000 300000 300000
Other 10000 50000 100000 100000 100000
Total Capital Expenditures 280000 500000 550000 650000 750000
% of Revenue 28.0% 9.5% 5.6% 4.0% 2.9%
Depreciation Computers, Sofware & Office Equipment (allocated to General & Administrative Expenses)
Depreciation Rate: Years 1 3 3 3 3 3
Year 0
Year 1 6667 6667 6667
Year 2 33333 33333 33333
Year 3 66667 66667 66667
Year 4 83333 83333
Year 5 116667
Total Depreciation 6667 40000 106667 183333 266667
XYZ Company
Working Capital
Years 1 to 5
($)
Year 1 Year 2 Year 3 Year 4 Year 5
Net Revenues 1000000 5250000 9750000 16250000 26000000
Accounts Receivable
% of Revenue 8.3% 8.3% 8.3% 8.3% 8.3%
Days Outstanding 30 30 30 30 30
Accounts Receivable 149400 627480 913000 1577000 2656000
(Increase)/Decrease from Prev. Period -149400 -478080 -285520 -664000 -1079000
Inventory
% of Revenue 8.3% 8.3% 6.7% 6.7% 6.7%
Inventory Turns 12 12 15 15 15
Inventory Days 30 30 24 24 24
Inventory 149400 627480 737000 1273000 2144000
(Increase)/Decrease from Prev. Period -149400 -478080 -109520 -536000 -871000
XYZ Company
Funding Projections
Years 1 to 5
($)
Begin Year 1 Year 2 Year 3 Year 4 Year 5
Beginning Cash 1500000
Equity
Common 500000 500000 500000 500000 500000 500000
Increase / (Decrease) Previous Period
Preferred
A Round 1000000 1000000 1000000 1000000 1000000 1000000
B Round 500000 500000 500000 500000
Total Preferred 1000000 1000000 1500000 1500000 1500000 1500000
Increase / (Decrease) Previous Period 500000
Total Equity 1500000 1500000 2000000 2000000 2000000 2000000
Debt
Short Term Debt 100000
Increase / (Decrease) Previous Period 100000 -100000
Total Equity & Debt 1500000 1500000 2500000 2400000 2400000 2200000
Interest
Interest Rate
Short Term Debt 9.0% 9.0% 9.0% 9.0% 9.0%
Long Term Debt 12.0% 12.0% 12.0% 12.0% 12.0%
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Interest Expense
Short Term Debt 9000
Long Term Debt 60000 48000 36000 24000
Total Interest 60000 48000 45000 24000
Interest Income
Interest Rate 4.0% 4.0% 4.0% 4.0% 4.0%
Interest Income 10000
Retained Earnings
Net Income -712131 -218064 704515 1002741 2252034
Dividends 50000
Increase / (Decrease) Retained Earnings -712131 -218064 704515 1002741 2202034
Beginning Retained Earnings -712131 -930195 -225681 777060
Ending Retained Earnings -712131 -930195 -225681 777060 2979094
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XYZ Company
Income Statement
Years 1 to 5
($)
Year 1 Year 2 Year 3 Year 4 Year 5
OPERATING EXPENSES
Sales & Marketing 229000 997750 1805400 2911500 4676000
Research & Development 149000 413000 702550 1241500 1752000
General and Administration 171667 465150 790107 1191933 1771467
Total Operating Expenses 549667 1875900 3298057 5344933 8199467
% of Revenues 55% 36% 34% 33% 32%
EARNINGS BEFORE INTEREST & TAXES -712131 -158064 752515 1565781 3767390
XYZ Company
Balance Sheet
Years 1 to 5
($)
Begin Year 1 Year 2 Year 3 Year 4 Year 5
ASSETS
CURRENT ASSETS
Cash 1500000 408170 367660 570510 792870 1735714
Accounts Receivable 149400 627480 913000 1577000 2656000
Inventories 149400 627480 737000 1273000 2144000
Other Current Assets 18000 75600 110000 190000 320000
Total Current Assets 1500000 724970 1698220 2330510 3832870 6855714
PROPERTY & EQUIPMENT 236619 604905 910810 1187190 1427381
TOTAL ASSETS 1500000 961589 2303125 3241319 5020060 8283094
LONG TERM DEBT (less current portion) 400000 300000 200000 100000
STOCKHOLDERS' EQUITY
CommonStock 500000 500000 500000 500000 500000 500000
Preferred Stock 1000000 1000000 1500000 1500000 1500000 1500000
Retained Earnings -712131 -930195 -225681 777060 2979094
Total Equity 1500000 787869 1069805 1774319 2777060 4979094
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TOTAL LIABILITIES & EQUITY 1500000 961589 2303125 3241319 5020060 8283094
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XYZ Company
Cash Flow Statememt
Years 1 to 5
($)
Year 1 Year 2 Year 3 Year 4 Year 5
OPERATING ACTIVITIES
Net Earnings -712131 -218064 704515 1002741 2252034
Depreciation 43381 131714 244095 373619 509810
Working Capital Changes
(Increase)/Decrease Accounts Receivable -149400 -478080 -285520 -664000 -1079000
(Increase)/Decrease Inventories -149400 -478080 -109520 -536000 -871000
(Increase)/Decrease Other Current Assets -18000 -57600 -34400 -80000 -130000
Increase/(Decrease) Accts Pay & Accrd Expenses 155720 502000 299280 696000 1131000
Increase/(Decrease) Other Current Liab 18000 57600 34400 80000 130000
Net Cash Provided/(Used) by Operating Activities -811830 -540510 852850 872360 1942844
INVESTING ACTIVITIES
Property & Equipment -280000 -500000 -550000 -650000 -750000
Other
Net Cash Used in Investing Activities -280000 -500000 -550000 -650000 -750000
FINANCING ACTIVITIES
Increase/(Decrease) Short Term Debt 100000 -100000
Increase/(Decrease) Curr. Portion LTD 100000
Increase/(Decrease) Long Term Debt 400000 -100000 -100000 -100000
Increase/(Decrease) Common Stock
Increase/(Decrease) Preferred Stock 500000
Dividends Declared -50000
Net Cash Provided / (Used) by Financing 1000000 -100000 -250000
XYZ Company
Break-Even Analysis
Years 1 to 5
($)
Year 1 Year 2 Year 3 Year 4 Year 5
Revenue 1000000 5250000 9750000 16250000 26000000
Cost of Revenue
Variable 729750 2450450 4122000 7139000 10990000
Fixed 387714 1081714 1577429 2200286 3043143
Total 1117464 3532164 5699429 9339286 14033143
Operating Expenses
Variable 160000 840000 1560000 2600000 4160000
Fixed 389667 1035900 1738057 2744933 4039467
Total 549667 1875900 3298057 5344933 8199467
XYZ Company
Income Statement
Year 1 by Months
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7
OPERATING EXPENSES
Sales & Marketing 11450 18320 22900 22900
Research & Development 7450 11920 14900 14900
General and Administration 8583 13733 17167 17167
Total Operating Expenses 27483 43973 54967 54967
EARNINGS BEFORE INTEREST & TAXES -25000 -20000 -33357 -53370 -66713 -66713
NET EARNINGS BEFORE TAXES -25000 -20000 -33357 -53370 -66713 -66713
TAXES
XYZ Company
Income Statement
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Year 2 by Months
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7
OPERATING EXPENSES
Sales & Marketing 49888 49888 69843 59865 69843 69843 79820
Research & Development 20650 20650 28910 24780 28910 28910 33040
General and Administration 23258 23258 32561 27909 32561 32561 37212
Total Operating Expenses 93795 93795 131313 112554 131313 131313 150072
EARNINGS FROM OPERATIONS -7903 -7903 -11065 -9484 -11065 -11065 -12645
EARNINGS BEFORE INTEREST & TAXES -7903 -7903 -11065 -9484 -11065 -11065 -12645
INTEREST INCOME / (EXPENSE) -5000 -5000 -5000 -5000 -5000 -5000 -5000
NET EARNINGS BEFORE TAXES -12903 -12903 -16065 -14484 -16065 -16065 -17645
TAXES
Year 1
Total Annual
Month 8 Month 9 Month 10 Month 11 Month 12 12 Months Projection
-45000 -45000
Year 2
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Total Annual
Month 8 Month 9 Month 10 Month 11 Month 12 12 Months Projection
XYZ Company
Income Statement
Years 3, 4 & 5 by Quarters
Year 3 Year 4
1st Qtr 2nd Qrtr 3rd Qrtr 4th Qrtr Total 1st Qtr 2nd Qtr
OPERATING EXPENSES
Sales & Marketing 370338 462923 462923 509215 1805400 537508 716677
Research & Development 144113 180141 180141 198155 702550 229200 305600
General and Administration 162073 202591 202591 222851 790107 220049 293399
Total Operating Expenses 676524 845656 845656 930221 3298057 986757 1315676
EARNINGS FROM OPERATIONS 154362 192953 192953 212248 752515 289067 385423
EARNINGS BEFORE INTEREST & TAXES 154362 192953 192953 212248 752515 289067 385423
INTEREST INCOME / (EXPENSE) -12000 -12000 -12000 -12000 -48000 -11250 -11250
NET EARNINGS BEFORE TAXES 142362 180953 180953 200248 704515 277817 374173
Year 4 Year 5
3rd Qtr 4th Qtr Total 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
XYZ Company
Cash Flow Statement
Year 1 by Months
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7
OPERATING ACTIVITIES
Net Earnings -25000 -20000 -33357 -53370 -66713 -66713
Depreciation 3615 3615 3615 3615 3615 3615 3615
Working Capital Changes
(Increase)/Decrease Accounts Receivable -49800 -29880 -19920
(Increase)/Decrease Inventories -49800 -29880 -19920
(Increase)/Decrease Other Current Assets -6000 -3600 -2400
Increase/(Decrease) Accts Pay & Accrd Expenses 31 49969 32200 21320 880
Increase/(Decrease) Other Current Liab 6000 3600 2400
Net Cash Provided/(Used) by Operating Activities -21385 -16385 3646 -79373 -77315 -81618 -62218
INVESTING ACTIVITIES
Property & Equipment -50000 -100000 -50000 -40000 -40000
Other
Net Cash Used in Investing Activities -50000 -100000 -50000 -40000 -40000
FINANCING ACTIVITIES
Increase/(Decrease) Short Term Debt
Increase/(Decrease) Curr. Portion LTD
Increase/(Decrease) Long Term Debt
Increase/(Decrease) Common Stock
Increase/(Decrease) Preferred Stock
Dividends Declared
Net Cash Provided / (Used) by Financing
CASH AT BEGINNING OF PERIOD 1500000 1428615 1312230 1265877 1146504 1069188 987570
CASH AT END OF PERIOD 1428615 1312230 1265877 1146504 1069188 987570 885352
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XYZ Company
Cash Flow Statement
Year 2 by Months
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7
OPERATING ACTIVITIES
Net Earnings -12903 -12903 -16065 -14484 -16065 -16065 -17645
Depreciation 10976 10976 10976 10976 10976 10976 10976
Working Capital Changes
(Increase)/Decrease Accounts Receivable -112050 -104580 52290 -52290 -52290
(Increase)/Decrease Inventories -112050 -104580 52290 -52290 -52290
(Increase)/Decrease Other Current Assets -13500 -12600 6300 -6300 -6300
Increase/(Decrease) Accts Pay & Accrd Expenses -149120 -6600 31 331139 50190 2310 52500
Increase/(Decrease) Other Current Liab 13500 12600 -6300 6300 6300
Net Cash Provided/(Used) by Operating Activities-375147 -8527 -214217 432211 -59478 -2778 -58749
INVESTING ACTIVITIES
Property & Equipment -100000 -100000 -100000
Other
Net Cash Used in Investing Activities -100000 -100000 -100000
FINANCING ACTIVITIES
Increase/(Decrease) Short Term Debt
Increase/(Decrease) Curr. Portion LTD 100000
Increase/(Decrease) Long Term Debt 400000
Increase/(Decrease) Common Stock
Increase/(Decrease) Preferred Stock 500000
Dividends Declared
Net Cash Provided / (Used) by Financing 1000000
CASH AT BEGINNING OF PERIOD 408170 933023 824496 610279 1042490 983012 880233
CASH AT END OF PERIOD 933023 824496 610279 1042490 983012 880233 821484
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Year 1
Estimated Annual
Month 8 Month 9 Month 10 Month 11 Month 12 Year 1 Projection
-280000 -280000
-280000 -280000
Year 2
Estimated Annual
Month 8 Month 9 Month 10 Month 11 Month 12 Year 2 Projection
100000 100000
400000 400000
500000 500000
1000000 1000000
XYZ Company
Cash Flow Statement
Years 3, 4 & 5 by Quarters
Year 3 Year 4
1st Qtr 2nd Qrtr 3rd Qrtr 4th Qrtr Total 1st Qtr 2nd Qtr
OPERATING ACTIVITIES
Net Earnings 142362 180953 180953 200248 704515 183181 246714
Depreciation 61024 61024 61024 61024 244095 93405 93405
Working Capital Changes
(Increase)/Decrease Accounts Receivable -36520 -166000 -83000 -285520 -83000 -332000
(Increase)/Decrease Inventories 91480 -134000 -67000 -109520 -67000 -268000
(Increase)/Decrease Other Current Assets -4400 -20000 -10000 -34400 -10000 -40000
Increase/(Decrease) Accts Pay & Accrd Expenses 38280 174000 87000 299280 87000 348000
Increase/(Decrease) Other Current Liab 4400 20000 10000 34400 10000 40000
296626
Net Cash Provided/(Used) by Operating Activities 115976 241976 198272 852850 213586 88119
INVESTING ACTIVITIES
Property & Equipment -100000 -200000 -100000 -150000 -550000 -200000 -200000
Other
Net Cash Used in Investing Activities -100000 -200000 -100000 -150000 -550000 -200000 -200000
FINANCING ACTIVITIES
Increase/(Decrease) Short Term Debt 100000
Increase/(Decrease) Curr. Portion LTD
Increase/(Decrease) Long Term Debt -100000 -100000
Increase/(Decrease) Common Stock
Increase/(Decrease) Preferred Stock
Dividends Declared
Net Cash Provided / (Used) by Financing -100000 -100000 100000
Year 4 Year 5
3rd Qtr 4th Qtr Total 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
100000 -100000
-50000
-100000 -250000
-50000 -50000
-250000 -100000 -250000
XYZ Company
Summary
Years 1 to 5
Growth
Revenue Growth Rate - CAGR: 425% 86% 67% 60%
Net Earnings Growth Rate - CAGR: Nil Nil 42.3% 124.6%
Ratios
Current Ratio 4.2 2.0 2.0 1.9 2.1
Debt to Capital (LT Debt + Equity) 0.0 0.3 0.2 0.1 0.0
Profitability
Gross Profit % -11.7% 32.7% 41.5% 42.5% 46.0%
Operating Expenses % 55.0% 35.7% 33.8% 32.9% 31.5%
Net Earnings % -71.2% -4.2% 7.2% 6.2% 8.7%
Returns
Return on Assets -74.1% -9.5% 21.7% 20.0% 27.2%
Return on Equity -90.4% -20.4% 39.7% 36.1% 45.2%
Return on Capital (LT Debt + Equity) -90.4% -13.9% 32.4% 32.6% 43.5%
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Assumptions: REF
Investor required IRR 60% A
P/E ratio at IPO or acquisition 15 B
Initial investment $1,500,000 C FV(A,C) G/F IRR(D,G)
REF D E F G H I J K
Negotiation Workspace
Investor's Investor's Investor's Investor's
Year Share Return ROI IRR
1 25.0% $ 0% #N/A
2 25.0% $ 0% #N/A
3 25.0% $2,641,930 176% 21%
4 25.0% $3,760,278 251% 26%
5 40.0% $13,512,206 901% 55%
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$1,500,000 $
$1,500,000 $ $
$1,500,000 $ $ $2,641,930
$1,500,000 $ $ $ $3,760,278
$1,500,000 $ $ $ $ $13,512,206
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XYZ Company
Valuation
Venture Capital Method
Years 1 to 5
Multiple Rounds
Calculations
Market Capitalization at IPO $33,780,514 H B*C