Construct a balance sheet for your business as it might look on the day before you start trading. This should be done now.
List and explain the assumptions underpinning your financial forecasts.
Construct a balance sheet at the end of years 1, 2 and 3 assuming you achieve the level of sales in your sales forecast. These should be done after you have completed the pro forma profit and loss account (Assignment 18) and pro forma cash-flow forecast (Assignment 17).
Using the format on the break-even analysis sheet (Table 20.1):
Construct a break-even analysis for year 1 of your business from the figures calculated in the last three chapters.
Estimate the effect of the following events on your break-even point for each year:
a 10 per cent rise/fall in sales volume;
a 10 per cent rise/fall in unit selling price;
a 10 per cent rise/fall in variable costs per unit of sale, eg a meal;
a 10 per cent rise/fall in fixed costs;
a requirement for achieving your profit objective by year 1 – now what ‘volume’ of product must you sell to break even?
