Cash Inflows & Outflows for Kadns Entertainment Forecasted - Research Paper

Introduction

Table 1 in the excel file represents the estimated cash inflows and cash outflows as expected for the new venture, Kadns Entertainment. The information used for developing this Pro-forma cash flow statement as part of the forecasting process. The Pro-forma cash flow statement was used to estimate cases and positions when there may be shortages of funds in the future when the new venture has been launched. This would make the owner, who is the enterprise manager to prepare adequately in obtaining funds in terms of loans to settle the projected funding shortfall. Alternatively, in case there is a projection of excess cash by the Pro-forma cash flow statement, the excess money can get well planned for when the project has been implemented.

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From table 1, it displays the starting cash at the beginning of each financial year and the end cash position of the enterprise. Using cash budgeting, there is an estimation of the sales for the years 2020 and 2021 by assuming that the future cash flow would resemble the one as projected in the Pro-forma cash flow. In the making of the Pro-forma cash flow, it was assumed that the same ratio of expenses to sales of the enterprises similar to Kadns Entertainment would prevail for this new venture. In case there would be no significant alterations in the manner in which the enterprise operates, then this would be a reasonable assumption.

Table 2 in the excel file represents the Pro-forma statement of Kadns Entertainment. I prepared the Pro-forma income statement to the project of the future of the business when in operation. The report provides the expected financial performance of the future, and the analysis is based on research done from other businesses of similar set-up. Generally, I used the past and current income statements of existing Dj truck companies and made adjustments to make a reflection of probable future events as a guide of projecting the future performance of Kadns Entertainment enterprise.

The projection of the income statement realized the net sale of $ 290,000 and $ 340,000, respectively, for the financial years 2020 and 2021. This would translate to a gross profit of $ 90,000 and $ 160,000 for the fiscal years 2020 and 2021 respectively after deduction of total expense from the net sales. However, deducting all the costs, that is, the operating expenses, general and administration expenses, and the imposed tax, the venture will realize a net income of $ 33,800 and $ 83,700 in the financial years 2020 and 2021 respectively.

Conclusion

In conclusion, Kadns Entertainment can be a great business to venture in. From the Pro-forma statements, income statement and cash flows as provided, including sales and earnings forecast, to make the venture a good business. As seen in the excel file, the Pro-forma is quite essential, however, quintessential. Without having such a major project as an entrepreneur tending to venture in Kadns Entertainment cannot approve of the business model. Therefore, the financial report and analysis as in the Pro-forma enable the entrepreneur to foresee the future of the business technically. This makes the Pro-forma statements to be very crucial documents for start-up businesses. Further, the papers should be prepared with the utmost precision so that the entrepreneur is not misled to venturing into a business that is not viable.