The most important element of a business plan is the financial plan which presents the necessary financial prospects and expectation of a business. The financial plan is the basic component of the business plan as it provides the feasibility of a project and enables the investors to make logical decisions regarding the acceptance and rejection of the project and whether the business would provide the expected cash flows and profits relative to the amount invested. The financial plan also provides insight into the expected payback period of the business to carry out a comparative analysis with other alternatives to make decisions regarding investment of funds.
The financial plan of Cold Stone Creamery franchise illustrates the expected amount of investment required to open the franchise and operate it effectively. The expected financial performance of the company depending on the profits, cash flows and position of the company is highlighted in the financial plan. The main components of the financial plan can be analyzed individually through the expected sales, profit and loss, breakeven point and payback period. The expected profit and loss of the business is presented through the prospect income statement. The financial analysis and evaluation included in the financial plan are completed by implementing various assumptions related to the expected level of sales, operating expenses and growth in future years. These assumptions have been emphasized in a separate section of the financial plan to help in a better understanding of financial statements. The financial viability of the project is further illustrated by applying the capital budgeting technique of payback period.
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