Cinema Theme Park’s Financial Analysis Coursework

Exclusively available on IvyPanda Available only on IvyPanda

Start-up costs

These costs are required when starting a business. These costs vary depending on type, scope and the nature of the business that an individual intends to start. Even though a cinema theme park business is capital intensive, the amount of startup cost will be low. This can be attributed to the fact that the business intends to offer only two products. Besides, there are plans to rent as opposed to buying (Shapiro 2005). Further, the amount of startup cost will give an indication on the capital that needs to be raised. The table presented below shows a summary of the total startup costs for the business.

We will write a custom essay on your topic a custom Coursework on Cinema Theme Park’s Financial Analysis
808 writers online
ProductNamePriceTotalClass
Screens theatreOptima HD26€299.99 x 2€ 600Asset
Screen projectorsDiag.€699 x2€ 1,398Asset
FietsenrekHoog- nag€ 131 x 3€ 393Asset
Chair, Idemo RedEKTORP T€149 ex 25€ 3,725Asset
PillowsKUNGSÖ€ 25 x 30€ 750Asset
Total capital€ 6,866
Popcorn machinePopcorn€ 29.95€ 29.95Expense
Cotton candy machineCarnival€ 34.94€ 34.94Expense
Coffee machinePhilips HD7880€ 78€ 78Expense
ChocolateChocomelk€ 1 x 5€ 5Expense
Popcorn maisValle del sole€ 1.39 x 2€ 3Expense
Cotton candy sugarCotton candy express€ 24.95€ 898Expense
Cotton candy conesCaramel cone€ 29.95€ 29.95Expense
CoffeeOro Nescafe€ 6.69€ 80Expense
Coca colaCoca-Cola regular€0.45 x 40€ 24Expense
TeaRooibos Lipton€1.49 x 4€ 6Expense
TeaGreen tea€1.29 x 4€ 5Expense
TeaForest Fruit€1.58 x 4€ 912Expense
Tea KettleInventum€19.99 x 4€ 80Expense
Glasses – 8 per packageCafé sterrenmix€1.49 x 15€ 1.07Expense
Napkins packageSterrenmix€1.39 x10€ 667Expense
Popcorn bagsPopcorn€ 0,25€ 3Expense
€ 2,856.91
Total expense€ 9,722.91
Miscellaneous€ 2,277.09
Total startup cost12,000

The table shows that the total amount of startup cost that is required for the business is €12,000. The assets that will be bought amounts to €6,866.This category comprises items that are bought only once in the business. The second category, expenses, comprises items that will be bought for use in the business. Some of the items that have a life span of only one year will also be included in this category because they cannot be capitalized. The final category is miscellaneous. This will cater for changes in prices. The market is quite dynamic and the current quotes listed above may not remain the same at the time the business will be started. Even though the list of assets and expenses required for the start up is comprehensive, the costs will cater for the items left out. Thus, it will be accounted for under expenses. From the start-up cost, it is easy to estimate the amount of initial capital requirement. Capital can be raised through various ways (Shapiro 2005). The most common ways are through personal savings, family, equity, debt, and through business partners. Thus, the method of raising capital depends on the size of the business and the form of business. In this case, the cinema theme park will be a partnership business of three. The partners will raise the funds equally. The partners will rely on contributions and support of their family members and savings. The table presented below shows a summary of the start-up cost and capital.

ItemAmount
Expenses5,134
Assets6,866
The total amount required12,000

The table presented below shows a summary of the capital raised.

PartnersAmount in €
14,000
24,000
34,000
Total12,000

Assumptions

Before preparing the financial statements, it is important to come up with the assumptions that will be applied in the preparation of the financial statements. The first assumption will be on population. Analysis of the population will give estimates of the sales value for the business. The business will be located in Apeldoorn. It is one of the largest cities in the Netherlands. The last population census was carried out in 2001 and the city had a total population of 153,681. However, the population has grown significantly over the years. At the beginning of 2015, the population was estimated to be 158,059. The population growth rate currently stands at 0.39%. The population of Netherland is considered to have a high proportion of old people. The table presented below shows the breakdown of the population of the city.

AgeMale, %Female, %TotalMaleFemaleTotal
85+0.361.051.41569.011,659.622,228.63
80-840.61.181.78948.351,865.102,813.45
75-791.141.742.881,801.872,750.234,552.10
70-741.551.953.52,449.913,082.155,532.07
65-691.932.134.063,050.543,366.666,417.20
60-642.32.334.633,635.363,682.777,318.13
55-592.772.695.464,378.234,251.798,630.02
50-543.733.67.335,895.605,690.1211,585.72
45-493.653.547.195,769.155,595.2911,364.44
40-443.933.817.746,211.726,022.0512,233.77
35-394.274.088.356,749.126,448.8113,197.93
30-344.254.058.36,717.516,401.3913,118.90
25-293.633.547.175,737.545,595.2911,332.83
20-243.042.935.974,804.994,631.139,436.12
15-192.962.835.794,678.554,473.079,151.62
10-143.112.976.084,915.634,694.359,609.99
05-093.23.066.265,057.894,836.619,894.49
00-043.122.986.14,931.444,710.169,641.60
Total49.5450.4610078,302.4379,756.57158,059.00

The percentage of the population representing male is 49.54% and 50.46% for female. Thus, the proportion is almost half. The total number of male is 78,302 while the total number of female is 79,757. The business targets people of different age groups because it is a family oriented business. Thus, the most appropriate age group is between 5 and 70 years, both male and female. The total population in this age group is 133,291.The Company targets 4% of the population aged between 5 and 70 years. Thus, the number of estimated customers is 5,325. Further, it is expected that each person will spend approximately €1.46 per year at the park. This will amount to €7,759 for the entire year. The calculations will be based on the assumption that the business will operate at 48% of full capacity. Further, the amortization of the start-up costs will be carried out over a period of six years. The pricing used by the company is based on the averages in the industry. The company will outsource several services such as cable TV, payroll services, and waste management among others. Also, the projection of the staff salaries will be based on the assumption that they are full-time employees working eight hours in a day. All the tax rates that are applicable in the city will be used in the calculations (Shapiro 2005).

Pro forma financial statements

Forecasts

Sales and direct costs forecast

Sales2015
First screen2,716
Second screen3,492
Cafeteria1,552
Total7,759
Direct cost
First screen867
Second screen1,115
Cafeteria495
Total2,477

Personnel expenses forecast

The table presented below shows the summary of the salaries and the number of staff members in each department.

DepartmentNumber of employees’Cost
Operations6847
Sales and marketing1120
General and administrative2373
Others1168
Total101,508

Opening balance sheet

  • Cinema Theme Park
  • Balance sheet
  • As at 31st January 2015
Amount in €
Assets
Current assets
Cash5,134
Non-current assets
Fixed assets6,866
Total assets12,000
Liabilities and capital
Current liabilities
Short term borrowing0
Non-current liabilities
Long term borrowing0
Total liabilities0
Capital
Partners’ contribution12,000
Total capital12,000
Total liabilities and capital12,000
  • Cinema Theme Park
  • Profit and loss projection
  • For the 12 month period ended 31st December 2015
JanuaryFebruaryMarchAprilMayJuneJulyAugustSeptemberOctoberNovemberDecember2015
Sales536.60715.461,073.201,073.201,073.201,073.20715.46536.60240.55240.55240.55240.557,759.11
Direct Cost of Sales168.49224.66336.99336.99336.99336.99224.66168.4985.7185.7185.7185.712,477.11
Direct salaries70.5770.5770.5770.5770.5770.5770.5770.5770.5770.5770.5770.57846.82
Total Cost of Sales239.06295.23407.56407.56407.56407.56295.23239.06156.28156.28156.28156.283,323.93
Gross Margin297.53420.23665.64665.64665.64665.64420.23297.5384.2884.2884.2884.284,435.18
Operating Expenses
Sales and Marketing salaries10.0210.0210.0210.0210.0210.0210.0210.0210.0210.0210.0210.02120.27
Promotional activities3.273.273.273.273.273.273.273.273.273.273.273.2739.22
Travel0.330.330.330.330.330.330.330.330.330.330.330.333.92
Sundry expenses1.631.631.631.631.631.631.631.631.631.631.631.6319.61
General and Administrative salaries31.0731.0731.0731.0731.0731.0731.0731.0731.0731.0731.0731.07372.84
Utilities2.612.612.612.612.612.612.612.612.612.612.612.6131.38
Insurance2.682.682.682.682.682.682.682.682.682.682.682.6832.16
Telephone1.741.741.741.741.741.741.741.741.741.741.741.7420.92
Other salaries14.0314.0314.0314.0314.0314.0314.0314.0314.0314.0314.0314.03168.38
Postal Fees0.330.330.330.330.330.330.330.330.330.330.330.333.92
Professional Fees1.631.631.631.631.631.631.631.631.631.631.631.6319.61
Office Supplies99.3798.9798.5698.1497.7297.3096.8696.4295.9895.5395.0794.611,164.52
Bank charges0.220.220.220.220.220.220.220.220.220.220.220.222.61
Business License0.080.080.080.080.080.080.080.080.080.080.080.080.92
Maintenance of facility3.273.273.273.273.273.273.273.273.273.273.273.2739.22
Total Operating Expenses172.29171.88171.47171.06170.64170.21169.78169.34168.89168.44167.98167.522,039.50
Profit Before Interest and Taxes125.25248.35494.16494.58495.00495.42250.46128.20-84.62-84.17-83.71-83.252,395.68
EBITDA125.25248.35494.16494.58495.00495.42250.46128.20-84.62-84.17-83.71-83.252,395.68
Interest Expense0.000.000.000.000.000.000.000.000.000.000.000.000.00
Taxes Incurred37.5781.96163.07163.21163.35163.4982.6542.30-27.92-27.78-27.62-27.47786.82
Net Profit87.67166.39331.09331.37331.65331.93167.8185.89-56.69-56.39-56.09-55.771,608.86
  • Cinema Theme Park
  • Cash flow projections
  • For the 12 month period ended 31st December 2014
JanuaryFebruaryMarchAprilMayJuneJulyAugustSeptemberOctoberNovemberDecember2015
Cash Received
Cash Sales536.60715.461,073.201,073.201,073.201,073.20715.46536.60240.55240.55240.55240.557,759.11
Subtotal Cash from Operations536.60715.461,073.201,073.201,073.201,073.20715.46536.60240.55240.55240.55240.557,759.11
Subtotal Cash Received536.60715.461,073.201,073.201,073.201,073.20715.46536.60240.55240.55240.55240.557,759.11
Expenditures
Cash Spending125.69125.69125.69125.69125.69125.69125.69125.69125.69125.69125.69125.691,508.32
Payment of utilities40.85357.04460.69647.69647.83647.97641.66451.72353.32205.41205.56205.714,865.44
Subtotal Spent on Operations166.54482.74586.38773.38773.52773.66767.36577.41479.02331.10331.25331.406,373.76
Additional Cash Spent0.000.000.000.000.000.000.000.000.000.000.000.000.00
Subtotal Cash Spent166.54482.74586.38773.38773.52773.66767.36577.41479.02331.10331.25331.406,373.76
Net Cash Flow370.05232.73486.82299.81299.67299.54-51.89-40.81-238.46-90.55-90.70-90.851,385.35
Cash Balance805.821,038.551,525.371,825.172,124.852,424.392,372.492,331.682,093.222,002.671,911.971,821.1222,277.28
  • Cinema Theme Park
  • Balance Sheet
  • As at 31st December 2015
Assets
Current assets
Cash6,743
Non-current assets
Fixed assets6,866
Total assets13,609
Liabilities and capital
Current liabilities
Accounts payable0
Short term borrowing0
Non-current liabilities
Long term borrowing0
Total liabilities0
Capital
Partners’ contribution12,000
Profit1,609
Total capital13,609
Total liabilities and capital13,609

Ratio analysis

The table presented below shows a summary of the ratios for the proposed business.

1 hour!
The minimum time our certified writers need to deliver a 100% original paper
2015
Liquidity ratios
Current
Quick
Leverage ratios
Total Debt to Total Assets0%
Debt to Net Worth0%
Current Liabilities to total liabilities0%
Profitability ratios
Net Profit Margin23%
Return on Equity43%
Activity Ratios
Accounts Payable Turnover27.22
Payment Days21
Total Asset Turnover0.43

The business does not have both current and long term assets. This implies that the leverage level is zero. Further, the liquidity ratios cannot be estimated. The liquidity and efficiency ratios were relatively high. This implies that the business is expected to perform well at the end of the first year (Shapiro 2005).

Break even analysis

Total revenue (P * Q) = total cost [Variable (VC * Q) + fixed cost]

1.46 * Q = (0.46 *Q) + 75.66046

1Q = 75.66046

Q = 75.66

Thus, the break-even number of units is 75.66. The break-even amount of sales is €110.75. The break-even annual sales total to €1329.02. The estimated annual revenue for the year 2015 is €7,759.11. This value exceeds the break-even annual sales. This shows that the business is profitable (Brigham & Michael 2009).

Profit projection

The table presented below shows the profit projection for four years. The calculations will be based on the assumption that the business will grow at 4% annually.

Remember! This is just a sample
You can get your custom paper by one of our expert writers
20152016201720182019
Sales7,759.118,069.478,392.258,727.949,077.06
Total Cost of Sales3,323.933,456.893,595.163,738.973,888.53
Gross Margin4,435.184,612.594,797.094,988.975,188.53
Total Operating Expenses2,039.502,121.082,205.922,294.162,385.93
Profit Before Interest and Taxes2,395.682,491.512,591.172,694.812,802.61
Net Profit1,608.861,673.211,740.141,809.751,882.14

References

Brigham, E & Michael, J 2009, Financial management theory and practice, South-Western Cengage Learning, USA.

Shapiro, A 2005, Capital budgeting and investment analysis, Pearson Education, New Delhi, India.

Print
Need an custom research paper on Cinema Theme Park’s Financial Analysis written from scratch by a professional specifically for you?
808 writers online
Cite This paper
Select a referencing style:

Reference

IvyPanda. (2022, June 3). Cinema Theme Park's Financial Analysis. https://ivypanda.com/essays/cinema-theme-parks-financial-analysis/

Work Cited

"Cinema Theme Park's Financial Analysis." IvyPanda, 3 June 2022, ivypanda.com/essays/cinema-theme-parks-financial-analysis/.

References

IvyPanda. (2022) 'Cinema Theme Park's Financial Analysis'. 3 June.

References

IvyPanda. 2022. "Cinema Theme Park's Financial Analysis." June 3, 2022. https://ivypanda.com/essays/cinema-theme-parks-financial-analysis/.

1. IvyPanda. "Cinema Theme Park's Financial Analysis." June 3, 2022. https://ivypanda.com/essays/cinema-theme-parks-financial-analysis/.


Bibliography


IvyPanda. "Cinema Theme Park's Financial Analysis." June 3, 2022. https://ivypanda.com/essays/cinema-theme-parks-financial-analysis/.

Powered by CiteTotal, free referencing generator
If you are the copyright owner of this paper and no longer wish to have your work published on IvyPanda. Request the removal
More related papers
Cite
Print
1 / 1