Task 4.2

New Attempt

Drawing on what you know of the business from the Case Study – Dusk DistilleryLinks to an external site., and the work you have done on the Business Plan, you now establish some financial calculations for the business. 

It’s now April.  The Jan- Mar quarter of the finances has been completed for you based on actual figures in The Finances spreadsheet. You are to refer to these to make projections for the rest of the current financial year (Apr-Jun) as well as projections for the following financial year.  Your task is to aim for a turnover of $2.5M in the next financial year (July-June).  This is achievable with 15% growth for each quarter. 

For Phase 1, when the gin is introduced to the market, Paul expects $50,000 in sales for each of the months of April, May and June.  You are to project an increase of 15% for each quarter of each liquor thereafter.  Paul assures you that the current distillery equipment can produce and dispatch 60,000 litres over the next 15 months – aged, bottled and ready to go. Ensure that you do not factor more than 60,000 litres of alcohol. 

For Phase 2, with financial backing and larger scale distilling systems, productivity is set to increase in future years.  As distilling takes time and rum must be aged, the benefits of larger scale distilling system are out of scope at this time.  You don’t have to consider the higher productivity from a larger distillery plant.  Your goal is to achieve funding in the very near future on projections for the coming financial year.  With the introduction of 30,000 litres of the gin to market as well as 30,000 litres of rum, you should be able to reach it. 

For Phase 3, and again with the funding sought, the cellar doors, gift shop and restaurant will open on the 1st October.  Cash incoming will increase and, with the extra staff and running costs, so will the cash outgoing.  You should make projections that reflect both.   

Download and complete the second worksheet (Exp Cash Flow) in  The Finances spreadsheetDownload The Finances spreadsheet.

populate the income from April onwards.  Ensure that the Total Incomingin the Expected Cash Flow worksheet for the 12 months from July to June (the sum of H12:S12) is close to and at least $2.5M.   This is the target turnover for the financial year (July to June).     You have 60,000 litres of spirits to sell over the next 15 months. 

populate the expenses in the Expected Cash Flowworksheet from April onwards from what you can gather from the Case Study – Dusk Distillery, or from your independent research.   You can estimate the outgoings based on provided costs.  Ensure that the cash incoming for the financial year (July to June) is greater than the total outgoing (the sum of H35:S35). 

As you can see from the completed Start-up and Equipment Capital in The Finances workbook, the business put $500,000 start up capital into the bank and needs to borrow approximately $6M to implement Phases 2 and 3.   If you can demonstrate that the business will turn over $2.5M in the next financial year, you have an argument for a $6M investment. 

Rubric

BSBOPS601 Task 4.2