******PLEASE ANSWER QUESTIONS 7 and 8 .********** the other answers are already completed.

FIT FORWARD INCOME STATEMENT CASE STUDY

Fitness and outdoor recreation coaches and professionals offering personal and group training.

Sarah wants to start a new business. She has been testing the business the past year as the only employee and has several clients (she works 20 hours a week at this in addition to her other job). She wants to form a formal business. She has made a business plan and wants to apply for a bank loan to start her new business, Fit Forward. She needs to a) determine how much money she should ask for; and b) prepare her documents for her meeting with the bank manager a project balance sheet and project income statement. Below is the information you have gathered from Sarah. Answer the following guided questions to help her.

Please submit the assignment as a word document you can save as FIT FORWARD_yourname. I can accept pdf files but it is a lot easier to provide feedback in word documents. You can delete the Q & As with Sarah for the submitted assignment.

BALANCE SHEET

How much money does she need to get started?

You: Do you have any inventory?

Sarah: No, I dont have any inventory this is a service. Im not selling a product.

You: Do you have equipment?

Sarah: Im going to run the business from home. But I need $12,000 for computer, website development and hosting, and fitness/outdoor rec equipment.

You: Do you have any cash assets? You should have some cash assets to cover your operating expenses for 3 months.

Sarah: I do have some personal cash assets but I have to figure out how much I need for 3-months of operating expenses.

You: Ok. I will ask you about your overhead expenses in a bit to figure out what cash you would need on-hand.

How are you planning to finance the investment?

You: How much of your own capital are you investing?

Sarah: I have $5,000 in personal savings. And I inherited $10,000 from my grandparents. So $15,000.

How much do you expect your operating expenses will be?

You: Tell me, how much do you expect your operating expenses will be? How much to run the business even if you had 0 clients?

Sarah: I will be running the business out of my home. So I am estimating 10% of my household expenses for the business.

• My mortgage, rent, is $1800/month. So that would be $180 a month or $2160/year (10%).
• I need internet and cell phone. Cell phone is $80/month. Rogers internet, fastest speed, is $89/month. Thats $169 a month. So that would be $16.9 a month or $312 per year (10%)
• Heat/Electricity/Water is $420 a month. So thats $42 a month (10%) or $504 per year.

FIT FORWARD PROJECTED BALANCE SHEET

ASSESTS		LIABILITIES AND EQUITY
Cash	$ ?? Question 1 ??	Bank loan	$ ?? Question 8 ??
Inventory	$ ?? Question 2 ??
Current Assets	$ ?? Question 3 ??	Current Liabilities	$ ?? Question 9 ??
Long-Term Assets:		Equity:
Equipment	?? Question 4 ??	Owner Capital	?? Question 6 ??
TOTAL ASSETS	$ ?? Question 5 ??	L. & EQUITY	?? Question 7 ??

Based on the information Sarah provided above, complete the Balance Sheet by answering these guided questions. Answer below each question and also fill in the Balance Sheet table above. Make sure you show ALL of your work towards the answer in words or numbers.

1. What cash assets should Sarah have on hand. These assets should equal 3 months of operating expenses.

1. a) Determine Sarahs Total Operating Expenses Sara has her personal savings and some external income deem her grandparents. This is called cash in hand asset. Yes the asset is equal to 3 months of operating expenses even though Sara has more. Saras operating expenses are internet, phone bill, heat, electricity, water and house rent 1b) How much cash assets required for 3 months of operating expenses? The cash asset required for 3 months of operating expenses is approximately $716.70

2) What is the inventory?

Inventory refers to all the items, goods, merchandise, and materials held by a business for selling in the market to earn a profit.

3) What are Total Current Assets?

Total current assets is the aggregate amount of all cash, receivables, prepaid expenses, and inventory on an organizations balance sheet.

4) What are Long-Term Assets? Equipment?

Long term assets (also called fixed or capital assets) are those a business can expect to use, replace and/or convert to cash beyond the normal operating cycle of at least 12 months.

4a) Has Sarah correctly estimated her equipment? Is there any she may have left out? Is there anything she may have included incorrectly? (2 points note you do not need to correct any problems just point them out).

No, Sara has estimated all the equipment, she does have have anything left out and has not included anything incorrectly

5) What are Total Assets?

Total assets refers to the total amount of assets owed by a person or entity.

6.) What is Sarahs capital investment into the company the equity she is putting in?

Saras capital invested into the company is $15000

7) We are planning on a projected balanced bottom line. That means that Assets must equal Liabilities+Equity. What are the companies projected Liabilities and Equity?

8) What dollar amount should Sarah seek as a bank loan?

9) What are the current liabilities?. Current liabilities are short term debt of a company that must settle in one year with cash. Current liability are banks over draft, creditors, bills payable etc.