Comfy_MirandaLoukota_Memo

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Maryville University *

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Jun 10, 2024

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Uploaded by MissRedDevil

Miranda Loukota 435 Meadow Cir. Greenwood, IN 46142 28 January, 2024 To: The Shark Subject: Future Projections for The Comfy Dear Shark, After looking at the projected growth for The Comfy for year 2 and year 3 of operations, it has been determined that additional funding would not be needed to support the projected growth in sales. If you look at the balance sheet for the first three years below, you can see that from the projections we are able to steadily balance assets and liabilities and equity, while maintaining a rapidly growing retained revenue. Balance Sheet Year 1 Year 2 Year 3 Assets Current Assets 4,082,500 5,324,805 7,987,207 Long-Term Assets 8,165,000 10,649,610 15,974,414 Total Assets 12,247,500 15,974,414 23,961,621 Liabilities Accounts Payable $ 3,266,000 $ 4,259,843.80 $ 6,389,765.70 Long-Term Debt $ 6,067,836 $ 5,131,044 $ 5,483,537 Common Stock $ 100,000 $ 100,000 $ 100,000 Accumulated Retained Earnings $ 2,813,664 $ 6,483,526 $ 11,988,319 Total Liabilities and Equity $ 12,247,500 $ 15,974,414 $ 23,961,621 I feel that part of our additional cash inflow, all of which is currently put into retained earnings, should be added to a rainy-day fund, making sure that if sales decrease, or the economy goes into a downfall, we have enough funds to cover operations for a minimum of six months. Once this goal has been met, we can lower how much is being put into the rainy-day fund and consider issuing some stock for the company, however that amount that would be issued, would be determined later depending on the financial state of the company then.

Product Sale Forecast Online Home Shopping Network Bed Bath and Beyond YR 1 75,000 300,000 200,000 YR 2 100,000 400,000 250,000 YR 3 150,000 600,000 375,000 Current Assets, Long-term assets, and account payable are 25%, 50%, and 20% of sales, respectively. Long-term debt and equity are not fixed in relation to sales. Using the table above, you can see where our product projections for year 3 are currently. If we break this down, then we have a monthly operating cost of approximately $1,575,000, and to cover six months, would need $9,450,000. This is an amount that we already have inside of our retained earnings and would still give us $2,538,319 in excess funds. I believe that the extra funding for the company that we have after meeting and maintaining the rainy- day fund, could be used to look into contracts with companies such as Disney, Pixar, Sony, and video game companies to make products using their characters, which would help not only expand the customer base of The Comfy, by opening it to fanbases, but we could also make these products a limited item to help increase the interest in the item as a rarity, but also charge a slightly higher price to help offset the money that was put in the contract for the use of the characters. Of course, all of this is based on projections, and depending on if these projections are met or exceeded, or not met, would alter our plan, as well as our financial standing. Please let me know if you have any questions, or suggestions about this plan. Thank you, Miranda Loukota The Comfy

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