Suppose that you have just "run out of money" and are unable to move your "idea" from its development stage to production and the startup stage. Thus, you remain convinced that with a reasonable amount of additional financial capital you can be a successful entrepreneur. While your expectations are low, you are meeting with a loan officer of the local bank in the hope that you can get a personal loan in order to continue your venture.
A) As you are about to enter the bank, you see a bank money bag lying on the street. No one is around to claim the bag. What would you do?
B) Now let's suppose that what you found lying on the street was a $100 bill. The thought crosses your mind that it would be nice to take your significant other out for a nice dinner- something that you have not had for several months. What would you do?
C) Now instead of $100 you find a $1 bill on the street. The thought crosses your mind that you would buy a lottery ticket with the dollar. Winning the lottery would certainly solve all your financing needs to start and run your venture. What would you do?
8 Ricardo Martinez has prepared the subsequent financial statement projections as part of his business plan for starting the Martinez Products Corporation. The venture is to manufacture and sell electronic components that make standard overhead projectors "smart." In essence through voice commands a projector will be turned on, off, and the brightness of the projection altered. This will allow the user to avoid audience annoyances associated with a bright projection light during periods when no overhead transparency is being used. Venture investors usually screen prospective venture opportunities in terms of projected profitability and financial performance.
A) Use the subsequent projected financial statement for Martinez Products to evaluate financial ratios showing the venture's projected (a) gross profit margin, (b) net profit margin, (c) asset intensity, and (d) ROA
9){Ratio Calculations} Ricardo Martinez, the founder of Martinez Products Corporations, projects sales to double to $400,000 in the second year of operation.
A) If the financial rations evaluated for year 1 in problem 8 remain the same in Year 2, what would be Martinez dollar amount projections in his business plan for (a) gross profit, (b) net profit or income, and (c) total assets?