Income Statement

Question: Opening a shop with the name of mady vegetarian food. Need to work on the finance and critical risk Financial Demonstrate the viability of the undertaking Pro forma balance sheet, income statement, cashflow statement and break-even chart : Operations. Location( Brunswick Melbourne Australia Vic), labour availability, wage rate, proximity to suppliers, customers and community support, taxes and zoning, plant and equipment Answer: In arriving at a conclusion about the viability of the new business, we have made certain assumptions while drawing up the income statement, balance sheet, cash flow statement and the break-even analysis of the business. We will explain the same under separate headings. All the figures in the analysis are assumed. Income Statement The following assumptions were made: This is the first year of business and the revenue from sales is not much The wage rate in Melbourne, Victoria is $16 per hour as of 2016 ("Melbourne, Victoria City Wages - City of Melbourne Average Hourly Rate - PayScale", 2016) The business does not have any long-term or short-term interest payment obligations It operates where tax is not applicable Cash Flow Following are the assumptions involved: There is no revenue from operations The entire revenue is dependent on cash sales There are no long-term borrowings Absence of tax except a GST payment of $5000 Current assets purchased worth $10000 Balance Sheet The following items were assumed while making the balance sheet: There is no inventory at the end of the year A long term asset was purchased Absence of depreciation Other figures of liabilities are assumed Break Even Analysis Following are the assumptions: The selling price per unit is assumed along with the average cost per unit ("Minimum wages - Fair Work Ombudsman", 2016) Analysis The figures taken in the entire calculation are assumed. Other assumptions made are stipulated above and it can be seen from those figures that the business makes a profit in its first year. Interest on long-term liabilities is absent and depreciation is not charged for the long-term asset purchased ("Evaluating Product Viability", 2016). The business operates in an environment where there is no tax on its income. On the other hand, it has a GST expenditure of $5000 during the year. The prospects are looking good from the financial statements, as it has not incurred any loss during the year depending on the assumed environment of performance. Its operating profits are considerable. The liquidity position of the business is moderate and there is a moderate amount in the form of cash in hand (Taylor, 2016). The business is yet to acquire any long-term asset. Therefore, it can be concluded that the business is viable at the present point of time. References Evaluating Product Viability. (2016).Shopify. Retrieved 4 June 2016, from https://www.shopify.com.au/guides/what-to-sell/evaluating-product-viability Melbourne, Victoria City Wages - City of Melbourne Average Hourly Rate - PayScale. (2016).Payscale.com. Retrieved 4 June 2016, from https://www.payscale.com/research/AU/Location=Melbourne-Victoria/Hourly_Rate Minimum wages - Fair Work Ombudsman. (2016).Fairwork.gov.au. Retrieved 4 June 2016, from https://www.fairwork.gov.au/pay/minimum-wages Taylor, K. (2016).Kroger and Whole Foods might be investing billions into a losing game.Business Insider Australia. Retrieved 4 June 2016, from https://www.businessinsider.com.au/is-online-grocery-actually-the-future-2016-3