Finance & Business | Accounting Principles

Equipment and operating

by on Dec.13, 2009, under Business

Equipment and operating facilities will be limited. As product pick up and deliveries will be required, as well as vehicle for sales travel, both a small van and presentable station wagon will be needed. David Janes has a company car with his present position, thus leasing both vehicles will be necessary for the new venture. Store fitting and fixtures will be required and some storage shelving to store inventory in the garage. It is estimated that the total cost for fitting and fixtures will be $23,000 and this will have to be paid before the store commences trading. Lease rates are paid on a monthly basis with a two month deposit held by the centre management.

Savings accumulated by the Janes permit investing $20,000 in the business as Director Loans and to provide some operating funds. As presently employed the combined incomes of the Janes is in excess of $55,000 per annum. Net income has been directed towards saving for a business opportunity and removing their home mortgage. Reduced salaries will be taken from the new enterprise, $25,000 and $15,000 respectively while anticipating paying the single staff employee a salary of $18,000 and allowing $2000 for direct employee overhead costs.

Operational figures reveal that the venture will not become profitable until the second year and external financing will be required. Anticipating capital value accumulating in the business and payback of Director’s Loans in a reasonable operating period, the venture is considered viable. An overdraft facility of a maximum of $15,000 will be requested from the bank using the personal home property as security.

The information and material contained in this document are the property of P.R & E.M. Rossi cannot be copied, released, or used for purposes other than those authorized by the property holders. All intellectual and property rights remain with the property holders.

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