P’kolino case: The P’kolino financials are pretty detailed;
they should begin to acquaint the new entrepreneur with the sort of financial
planning needed to get a substantial enterprise off the ground. Please pay
special attention to the financial assumptions—numbers alone are just
gobbledegook. They need to be based on real assumptions connecting projections
to the real world.
Please answer the
1.How do the common-sized income sheet ratios compare to
industry standards? Can you explain the variances in a way the makes the
projections seem sound?
2.How do the revenues per employee compare to industry
standards? Again, can you explain the variances?
3.Do the financial projections accurately capture all the
expenses that are implied in the written plan (refer back to the previous
4.Is the proposed financing sufficient to cover the
company’s cash flow needs? What happens if sales are not as high or quick to
materialize as expected?