Form of Ownership Chosen and Reasoning

As we are new entrepreneurs, doing business alone becomes riskier for us so we decided to start a
restaurant business together with 5 friends and slowly we will take our business to a bigger scale
day by day. And at the end of the day, we will succeed.

Partnerships, often called general partnerships, are businesses with more than one owner. If
we are 5 persons in our business then team up on a business venture. Partnerships are usually
founded on formal partnership agreements outlining the ownership share, rights, and
obligations of each partner. Partnerships are a popular type of company ownership for
professional firms.

Partnerships provide some notable advantages, including:

✓ Simplicity: Partnership is a relatively simple structure. Depending on the number of

partners and the terms of your agreement, we can also be relatively simple to run.

✓ Pass-through taxation: Partnerships are pass-through entities, with income passing

through to partners proportionally based on the share of ownership. If our partnership is
split evenly down the middle, for example, 50% of the business’s profits would pass
through to each partner’s personal income.

✓ Control over the business: Partnerships allow their owners to participate in the business
directly and allocate profits and control according to their own wishes. New partners can
be brought in relatively easily.

✓ Shared Responsibility: A partnership allows for shared responsibility and shared risk.
This means that the burden of running the restaurant business is shared between partners,
and decisions can be made collaboratively.

✓ Increased Resources: Partnerships can also provide access to more resources, including
financial resources, expertise, and networks. This can help a restaurant business to expand
more quickly than if it were run by a single individual.
Organizational Chart
Compensation and Benefits Packages

Compensation and benefits (C&B), which deals with the payment of employees and the provision
of benefits. It includes the process of determining how much an employee should be paid and
deciding what benefits should be offered. C&B also encompasses the administration of employee
benefits programs, including enrolling employees in benefits plans, processing claims, and
communicating information about benefits to employees.

C&B professionals must stay up-to-date on changes in labor laws and regulations that affect
employee pay and benefits. They also need to be knowledgeable about the various benefits plans
available and the costs of those plans. C&B professionals must be able to design benefits programs
that meet the needs of the organization and its employees. They must also be able to administer
benefits programs efficiently and effectively.

Aspects of Compensation and Benefits

Compensation and benefits are two important aspects of human resources. Compensation includes
wages and salaries, while benefits include things like health insurance, vacation time, and pension
plans. Compensation and benefits are important because they can help attract and retain talented
employees. In order to be competitive, it is important for companies to offer a good compensation
and benefits package.

Benefits of Compensation and Benefits

There are many benefits to a well-designed compensation and benefits program. First, a good
program can help to attract and retain talented employees. It can also help to motivate employees
to achieve the organization's goals. Compensation and benefits programs can also be used to
reward employees for their hard work and dedication. Finally, a well-designed program can help
to reduce employee turnover and improve morale.
Staffing Plans

Staff can be 15 persons at start-up. After a few years, staff members will increase. Management
will be a partnership business type. I will employ a sales staff of 3 part-time employees. These
positions are yet to be filled. However, I feel the labor pool is such that finding qualified employees
will not be an issue. In this business, sales associates will be paid a monthly wage, plus a
commission. My management strategies are given below:

✓ Maintaining good communication with my staff.

✓ Build a strong key as a manager.
✓ I take time and use some techniques when I hire staff.
✓ Stay current with business strategies, trends, and processes.
✓ Keep my business neat and tidy.

Key Assumptions
The following assumptions serve as the foundation for the company's financial
projections. These very conservative assumptions are anticipated to deviate, but
only a little, such that the company's primary financial strategy won't be
compromised.
Year 1 Year 2 Year 3
Current Interest Rate 9% 10% 11%
Long-term Interest 11% 11% 11%
Rate
Tax Rate 5% 5% 5%
Others 0% 0% 0%
Breakeven Analysis
This Break-even Analysis tables

Assumptions
Average Percent Variable Cost 10%
Estimated Monthly Fixed Cost 30,000
Estimated Monthly Revenue Break-even 30,000/ (1-.10)
=33,333

Analysis & Data

✓ Income Statement
✓ Cashflow Statement
✓ Balance Sheet
✓ Ratio Analysis
 Business Name
Income Statement
January 2023 - December 2023
Forecasted Profit and Loss account for 3 years:

Title Year 1 Year 2 Year 3

Forecasted sales 12,00,000 15,00,000 18,00,000

Forecasted costs (Purchase) 8,00,000 9,50,000 10,00,000

Gross margin 4,00,000 5,50,000 8,00,000

Gross margin (%) 33.33 36.66 44.44

Expenses
Payroll 13,500 16,000 19,000

Sales and marketing and 1,500 2,000 2,500

other expenses
Depreciation 3,000 3,000 3,000

Leased equipment - - -

Utilities 4,000 4,500 5,000

Repairs of Fixed Assets 5,000 7,000 7,500

Postages & Telegrams 1,500 2,000 2,500

Stationary 1,000 1,200 1,500

Packaging 500 700 1000

Travelling 5,000 8,000 10,000

Insurance 2,500 2,500 2,500

Rent 7,000 7,500 8,000

Payroll taxes 25,000 30,000 32,000

Other 500 700 1200

Total Operating expenses 70,000 85,100 95,700

Profit before interest and 3,30,000 4,64,900 7,04,300

taxes
Interest expenses - - -

Tax incurred 26,000 35,000 40,000

Net profit 3,04,000 4,29,900 6,64,300

Net profit/sales (%) 25.33 28.66 36.90

 Business Name
Cashflow Statement
January 2023 - December 2023
Cashflow Statement for 3 years

Cash Received Year 1 Year 2 Year 3

Cash from Operating
Activities:
Cash Sales 12,00,000 15,00,000 18,00,000

Receipts from other 50,000 80,000 1,00,000

operating activities
Subtotal Cash for 12,50,000 15,80,000 19,00,000
Operations
Additional Cash Received
Sales Tax, VAT, HST/GST 10,000 12,000 15,000
Received
Sales of Other Current 25,000 30,000 50,000
Assets
New Investment Received 1,00,000 2,00,000 3,00,000

Subtotal Cash Received (A) 13,85,000 18,22,000 22,65,000

Expenditures
Expenditures from
Operations
Cash Spending 4,00,000 5,00,000 6,00,000

Cash payments to 1,00,000 1,20,000 1,50,000

employees
Cash payments to suppliers 80,000 1,20,000 2,00,000
Income taxes paid 10,000 12,000 15,000

Payments from other

operating activities
Bill Payments 1,50,000 2,50,000 3,00,000

Subtotal Spent on 7,40,000 10,02,000 12,65,000

Operations
Additional Cash Spent
Sales Tax, VAT, HST/GST 5,000 7,000 10,000
Paid Out
Purchase Long-term Assets 50,000 80,000 1,00,000

Subtotal Cash Spent (B) 7,95,000 10,89,000 13,75,000

Net Cash Flow (A-B) 5,90,000 7,33,000 8,90,000

Cash Balance 1,25,000 1,68,000 3,60,000

 Business Name
Balance Sheet
January 2023 - December 2023
Balance sheet for 3 years

Assets Year 1 Year 2 Year 3

Current Assets
Cash in hand 1,25,000 1,68,000 3,60,000
Accounts Receivable 30,000 40,000 50,000
Unused stationery 1500 2,000 2,500
Expenses made in advance 1200 1300 1700
Other Current Assets 0 0 0
Total Current Assets 1,57,700 2,11,300 4,14,200
Long-term Assets
Furniture’s 1,30,000 1,30,000 1,30,000
Office Equipment 40,000 40,000 40,000
Machinery 20,000 30,000 40,000
Less: Accumulated Depreciation (Long (4,000) (8,000) (12,000)
Term Assets)
Total Long-term Assets 1,86,000 1,92,000 1,98,000
Total Assets 3,43,700 4,03,300 6,12,200
Liabilities and
Current Liabilities
Accounts Payable 50,000 70,000 85,000
Creditors 20,000 30,000 35,000
Outstanding Expense 10,000 15,000 20,000
Advance income 20,000 25,000 40,000
Subtotal Current Liabilities 1,00,000 1,40,000 1,80,000
Long Term Liabilities 1,20,000 1,50,000 2,00,000
Retained Earnings 1,23,700 1,13,300 2,32,200

Total Liabilities and Capital 3,43,700 4,03,300 6,12,200

Major types of Ratios

Liquidity Ratio

• Current Ratio
• Quick Ratio
• Net Working Capital

Activity Ratio

• Fixed Asset Turnover

• Total Asset Turnover
• Accounts Receivable Turnover
• Collection Period
• Accounts Payable Turnover
• Payable Deferral Period

Profitability Ratio

• Gross Profit
• Operating Profit
• Net Profit
• Return on Asset
• Return on Equity

Ratio Analysis

A tool used by analysts which utilizes the relationship between accounting figures and their
trends over time to establish values and evaluate risks. Ratio analysis provides analysts with
useful information understand about developing insights into the economic characteristics of
different industries and different firms in the same economic additional, different over time in a
single firm or between firms due to operation, financing, and investing decisions made by

management as well as an external economic factor is often highlighted by the common-side

statement
Purpose and Use of Ratio Analysis

A primary advantage of ratios is that they can be used to compare the risk and return relationships of
firms of different sizes. Ratios can also provide a profile of a firm, its economic characteristics and
competitive strategies, and its unique operating, financial, and investment characteristics. In addition,
ratios are very informative for the firm’s insiders and outsiders. Ratio analysis expresses the relationship
among selected financial statement data. The relationship is expressed in terms of a percentage, a rate,
or a simple proportion.

Liquidity Ratios

𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝑨𝒔𝒔𝒆𝒕𝒔
Current Ratio =
𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝑳𝒊𝒂𝒃𝒊𝒍𝒊𝒕𝒊𝒆𝒔
𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝑨𝒔𝒔𝒆𝒕𝒔−𝑰𝒏𝒗𝒆𝒏𝒕𝒐𝒓𝒊𝒆𝒔−𝑷𝒓𝒆𝒑𝒂𝒚𝒎𝒆𝒏𝒕𝒔
Quick Ratio=
𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝑳𝒊𝒂𝒃𝒊𝒍𝒊𝒕𝒊𝒆𝒔
𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝑨𝒔𝒔𝒆𝒕𝒔−𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝑳𝒊𝒂𝒃𝒊𝒍𝒊𝒕𝒊𝒆𝒔
Net Working Capital Ratio =
𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝑳𝒊𝒂𝒃𝒊𝒍𝒊𝒕𝒊𝒆𝒔

Title Year 1 Year 2 Year 3

Current Ratio 1.58 1.50 2.30

Quick Ratio 1.56 1.50 2.29
Net Working Capital Ratio 0.58 0.51 1.30

Liquidity Ratio
2.5

1.5

0.5

0
Year 1 Year 2 Year 3

Current Ratio Quick Ratio Net Working Capital Ratio

Activity Ratio

𝑹𝒆𝒗𝒆𝒏𝒖𝒆
Fixed Asset Turnover = 𝑨𝒗𝒆𝒓𝒂𝒈𝒆 𝑭𝒊𝒙𝒆𝒅 𝑨𝒔𝒔𝒆𝒕𝒔

𝑹𝒆𝒗𝒆𝒏𝒖𝒆
Total Asset Turnover = 𝑨𝒗𝒆𝒓𝒂𝒈𝒆 𝑵𝒆𝒕 𝑻𝒐𝒕𝒂𝒍 𝑨𝒔𝒔𝒆𝒕𝒔

𝑹𝒆𝒗𝒆𝒏𝒖𝒆
Receivable Turnover = 𝑨𝒗𝒆𝒓𝒂𝒈𝒆 𝑹𝒆𝒄𝒆𝒊𝒗𝒂𝒃𝒍𝒆𝒔

𝟑𝟔𝟓
Collection Period = 𝑹𝒆𝒄𝒆𝒊𝒗𝒂𝒃𝒍𝒆 𝑻𝒖𝒓𝒏𝒐𝒗𝒆𝒓 𝑹𝒂𝒕𝒊𝒐

𝑷𝒖𝒓𝒄𝒉𝒂𝒔𝒆𝒔
Payable Turnover = 𝑨𝒗𝒆𝒓𝒂𝒈𝒆 𝑷𝒂𝒚𝒂𝒃𝒍𝒆𝒔

𝟑𝟔𝟓
Payable Deferral Period = 𝑷𝒂𝒚𝒂𝒃𝒍𝒆 𝑻𝒖𝒓𝒏𝒐𝒗𝒆𝒓 𝑹𝒂𝒕𝒊𝒐

Title Year 1 Year 2 Year 3

Fixed Asset Turnover 6.45 7.81 9.01
Total Asset Turnover 3.49 3.72 2.94
Receivable Turnover 40 38 36
Collection Period 9.12 9.6 10.14
Payable Turnover 16 13.57 11.76
Payable Deferral Period 22.81 26.89 31.04

Activity Ratio
45
40
35
30
25
20
15
10
5
0
Fixed Asset Total Asset Receivable Collection Payable Payable
Turnover Turnover Turnover Period Turnover Deferral Period

Year 1 Year 2 Year 3

Profitability Ratio

𝑮𝒓𝒐𝒔𝒔 𝑷𝒓𝒐𝒇𝒊𝒕
Gross Profit Margin = 𝑹𝒆𝒗𝒆𝒏𝒖𝒆
×100

𝑶𝒑𝒆𝒓𝒂𝒕𝒊𝒏𝒈 𝑷𝒓𝒐𝒇𝒊𝒕
Operating Profit Margin = ×100
𝑹𝒆𝒗𝒆𝒏𝒖𝒆
𝑵𝒆𝒕 𝑷𝒓𝒐𝒇𝒊𝒕
Net Profit Margin = 𝑹𝒆𝒗𝒆𝒏𝒖𝒆 ×100
𝑵𝒆𝒕 𝑰𝒏𝒄𝒐𝒎𝒆
Return on Asset =
𝑨𝒗𝒆𝒓𝒂𝒈𝒆 𝑻𝒐𝒕𝒂𝒍 𝑨𝒔𝒔𝒆𝒕𝒔
𝑵𝒆𝒕 𝑰𝒏𝒄𝒐𝒎𝒆
Return on Equity =
𝑨𝒗𝒆𝒓𝒂𝒈𝒆 𝑻𝒐𝒕𝒂𝒍 𝑬𝒒𝒖𝒊𝒕𝒚

Title Year 1 Year 2 Year 3

Gross Profit Margin (%) 33.33 36.66 44.44

Operating Profit Margin (%) 27.5 31 39

Net Profit Margin (%) 25.33 28.66 36.90
Return on Asset (%) 0.89 1.07 1.09
Return on Equity (%) 2.46 3.48 2.86

Profitability Ratio
50
45
40
35
30
25
20
15
10
5
0
Gross Profit Margin (%) Operating Profit Net Profit Margin (%) Return on Asset (%) Return on Equity (%)
Margin (%)

Year 1 Year 2 Year 3