Financial Management of a Small Burger Restaurant Coursework

monetary Management of a Small Burger Restaurant - Coursework ExampleThey provide a rough idea of how the dividing line can be in future and can even identify argonas of concerns that can appear in future. Each head in the projected financial statement is based on certain assumptions roughly can easily be predicted while some are difficult to predict as they are outside businesss control for e.g. changes in taxes, an unpredictable event etc. (Lasher. 2000 Covello. 1998) In a small business like burger eating house operative in a college campus, since there are no proper planning departments and tools, the projection technique of financial management can be useful. A regular(prenominal) small burger restaurants sources of tax income can be sale of food and beverages. The main heads of be could be the material costs, packaging and transportation of food etc. In any other business, the restaurants dedicate operating expenses like rents, utilities, labor wages, cleaning expenses etc. Such businesses are not operative in a very dynamic environment nor are very large businesses which have many complexities and changes to arrive at account of. The estimated projected income statement for such a business for 3 years can be presented as below Pro-forma 3 years Projected Income Statement YEAR-1 YEAR-2 YEAR-3 SALES REVENUE (NET) ($) ($) ($) Food revenue 505,890 570,276 548,674 Beverage Revenue 151,110 153,884 233,682 Food Cost (143,719) (158,863) (168,542) Beverage Cost (47,906) (44,807) (42,136) TOTAL INCOME 465,375 520,490 571,678 OPERATING EXPENSES Advertising 1,200 2,400 3,000 derogation 36,000 28,800 23,040 Utilities and Phones 31,080 33,300 37,200 Wages 344,925 356,423 367,920 Officers Salary 42,000 43,680 45,420 Rent 7,500 7,500 7,500 TOTAL OPERATING EXPENSES 462,705 472,103 484,080 OPERATING PROFIT 2,670 48,388 87,598 NET PROFIT 2,670 48,388 87,598 The analytic thinking of the projected income statement for three years is detailed below Revenue The busi ness deals and serves meals which include foods and beverages. The restaurant serves food items like burgers, apple pies, nachos and cheese and salads etc, while it mainly serves beverages and soft drinks with the meal. This makes two main products as the revenue generating which are food revenue and beverages revenue. Food & Beverages Revenue The food revenue constitutes around 65% to 75% of the total revenue. We analyzed that on an average a customer spends around $6 on an order. Since we have no study about the units of sales and what items of food are preferred and sold we shall make bold that out of the revenue received from each customer on an average, a portion of average exchange price of food items can be taken as revenue from the food. Similarly for the beverages no information regarding the number of units sold is given, therefore we shall take the revenue as a portion of average exchange price of beverages. The beverages ranges from a price range of $1.29 to $ 1.49 t his means that out of the total $6 spend on an order by a customer $1.29 to $1.49 will be spent on beverages, which makes around 25% to 35% of the average order that is $6. Rest 65% to 75% of the remaining revenue will be generated from food items. Based on this assumption in year 1, if there are 300 customers passing(a) and the business operated 365 days a year and an average customer spending is $6, the food revenue on an estimate can be around 77% which makes $505,890 and the remaining 23% can be