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    Object Cost: "Sorbeteros" Will Keep Inventory For The Ice Cream Making Ingredients

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    Lester Sardido
    The document discusses the financial data and capital requirements for a proposed ice cream business called "Sorbeteros". It predicts that Sorbeteros will have positive cash flow due to quick inventory turnover of ice cream products. Details are provided on working capital needs, cash management strategies, inventory management processes, accounts payable terms, and the estimated 61 day cash conversion cycle. A capital budget outlines the estimated costs for land and building acquisition, required equipment, total working capital needs, and total capital needed to start the business.

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    Object Cost: "Sorbeteros" Will Keep Inventory For The Ice Cream Making Ingredients

    Uploaded by

    Lester Sardido
    27 views3 pages
    The document discusses the financial data and capital requirements for a proposed ice cream business called "Sorbeteros". It predicts that Sorbeteros will have positive cash flow due to quick inventory turnover of ice cream products. Details are provided on working capital needs, cash management strategies, inventory management processes, accounts payable terms, and the estimated 61 day cash conversion cycle. A capital budget outlines the estimated costs for land and building acquisition, required equipment, total working capital needs, and total capital needed to start the business.

    Original Title

    Part 2 I Financial Plan

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    The document discusses the financial data and capital requirements for a proposed ice cream business called "Sorbeteros". It predicts that Sorbeteros will have positive cash flow due to quick inventory turnover of ice cream products. Details are provided on working capital needs, cash management strategies, inventory management processes, accounts payable terms, and the estimated 61 day cash conversion cycle. A capital budget outlines the estimated costs for land and building acquisition, required equipment, total working capital needs, and total capital needed to start the business.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    27 views3 pages

    Object Cost: "Sorbeteros" Will Keep Inventory For The Ice Cream Making Ingredients

    Uploaded by

    Lester Sardido
    The document discusses the financial data and capital requirements for a proposed ice cream business called "Sorbeteros". It predicts that Sorbeteros will have positive cash flow due to quick inventory turnover of ice cream products. Details are provided on working capital needs, cash management strategies, inventory management processes, accounts payable terms, and the estimated 61 day cash conversion cycle. A capital budget outlines the estimated costs for land and building acquisition, required equipment, total working capital needs, and total capital needed to start the business.

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    You are on page 1of 3

    II.

    Financial Data
    A. Capital Requirement
    i. Working Capital
    Object Cost
    Raw Inventory 00.00
    Work In Progress 00.00
    Finished Products 00.00
    Accounts Receivable 00.00
    Accounts Payable 00.00
    Total Working Capital 00.00

    Cash Management
    It is predicted that “Sorbeteros” will have a positive cash flow due to
    the quick turnover of the inventory. Ice cream is a quick moving product
    that will not remain stocked for long. We expect highest sales during the
    festive seasons and during school vacation. There will be steady sales
    from our contracted outlets such as hotels and social joints. These will be
    our largest The company will incur substantial costs in procuring and
    processing the fruits. However, these costs will be justified by the
    premium costing structure that we will adopt for the final product to give
    healthy returns.
    Inventory Management
    “Sorbeteros” will keep inventory for the ice cream making ingredients
    (ice cream mix and the fruits) in cold storage at the site. The average
    inventory for the finished product will be 30 days to ensure that we have
    enough stock to meet any surge in demand for the product. We will also
    keep two months’ worth of fruit inventory to ensure that we do not run out
    of supply. We will keep larger batches of fruits that are hard to find to
    ensure that we are always ready to produce all the flavors, even if there is
    an upsurge of orders.
    Even though sales are projected to be constant throughout the year,
    there will be spikes in product demand during vacations, school holidays
    and when the contracted suppliers have conventions at their premises.
    Accounts Payable
    Permanent staffs will be paid monthly salaries. Contracted workers
    will be paid on per-project basis. All the utilities will be paid every month
    (within 18 days after receiving the bill). Ice cream mix will be paid within
    30 days of receiving the invoice. Since defaulting on this payment attracts
    an interest, we will try never to default.
    Cash Conversion Cycle (CCC)
    We are looking to hold only 60 days’ worth of processed fruit in our
    inventory. We will have a 30-day credit window for our collectible accounts
    and up to 30 days for our accounts payables. Given that we will have a
    day’s worth of ice cream as work in progress, we will have an average of
    61 days to generate cash inflows from the inventory. This period will be
    sufficient for us to pick up revenue generation since the working capital
    has been set aside to start the business.
    The calculation is given by the formula:
    CCC = Average Days Inventory + Average Collection Period –
    Average Days Payable CCC = 61 +3 0 – 30 CCC = 61 days

    Capital Budget for “Sorbeteros”


    Sorbeteros Capital Budget
    Project/Activity Est. Cost(In Peso)
    Land Acquisition and Plant Building
    Acquisition of piece of land, preparation, building and
    installation of the plant (with utilities)
    Total Cost P 0.0
    Required Equipment
    Walk in Freezer (Insulated) 0.0
    Sink (4 compartments) 0.0
    Stools (5) 0.0
    1 Fruit sorting table (with conveyor) + 2 processing 0.0
    table
    1 ton refrigerated van 0.0
    Assorted Utensils 0.0
    Ice cream making machine(s) 0.0
    Weighing Scale 0.0
    Vacuum Sealer 0.0
    Double door cooler 0.0
    Gas Stove 0.0
    Total Equipment Costs 0.0
    Total Working Capital 0.0
    Total Capital Needed 0.0

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