The below table is the profit and loss projection for the first five business years. The sales are seen to increase each year, causing a considerable increase in the net profit too.

From the above analysis, the US industry size of the fashion designer industry was valued at USD 3 billion in 2021 and is expected to grow at a compound annual growth rate (CAGR) of 5% from 2021 to 2026. Therefore, it was assumed that USD 3 billion of the fashion designer industry in 2021 yielded an increase of 5% in the year 2021 to 2026. Therefore, the US industry research of $ 3,000,000,000 projected in 2021 yielded an increase of 0.2% in which a total revenue of $ 6,000,000 would be made in the year 2021. Every business always aspires to increase its sales. With the marketing strategy adopted, it is assumed that this will yield an increase of 20% in the subsequent years of business activities, causing the revenue for each year to increase too.

https://www.ibisworld.com/united-states/market-research-reports/fashion-designers-industry/

Chart: Profit and Loss

Cash Flow Statement

Below is a cash flow statement projection for five years showing the movement of cash within the business. It is assumed that the owner of the business is seeking an investor’s fund of $4,000,000 to finance the funding of the business.

Chart: Cash Flow

The graph above shows the upward movement of the closing cash balance, which indicates that there is an increase in the cash balance at the end of every period.

Balance Sheet

Below is the financial forecast of the balance sheet for the business. The below table shows the steady growth in the net worth of the organization; this shows that the business is a very profitable one. All long term assets are assumed to have depreciated after five years.

Table: Balance Sheet

Chart: Net Worth

Break-Even Analysis

Break-even is the point where the business neither makes profit nor loss. This means that at break-even, the business is only able to pay up its expenses, both fixed and variable cost, without any excess. The essence of break-even is to determine the number of sales that could lead to profitability. Below is the formula for break-even

Sales = total cost

Sales = fixed cost + variable cost

Sales = $ 2,780,000 + sales (0%)

Sales (1-0) = $ 2,780,000

Sales (1) = $ 2,780,000

Sales = $ 2,780,000 = $ 2,780,000

This means that there must be more than $ 2,780,000 worth of sales yearly before any profit can be recorded. The above analysis can be seen in the below graph showing the curve of sales and total cost. A different amount of sales is assumed to show the possibility of an intersection which indicates the break-even point, beyond which the company starts making a profit.

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