Cash flow projection
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2003 2004 2005 2006 2007 2008
Sales $7,500,000
Cost of Sales $5,025,000
Gross Margin $2,475,000
SG&A Expense $394,737
Depreciation $375,000
Interest Expense $25,000
Taxable Income $1,680,263
Taxes $571,289
Net Income $1,108,974
Read the Blue Mesa Sales and Cost Projections provided in Materials below and use that information as the basis for your cash flow projections.
Use the template in Materials to complete your cash flow estimates, making sure to fill in all the cells
The following are the sales and cost projections for the first year of the project.
2003
Sales $7,500,000
Cost of Sales $5,025,000
Gross Margin $2,475,000
SG&A Expense $394,737
Depreciation $375,000
Interest Expense $25,000
Taxable Income $1,680,263
Taxes $571,289
Net Income $1,108,974
Sales are expected to grow 15 percent in the first year and 10 percent a year for the next four years. Gross margin is expected to stay constant as a percentage of sales, as are SG&A expenses. PP&E is expected to increase by $350,000 per year, with depreciation expense remaining at $375,000 per year. Working capital per year is estimated at 35 cents per dollar of sales. The tax rate will remain constant at 34 percent. Interest expense remains constant at $25,000 per year. In 2002 working capital was $2,275,000.
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