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Financial analysis and funding plan
Abdussamet akca
30/01/2022
Financial analysis and funding plan
Robots are very important in improving the functionality of the defense industry. The use of robots helps improve the efficiency at the workplace as they can overcome the weaknesses of a human being—the human being as faced with shortcomings such as getting tired while doing their job and making errors. Since there is huge demand s for the products being manufactured by different industries, sometimes has resulted in overstraining on the available labor, which always fails to achieve the targets set for them. Some products are also manufactured from toxic chemicals, which are harmful when exposed to human beings. In the provision of security, robots can detect security threats faster and take faster actions. Because of an increase in demand for robots, our projects will mainly focus on developing robots to be used in both industries and different security agencies. The project aims to develop robots to use factories, treat people and help in providing security.
Project costs
Robot development projects have a lot of costs. To have fully functioning robots requires the robot manufacturer to incur some critical costs. Costs incurred are necessary as they ensure that robot developers become efficient in developing a product that will meet customers’ needs. Some of the critical costs necessary in the manufacturing and development of the robots include research and development costs, material costs, installation costs, engineering costs, labor costs, technological costs, maintenance costs, and other costs.
Research and development costs
Robot technology is new. Many people and businesses have little knowledge about the functioning and effectiveness of robots. There are also functions that people carry out, which robots can carry out. Research and development costs are important costs that have to be incurred by an organization. Through research, an organization will be able to understand different roles and activities carried out in manufacturing and other sectors that robots can perform. Research identifies gaps that have not been addressed by existing robotic technology, and strategies are developed in the area.
Material costs
The manufacture of robots requires different types of materials. The raw material, which includes metals, batteries, and systems that ensure the efficient functioning of robots, is essential in robots’ development. These materials are usually outsourced from outside suppliers at a price. Robots’ development will therefore cost a company material. Material required to manufacture robots can be costly since they are a special type of metal.
Labor costs
Human labor is critical in the manufacturing of robots. People are employed in the firm to perform administrative duties. Human beings also operate machines used in robots manufacturing. Therefore, a human being performs a critical role in ensuring the running of the firm in terms of efficiency. The firm usually employs these people to work in the manufacturing firm, and they receive wages and salaries for the work they do in an organization.
Technological costs
Technology is key in the actualization of robots’ development. Robots, which are by themselves technology, operate under sophisticated automated Intelligence. Automated intelligence technology is costly, and its implementation costs an organization resource. Manufacturers spend their finances in developing technology and operating the technology they use. Technology that has been implemented also needs periodic maintenance to ensure that it is performing well. Maintenance costs also include repairing faulty machines used in the manufacturing process.
Installation costs
For the robots to function, they are supposed to be installed. Automated technology needs to be installed to realize the use of robots. Machines and all required technology that ensure accurate performance are installed and ensure that there is an efficient performance of the tasks assigned to them. The manufacturer has to be ready to incur the initial installation of machines used in the manufacturing process and all technology necessary for the proper functioning and operation of the manufacturing process.
Cost Budget
Budget item
Estimated Cost
Research and development costs
$ 300000
Materials
$ 500000
Machine installation
$ 50000
Labor costs
$ 50000
Technological costs
$ 100000
Total Cost
$1000000
Revenue Streams
Sale of Robots
After the successful establishment of robot manufacturing firms and the production of robots starts, revenues will mainly be generated from the sale of robots. It is expected that manufactured robots will be able to be sold to hospitals, schools, banks. Currently, governments are heavily investing in advanced robots to provide security in sensitive areas. Such provides the ready market for the products; thus, sales of robots become the main source of revenues for the firm. Because of the Covid-19 health measures, manufacturing firms have opted to start using robots that are identified to be cost-effective since they are cheap and efficient. Because of the realization efficiency, the demand for robots has therefore increased. Companies are now opting for a different production method of using convenient robots.
Installation revenues
Installing robots to clients at a small fee helps an organization generate revenues. Some manufacturers purchase robots and fail to install them to start functioning properly. Such clients might hire services from us to help them install those robots on their premises. The installation will be the second-largest stream of revenues for the robot manufacturing firm as clients will pay small fees for the services they provide.
Training revenues
Training clients and employees on the use of robots efficiently at a smaller fee helps generate revenues for the people. Training fee charged on the clients who want to understand operating robots is the organization’s revenue.
Sources of funding
Equity funding
During the commencement of the project, I will carry out equity financing. I will carry out marketing of my idea to potential investors in the company. Those who will accept my idea and invest some of their finances into the company will get to own some company shares. Subscribers will be invited from all over the world, and hence it will ensure that the project succeeds. Equity financing will also be a good option for me since it will help to spread the risk to many people. The shareholders will never ask for cash after investing in the company. They will only transfer ownership to other people when they feel not associated with the company.
Debt funding
Since investing in a robot manufacturing firm requires a lot of capital, it is necessary to look for an alternative source of funds to finance the business’s operations. Debt capital is key to ensuring that the organization can keep running. Even at a smaller interest fee, the company should obtain loans from investment banks and other capital-providing organizations. Debt financing also assures the company amount of revenues that can be raised.
Retained earnings
Profits that the firm generates through sales of robots are plowed back into the business. Such profits are re-invested back into the manufacturing, which helps the business carry out its activities, such as increasing the stock level.
Sales forecast
Year
1
2
3
4
5
6
Sales Revenue
200000
230000
264500
304175
349801.3
402271.4
Projected cash flow statement
Year
1
2
3
4
5
6
Operating cash flow
Net Earnings
91700
114625
143281.3
179101.6
223877
279846.2
Depreciation
30000
30000
30000
30000
30000
30001
Less: Changes in working capital
-20000
-22000
-24200
-26620
-29282
-32210.2
Cash flow from operation
101700
122625
149081.3
182481.6
224595
277637
Investing activities
investment in property & Equipment
-50000
-50000
-50000
-50000
-50000
-49999
Net cash from investing activities
-50000
-50000
-50000
-50000
-50000
-49999
Financing activities
issuance(repayment) of debt
1000000
0
0
-45000
0
0
Issuance(repayment) of equity
1000000
0
0
0
0
0
Cash from financing
2000000
0
0
-45000
0
0
Net Increase (decrease) in cash
2051700
72625
99081.25
87481.56
174595
227638
opening cash balance
0
2051700
2124325
2223406
2310888
2485483
closing cash balance
2051700
2124325
2223406
2310888
2485483
2713121
Proforma Income Statement
Year
1
2
3
4
5
6
Revenue
200000
230000
264500
304175
349801.3
402271.4
Cost of Goods Sold
50000
57500
66125
76043.75
87450.31
100567.9
Gross profit
150000
172500
198375
228131.3
262350.9
301703.6
Expenses
Administrative expenses
15000
17250
19837.5
22813.13
26235.09
30170.36
Depreciation & Amortization
3000
3450
3967.5
4562.625
5247.019
6034.072
Interest
1000
1150
1322.5
1520.875
1749.006
2011.357
Total expenses
19000
21850
25127.5
28896.63
33231.12
38215.79
Earnings before tax
131000
150650
173247.5
199234.6
229119.8
263487.8
Tax
39300
45195
51974.25
59770.39
68735.95
79046.34
Net earnings
91700
105455
121273.3
139464.2
160383.9
184441.5
References
PADURE, G. Using financial management to adopt long-term funding.
Rodrigues, J. C. (2022). Business models for the digital transformation of audiovisual archives. International Journal of Entrepreneurial Behavior & Research.
Sledgianowski, D., Gomaa, M., & Tan, C. (2017). Toward integration of Big Data, technology and information systems competencies into the accounting curriculum. Journal of Accounting Education, 38, 81-93.