BalanceSheet IncomeStatement

Start a business a lemonade stand

• Put in 1000 shares of your own money (1000 \$)

• Borrow 500 through shares to an investor (1\$ each)

• Borrow 250 \$ from a friend at 10% interest p.a. (money earned through this does not need to be redistributed to shareholders)

Buy a lemonade stand (fixed assets) and supplies (inventory)

First year of operation income statement

Income statement:

• Profitability

• Revenues

• Expenses

• Net profits

Assumptions:

• It takes one year to sell 800 cups

• Price 1\$ / cup

• 530\$ / year staff payments

Growing the business

Operating assumptions:

• All cash is used to buy addition lemonade stands

• No dividend paid

• We can charge .05\$ more / cup / year

• We can sell 5% more cups / stand / year

  

Cashflow statement

Evaluating value