MyGiftShopper. net Financial ments of MyGiftShopper. net have been explained in a detailed manner and different important costs and expenses that the company might have to incur have been recorded. The profit and loss statement of the company shows that the company would suffer loss in the first year; however from the second year profits would start and company would be able to improve its profits with the passage of time. The financial statements reflect the growing opportunities in the market and how the firm would be able to capitalise on the opportunities.
Also one of the positives of the business plan is that the team has prepared a summary of project financial statements along with different financial statements to make it easier for readers. The financial statements have some flaws as the management has overestimated the sales and the growth of the company. The growth of the company as estimated is 76% whereas the industry growth is only 7.5% which shows that either the management is very confident or has overestimated the growth. In addition to this, the Cost of Goods percent to sales for MyGiftShopper. net is 14.4% whereas other firms and even big names like Amazon, Overstock and Bluefly have CoGS ratio to sales of 77.5%, 83%, and 62.5% respectively.
Therefore this indicates the management is overestimating and feeling overconfident. The operating income is 50% of the company whereas competitors like Amazon, Overstock, eBay and Bluefly have operating income of 1.8%, -1.7%, 20.4% and -4.3% respectively. This shows that the management has overestimated the revenues and/or underestimated the costs because of large competitors like Amazon, eBay and others are not able to earn such high operating income margin then how a new firm like MyGiftShopper. net could achieve such high margin.
Therefore, it shows that the calculated figures and the projected financial statements have been overestimated. Endeavor The financial statements of Endeavor have been prepared with great detail to attention. The financial statements reflect hard work the team has put in to prepare the financial statements. Different costs that are associated with the business have been identified and projected by the team in order to analyse the expected profitability of the firm.
Financial statements show that firm would be reporting operating and net loss in the first two years and then in the third year, the company would be able to achieve profits. In addition to this, the team has also conducted valuation techniques that would be helpful for investors to analyse and would assist in their decision making. However other valuation techniques could have also been applied to give better idea to investors. The financial statements projected by the team shows that the revenues of the company would increase by 1,334.5% i the second year and then by 231% in the third year and then by 105% in the fourth year and then it increased by 81% in the fifth year.
The average revenue growth is equal to 438%. The revenues and their annual growth have been shown in the following table: Year 1 Year 2 Year 3 Year 4 Year 5 Revenue 253,500 3,636,525 12,062,550 24,771,778 44,864,391 Growth 1334.53% 231.71% 105.36% 81.11% Although, the business idea is good and could achieve high growth rate however the management has overestimated the revenue as such a growth rate is very rare and therefore this growth rate would misrepresent users of the financial statements.
Similarly, the net profit of the firm has been increasing at a rapid pace and this also reflects that the management has overestimated the financial figures of the firm.