FIN 515 Online Class Help & Corporate Finance Assignment

Executive Summary

Bean Haven Coffee Co is a specialty coffee business venture requiring comprehensive startup financing to establish operations. This FIN 515 assignment presents a detailed financial plan including capital structure, startup expenses, opening day balance sheet, and owner's personal financial statement. The business model combines a fixed retail location with a mobile coffee truck to serve the growing demand for premium, fair-trade coffee in the local market.

Sources of Capital - Total Funding: $152,920

The startup capital structure demonstrates a balanced approach to financing, combining equity investment with debt financing to minimize risk while maintaining adequate working capital reserves.

Equity Financing: $90,000 total investment
• Pere Osoba (60% ownership): $60,000
• Angel Investor (40% ownership): $30,000

Debt Financing Breakdown:

• Bank Loans: $55,000 from Community Growth Bank (Small Business Loan)
• Vendor Financing: $7,920 for espresso machine equipment
• Total Debt: $62,920
• Debt-to-Equity Ratio: 0.70 (indicating conservative leverage)

Startup Expenses - Total Investment: $156,920

The comprehensive startup expense budget covers all necessary investments to launch Bean Haven Coffee Co, from real estate and equipment to working capital and contingency reserves. Note: Total expenses ($156,920) exceed available funds ($152,920) by $4,000, requiring reconciliation through either additional capital or expense reduction.

Major Capital Expenditures:

• Capital Equipment ($68,200): Espresso machines & grinders ($30,200), mobile coffee truck ($20,000), furniture & seating ($8,000), refrigeration & POS system ($10,000)
• Leasehold Improvements ($20,000): Interior décor and build-out for retail location
• Buildings/Real Estate ($6,000): Purchase costs and initial setup ($5,000 + $1,000 other)
• Opening Inventory ($4,100): Fair-trade coffee beans ($1,500), pastries ($800), supplies ($1,500), cleaning supplies ($300)
• Working Capital ($25,000): Operating cash reserve for first 3 months
• Contingency Fund ($21,320): Reserve for unexpected expenses (13.6% of total budget)

Additional startup costs include location and administrative expenses ($6,000), advertising and promotional expenses ($4,500), and other technology expenses ($1,800) for POS software and online ordering integration.

Opening Day Balance Sheet - Bean Haven Coffee Co

The opening day balance sheet presents the financial position of Bean Haven Coffee Co at launch, showing total assets of $133,500 balanced against liabilities and owner's equity. This statement demonstrates sound financial structure with adequate liquidity and manageable debt levels.

Assets Breakdown:

• Current Assets ($30,300): Cash in bank ($25,000), inventory ($4,100), prepaid expenses ($450), other ($750)
• Fixed Assets ($97,200): Machinery & equipment ($68,200), furniture & fixtures ($8,000), leasehold improvements ($20,000), other ($1,000)
• Other Assets ($6,000): Security deposit for retail location
• Total Assets: $133,500

Liabilities & Net Worth:

• Current Liabilities ($10,460): Accounts payable ($1,500), notes payable due within 12 months ($3,960), current portion of long-term debt ($5,000)
• Long-term Liabilities ($25,000): Bank loans payable greater than 12 months ($30,000 less short-term portion of $5,000)
• Total Liabilities: $35,460
• Owners' Equity (Net Worth): $98,040
• Current Ratio: 2.90 (indicating strong short-term liquidity)

Personal Financial Statement - Pere Osoba (Owner)

The owner's personal financial statement demonstrates creditworthiness and ability to support the business venture. Pere Osoba maintains a strong personal financial position with $84,000 net worth, providing additional security for lenders and investors.

Personal Assets ($135,000):

• Cash & Investments: Checking ($15,000), savings ($10,000), CDs ($5,000), mutual funds/ETFs ($12,000), retirement funds ($20,000), emergency fund ($3,000)
• Real Estate: Home equity ($45,000), land plot/family property ($10,000)
• Personal Property: Vehicle ($7,000), furniture & electronics ($3,000), life insurance cash value ($5,000)

Personal Liabilities ($51,000): Credit card debt ($2,500), personal line of credit ($3,000), home mortgage ($35,000), student loans ($7,500), insurance premiums ($1,000), miscellaneous obligations ($2,000)

Personal Net Worth: $84,000 (Assets $135,000 - Liabilities $51,000)

Security and Collateral for Loan Proposal

To secure the $55,000 bank loan and $7,920 vendor financing, Bean Haven Coffee Co offers substantial collateral and personal guarantees:

• Mobile Coffee Truck: $20,000 value (leased asset)
• Espresso Machines & Grinders: $30,000 collateral value
• Furniture & Fixtures: $6,000 collateral value
• Total Collateral Value: $56,000

Loan Guarantors: Pere Osoba (Owner), Angel Investor (TBD), Sarah Nguyen (CPA), Michael Rivera (Esq.), and Community Growth Bank

Conclusion

This comprehensive FIN 515 business startup financial plan for Bean Haven Coffee Co demonstrates thorough financial planning and analysis skills essential for entrepreneurial success. The plan presents a realistic capital structure combining $90,000 in equity with $62,920 in debt financing, detailed startup expense budgeting totaling $156,920, and a strong opening day balance sheet showing $133,500 in assets.

The owner's personal net worth of $84,000 provides additional creditworthiness and demonstrates commitment to the venture. Key financial ratios indicate sound financial health: a current ratio of 2.90 shows strong liquidity, while a debt-to-equity ratio of 0.70 reflects conservative leverage. The $4,000 funding gap between available capital ($152,920) and planned expenses ($156,920) requires resolution through either expense reduction or additional capital raising before launch.

Financial Planning Best Practices Demonstrated

• Comprehensive capital structure analysis with multiple funding sources
• Detailed line-item budgeting for all startup expenses
• Professional balance sheet preparation following GAAP standards
• Personal financial statement supporting business creditworthiness
• Collateral identification and loan guarantee arrangements
• Contingency planning with 13.6% reserve fund
• Working capital adequacy for 3-month operating expenses

Results & Grade

Final Grade: A+ (96/100)

The professor praised the comprehensive and well-organized business startup financial plan, noting the realistic capital structure, detailed expense budgeting, and professional presentation of financial statements. The assignment demonstrated strong understanding of entrepreneurial finance, startup funding strategies, and financial statement preparation. Minor deduction for the $4,000 funding gap that requires reconciliation, but overall execution was excellent.

Why This Assignment Succeeded

• Complete and realistic startup capital structure with multiple funding sources
• Detailed line-item budgeting covering all necessary startup expenses
• Professional opening day balance sheet following GAAP accounting standards
• Comprehensive personal financial statement demonstrating owner creditworthiness
• Appropriate collateral identification and loan security arrangements
• Conservative financial ratios (current ratio 2.90, debt-to-equity 0.70)
• Adequate contingency planning with 13.6% reserve fund
• Clear identification of funding gap requiring resolution