Problem:
I am working on a mini-case i need help constructing an income statement, balance sheet, DDA and value for a venture (that specialized in the development and testing of new drug delivery technologies) with the following factors (limited financial statement projections for the next two years are):
| first year revenues |
$12,500 |
| second year revenues |
$16,000 |
| expenses (including depreciation) |
$125,000/year |
| initial time-zero (net) fixed assets |
$50,000 |
| depreciation |
10% of beginning-of-year net fixed assets |
| accounts payable (yrs 1 and 2) |
$750 |
| inventories (yrs 1 and 2) |
$0 |
| corporate marginal tax rate |
30% |
| accounts receivable (yrs 1 and 2) |
$0 |
| accrued expenses (yrs 1 and 2) |
$300 |
| required cash |
$3,000 |
| debt (all years) |
$0 |
-the world market for biopharmaceuticals was about $50 billion in 2001
-sales of polymer-based drug delivery systems are forecasted to reach $1.4 billion in 2008
-pulmonary delivery systems currently account for one-third of the drug delivery market and sales are projected to reach $22 billion by 2008
-the venture will initially operate as an independent corporation but will be merged into its parent at the end of its second year. at that time the venture's entrepreneurial team will be paid a lump sum of $2.5 million as the terminal value for the venture.
Required to do:
Question 1. How can i construct the venture's income statements for years 1 and 2?
Question 2. How can i construct the venture's balance sheets at startup and at the end of years 1 and 2? if i put initial fixed asset investments in year 0 and initial working capital investments in year 1--and assume the initial $50,000 is equity financed.