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Explanations Behind Each Financial Statement

Autor:   •  March 4, 2014  •  Essay  •  587 Words (3 Pages)  •  1,188 Views

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Explanations Behind Each Financial Statement

Minimum Profit (top-down analysis)

Sales Revenue – Photo-Shoots = When interviewing other photographers I found that 10 clients per month was the lowest amount of clients that they served. To be very conservative I am going to estimate that I will have three clients in the first month, five in the second, seven in the third, and 10 in the fourth. I will be spending a lot of time in my first months in business advertising and trying to obtain a clientele. Therefore, I don't believe that I will have ten customers until the last month. I plan to charge each customer $100 for a photo-shoot. I came to this price after my interviews with other photographers and Donna; it is much under what other photographers are changing but it is still enough that I can make a profit. The lowest price that the other photographers charged was $135. This price does not include the price for hair and make-up. I will contract out this work. Any extra expenses incurred while working for a client will be charged to that client. For example, if they want me to purchase extra props, they will have to pay for the props. If I have 25 clients and charge $100 per client I will make $2500 in revenue.

Cost of Goods Sold = I have estimated that each person who I photograph will buy two 8 by 10 pictures (this estimation is due to information that I obtained through my interview with Donna. Donna, who owns Expressions by DSK, said that a lot of models bought 8 by 10's for their portfolios and that they get 2-4 pictures). It cost $4.99 plus tax to develop an eight by ten picture at Blacks. Multiplied by 1.13 takes into account the HST. If I have three customers the first month, five the next, seven clients in the third month, and 10 in the final month, I will have a total of 25 clients. If each client buys to two pictures it will cost me $282 to get them all developed.

Sales

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