Expanding The Dreamx Coffee Business - 1527 Words

Expanding the Dreamx Coffee Business The Dreamx coffee business would be expanding one day keeping in view the trend in the area. This paper aims at proposing the desired expansion plan of Dreamx coffee business which is a small scale business. Financial plan: The expansion of a business will be based upon debt financing as all the available sum was used in launch of first branch. Thus, the Dreamx Coffee Parlor business plan has been created mostly by views that are all the basic components of an ideal business plan. One must realize that financing is needed at every stage of the business. It is needed from starting up business till ramping it up to the profitability. Financing needs vary from business to business. For example retailers†¦show more content†¦Efficient budget allocation is the prime duty of the finance department. Financial plan of the new branch will ensure a specific profit margin after the payment of finance cost (Ayyagari et al., 2007). The following financial terms will help us to lay a sound financial plan for our new branch: Solvency: Solvency can be defined as financial health of the company in long term. In order to interpret about the financial health of the company, the following ratios will help us; Debt Ratio: Debt ratio can be calculated as; Total Liabilities /Total assets * 100 The debt ratio of the company is expected to follow the following trend with dip in some years due to more current liabilities and leverage of the company. Ages of payables: Increase in the ages of the payable was due to increased and improved relationship with suppliers. Cash Debt Coverage: Cash debt Coverage can be calculated as; Net Operating Cash Flow / Average Total liabilities There are negative cash flows expected during launch of any new business plan. This negative cash would improve due to reduction in total liabilities and improvement in the cash flows. Interest Coverage Ratio Interest Coverage Ratio can be calculated as; Profit before interest tax / Interest The interest cover ratio provides the basis for the company higher returns. This ratio would be lower in the initial period because of the increased debt expenses. Later on it will become higher due to paying of all the debts. Profitability: