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Low Tech Tees is a start-up company that sells yellow T-shirts of unique design and content. Based out of Florida, this company plans to expand and sell not only online, but in different shops as well. To start out strong, the company needs capital to purchase a printing machine and the necessary components. It will also need to buy starting inventory and cover any expenses that come with the production of these shirts.
A ten-year forecast of income and expenses was calculated, as well as the company capital costs and its cash flows. This data was analyzed and a return on investment was projected. Assumptions made to obtain these projections were made by comparing supplier shirt prices, ink prices and rent costs. Other assumptions such as the company having a $500 minimum cash balance were also taken into account. Industry averages for sales, interest rates, and taxes were also applied.
As a result of the forecasts and calculations, it is not recommended that one invest the needed amount in this company. Sales numbers would be too low to sustain profitable growth and profit, given the current conditions.