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Section 1
Team 3
Fall 2016
Business Plan
Business Name: Madison Seaweed, LLC
Business Idea: Sugar Kelp Farming & Harvesting
Team Members:
Table of Contents
Executive Summary.. 3
Narrative..................4-5
Management
Exhibit 1: Organizational Chart....6
Exhibit 2: Employee Costs Chart......7
Marketing
Exhibit 3: Market Segmentation Analysis...................8
Exhibit 4: Market Quantification......9
Exhibit 5: Positioning/Competitive Analysis.......10
Exhibit 6: Marketing Mix....11
Operations
Exhibit 7: Flowchart...12
Exhibit 8: Quality Assurance.......13
Exhibit 9: Inventory, Suppliers, and Distribution....14
Exhibit 10: Capacity & Resources...15
Finance
Exhibit 11a: Income Statement...16
Exhibit 11b: Income Statement Notes....17
Exhibit 12a: Balance Sheet. ....18
Exhibit 12b: Balance Sheet Notes...19
Exhibit 13a: Cash Flow Statement......20
Exhibit 13b: Cash Flow Statement Notes...21
Exhibit 14: Financial Ratios & Analysis..22
Bibliography...23-31
Biographies & Photos..32
3
Executive Summary
Madison Seaweed, LLC
Matthew Shifflett
Address: Harrisonburg, VA
Website: madisonseaweed.com
Competition: Our competitors include various types of seaweed providers such as Ocean Approved,
Maine Sea Farms, Atlantic Holdfast, and Maine Coast Sea Vegetables.
Narrative
Elevator Pitch: We will be jumping into a new, unsaturated market in the United States - the sugar
kelp industry. Madison Seaweed is a Limited Liability Company that produces high quality sugar kelp
to sell to food and alginate manufacturing companies. Our firm is located in New London,
Connecticut and will have ten employees who serve our buyers in the Northeastern region and
California. In Year One, we project to serve five to six small companies and expect a 3.27% growth
each year for the next five years. In Year Three, we project to generate annual revenues of
$1,150,672 and will begin to distribute dividends at the end of the year. With a high level of expected
growth within the next few years, we are entering this market at the perfect time and will be able to
Product Description: Our sugar kelp farm encompasses the nursing, cultivating and harvesting of
sugar kelp. From nursing the spores, maintaining life in the open ocean, and drying and packaging
the sugar kelp, our company will ensure only the best quality sugar kelp is shipped from our
warehouse. Our sugar kelp is grown in the most suitable conditions and our quality is defined by the
unique controlling aspects of our nursing and harvesting processes, including constantly testing the
Competitive Advantage: Our company focuses on being the most reliable and high-quality source
for sugar kelp. By employing unique methods, we are able to predict our annual crop yield and can
maintain the quality that we promise our customers. In contrast, our competitors utilize wild
harvesting methods, in which they harvest the limited amount of seaweed they can find in the open
ocean; therefore, they cannot predict how much they will be able to supply or have the luxury of
being able to regulate quality. We also offer free shipping to our customers, which can save them up
Value Proposition: Investors should feel confident in our company because of our high market
potential. With the rapidly increasing demand for sugar kelp in the aquaculture industry, we can
jump in as a competitor early and establish a strong market share (A Guide to the Seaweed Industry,
2016). We will build lasting customer relationships with our clients to ensure they continue to
Business Strategy: Our human resource strategy differentiates us because we strive for high
employee job satisfaction. Unlike any other seaweed farming company, we provide our aquaculture
farmers and warehouse employees with full benefits, a salary and a bonus. Our operational strategy
differentiates us because we control all aspects of our harvesting processes, as opposed to our
Business Location: Our company will be located in New London, Connecticut. Our 19,000 square
foot warehouse is located close to the ocean and we maintain our farm off the coast. The
Connecticut oceanic region provides the specific water temperature and environment we need to
Outsourced Functions: We outsource a bookkeeper, the initial setup labor, a lawyer and shipping.
The bookkeeper is outsourced because we do not require extensive tax work considering we are a
LLC; this saves us an estimated $45,000 a year (Salary.com, 2016). The initial setup of the farm is
due to the high costs of mooring, net, and rope installation. The lawyer is outsourced due to the
situations when we need to handle legal papers, issues and concerns. With the average cost of
shipping one ton of dried kelp ranging from $2,500 to $3,000, we will be saving a substantial amount
Conclusion: We are seeking $325,000 in exchange for a 43.9% stake in our company. With a market
potential exceeding 61 million dollars in Year One paired with our low production costs, you can be
_____________________
1. We will be outsourcing the Accountant because the few basic needs of hiring a full-time Accountant
do not justify the cost.
2. We will hire an additional Sales Representative in Year 4.
3. We will hire an additional Sugar Kelp Farmer in Year 4.
7
FICA-$1,530
FUTA-$420 HI-$6,578
Sugar Kelp $19,650
$20,000 SUTA-$645 IRA-$25 $29,998 $59,996
Farmer (2) $38,890
WC-$200 (3% of salary $600)
$295,390
Grand Total $362,000 $35,284 $73,478 $470,762 $644,973
$770,315
We provide our employees a standardized health care package that includes 80% coverage, a $25 copay, and a $1,652 deductible
(KFF, 2015). This package costs $6,578 and they receive 21 paid vacation days. We offer a simple IRA where we match up to 3% of
their contribution.
We start looking for our General Manager, Director of Operations and the Sales Manager in early October 2016 and hire them by
January 2nd, 2017. We start looking for the Sales Representatives, the Sugar Kelp Farmers and the Warehouse Employees in early
April 2017 and hire them by early June 2017.
8
According to a study done by Panjiva (2016), in the United States, there are 23 food companies that purchase
sugar kelp and 321 worldwide. According to a study done by ThomasNet, there are 11 alginate suppliers in the
US that purchase sugar kelp to manufacture alginate (Sodium Alginate, 2016).
According to the data from Grand View Research (2016), we found that the brown seaweed's market revenue
was going to increase by roughly $57,000,000 in the next 5 years. This estimate includes all of the potential
buyers for brown seaweed with sugar kelp included. We determined with our above data that 23 potential food
companies would purchase our sugar kelp. To find how much revenue would be generated by the sugar kelp
industry for the next five years, we multiplied our number of potential sugar kelp buyers (23) by the total revenue
generated by the brown seaweed industry and divided it by the total number of brown seaweed potential buyers
(321). We then calculated the growth rate for every year from 2016 to 2021 and averaged the total, which led us
to find an average growth projection of 8%.
According to a study done by Markets and Markets (2015), we found that the annual growth rate from 2014 to
2019 for the alginate manufacturing companies is projected to be 3.8% for those five years. Since there are no
evident facts about potential growth of the alginate market for 2020 and 2021, we will keep that growth rate for
those years as well, which leaves us with an average growth projection of 3.8%.
9
According to a study done by The World Bank Group (2014), from 2000-2013, the kelp industry has grown by an average of 3.27% each year. We broke
down the number of tons produced each year and calculated the growth percentage from year to year. After we calculated those numbers, we averaged all
of them together and came up with the 3.27% growth.
Ocean Approved, LLC was the first commercial kelp farm in the United States in 2012. Located in Maine, they are a great proxy firm to use because they
are relatively the same size as our company. Also, they grow the exact kind of kelp that we grow. According to Ocean Approved, they began small,
harvesting and selling around 5 tons of sugar kelp in their first year. Paul Dobbins, the President of Ocean Approved, has declined to release revenue
marks, however, he has said that Ocean Approved has grown nearly 400% since their first year of opening in 2012. With an estimated total of 20,472 tons
in the United States market, and Ocean Approved producing an estimated amount of 25 tons of sugar kelp this year, after increasing 400%, they have an
estimated market share of .00122 (.122%). Since we are focusing solely on sugar kelp, we will be able to produce more tons per year than Ocean Approved
originally did. From Year One to Year Five, we project similar growth, once again staying on the more aggressive side since we are focusing on only one
type of kelp. To acquire the number each year for our market share projection, we divided our projected annual unit sales by the total number of tons
produced in the market. Our market share is based on our total tons produced compared to the entire market.
We used Ocean Approved, LLC as our proxy firm in this matter. In 2015, they harvested and sold an estimated 25 tons of sugar kelp and started around 5
tons. We will start at the same rate, but project more growth since we're focusing solely on sugar kelp. With the market growing around a constant 3% year
to year, and all studies saying kelp is going to break through into the United States very soon, we will be able to achieve these numbers (NPR, 2016).
Positioning Statement: Madison Seaweed LLC is the most reliable company in the sugar kelp
industry for food and alginate manufacturers. We provide the highest-quality product by controlling
all aspects of our harvesting processes and solely growing sugar kelp. We have a consistent quantity
and quality of supply that will meet your expectations with our distinctive techniques.
After performing a SWOT analysis on our company, we determined internal and external
characteristics that will affect our company. We consider our strength to be prioritizing one strain
of seaweed. By growing solely sugar kelp, we can produce more than our competitors and employ
strategic quality checking methods. There is substantial opportunity in jumping into this industry
early because we can establish a large customer base and control a large portion of the United States
industry.
11
Exhibit 7: Flowchart
_____________________
1 Assuming the 65-line model, each line produces .4lbs per hour and each tube accounts for one line.
Therefore, the nursery can produce all the tubes necessary for each line and when converted from number
of tubes to dried lbs. it produces 26lbs per hour (.4lbs x 65 lines).
2 The farmers are often faced with the decision of harvesting the entire strand of kelp vs. letting it pass to the
process. The strands that include seeds usually take up most of the strand. It would be an ineffective use of
time to try to pick the seeds out and attempt to save a minimal amount of kelp.
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Indicate the Why is this dimension important, given your industry & Identify the Quality Step(s)
Dimensions of target market? on the Process
Quality on Flowchart/Service Blueprint
which you will to which this corresponds.
focus.
Consistency in our final product will be key to our buyers Random samples taken at each
Consistency because they will use it in making alginate and ingredients. stage to be examined and
evaluated for quality
Perceived Perceived quality will be important for building our reputation Finished Goods
Quality in the market and contribute to our growth.
Providing a reliable product to our customers will be a key Nursery, Farm Management
element because our customers require our output to produce
Reliability
their own products. There is no room or time for errors or
unreliable products and poor quality.
Use the space below to describe any additional Proactive Quality Assurance Plans that are not connected to a
specific activity on your Process Flowchart / Service Blueprint.
Constantly staying updated on current and upcoming weather forecasts in order to take appropriate measures in the event
of inclement weather such as hurricanes, severe storms, unusual temperatures, and current trends in oceanic currents.
We will also perform routine checks on both simple and heavy equipment such as our ropes, nets, and machinery to
maintain their acceptable conditions and decide when repairs or replacements are appropriate and necessary.
Describe any reactive quality assurance plans. Include a recovery plan should a customer receive poor quality
goods and/or services.
To secure excellent customer satisfaction when unacceptable goods reach a customer, we will immediately apologize and
rapidly reproduce the entire order and provide expedited shipping. We would also conduct an extra quality check prior to
re-shipping the new order to ensure the quality is up to our standard.
If a random sample, which consists of a strand from every line, at any stage of production fails, the stage in which the
sample was produced and the one succeeding it would halt production. We will then test the quality in both stages and
verify if the rest of the product passes quality tests. Unacceptable output is removed from both stages. During this process
we will also isolate and resolve the problem affecting quality to resume production as soon as possible.
Extreme weather poses hazardous consequences to the facilities and our crops. Due to this, our employees will be on call
during inclement weather. We will transfer the lines into holding tanks inside our 19,000 square foot warehouse during
severe storms until it is safe to place them back. We will also be able to adjust the depth of the lines to avoid extreme
wave action and runoff events.
Growing sugar kelp involves a series of stages at which the end result of each stage provides an appropriate point to
ensure the quality of the product thus far. Therefore, our employees will report the results of samples taken to the
Director of Operations, which will allow him to conduct a quick and effective overview of the health of our sugar kelp.
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At the end of Year One 3.6lbs Varies with orders 0lbs 600lbs 0lbs - 600lbs
At the end of Year Two 10.4lbs Varies with orders 600lbs 1,400lbs 600lbs- 800lbs
At the end of Year Three 24lbs Varies with orders 600lbs 8,000lbs 600lbs 8,000lbs
At the end of Year Four 29.6lbs Varies with orders 600lbs 8,000lbs 600lbs 8,000lbs
At the end of Year Five 41.2lbs Varies with orders 600lbs 8,000lbs 600lbs 8,000lbs
What is the lifespan of A lifespan of 6 10 years, if kept in low to zero humidity and airtight storage (Hanson, 2016).
your finished goods Final product will be in airtight sealed bags, so no specialty equipment is required to control room
inventory? NA climate.
How will you manage
When applicable, dried kelp in storage will be sold when demand exceeds production capacity. It
perishability of Finished can last 6 10 years in dried storage, so perishability of finished goods inventory will not be much
Goods Inventory? NA
of a concern.
DISTRIBUTION
If your organization does not require distribution, please check this box: NA
Name of transportation Reason for selecting this provider/carrier Frequency of Pick Up /
provider/carrier Drop off
FedEx is the leader in fast, overnight freight shipping. In Will vary with orders
FedEx addition, they provide excellent customer service and
cost effective solutions (World Freight Rates, 2013).
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Bottleneck Brief description of How will you manage the bottleneck identified on your Process
Bottleneck Map to ensure you can appropriately serve or supply your
customers?
B1 Drying harvested sugar kelp As demand increases, we will purchase special equipment that will
speed up the drying process.
Describe all/any adjustments you will make as resource requirements vary with time. Be specific
regarding which key resources will be adjusted, when and how. If you will make multiple
adjustments, explain each adjustment.
While the sugar kelp is growing at the ocean site, we will have one of the workers that control the planting and
harvesting assist the nursery in producing more spore tubes. The other employee will perform daily maintenance on
the ocean site and equipment. By Year Four, as demand rapidly increases, we will hire one more aquaculture farmer
to help with the planting of spore tubes and harvesting stages. By Year Five, we will increase the number of lines in
the ocean site to meet increasing demand. We will also have a surplus of finished goods to keep in inventory,
providing us with a constant supply of finished products available for sale.
1. Sales Revenue: We based our revenue off of industry averages and also the projected growth rate of the seaweed industry. For Year One we are only
able to grow for a couple months at the end of the year due to farm setup, employee training and growing season. The next two years we expect to see
substantial growth in sales and by Years Four and Five, based off of projected growth, we will be large enough to add an extra farmer and sales person
which will greatly ramp up our production, hence the higher revenue.
2. Cost of Goods Sold: We calculated cost of goods using averages we found through Bizminer (2016) and then multiplied the cost by the amount of
sugar kelp we projected to grow and sell that fiscal year.
3. Salaries and Wages: We got the number of necessary employees by examining the employee breakdown of other companies that are similar to ours.
For Year One, we do not plan on hiring some of the employees such as the farmers and sales person until halfway through our fiscal year. This is due
to the fact that there will be no work for them because we will be utilizing that time to set up the farm and warehouse and sugar kelp not being in
season at the time. For Years Four and Five, we plan on adding an extra farmer and sales person to keep up with our growing demand.
4. Payroll Tax Expense: We calculated these by looking up the tax rates for the employees for the state of Connecticut and then applying these tax
rates to our employees (Ficatax.org, 2015).
5. Employee Benefits and Expenses: Health care was calculated by taking the number for the standard package in Connecticut and then applying that
to our employees (KFF, 2015). For IRA we used a $25 starting package and provided room for standardized bonuses.
6. General Insurance Expense: We found an insurance quote for a business that is similar to ours in size (Liability Insurance, 2016).
7. Depreciation Expense: For depreciation expense we used the MACRS schedule and depreciated the boat for 10 years, aquariums for 7 years,
refrigerator for 7 years, drying machine for 5 years and the computers for 5 years (Publication 946, 2015).
8. Rent Expense: For rent expense we found listings for the size of warehouse that we would need to run our business (Summer, 2015).
9. Travel, Meals and Entertainment: For this cost we allocated a chunk of money for Sales Representatives to take potential customers out to dinner to
increase customer relations. For Years Four and Five we increased this number because we project that we will have a large increase in sales going into
these two years (Certify, 2015).
10. Taxes and Licenses: For this number we found the numbers for permits and licenses and then multiplied them by the amount of product we plan
to grow (Legislation Related to Increasing Agricultural Trade, 2014).
11. Office Expense: We searched the equipment and office supplies we would need through office supply stores and based the amount we needed off
the number of employees we have in each position. Each upper level management has a desk, computer and file cabinets and the break room has a
microwave, table, chairs, a refrigerator and small television. We then allocated $500 per year after Year One to compensate for general office expenses
(Office Supplies, 2014).
12. Professional Expense: For this expense we searched for the initial lawyer fee that it would require to do the paperwork and get our business started.
We also included the cost of our bookkeeper (Salary.com, 2016).
13. Utilities: For utilities we inputted our square footage, amount of annual hours worked, the location, building type, heating and cooling type, and
the appliances into an energy cost calculator for businesses and received a number from that (ConEdison, 2016).
14. Product transportation: This cost is for the box truck we will use to transport our product from the farm to the warehouse. We searched for
listings of a 17-foot box truck and averaged together leasing prices of multiple similar listings (2017 Ford, 2016).
15. Shipping cost: For this cost we searched for commercial shipping costs through a shipping fleet and multiplied that cost by the amount of product
we plan to ship each year (World Freight Rates, 2013).
16. Interest Revenue: For this account we invested $250,000 for one year in a money market account that yielded 1.11% on our investment, which
provided $2,750 of interest revenue (By Not Nickle and Diming You, 2013).
17. Interest Expense: This account was based off of our $52,000 loan at 8% paid off over the course of 5 years.
18. Operational Cash Flow: This is cash generated from our general business operations.
19. Free Cash Flow: This is based off of cash generated from our general business operations less capital expenditures.
20. WACC (Cost of Capital): Based on a study done by the NYU Stern School of Business where they calculated the WACC for more than 95
different industries (Cost of Capital by Sector, 2016).
21. NPV (Net Present Value): This was based off of operational cash flow and our WACC.
22. IRR (Internal Rate of Return): This was based off of operational cash flow.
23. MIRR (Modified Internal Rate of Return): We used the operational cash flow and the WACC for the calculation.
18
Organization- LLC with Co-founders, Matthew Shifflett, Alec Avery, Skyler Mang, Timea Guibe, Michael Peterson and
Carlos Diniz. The money contributed was $123,000, $5,000, $5,000, $5,000, $50,000, and $77,000, respectively. We
currently control 63.86% of the business. Outside investors contributed $150,000 to receive 36.14% total. We are
currently looking for an investment of $325,000 for initial start-up costs and salaries for the beginning two years.
1. Cash and Cash Equivalents: As a company, we did not want a large sum of cash simply sitting in the account. In Year
Three of operations, we had a surplus of cash and decided to begin to distribute dividends. The same applied for Years
Four and Five.
2. Accounts receivable: As a business, the bulk of our sales will come in the summer months because of our winter
growing season. Since this is the case, we will not have a large amount of money owed to us at the end of the year, as we
have a 30-day credit period. We estimated, based on industry averages, that our ending accounts receivable would be
3.12% of our total assets (BizMiner, 2016).
3. Inventory: Consists of our safety stock on hand and average level of finished goods. Since this product takes a decent
amount of time to grow, we must have a sizeable amount on hand year to year.
4. Short Term Investments: We found a one-year money market account yielding 1.11% and invested $250,000 in Year
One, giving us an extra $2,750 in interest revenue (By Not Nickle and Diming You, 2013).
5. Machinery and Equipment: In our first year of operations we had to purchase a boat for $50,000 computers priced at
$999.99 each, a 1,000-gallon aquarium and an industrial fridge. In the final 2 years, we add on another fridge, aquarium
and a drying machine due to expansion needs. Items are depreciated using the MACRS method, with the boat at a
lifespan of 10 years, the refrigerators and aquariums with lives of 7 years and the computers and drying machine with
lives of 5 years (Publication 946, 2015).
6. Buildings: For our first four years of operations, we found a warehouse for rent in New London, Connecticut. Per the
website, if the selling price is above $400,000, you have the option to rent for 1% of the asking price per month. The
warehouse we are interested in is currently listed at $500,000. Given the small amount of cash on hand during our first
few years of operations, we were unable to purchase it. In Year Five however, we decided to purchase the warehouse
with the surplus of cash that we had (Summer, 2015).
7. Accounts Payable: Given the low prices of items needed in the growth of our kelp, as a company we generally have
enough cash on hand to pay for supplies. Per industry averages for the previous 5 years, our accounts payable fluctuates
between .4% and 2.15% of total liabilities and stockholders equity (BizMiner, 2016).
8. Accrued Salaries & Wages: As a company, we pay our employees on the 1st and the 15th of each month. In 2017, 2018
and 2021, this constitutes two full weeks at the end of December that are not paid until January 1st. Taking the annual
salary expense for those years and dividing it by 52, then multiplying by 2 gave us the necessary accrual rates for those
respective years. In 2019, the same steps applied, but for only one week at the end of December. In 2020, one and half
weeks needed to be accrued at the end of the year.
9. Accrued Payroll Taxes & Benefits: The same steps as the accrued salaries & wages apply here, instead, substituting the
sum of the payroll taxes & benefits as opposed to salaries.
10. LT Debt Less Current Maturities: Since we did not have much collateral to back up our loan, we were only able to
take out 80% of our $65,000 in fixed assets, resulting in a $52,000 note. This is paid off in 5 years at 8% with 12
payments per year in using Microsoft Excel (2013).
11. Common Stock: The value of the co-founders and outside investors shares along with the requested investment
amount.
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1. Net Income: All of our revenue streams less our expenses. The first two years are negative due to initial
salaries and start-up costs, but we become self-sustaining relatively quickly.
2. Depreciation: As mentioned earlier, we used the MACRS method for depreciating our fixed assets. The
expense does not decline as fast between Years Three, Four and Five because we added to assets valued at
$21,000 total (Publication 946, 2015).
3. Accounts Receivable: This tends to increase with the more sales we have from year to year. Given the high
number of sales, we will have more at the end of Year Five that are due than in the beginning stages of
business.
4. Inventory: This number is based on the units of product that we have not yet sold. This includes both our
finished goods and the safety stock necessary.
5. Accounts Payable: Given the low cost of supplies, we generally have enough cash on hand to pay for
everything needed. However, we realize there will be points throughout the year that we must use credit so
we took the industry averages for the past five
years that fluctuated between .4% and 2.15% of total liabilities and stockholders equity and applied it to our
business (BizMiner, 2016).
6. Accruals: As stated earlier, our accrual process varies from year to year. This contributes to the changes in
numbers from year to year.
7. Fixed Asset Purchases: As a company, we have a small number of fixed assets. Until we begin producing a
significant amount in Year Four and Year Five, we do not need any additional assets. We also purchased the
warehouse we had been renting in Year Five (2015, Summer).
8. Short term Investments: In Year One, we had a cash surplus at the end of the year and decided to invest it
in a one-year maturity money market account yielding 1.11% (By Not Nickel and Diming You, 2013).
9. Long Term Debt Borrowings: We calculated that we were able to secure a $52,000 loan from the bank at
8%. We were only able to receive this much because of our low amount of available collateral. We paid it off
in five years at 8% interest rate in using Microsoft Excel (2013).
10. Dividends: In Year Three, Year Four and Year Five, we had a significantly greater amount of cash on
hand than we had in previous years. We decided to distribute this out to our various shareholders for all three
years.
In Year Two and Year Five, our ending cash balances on our cash flow statement are $1 and $2 greater,
respectively, than our ending cash balance on our balance sheet. We believe this is due to a rounding error.
22
1. Current Ratio: Our initial current ratio starts out relatively high compared to industry average because of our initial startup capital and high
inventory. It then levels out as we become a more established company, however, it begins to increase again due to an increase in our total current
assets due to projected growth and also a decrease in current liabilities from a decrease in accounts payable and current maturity of long term debt
(BizMiner, 2016).
2. Quick Ratio: Our quick ratio begins relatively high from our initial cash and cash equivalents being high the first year. The ratio then tapers off but
then begins to increase again substantially due to a sharp increase in cash and cash equivalents and a decrease in both accounts payable and current
maturity of long-term debt.
3. Debt to Equity: Our debt to equity ratio starts relatively low because of our amount of invested money coming Year One. For Year Two the
number is very high because of the sharp decrease in total stockholders equity because of the reduction from retained earnings. The ratios then start
to level out as we become a more established company and then in the final two years we have a strong debt/equity ratio because of our decrease in
accounts payable and long term maturity of debt, paired with a sharp increase in retained earnings from our projected growth.
4. Times Interest Earned: Due to our lack of collateral, we were not able to secure a high value loan, therefore, our times interest earned is in the
negatives and then turns very positive because our EBIT becomes positive in later years and interest expense is declining simultaneously.
5. Inventory Turnover: For Year One our ratio is relatively low because we did not produce nor sell much product due to startup activities such as
setting up the farm and warehouse and waiting for the growing season to start. The number then jumps up because sales sharply increase which we
referenced from industry averages and we would be retaining little inventory in these years. The numbers then go back to normal because even though
we have high sales, we still retain a fair amount of product (BizMiner, 2016).
6. Receivables Turnover: In the years that the ratio is off our accounts receivable is very low causing a higher ratio than average, they then increase to
return our ratio back to normal.
7. Fixed Asset Turnover: This ratio starts out at a relatively average rate due to our small amount of sales and fixed number of $65,000 in equipment.
The ratio then grows rapidly because the equipment cost stays the same but our sales increase. In Year Five the ratio goes back to an average number
because of the purchase of our warehouse at the end of the year.
8. Operating Profit Margin: The reason our ratio is negative in the first couple of years is because the business is starting up so operating income is
negative while sales is a relatively small number when compared to the later years. The ratio then levels off to the average when sales and operating
income both increase into the positive figures (BizMiner, 2016)
9. Return on Assets: In our initial years the ratio is negative because our net sales are low due to the startup of the business and our assets being high.
The ratio then starts to get closer to the industry average because as we become more established and grow, our net income increases (BizMiner,
2016).
10. Net Profit Margin: Our ratio is negative initially because of the startup costs of the company and low sales, but as the company progresses, our
sales increase and we then start to turn a profit which drives the ratio up to near the industry average (BizMiner, 2016).
11. Total Asset Turnover: This ratio starts off relatively low because we start out with low sales. However, as we become more established, our sales
sharply increase while our total assets go down in Years Two and Year Three but then sharply increase in Year Four and Year five due to long-term
investments, inventory, and cash/cash equivalents.
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12. Return on Equity: The reason our ratio is negative the first two years is because our net income is negative due to our initial startup costs coupled
with low revenue. Our net income then turns positive the last three years due to a bump in sales so the ratio evens out.
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24
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25
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26
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Talked briefly to an experienced Seaweed Farmer that has been in the industry for over 3
decades. Larch provided us with valuable information on both the economics and
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29
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Talked briefly to an experienced Seaweed Farmer that has been in the industry for over 3
decades. Larch provided us with valuable information on both the economics and
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31
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32
My name is Alec Avery from Chesapeake, Virginia. I'm currently a junior majoring in
Computer Information Systems at James Madison University. My plans are to graduate in the
spring of 2018 with a job in consulting.
My name is Carlos Diniz Ponce, I am originally from Valencia, Venezuela and have
been living in Staunton, VA. I am a Blue Ridge Community College Management
Major transfer student. I have worked for the Virginia Dept. of Social Services as a
case manager and Benefit Programs Specialist for almost 3 years, and resigned my
position to fully dedicate my time to COB 300 and the remainder of my college
career.