Financial Analysis and Documentation

Introduction
Watermelon is thrilled to bring you a refreshing and delicious beverage that captures the essence
of summer in every sip. Packed with the natural goodness of juicy watermelons, our product is
designed to quench your thirst and satisfy your taste buds. This analysis aims to provide a clear
understanding of the financial aspects surrounding the production, marketing, and potential
profitability of Watermelon. Through meticulous research and data collection, we have evaluated
the market demand, production costs, pricing strategies, and projected sales figures for
Watermelon. Our analysis includes a detailed examination of the competitive landscape, target
customer segments, and potential revenue streams. Moreover, this documentation highlights key
financial indicators such as return on investment, and profit margin. It also outlines the necessary
funding requirements, including capital expenditures, working capital needs, and anticipated
sources of financing. By examining the financial viability of our new product, Watermelon, we
aim to provide stakeholders with valuable insights to make informed decisions and chart a
successful path for its launch and sustained growth in the market.

Sales Forecasting
Based on market research and historical data, our sales forecasting for Watermelon predicts steady
growth over the next five years, reflecting increasing consumer demand. We anticipate sales to
reach significant milestones, driven by effective marketing strategies and product differentiation.
The forecast considers market trends, competitor analysis, and consumer preferences to provide
accurate sales projections. This enables us to align production, distribution, and marketing efforts
for optimal market penetration and revenue generation.

The following Table and graph show our expected sales for the coming five years:

Expected Sales (Per year) 250 ml. Bottle 500 ml. bottle
First Year 3000000 3500000

Second Year 4000000 5000000

Third Year 5500000 6000000

Fourth Year 7000000 6500000

Fifth Year 7500000 8000000

Graph:

SALES FORECASTING
250 ml. Bottle 500 ml. bottle

8000000
7000000
6000000
5000000
3500000
6500000 7500000
5500000
3000000 4000000

FIRST YEAR SECOND YEAR THIRD YEAR FOURTH YEAR FIFTH YEAR

Graph: Sales Forecasting

Profit and Loss Projection

The profit and loss projection for the new product, 250 ml Watermelon, provides an estimation of
its financial performance. It considers market research and sales forecasts to estimate the revenue
generated from the sales of 250 ml Watermelon bottles. By deducting the associated costs, such as
production, packaging, marketing, distribution, and overhead expenses, the projection helps
determine the net profit and assess the potential profitability of the 250 ml Watermelon product.

Item Year 1 Year 2 Year Year 4 Year 5

3
Total Sales 4050000 5490000 6310000 7450000 8990000

Total Cost -4450000 -4650000 -5160000 -5380000 -6060000

Total Profit -400000 840000 1150000 2070000 2930000

Tax 30% — 252000 345000 621000 879000

Net Profit -400000 588000 805000 1449000 2051000

Interpretation:
First-year Total Sales of $4,050,000 couldn't cover Total Costs of $4,450,000, resulting in a Loss
of $400,000. No tax was applicable, leading to a Net Profit of -$400,000. Second-year Total Sales
increased to $5,490,000, resulting in a Profit of $840,000 after deducting Total Costs of
$4,650,000. With a 30% tax rate, Net Profit was $588,000. Third-year Total Sales rose to
$6,310,000, generating a Profit of $1,150,000. After applying a 30% tax rate, Net Profit amounted
to $805,000. Fourth-year Total Sales reached $7,450,000, leading to a Profit of $2,070,000 after
accounting for Total Costs of $5,380,000. Net Profit, after a 30% tax deduction, was $1,449,000.
Fifth-year Total Sales amounted to $8,990,000, resulting in a Profit of $2,930,000. After deducting
Total Costs of $6,060,000 and applying a 30% tax rate, Net Profit was $2,051,000. These figures
indicate the financial performance of Watermelon over a span of five years. It shows the
progression from an initial loss in Year 1 to increasing profits in subsequent years, indicating the
potential for the product's profitability and growth.

Graph:

Profit and Loss Projection

10000000
8000000
6000000
4000000
2000000
0
Total Sales Total Cost Total Profit Tax 30% Net Profit
-2000000
-4000000
-6000000
-8000000

For 250 ml. Year 1 For 250 ml. Year 2 For 250 ml. Year 3 For 250 ml. Year 4 For 250 ml. Year 5

Graph: Profit and Loss Projection

Profit and Loss Projection
The profit and loss projection for the new product, 500 ml Watermelon, provides insights into its
expected financial performance. Based on market research and sales forecasts, the projection
estimates the revenue generated from the sales of 500 ml Watermelon bottles and deducts the
associated costs to determine the net profit. This analysis takes into account factors such as
production costs, packaging expenses, marketing costs, and overheads to provide a comprehensive
overview of the financial implications. The profit and loss projection serves as a valuable tool for
assessing the profitability of the 500 ml Watermelon product and making informed business
decisions regarding pricing strategies, cost optimization, and potential revenue growth.

Item Year 1 Year 2 Year 3 Year 4 Year 5

Total Sales 7551000 8490000 9610000 10850000 11990000

Total Cost -8100000 - -7860000 -8180000 -8460000

7250000
Total -549000 1240000 1750000 2670000 3530000
Profit
Tax 30% — 372000 525000 801000 1059000

Net Profit -549000 868000 1225000 1869000 2471000

Interpretation:
First-year Watermelon's Total Sales amounted to $7,551,000, but with Total Costs of $8,100,000,
the company incurred a loss of $549,000. Second-year Watermelon's Total Profit improved to
$1,240,000, driven by increased Total Sales of $8,490,000 and reduced Total Costs of $7,250,000.
In the third year, Watermelon's Total Profit continued to grow, reaching $1,750,000. With Total
Sales of $9,610,000 and Total Costs of $7,860,000, the company demonstrated consistent progress
in improving its financial performance. Fourth-year Watermelon's Total Profit surged to
$2,670,000, driven by higher Total Sales of $10,850,000 and controlled Total Costs of $8,180,000.
Fifth-year Watermelon's Total Profit further increased to $3,530,000, reflecting sustained growth.
Total Sales reached $11,990,000, while Total Costs remained managed at $8,460,000, indicating
a healthy financial trajectory for the company. This growth was driven by higher Total Sales and
effective cost management. The projection highlights the potential for profitability and the need to
continually optimize costs and sustain revenue growth to achieve long-term success.
Graph:

Chart Title
15000000

10000000

5000000

0
Total Sales Total Cost Total Profit Tax 30% Net Profit

-5000000

-10000000

For 500 ml. Year 1 For 500 ml. Year 2 For 500 ml. Year 3 For 500 ml. Year 4 For 500 ml. Year 5

Graph: Profit and Loss Projection