The attached Excel (spreadsheets employ
accrual method accounting and are presented in
accordance with Generally Accepted (American)
Accounting Principles (GAAP, FASB). Amounts shown
are in RMB (China's Currency of roughly 8.275 to 1
US Dollar) unless preceded by a dollar sign, in
which case the amount that follows is in US
dollars. These financials are estimates and
projections, but are detailed. The spreadsheet sheets
show, in order, The projections show the SUPPLY AND
DEMAND, OPERATING STATEMENT, FUNDS FLOW, BALANCE SHEET
by month for all three years together with the BUSINESS
MODEL PARAMETERS. Figures in blue drive the financial
model and are entered manually. All the other figures are
derived by equations that are tailored for this
business, but fall within GAAP and FASB practices. The assumptions of the financial projections, in order of
impact on the investment, are believed to be: Every winter, the factory is shut down for
its annual product changeover, unless existing
customers' demand product as evidenced by payment on
delivery or earlier. Accordingly, in keeping with the
conservative bias of the financial projections, no
production, nor sales are shown until mid-march. This
shutdown also allows time for the outstanding
receivables to clear and prevents complication of the
new models interfering with the existing models (if a
customer or a distributor knows the next year's model is
going to be very good/cheap/advanced, they may become
reluctant to pay for or accept the current model). The
Company has too much money in receivables at stake to
risk jeopardizing its financial well being with its own
good engineering and manufacturing advances. During this
shutdown, a 50% maintenance wage will be given to
factory workers. Every December, as a bonus, the workers
are given double pay (which helps offset their costs of
relocating for the winter.) |