03 May Business project
Financials
| EGEE-401 FINAL PROJECT – BUSINESS PLAN | |||
| Names of Group Members who contributed his/her fair share to the project: | |||
| Possible Range | |||
| FACTS | Low | High | |
| Semi Company (makes one tool model only) | |||
| 550,000,000 | $ Annual Revenue | ||
| 4,500,000 | $ Tool Price | ||
| 40% | % Market Share | ||
| 60 | Seconds Processing time per Wafer | ||
| 200 | Hours MTBF of complete tool | ||
| 4 | Hours MTTR to repair complete tool | ||
| 26,000 | $ Scrap/y due to tool manfunctions | ||
| 5 | Number of actuators per tool | ||
| 7 | Years life of tool, product, and loan duration | ||
| 8% | % MARR Minimum Attractive Rate of Return (same for Motion) | ||
| 8% | % Interest on interest-only loan by Semi to Motion | ||
| 78% | % Engineering Cost Factor to qualify and design-in a new component (as a % of annual demand of the existing component) | ||
| 5000 | $ Unit Price of Old Actuator | ||
| 10,000 | Hours MTBF of Old Actuator | ||
| 5 | Years (Term of interest-only capital loan to Motion Co) | ||
| 80% | % of capital covered by loan | ||
| Motion Company (Makes superior wafer-lift actuator) | |||
| 1 | Seconds: New Actuator Processing-Time Savings per Wafer | ||
| 26,000 | Hours: MTBF of new actuator | ||
| 11% | % reduction in the probability of tool malfunction leading to scrapped wafers | ||
| 950,000 | $ Capital Equipment Required | ||
| 7 | Years useful life of Capital Equipment | ||
| 1,900 | $/Actuator Materials Cost | ||
| 2,100 | $/Actuator Labor Cost | ||
| 1,400,000 | $ Other Direct Cost (building & utilities) | ||
| 5% | % Indirect Costs/Revenue | ||
| 40% | % Tax Rate | ||
| 5 | Weeks-of-Sales Cash-Asset Requirement | ||
| 4 | Weeks-of-Sales Receivables-Asset Requirement | ||
| 3 | Weeks-of Cost-of-Goods-Sold Finished-Goods-Inventory Asset Requirement | ||
| 5 | Weeks-of-Materials-Expense Materials-Inventory Asset Requirement | ||
| 4 | Weeks-of-Materials-Expense Accounts-Payable Liability | ||
| ECONOMIC VALUE | |||
| Value per actuator of throughput improvement | |||
| 1% | 2% | % Processing Time Savings | |
| 50,000 | 100,000 | $ Value of throughput improvement per tool | |
| 15,000 | 30,000 | $ Value of throughput improvement per actuator | |
| Value per actuator of Tool Availability improvement | |||
| 95% | 100% | %Availability of tool with old actuator = MTBF/(MTBF+MTTR) | |
| 200 | 220 | Hours MTBF of tool with new actuators = ((Current MTBF of Tool)^-1 – 4*(MTBF of Old Actuator)^-1 + 4*(MTBF of New Actuator)^-1)^-1 | |
| 95% | 100% | %Availability of tool with new actuator = MTBF/(MTBF+MTTR) | |
| 800 | 1,500 | $ Savings per actuator =(%Down-time reduction)(Tool Price)/(Number of Actuators) | |
| Value per actuator of scrap reduction | |||
| 15,000 | 25,000 | Value of scrap reduction over the life of a tool | |
| 3,000 | 6,000 | $ Savings per actuator | |
| Cost for Semi to change and requalify the design with the new actuator | |||
| 80 | 150 | Number tools produced per year (Semi Annual Revenue)/(Tool Price) | |
| -250 | -1,000 | $ Cost of engineering design change to incorporate new actuators =(Egr Cost Factor)(Old Actuator Price)(A/P,i,Life) | |
| Net Economic Value to Semi (per actuator) by switching to the new actuator | |||
| 15,000 | 30,000 | Sum of above values | |
| Actuator Demand | |||
| 611 | 300 | 900 | Actuator Units/y = [Tools/y Production Rate](Actuators/tool) = [(Semi Revenue)/(Tool Price)](Actuators/Tool) |
| ECONOMIC VALUE PRICING | |||
| 17,000 | 35,000 | Price per actuator that would capture all economic value for Motion = (Net Economic Value to Semi) + (Price of old actuator) | |
| 4,000 | 10,000 | Price/actuator that gives Motion Return-on-Assets = MARR (i.e. lowest possible price) (Use “Goal Seek” to temporarily set A135 = MARR by changing A67 ) | |
| 3,000 | 10,000 | Price per actuator currently paid by Semi | |
| 9,500 | 4,000 | 35,000 | Price per actuator proposed to Semi (Manually enter your price) |
| INCOME STATEMENT – MOTION COMPANY (forecast for each year) | |||
| OPERATING REVENUE | |||
| 4,000,000 | 16,000,000 | $ Total Operating Revenue (Actuator Demand)(Price/Actuator) | |
| OPERATING EXPENSES | |||
| Direct Cost of Goods Sold | |||
| 900,000 | 1,200,000 | $ Labor Cost | |
| 900,000 | 1,200,000 | $ Material Cost | |
| 1,000,000 | 2,000,000 | $ Other Direct Cost | |
| 100,000 | 200,000 | $ Depreciation of Capital Equipment | |
| 3,000,000 | 4,600,000 | Total Cost of Goods Sold | |
| Gross Profit | |||
| 700,000 | 13,000,000 | ||
| Indirect Costs | |||
| 200,000 | 1,200,000 | Selling, General, & Administrative | |
| 100,000 | 300,000 | Interest expense on debt to Semi | |
| 300,000 | 1,200,000 | Total Indirect Costs | |
| Net Income Before Taxes | |||
| 600,000 | 13,000,000 | ||
| Taxes | |||
| 150,000 | 6,000,000 | ||
| NET PROFIT | |||
| 200,000 | 7,000,000 | ||
| BALANCE SHEET – MOTION COMPANY (On First Day of Operation) | |||
| ASSETS | |||
| Current Assets | |||
| 300,000 | 1,300,000 | Cash | |
| 300,000 | 1,300,000 | Accounts Receivable | |
| 250,000 | 400,000 | Inventory (Finished Goods) | |
| 50,000 | 150,000 | Inventory (Materials) | |
| 900,000 | 4,000,000 | Total Current Assets | |
| Fixed Assets | |||
| 700,000 | 1,200,000 | Equipment | |
| Total Assets | |||
| 1,600,000 | 5,000,000 | ||
| LIABILITIES & EQUITY | |||
| Current Liabilities | |||
| 50,000 | 100,000 | Accounts payable | |
| Long-term Liabilities | |||
| 1,000,000 | 1,350,000 | 3,500,000 | Debt to Semi |
| 1,400,000 | 4,000,000 | Total Liabilities | |
| Equity | |||
| 200,000 | 800,000 | Stock | |
| – 0 | Retained Earnings (None) | ||
| 200,000 | 800,000 | Total Equity | |
| Total Liabilities and Equity | |||
| 1,600,000 | |||
| METRICS | |||
| Measures of Financial Health | |||
| 500,000 | 3,500,000 | Working Capital | |
| 1.0 | 40 | Current Ratio (must be >2 | |
| 1.0 | 40 | Acid Test Ratio (must be >1) | |
| 1% | 250% | % Return on Assets (Must be > MARR) | |
| 1% | 1200% | % Return on Equity (Must be > MARR) | |
| 1.0 | 60 | Interest Coverage (Must be >3) | |
| 10.0% | 80% | Gross Margin | |
| 1.0% | 50% | Net Profit Ratio (Margin on Sales) | |
| Pre-tax IRR to Semi (from loan and net benefits) | |||
| Benefit to Semi | Year | ||
| (3,000,000) | (1,350,000) | 0 | Loan amount |
| 200,000 | 13,000,000 | 1 | Loan payment + Economic Benefits [Econ Benefits = (Max Price – Actual Price)(Annual Qty)] |
| 200,000 | 13,000,000 | 2 | Loan payment + Economic Benefits [Econ Benefits = (Max Price – Actual Price)(Annual Qty)] |
| 200,000 | 13,000,000 | 3 | Loan payment + Economic Benefits [Econ Benefits = (Max Price – Actual Price)(Annual Qty)] |
| 200,000 | 13,000,000 | 4 | Loan payment + Economic Benefits [Econ Benefits = (Max Price – Actual Price)(Annual Qty)] |
| 200,000 | 13,000,000 | 5 | Loan payment + Economic Benefits [Econ Benefits = (Max Price – Actual Price)(Annual Qty)] |
| 200,000 | 13,000,000 | 6 | Loan payment + Economic Benefits [Econ Benefits = (Max Price – Actual Price)(Annual Qty)] |
| 3,000,000 | 13,000,000 | 7 | Loan payment + Economic Benefits + Loan Payoff |
| – 0 | 75,000,000 | Net Present Value =NPV(A137:A144) | |
| 7% | 1000% | IRR | |
| 500,000 | 20,000,000 | Annual Profit if Motion could sell to all Semi competitors = (Motion Profit)/(Semi Market Share) | |
| 5,000,000 | 170,000,000 | Value of Patent = PV(Profits from serving the whole market over the 15 year patent life) |
Sheet3
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