StartUp, Inc. is planning its fundraising efforts, and needs to calculate how mu

Question

StartUp, Inc. is planning its fundraising efforts, and needs to calculate how much money it needs to raise to cover its cash needs through its first 12 months of operations.The founders have identified the following in their planning

Necessary equipment purchases:$250,000

Marketing materials:$20,000

Legal fees:$25,000

Expected loss, first 12 months:$150,000

Depreciation, first 12 months:$24,000

Tenant improvements on office space:$40,000

Product development costs:$80,000

How much money does StartUp need to raise for its first 12 months?

Startup, Inc realizes that it left out some key numbers in its earlier calculations.They need to produce $50,000 worth of inventory, they expect to have accounts receivable reach $30,000 by the end of the twelve months, and accounts payable will reach $20,000.How much additional cash will they need to raise to cover these items?

Explanation / Answer

Particulars Amount ($) Equipment purchases           250,000 Marketing material             20,000 Legal fees             25,000 Tenant improvements             40,000 Product development costs             80,000 Estimated cash required to raise        415,000 Note: Depreciation are not considered as they are non-cash expenses and expected loss is not an expense. Additional cash required Particulars Amount ($) Inventory             50,000 Accounts receivable             30,000 Accounts payable          (20,000) Net working capital / Additional cash required           60,000 Please hit the like button if the answer helped you else leave a comment for further clarification. Thank you! All the best!

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