Create contingency plans to address major problems or setbacks as they occur.

CLC Capstone: Five-Star Cleaning Services

Jessica Cisneros

Nicholas Gaudet

Cory Nicholson

Rebekah Reno

MGT-485

March 26, 2017

Financial Plan: Five-Star Cleaning Services

Possible Sources of Investment Capital

There are various sources of finance that Five-Star Cleaning services can consider for investment capital. They include: funds from friends and family members, loans from financial institutions, and sale of shares. Friends and family members can be approached by informing them about the business ideas and plans. When they feel satisfied that the business is viable, they can provide support in form of funding (Campbell, Edgar & Stonehouse, 2011). In the same way, financial institutions such as banks and credit societies can lend a help to the organization, which will then refund after it makes significant profits within an agreed period of time.

How Financial Information Can help Craft Business Strategy

Five-Star Company can use financial information to inform its business strategies in many ways. First, the organization can use its financial performance to identify its strengths and weaknesses. For instance, its revenue and profits information can be used by top decision-makers to determine whether the company met its financial goals and targets (Campbell, Edgar & Stonehouse, 2011). Through that, the organization can seek ways of sealing loopholes that deterred it from moving forward. Financial information can also help to assess whether the company is financially capable to expand its operations and engage in initiatives that boosts its sales.

Key Financial Ratios

Financial ratios help a business to identify their profitability on a short term and long term basis. It gives stakeholders an indicator of the health of the company. Kiyosaki (2015), says that for a business, a stakeholder should look at a minimum of three financial ratios when deciding on the health of that business. That being said, we at Five-Star Cleaning Services wish to look at five main ratios so that we get a deeper picture of what the status of our company is. The following are the five we have selected:

• Quick Ratio: Liquid Assets / Current Liabilities

• Current Ratio: Current Assets / Current Liabilities

• Debt-to-Equity Ratio: Total Liabilities / Total Equity

• Gross Margin Percentage: Gross Margin (Sales-Cost of Goods Sold) / Sales

• Net Operating Margin Percentage: Earnings before Taxes and Interest / Sales

These ratios should give the best look at our profitability, liquidity, and capital at any given time.

References

Campbell, D., Edgar, D., & Stonehouse, G. (2011). Business strategy: an introduction. Palgrave Basingstoke: Macmillan.

Kiyosaki, R. (2015, June 30). 8 Key Financial Ratios For Knowing the Health of a Business. Retrieved from http://www.richdad.com/Resources/Rich-Dad-Financial-Education-Blog/June-2015/8-key-financial-ratios.aspx