The Pasta Tree
Company Summary
The Pasta Tree has built a reputation on offering the most delicious, nutritious pasta products. The business will operate as a general partnership with Jill Forman and John Wingate both performing management responsibilities.
2.1 Company Ownership
The Pasta Tree is owned by Jill Forman and John Wingate.
2.2 Company History
The Pasta Tree’s first products were created in the kitchen of Jill Forman. It was in her kitchen that she first created fresh pasta that was used in a part-time catering business operated by John Wingate and herself.
Customers quickly began to request special orders of the pasta products. They proved to be so popular that Jill and John pooled their resources and began The Pasta Tree. They opened a storefront and began to sell directly to the public.
After one year of operation, John was successful in getting the city’s natural food stores to carry The Pasta Tree products. Over the last two years, The Pasta Tree’s products have become popular in upscale natural food stores in Springfield.
The Pasta Tree’s operations has expanded dramatically over the past three years. What was initially a two person operation has expanded to now include a staff of four in production, delivery, and sales.
The following table and chart illustrates the sales success of The Pasta Tree.
| Past Performance | |||
| FY 2000 | FY 2001 | FY 2002 | |
| Sales | $155,000 | $178,250 | $200,000 |
| Gross Margin | $60,000 | $70,000 | $80,000 |
| Gross Margin % | 38.71% | 39.27% | 40.00% |
| Operating Expenses | $100,000 | $105,000 | $110,000 |
| Collection Period (days) | 35 | 35 | 39 |
| Inventory Turnover | 15.00 | 15.00 | 15.00 |
| Balance Sheet | |||
| FY 2000 | FY 2001 | FY 2002 | |
| Current Assets | |||
| Cash | $20,000 | $30,000 | $70,000 |
| Accounts Receivable | $10,000 | $12,000 | $14,000 |
| Inventory | $8,000 | $8,000 | $8,000 |
| Other Current Assets | $0 | $0 | $5,000 |
| Total Current Assets | $38,000 | $50,000 | $97,000 |
| Long-term Assets | |||
| Long-term Assets | $0 | $0 | $36,736 |
| Accumulated Depreciation | $0 | $0 | $5,248 |
| Total Long-term Assets | $0 | $0 | $31,488 |
| Total Assets | $38,000 | $50,000 | $128,488 |
| Current Liabilities | |||
| Accounts Payable | $3,000 | $7,000 | $10,000 |
| Current Borrowing | $2,000 | $4,000 | $3,000 |
| Other Current Liabilities (interest free) | $0 | $0 | $0 |
| Total Current Liabilities | $5,000 | $11,000 | $13,000 |
| Long-term Liabilities | $30,000 | $20,000 | $10,000 |
| Total Liabilities | $35,000 | $31,000 | $23,000 |
| Paid-in Capital | $20,000 | $10,000 | $0 |
| Retained Earnings | ($17,000) | $9,000 | $81,488 |
| Earnings | $0 | $0 | $24,000 |
| Total Capital | $3,000 | $19,000 | $105,488 |
| Total Capital and Liabilities | $38,000 | $50,000 | $128,488 |
| Other Inputs | |||
| Payment Days | 30 | 30 | 30 |
| Sales on Credit | $105,000 | $114,000 | $123,000 |
| Receivables Turnover | 10.50 | 9.50 | 8.79 |
2.3 Company Locations and Facilities
The Pasta Tree is located on 1234 Main St. The storefront is 3,000 square feet with 2/3 of the area dedicated to production. The location is perfect for foot traffic and there is quick access to the city’s freeway system.
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