XXX FISH
Executive Summary
A contributing factor to examining this new business venture is the constantly decreasing
farm income. Input costs are increasing every year and grain prices remain unchanged
which are decreasing net profits more and more each year. To counteract the occasional
net loss in farm profits, the mentor wanted to investigate if a fish farm would decrease the
risk associated with grain farming.
Attending many farm information seminars has shown the client that future farms in
Western Canada could possibly include either very large grain farms with lots of labor
and risk, or small grain farms with a value-added commodity venture on the side. The
small grain farm with a value-added venture on the side, may potentially counter-act the
risk associated with farm net incomes in Western Canada.
A third reason the client wanted to pursue with this idea is because rural communities in
Saskatchewan are fading away quickly. The client wanted to create an opportunity for
employment. and retain some youth in the community.
The potential fish producing facility will be producing high quality, premium fish
through an indoor recirculation system. The site will require some modifications to the
land and existing building included in the capital budget. These modifications costs are
minor compared to the high cost of purchasing specialized aquaculture equipment. The
total capital cost including equipment and land required to initiate XXX FISH is $514,
522.
XXX FISH will be managed by a board of directors consisting of five people, three
internal and two external directors. The facility will employ two full-time jobs; an
Aquaculture Manager and a Secretary/Treasurer as well as one part-time job, the
Aquaculture Assistant.
COMM 492.3 College of Agriculture and College of Commerce, University of Saskatchewan
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Fish will be grown to a live weight of 2.2 kg (5.5 lbs) and then shipped on a weekly basis
to be processed. There will be a 5% brokerage fee on top of processing to market the fish
to the wholesaler. XXX FISH is targeting the high-end white table cloth restaurants in
New York City. A simple sales plan will be used as the fish produced will be marketed as
a premium quality fish, servicing a niche market with high demand.
Total debt to be financed totals $680,000, consisting of $230,000 financed through debt
and $450,000 financed through equity, $49,950 of which will consist of the owner
purchasing 111 shares valued at $450 per share. Over the first 10 years of production
starting in 2007 and ending in 2016, the business will turn over a 5% internal rate of
return with dividends being paid out after the 4th year of production.
COMM 492.3 College of Agriculture and College of Commerce, University of Saskatchewan
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Table of Contents
Executive Summary ............................................................................................................. i
Table of Contents ............................................................................................................... iii
List of Figures ..................................................................................................................... v
List of Tables ..................................................................................................................... vi
INTRODUCTION .............................................................................................................. 1
1.0 History....................................................................................................................... 2
1.1 Objective ................................................................................................................... 2
1.2 Background and Literature Review .......................................................................... 2
1.2.1 Aquaculture Background Information ............................................................... 2
1.2.2 Advantages of Aquaculture in Saskatchewan .................................................... 3
1.3 Methodology ............................................................................................................. 3
1.3.1 Operations Management .................................................................................... 3
1.3.2 Target Markets ................................................................................................... 4
OPERATIONS PLAN ........................................................................................................ 5
2.0 System Operation ...................................................................................................... 6
2.1 Site Plan and 10 year Development Plan .................................................................. 6
2.2 Floor Plan .................................................................................................................. 8
2.3 Work Plan and Flow of Work ................................................................................... 8
2.4 System Operation ...................................................................................................... 9
2.4.1 Hatchery Operation ............................................................................................ 9
2.4.2 Recirculation System Operation ...................................................................... 10
2.5 Average Business Operation ................................................................................... 13
2.6 Environmental Limitations ..................................................................................... 13
2.7 Supply and Service Analysis .................................................................................. 14
2.8 Licensing and Fees .................................................................................................. 14
2.9 Capital Budget ........................................................................................................ 14
2.9.1 Description of Capital Budget ......................................................................... 14
2.10 Operating Expenses .............................................................................................. 16
2.10.3 Cash Management .......................................................................................... 19
2.10.3.1 Accounts Receivable ............................................................................... 19
2.10.3.2 Accounts Payable .................................................................................... 20
2.11 Cash Conversion Cycle ......................................................................................... 20
HUMAN RESOURCES ................................................................................................... 21
3.0 Organizational Structure ......................................................................................... 22
3.1 Job Descriptions ...................................................................................................... 22
3.2.1 President ........................................................................................................... 23
3.2.2 Aquaculture Manager....................................................................................... 23
3.2.3 Aquaculture Assistant ...................................................................................... 24
3.2.4 Secretary/Treasurer .......................................................................................... 25
3.3 Human Resources Strategy ..................................................................................... 25
MARKETING PLAN ....................................................................................................... 26
4.0 The 4 P’s – The Marketing Mix .............................................................................. 27
4.0.1 The Product and Service .................................................................................. 27
4.0.2 Pricing .............................................................................................................. 27
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4.0.3 Promotion......................................................................................................... 28
4.0.4 Place ................................................................................................................. 28
4.1 Segmentation, Targeting and Positioning ............................................................... 28
4.1.1 Segmentation.................................................................................................... 28
4.1.2 Targeting .......................................................................................................... 29
4.1.3 Positioning ....................................................................................................... 29
4.2 SWOT Analysis ...................................................................................................... 31
4.3 Market Analysis ...................................................................................................... 32
4.3.1 Past Performance ............................................................................................. 32
4.3.2 Markets ............................................................................................................ 32
4.4 Competition............................................................................................................. 33
4.5 Product and Services ............................................................................................... 35
4.6 Marketing Strategy.................................................................................................. 35
4.6.1 Sales and Profit Objectives .............................................................................. 36
4.6.2 Channels of Distribution .................................................................................. 36
4.7 Pricing Policy .......................................................................................................... 37
4.8 Select Market/Product/Service Mix ........................................................................ 38
4.9 Selling and advertising ............................................................................................ 39
4.10 Marketing Plan Budget ......................................................................................... 40
FINANCIAL PLAN.......................................................................................................... 41
5.0 Financing Budget .................................................................................................... 42
5.0.1 Debt Financing ................................................................................................. 42
5.0.2 Equity Financing .............................................................................................. 42
5.0.3 Dividend Policy ............................................................................................... 42
5.1 Economic Forecast .................................................................................................. 43
5.2 Projections of Income Statements, Balance Sheets and Cash Flow ....................... 43
5.3 Ratio Analysis ......................................................................................................... 45
5.4 Unit Cost of Production .......................................................................................... 46
5.6 Sensitivity Analysis ................................................................................................ 46
5.7 Risk Analysis .......................................................................................................... 49
CONCLUSION ................................................................................................................. 51
6.0 Conclusion .............................................................................................................. 52
REFERENCES ................................................................................................................. 53
APPENDIX A ................................................................................................................... 57
APPENDIX B ................................................................................................................... 59
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List of Figures
Figure 2.2.1 Detailed Schematic of the Facility ................................................................. 8
Figure 2.3.1 Schematic Involving Flow of Work for 9 month growth period .................... 9
Figure 2.4.2.1 Schematic of a Typical Recirculation System ........................................... 12
Figure 2.11.1 Cash conversion cycle flow chart ............................................................... 20
Figure 3.0.1 Organizational structure of XXX FISH ........................................................ 22
Figure 4.1.3.1 Matrix of the Seafood Industry in Relation to Price and Quality .............. 30
Figure 5.6.1 Breakeven scenarios based on pounds of Char sold ..................................... 47
Figure 5.6.2 Breakeven scenarios based on $/lb of Char .................................................. 48
Figure 5.6.3 Comparison of different scenarios using base case of 100% and changing
variables by 10% ....................................................................................................... 49
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List of Tables
Table 2.10.1.1 Direct Materials Budget Involving Inventory per Year ............................ 17
Table 2.10.1.2 Estimated Labor costs for 5 H Fish .......................................................... 17
Table 2.10.1.3 Estimates on Manufacturing costs for 5 H Fish ........................................ 17
Table 2.10.1.4 Estimates of Cost of Goods produced....................................................... 18
Table 2.10.1.5 Estimated Cost of Goods Sold for 5 H Fish ............................................. 18
Table 2.10.1.6 Estimated of Marketing and Administration expenses for 5 H Fish......... 19
Table 4.2.1 SWOT Analysis of XXX FISH ..................................................................... 31
Table 4.4.1 Summary of Direct Competition in Canada .................................................. 34
Table 4.5.1 Nutritional Information of Arctic Char per 100 grams .................................. 35
Table 4.10.1 Promotional budget ...................................................................................... 40
Table 5.0.1 Breakdown of financing................................................................................. 42
Table 5.0.3.1 Dividend schedule for XXX FISH for 10 years ......................................... 42
Table 5.2.1 Summary of financial results for 10 years ..................................................... 44
Table 5.3.1 Summary of financial ratio’s pertaining to XXX FISH ................................. 45
Table 5.4.1 Unit cost of production ($/lb) ........................................................................ 46
Table 5.6.1 Critical variables isolated to yield IRR = 0.................................................... 46
Table 5.6.2 Values of critical variables for main scenarios 2008 ..................................... 48
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INTRODUCTION
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1.0 History
XXX FISH operates in a former turkey barn. When operational, the turkey farm owned
the barn plus 10 acres of property surrounding the barn. Upon purchase, the objective was
to use the barn for a value added commodity that could create additional cash flow and
create employment in the area; such as a fish farm. Interest in aquaculture came from
researching the already successful Alberta Aquaculture industry.
1.1 Objective
Being a locally owned operation, the business is dedicated to creating a product to bring
wealth to the community. The fish is high quality and high priced with demand in niche
markets in many areas of the world. In particular, wholesalers in New York City demand
the fish to service the white tablecloth restaurants of the area. The business will raise
high quality fish to be sold by wholesalers.
1.2 Background and Literature Review
1.2.1 Aquaculture Background Information
Aquaculture involves the raising of aquatic species in a contained and controlled
environment using formulated feed. Intensive aquaculture includes the raising of fish in
net pens, in lakes, or in tanks on land with intent to increase biomass.
Aquaculture is a relatively new industry on the Prairie Provinces. It officially began in
Saskatchewan in 1970 when the government issued 166 licenses for extensive rainbow
trout culture in dugouts, ponds and pothole lakes and has grown rapidly since (SFRR,
2005). By 1975 the industry had expanded and the government issued 2500 licenses, 46
of which were used for commercial operations.
Since that time the amount of
commercial producers has declined and leveled off at around 15 active producers (SFRR,
2005). These numbers represent the amount of fish farms in Saskatchewan producing
rainbow/steelhead trout or Grass/Silver Carp. These fish are used to stock lakes, for
biological control of weeds and blue algae in dugouts/irrigation canals and also to be
processed for human consumption (SFRR, 2005).
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Saskatchewan is the largest aquaculture producer of the 3 Prairie Provinces. Aquaculture
has remained stable in Saskatchewan since 1999 producing 914 tonnes of trout in 2002.
With 15 commercial producers and nearly 2500 private producers of rainbow trout in the
province it seems that this market is stable and has reached a plateau for growth.
For
these reasons interest has turned to producing fish for the table market (SFRR, 2005).
Fish farming is the world’s fastest growing sector of agriculture business. Consumer
demand for fish is increasing while wild fish stocks are rapidly declining, mainly due to
over fishing (Lanteigne, 2002).
1.2.2 Advantages of Aquaculture in Saskatchewan
-Saskatchewan is a good location for intensive aquaculture due to the relatively nonexistent supply of some species of fresh fish to urban centers. SFRR (2005) reports that
most fish are frozen and transported in:
-Plentiful clean water free of salmonid diseases.
-Low capital cost for land acquisition.
-Competitive operating costs with respect to utilities and labor.
-Research and development initiatives at the University of Saskatchewan.
-Low license fees
1.3 Methodology
Fish farms in Saskatchewan generally use manmade ponds or confinement tanks or nets.
Pond types use large manmade dugouts, whereas confinement types use indoor tanks or
nets in a lake or river. Currently the only fish farms in Saskatchewan are trout farms with
the main purpose being to stock natural and man-made lakes and ponds.
1.3.1 Operations Management
Production of XXX FISH will rely on several key factors:
- Market demand for fresh fish.
- Operating capacity of the barn.
- Licensing requirements of commercial aquaculture
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XXX FISH
- Seasonality of the product. Demand may fluctuate depending on the time of the
year.
1.3.2 Target Markets
The Fish target market is the white tablecloth restaurants in New York. A premium price
can be achieved, and a high level of demand exists for this undersupplied product. The
stable, high value market is key to the success of XXX FISH.
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XXX FISH
OPERATIONS PLAN
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2.0 System Operation
Arctic Char is a northerly distributed freshwater fish well adapted to use in intensive
aquaculture. Producing Arctic Char in a recirculation aquaculture tanks provide the
benefit of being able to supply fresh fish year round, while being able to readily control
the environment. Production must remain somewhat intense to make recirculation tanks
cost effective due to the higher capital and upkeep costs.
To produce fish, all the aspects of the water must be controlled and remain constant.
Maintaining the water quality involves regulating the O2 and CO2, particulate removal,
and sterilization with UV light or ozone. Ammonia, pH and temperature regulation must
also be controlled to ensure fish survival and optimum growth and profitability.
The production system for XXX FISH will be a series of divided tanks. These divided
tanks will allow a staggered, consistent supply throughout the year.
Mechanical
filtration removes the solids, feces, algae, sand etc. which can damage the fish and
produce off flavors. The biological filtration removes the bacteria and ammonia from the
water and is done using large sand filters, O2 is also added and CO2 removed, as well as
UV light, to stop the growth of algae and bacteria.
The tank series involves having many tanks in a row connected to the filtration system.
The aquaculture system is stocked with fingerlings, which are young fish, at quarterly
intervals. The fish grow for about 8 to 9 months, eating approximately 2%/day of their
body weight in food. During the growth period, fish develop at different rates requiring a
grading system based on size. This results in weekly shipments of full grown fish.
2.1 Site Plan and 10 year Development Plan
Modifications to the existing barn include the following: landscaping inside the barn to
level the ground as well as create a slope gradient from the south to the north of the barn.
The slope gradient is developed for the waste water to flow by gravity out of the tanks
when needed and into the lagoon which will be constructed.
Once the landscaping is
complete, geo-thermal heating/cooling will be installed, which will be installed. Geothermal energy involves drilling deep holes in the ground to supply the heating and
COMM 492.3 College of Agriculture and College of Commerce, University of Saskatchewan
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XXX FISH
cooling source for the water in the recirculation tanks as well as heating and cooling the
office area, filter room, hatchery etc. The next stage of development will be installing the
water source from SaskWater’s pipeline which is fed from the South Saskatchewan River
and is top quality water that is required to raise Arctic Char. The existing well at the barn
site will not provide the system with the water flow requirements and has poor quality
water that is high in iron and may decrease the life-span of the filters and total system.
The closest point to tap into the existing SaskWater pipeline is located 4 kilometers from
the barn; therefore there is a substantial fee to bring the water into the barn.
The office, ice room, hatchery room, and filter room need to be constructed inside the
barn. The size of the rooms will be as follows: office – 15ft by 20 ft, ice room – 15 ft by
10 ft, hatchery – 15 ft by 25 ft, and filter room – 15 by 45 ft.
The final stage of
development in the site plant will be placing the equipment, tanks, filters, plumbing, etc.
into the facility.
The facility is going to contain its own hatchery for the fish eggs which are shipped from
a supplier in the Yukon. They will be hatched and grown into fingerlings at the
aquaculture facility. This will be a little extra work, but is well worth the extra profit
margin compared to buying the fingerlings from a supplier. The hatchery will be used
once every four months to maintain a constant supply of Arctic Char. The hatching
process is simple; the eggs are held in an oxygenated tube filled with water kept around
10 degrees Celcius. When the eggs hatch the small fish float to the top of the tube and
down a hose into the trough where they grow for about a week before being transferred to
the large growing tanks. There are 12 – 20’ diameter tanks placed down the middle of the
barn with inlet pipes full of fresh recycled water (95%) and fresh water (5%). Flowing
out of the bottom of the tanks will be the waste water which flows toward the filter room
where around 95% of it gets filtered and returned to the system and the remaining 5%
flows out to the waste water lagoon.
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Weekly shipments of Arctic Char will be shipped to a processing facility. approximately
250 kilometers away. No equipment should need to be replaced within ten years as the
average life-span on the equipment is between 10-15 years.
2.2 Floor Plan
Office
Hatchery
Ice
Room
20’
1% Slope
Fresh
Waste
Filtration
Room
Figure 2.2.1 Detailed Schematic of the Facility
2.3 Work Plan and Flow of Work
Operation flow through the barn is quite simple.
Eyed ova (eyed stage of oval
development in fish) are brought into the hatchery where they are incubated for seven
days until hatching occurs. At this point the fish (now called fingerlings) are transferred
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XXX FISH
to a twenty foot diameter tank. As the fish grow, they are graded and transferred to
successive tanks until a weight of 2.2 kg is reached. Once the fish are fully grown, they
are transferred to a large transport tub filled with ice water to die. The tub is then drained
and filled with ice to be shipped for processing.
Hatchery
Fingerling - Tank
(20‘)
Feeding
Grading - Tank 1
(20 ‘)
Grading - Tank 2
(20 ‘)
Shipping
Grading - Tank 3
(20 ‘)
Ice Packing
Ice water
(death)
Starving – Tank
(20’)
Figure 2.3.1 Schematic Involving Flow of Work for 9 month growth period
2.4 System Operation
2.4.1 Hatchery Operation
The hatchery system will be used to incubate the char ova. Eyed ova will be flown in
from Icy Waters in the Yukon Territory four times throughout the year. The ova will be
held in an oxygenated tube filled with water held at a temperature of 10 degrees Celsius.
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When the eggs hatch the small fish float to the top of the tube and down a hose into the
trough. Four hatching troughs, each measuring 2 ft by 6ft, will house the fingerlings until
they are large enough to be transferred to the tanks. The hatchery will not be part of the
recirculation system as young fingerlings are very sensitive to water quality. Instead, the
hatchery will use an open fresh water flow through system.
2.4.2 Recirculation System Operation
Recirculation aquaculture is simple in theory yet requires constant supervision. In short,
water from the production tank is filtered mechanically, separating the waste and solid
particles, after which it is biologically filtered and then returned to the tank. Large
volumes of water are required based on the intensity of the fish population.
In a
recirculation system approximately 95% of the water is reused with 5% makeup water
supplementing the system (PEI Ag and Forestry, 2000).
Each tank will hold approximately 36,738 L of water for a total of 440,856 L total. At a
5% stocking density, a yearly production of 22042 kg (440,856L water capacity x 5%
stocking density = 22,042kg) of Arctic Char can be produced. A feeding ratio of 1.2kg
feed:1kg fish requires a maximum of 26,450 kg of food (22,042kg x 1.2 = 26,450kg).
For every gram of food that enters the system, 370 mg of oxygen must be produced;
therefore the system requires 163 kg of oxygen per day (Murray Drew, 2005). Also at
26,450 kg of food, consisting of 40% protein, 10580 kg of protein will enter the system;
fish produce 20% ammonia per weight of protein, resulting in 2116 kg of ammonia. To
manage the system intricate filtration is required.
At a flow rate of 122.46L/second, 440,856 L of water is recirculated through the system
every hour. Polluted water will enter the filtration system through gravity fed pipes and
fresh water will enter the recirculation system immediately before the filtration process
begins. The water is first filtered through a drum filter to remove smaller particulate
matter. A degasser is used to remove nitrogen and carbon dioxide from the water before
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XXX FISH
it enters the oxygen generator which produces oxygen from the air. The air is compressed
and injected into the water with the oxygen injector which causes supersaturation. The
water then cycles through a fluidized bed bio filter, to remove ammonia. Bacteria are
used to convert deadly ammonia to harmless ammonium, using sand as a medium. This
process requires 89,934 m2 of surface area, which is accomplished through 17 m3 of sand.
The water is then passed through a UV filter to kill disease causing bacteria. Finally the
water is returned to the tanks using a 20hp pump. Between the pump and the tanks a heat
exchanger is in line to regulate the temperature to an optimum of 12 degrees Celsius.
Dead fish are removed from the system to prevent possible contamination. The carcasses
are put into a holding tank with citric acid which produces a liquid high in nutrients that
can be used as fertilizer.
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Waste
10% vol.
Makeup
H2 O
O2
Generator
Drum Filter
Degasser
O2
Injector
O2
Compressor
O2
Injector
Tank Water
Waste
X6
Heat
Exchanger
UV Filter
Pump
Bio Filter
Figure 2.4.2.1 Schematic of a Typical Recirculation System
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XXX FISH
2.5 Average Business Operation
The labor required for a typical day at the Fish Farm will consist of water quality tests in
the morning, totaling 1 – 1.5 hours of labor. Following water tests the fish need to be fed
once a day which involves manual feeding consisting of 1 hour of labor for weighing and
throwing the feed into the tanks. Tank cleaning is the only other labor consideration and
will be conducted three times a week depending on water quality. Tank cleaning will take
approximately 2 hours for all 12 tanks.
Once the fish are grown to market size there will be shipments going out which will
involve removing the fish from the final tanks and transferring them to transport tubs
filled with ice water. The tubs are drained and packed with ice for shipment. The total
labor for this operation using the laborer and the barn manager would be around 2 hours.
Transportation of the fish is a 6 hour round trip including unloading and paper work.
Grading of the fish involves separating the fish based on size because not all fish will
grow at the same rate. This is done every two or three months and takes three days to
complete since it involves manually handling the fish and transferring them to the proper
tanks.
Every three months there will be a new batch of fish to hatch. This operation involves
receiving the fish eggs and putting them into the hatching facility. The whole operation
requires 4 hours to complete, with 2 hours of driving and 2 hours to prepare the hatchery.
The eggs and potential fingerlings would be monitored in the hatchery for 1 week. The
fingerlings are then transferred to the grow tanks, a rapid process since the fingerlings are
only approximately 90 grams. Large quantities can be transferred by bucket to the tanks,
therefore the process would take 0.5 hours (Dean Foss, 2005).
2.6 Environmental Limitations
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XXX FISH
Environmental limitations of the site include a lack of flow from the existing well. Due
to this, the well will have to be supplemented with river water which will be piped in
from the South Saskatchewan River. An immense amount of waste water is produced by
the recirculation system which will be deposited a lagoon.
2.7 Supply and Service Analysis
Equipment for the facility will come from a variety of suppliers across North America.
Where possible XXX FISH will deal locally and attempt to use Canadian suppliers.
Aquaculture equipment and supplies will be obtained from: Aquatic EcoSystems, Wild
West Steelhead, Altech Industries, and Rainmaker Irrigation.
Other equipment and
development will be obtained from: Frontier Plumbing and Heating, Tegenkamp Electric,
Point Four Systems, Sierra Systems, Mandershceid Construction, Doetzel Landscaping
and Excavating and Sask Water.
2.8 Licensing and Fees
In Saskatchewan the license to produce fish commercially is $10/year.
2.9 Capital Budget
2.9.1 Description of Capital Budget
The client currently owns the land and the building which is adventitious to the business
in terms of capital costs. The client is going to rent the building and land to the business
for $2.00/year; $1.00/year for the building and $1.00/year for the land. Property tax as
assessed is $62.50/year. Water installation will total around $54,000, starting with a
$6000 charge for connection to the main water pipeline and $48,000 to pipe and trench
the water line 4 kilometers at $12/meter. Geo-Thermal costs are estimated at $100,000
which includes approximately 70 holes, piping, pumps, etc. The rooms built in the barn
will consist of an office, ice room, hatchery, and filter room. The total price of the
construction of these rooms comes to $22,800, estimated by Manderscheid construction.
The price consists of the concrete, lumber, insulation, jip-rock, labor and tin. The total
Landscaping and lagoon digging costs will be $15500 as quoted by Doetzel Loader and
Excavating Service. Engineering costs need to be considered before actual development
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XXX FISH
of this facility occurs and is estimated at around $6,000 to design a proper layout that is
efficient in labor and capital.
Hatching troughs are relatively inexpensive at $150 per trough with four of them to be
installed which will easily handle hatching capabilities for XXX FISH at 25 tonnes per
year. Equipment estimates for the facility include: the oxygen generator, oxygen
compressor, oxygen injector, drum filter, bio-filter, de-gasser, UV filter, tanks, piping,
water pumps, ice machine, hatching troughs, etc. are needed to keep the facility running.
Table 2.9.1 Break-down of Capital Budget
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XXX FISH
Capital Budget
Land
Piping: Class 2
Piping
Total Piping: Class 2
Building and Infrastructure: Class 06
Fish Barn
Geo thermal system
Electrical Installation
Water Installation
Landscaping and Lagoon
Building Construction
Engineering Costs
Total Class 06
Production Equipment: Class 08
Hatching Troughs
Oxygen Generator
Oxygen Compressor
Oxygen Injector
Drum Filter
Bio Filter
Degasser
UV Filter
Tanks
Back-up Generator
Water Quality Tester
Oxygen Sensor
Monitors
Water Pumps
Ice Machine
Office Equipment and Furniture
Transport Tubs
Total Class 08
Other Equipment <$200: Class 12
Computer, printer, monitor
Total Class 12
Total Equipment Costs
Total Land & Equipment
Estimated Cost
($)
1
Source of Estimates
Client renting to his own company
$
10,000 TS&M Plumbing
10,000
28,000 square ft.
1 Client renting building to his own company
100,000 Frontier Plumbing and Heating
1,200 Tegenkamp Electric
54,000 SaskWater
15,500 Doetzel Loader and Excavating service
22,800 Manderscheid Construction
6,000 Point Four Systems and Sierra Systems
199,501
$
1,200
10,000
1,000
8,800
40,450
46,500
1,740
12,000
127,920
18,000
3,000
1,000
2,950
17,200
5,000
1,500
5,260
303,520
$
$
1,500
1,500
514,521
514,522
8@ $150.00 Wild West Steelhead
Aquatic Eco Systems
3 @ $325 Aquatic Eco Systems
4 @ $2,200 Aquatic Eco Systems
Aquatic Eco Systems
6 @ $7750 Aquatic Eco Systems
3@ $580 Aquatic Eco Systems
Aquatic Eco Systems
Alchem Industries
Power Complete
Power Four Systems
Point Four Systems
Aquatic Eco Systems
2 @ $8600 Rainmaker Irrigation
Wild West Steelhead
2 @ $2630 Aquatic Eco Systems
Computer, Desk, Printers etc
2.10 Operating Expenses
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XXX FISH
Operating
expenses
consist
of
direct
materials,
labor,
overhead,
and
marketing/administration. These costs are presented in the following tables. 2007 and
2008 are shown, as 2007 the startup does not allow for an entire production cycle, and
costs are lower compared to other years because of this.
In 2008, a full year of
production is occurring, and more closely represents the yearly expenses for XXX FISH.
2008 values are based on the 2007 values, also accounting for 2% inflation.
Table 2.10.1.1 Direct Materials Budget Involving Inventory per Year
Description
Fish Eggs
Feed Costs
Total
Estimated Cost ($)/yr
Source of Estimates
2007
2008
$ 1,800.00 $ 1,974.00 Quarterly shipments @ $450 Icy Waters
$ 19,500.00 $ 39,780.00 Wild West Steelhead
$ 21,300.00 $ 41,754.00
Feed costs are less in the first year, because the entire production cycle will not be
completed in 2007.
Table 2.10.1.2 Estimated Labor costs for 5 H Fish
Description
Labourer
Total
$
$
Estimated Cost ($)/yr
Source of Estimates
2007
2008
1000 hrs @ $20.82/hr 20,820.00
21236
20,820.00 $
21,236.00 Labour Market Information
Table 2.10.1.3 Estimates on Manufacturing costs for 5 H Fish
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XXX FISH
Descripion
Variable Overhead Costs
Water
Electricity
Brokerage Fees
Estimated ($)/yr
2007
2008
9,816
7,200
4,091
Processing Costs
13,750
Total Variable Overhead
34,857
Fixed Overhead Costs
Property Taxes
Capital Cost Allowance
Total Fixed Overhead
Total Overhead Costs
63
41,077
41,140
75,997
Source of Estimate
20,025 SaskWater
14,688 SaskPower
17,024 5% commission
$0.25 X 55000 fish (Wild
14,025
West Steelhead)
65,762
63 Revenue Canada
41,899 Revenue Canada
41,962
107,724
Again, less water and electricity will be used due to the incomplete production cycle in
2007. Also brokerage fees are less because only a quarter of fish that would be normally
sold, are available for sale in 2007, and brokerage fees are based on the amount of fish
sold.
Table 2.10.1.4 Estimates of Cost of Goods produced
Descripion
Total Direct Expenses
Total Direct Labour & Benefits
Total Overhead Costs
Total Cost of Goods Produced
Estimated ($)/yr
2007
2008
21,301
41,725
23,464
23,933
75,996
107,724
120,761
173,382
Table 2.10.1.5 Estimated Cost of Goods Sold for 5 H Fish
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XXX FISH
Descripion
Estimated ($)/yr
2007
Beginning Inventory
Cost of Goods Produced
Cost of Goods Available for Sale
Ending Inventory
Cost of Goods Sold
2008
120,761
120,761
76,924
43,838
76,924
173,382
250,306
118,727
131,578
Table 2.10.1.6 Estimated of Marketing and Administration expenses for 5 H Fish
Description
Marketing Expenses
Shipping cost to N.Y.
Website Construction and Maintenance
Truck & Trailer Rental
Business Cards
Accounting Fees
Lawyer Fees
Total Marketing Expense
Summary of Administration & Marketing Expenses
Administration Salaries & Wages
Marketing Expenses
Interest on Long Term Debt
Total Admin & Marketing Expenses
Estimated ($)/yr
2007
2008
11,688
2,000
15,600
600
1,800
1,200
32,888
11,921
250
15,912
612
1,800
1,200
31,695
87,188
32,888
18,400
138,475
87,188
31,695
17,722
136,605
2.10.3 Cash Management
To purchase equipment and develop the facility a loan for $230,000 at an interest rate
8%. Annual loan payments were chosen due to the nature of the startup of the business.
Production will not be available for at least eight months after starting, thus monthly
payments are not an option. Equity of $450,000 also needs to be raised from investors.
2.10.3.1 Accounts Receivable
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XXX FISH
The wholesaler will be purchasing the dressed fish at a price of $7.00/lb CAN. Payment
will be requested upon delivery with a fourteen day grace period. After fourteen days
24% interest charges will apply.
2.10.3.2 Accounts Payable
Accounts payable for XXX FISH consists of EWOS for feed, Icy Waters for fish ova and
Wild West Steelhead for processing. Feed will be acquired from EWOS at a cost of
$1300.00/tonne (Dean Foss, 2005). A 3% discount is applied if the balance is paid within
seven days of receiving the feed. After that period of time, a 1.5% interest rate is applied
to the outstanding balance. Icy Waters requires payment upon delivery of the eyed ova.
After seven days an interest charge of 17% will be applied. Wild West Steelhead will be
processing and packaging the fish at a cost of $0.25/lb. Balance owing is to be paid
within fourteen days of processing after which a 24% interest charge is applied.
2.11 Cash Conversion Cycle
Inventory
270 days
Accounts
Receivable
14 days
CCC = 254 days
Accounts
Payable
30 days
Figure 2.11.1 Cash conversion cycle flow chart
The cash conversion cycle of 254 days consists of an average number of days inventory
of 270 days, which is an average growth period of Arctic Char, plus 14 days for average
receivables minus 30 days for days payable.
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XXX FISH
HUMAN RESOURCES
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XXX FISH
3.0 Organizational Structure
XXX FISH will operate through a board of directors, president, secretary/treasurer,
aquaculture manager, and aquaculture assistant. The secretary/treasurer and aquaculture
manager will report to the president who will in turn report to the board of directors. The
board of directors will consist of 5 members.. The president and owner of the operation
will be an integral part of the board as well as his wife, the secretary. Due to extensive
involvement in researching and developing the business, there is also a third board
member who isalso a key part of the board.
There are respected members of the
community whom the owner trusts and feels would make excellent additions to the board
of directors. Management will be conducted by the President and the Secretary/Treasurer
and the aquaculture manager.
Board of Directors
President
Secretary /
Treasurer
Aquaculture
Manager
Aquaculture
Assistant
Figure 3.0.1 Organizational structure of XXX FISH
3.1 Job Descriptions
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XXX FISH
XXX FISH will be operated by an aquaculture manager with the aid of an aquaculture
assistant. The assistant will report to the manager who reports to the president who in
turn answers to the board of directors. As well, a secretary/treasurer will answer to the
president as to the financial and daily business operations.
3.2.1 President
The duties of the president will include attending managerial meetings, having final say
on all managerial decisions, and ensuring that job descriptions are being met by each
employee.
3.2.2 Aquaculture Manager
As manager of the aquaculture operation, responsibilities will include:
-
Supervise Aquaculture Assistant
-
Purchase feed and equipment as necessary
-
Monitor the recirculation system to maintain required water quality
-
Perform daily water quality tests and make necessary adjustments
accordingly
-
Manage fish hatchery including selecting stock and maintaining health
until transfer to tanks
-
Monitor size and health of fish
-
Separate fish into respective tanks based on size and health
-
Organize appropriate kill times so as to maintain supply of dead fish to be
exported to Wild West Steelhead
-
Give direction to Aquaculture Assistant
as to daily duties and
requirements
-
Maintain a clean, organized facility
-
Plan harvest, processing and marketing of fish
-
Organize logistics of transport of eyed ova into facility and transport of
dead fish to Wild West Steelhead
-
Develop and maintain relationships with supplier and consumers of the
farm
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XXX FISH
The aquaculture manager will require post-secondary training as well as several years’
previous experience to ensure adequate knowledge of the operation. A diploma or
bachelor of sciences in fisheries and aquaculture technology would be sufficient to
operate the fish farm. The diploma course can be completed in 4 or 6 semesters either as
a direct or co-operative program. The B.Sc. program can be taken as direct entry for four
years, or as a combination of the diploma and B.Sc. programs resulting in dual capacity.
(Malaspina University – college, 2005). In addition to the required post-secondary
education, additional workshops will be encouraged for both the manager and assistant to
ensure up to date knowledge on technology and practices in the industry. Courses and
workshops such as these can be taken over several days through the Canadian
Aquaculture Institute.
Wage will be determined on experience and level of training in the aquaculture industry.
The aquaculture manager will be paid an annual salary or $50,000 per year based on the
estimates for biological technologists and technicians put out by the Labour Market
Information department of the government of Canada. The Aquaculture managers total
wage of $50,000 will be accounted for in the administration and marketing expenses.
3.2.3 Aquaculture Assistant
As assistant to the Aquaculture Manager, responsibilities will include:
-
Report to manager on daily basis in regards to water quality, fish health,
etc.
-
Perform daily water quality tests and make necessary adjustments
accordingly
-
Maintenance of the recirculation system equipment
-
Monitor stock for health or size issues
-
Separate and move fish based on size and health
-
Stocking fish tanks once fingerlings reach adequate size
-
Feeding fish as set out by manager
-
In charge of killing fish when required to fill shipments
-
Maintain clean facility including office, hatchery and packing areas
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XXX FISH
-
Clean tanks and filters as required
The aquaculture assistant will answer directly to the aquaculture manager. The position
will not require formal training, though preference will be given to those who have a
diploma or B.Sc. in fisheries and aquaculture technology. Previous experience in the
aquaculture industry will also be an asset. As for the manager, the assistant’s wage will
be determined based on level of education and experience. The assistant will be paid
hourly at a rate of $20.82 per hour (the current rate for biological technologists and
technicians). The aquaculture assistant’s total wage of $20,820 will be allocated in the
direct labor costs.
3.2.4 Secretary/Treasurer
The secretary/treasurer will be responsible for the bookkeeping and secretarial
duties.XXX FISH
Duties will include managing mail, bills and general office
housekeeping. The secretary will also answer to the president, but will have no one who
reports to them. The secretary/treasurer’s total wage of $30,000 will be accounted for in
the administration and marketing expenses.
3.3 Human Resources Strategy
The aquaculture assistant will report to the aquaculture manager who will in turn report to
the president who answers to the board of directors of XXX FISHthe business. In doing
so, a straight line of command is established with no confusion as to who is ultimately in
charge.
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XXX FISH
MARKETING PLAN
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XXX FISH
4.0 The 4 P’s – The Marketing Mix
4.0.1 The Product and Service
FISHXXX is producing Arctic Char, grown in recirculation aquaculture to an average
size of 2.2 kg (5.5 lbs) live weight. The fish are dressed, a process involving the removal
of the entrails resulting in a 15% loss in weight. The dressed fish then have an average
weight of approximately 1.87kg (4.675 lbs) (Dean Foss, 2005). The fish are shipped
dressed to M. Slavin & Sons, located in the Fulton Fish Market in New York City. Arctic
Char are considered a high end fish and serve a niche market, mostly white table cloth
restaurants which come to the Fulton Market each morning and buy fresh seafood for the
restaurant (NYFC, 2004). The fish are shipped dressed for two reasons, white tablecloth
restaurants who buy at the Fulton Market want to be able to prepare the fish in whatever
style they desire, whether it be filleted, as steak or cooked whole, therefore XXX FISH is
able to capture the entire market by leaving the chef with the ability to use the product
how he/she sees fit. As well, Wild West Steelhead, where XXX FISH are processed, has
the capability to process the fish right to fillets, but as more processing is done, more
weight is lost to waste, and cost is added to the final product. Because more than 40%
weight loss occurs when the fish is processed to a filet, cost cannot be recovered by the
increased price of the final product and the increased cost of production. Therefore it is
more attractive to ship the fish dressed, and not filleted (Dean Foss, 2005).
The limited supply of Artic Char keeps the price high and creates a market with a pull
strategy. That is, the demand is high enough that XXX FISH needs to do relatively little
in terms of marketing and advertising. Also as North Americans become aware of the
health benefits of fish and seafood, the market consumption is trending upwards thus
increasing demand (Kyoto 1995). Artic Char are known as “the delicacy of the north”
and will be marketed as such.
4.0.2 Pricing
Artic Char are sold into a niche market with a small supply and growing demand. The
Fulton Fish Market is made up of wholesalers, who will buy the fish, then turnaround and
sell it for a higher price. XXX FISH will be selling the Artic Char to wholesalers for $6
Comm 492.3 College of Agriculture and College of Commerce University of Saskatchewan
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XXX FISH
US per pound (approximately $7.08 CDN at an exchange rate of $0.84), which puts XXX
FISH in the same category as other high end fresh fish at the Fulton Fish Market.
Because the price of Arctic Char is related to the price of other high end fish, XXX FISH
is a price taker.
4.0.3 Promotion
As mentioned earlier, XXX FISH is promoting the Artic Char as the “delicacy of the
north”. Being that the fish is from Canada XXX FISH will use the notion that the fish are
from the north; utilizing images of snow and winter in the promotion of the product.
There will be limited advertising mostly involving building a small website with
information on the business and product. There is no need for extensive advertising as
XXX FISH is selling the Artic Char through Wild West Steelhead as a broker.
4.0.4 Place
XXX FISH is located in Saskatchewan The fish from the XXX FISH will be transported
by truck in a tub to the Wild West Steelhead facility to be processed. Once processed and
packaged the fish are sent on a refrigerated truck to New York.
4.1 Segmentation, Targeting and Positioning
4.1.1 Segmentation
Three major segmentation groups exist for XXX FISH; the white table cloth restaurant
market, the Jewish community in New York and the local Saskatchewan market (Dean
Foss, 2005). The white tablecloth restaurant is looking for a premium fish with a
consistent taste and quality which can be purchased fresh and prepared, to be sold for a
premium price. The Jewish community in New York is looking for an alternative protein
source a minimum of once per week. Due to the higher price of Arctic Char, and the rate
at which they are buying fish, it is more economical for many of the members of this
community to look towards average priced fish. Any quality fish product is chosen by
the Jewish community, with trout being very popular in the median of the price range.
The local Saskatchewan market is a small market in comparison to the New York market.
The Saskatchewan consumer would consider fish as a meal choice less often, since beef,
pork, and chicken are the main protein sources. Saskatchewan residents are looking for
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XXX FISH
cost effective, quality products but are more likely to choose a premium product like
Arctic Char when choosing fish, more often than the Jewish community, as fish is only
eaten once in a while.
4.1.2 Targeting
The target market for XXX FISH is the white tablecloth restaurants in New York. As a
premium price is to be obtained, and a high level of demand exists for this undersupplied
product, it is best to choose a stable, high value market. The other markets are less
appealing. The Jewish community may choose a middle priced fish versus a high priced
fish, and the local Saskatchewan market may be unstable and too small to support the sale
of the total supply XXX FISH. Also the Saskatchewan consumer will often want a
further processed fish, as they do not want to, or do not have experience to fillet, de-bone
or cut fish into steaks. This extra processing required will increase cost of production and
decrease the weight of saleable fish, as each process increases waste.
4.1.3 Positioning
Arctic Char is a high end fish that commands a high price. To help facilitate this, XXX
FISH will be marketed to the USA on the foundation of arctic characteristics. Even
though the fish are raised on the prairies, emphasis will be placed on the fact that they are
originally from the Yukon Territory. The idea is to create a vision for the customer of
this fish at home in the frigid waters of northern Canada surrounded by snow and ice. A
general image of northern vigor and purity will be created in the mind of the consumer.
This will add to the allure of the produce in the mind of customers and help bolster sales.
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XXX FISH
5H Arctic Char
High Quality
Salmon
Walleye
Tuna
Talapia
Trout
Catfish
Low Price
High Price
Frozen Seafood
Canned Seafood
Low Quality
Figure 4.1.3.1 Matrix of the Seafood Industry in Relation to Price and Quality
XXX FISH is to be seen as a premium quality fish, known as a delicacy, and will have a
premium price attached to it.
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XXX FISH
4.2 SWOT Analysis
Table 4.2.1 SWOT Analysis of XXX FISH
SWOT Analysis
Human Resource Plan
Strengths
Manager will be well trained in aquaculture
Manager oversees the laborer
Manager has extensive external contacts for advice
Manager has training for emergency situations
Laboror will be a loyal employee to mainly family
operation
Weaknesses
Manager will have education, but may lack experience
Labor on part-time, needs to be readily available on different
schedules
Manager and laborer must work well together
Laborer must obey managers orders
Need temporary replacement for manager and laborer for
Manager and laborer will be able to handle all on-site jobs holidays and sick days
Labor will always be done sufficiently with the aid of a
Laborer needs to be trained before starting
At least one employee must live in close proximity for
part-time laborer
emergencies
Physical Resources
Strengths
Weaknesses
Equipment available from Canadian retailers
Since it is specialized equipment, it is very expensive
Equipment is specialized for aquaculture
Need some back-up equipment for power failures, etc.
The barn needs geo-thermal energy installed and some minor
Equipment life span is 10-15 years
Maintenance on equipment is minimal
renovations
Most equipment may be contained in one room
The barn has a lot of area for the operation
Water quality and flow not suitable, need Saskwater line
Fish produced are not best suited to the barn because of high
No major regulations for growing farmed fish
High quality (new) aquaculture equipment
capital costs
Building and property cheap
Building not top quality
Financial Resources
Strengths
Weaknesses
Liquidity is a problem with no demand for used aquaculture
$/lb high in comparison to other fish ($7/lb)
equipment
Insolvent since 5H Fish's assets are not worth anything to
anyone else
Financially not very efficient because of high capital costs and
utility bills
Change in Canadian dollar
External Oportunities and Threats
Oportunities
Threats
Trade regulations eg. Tarriffs (none at the time)
No direct competition provincially, very little domestic
If profitable, more competition in future
Price setters in market
Arctic Char are premium fish consumed in white
A major market crash, where people can't afford premium fish
tablecloth restaurants
If another species of fish becomes preferred
Fish and seafood consumption trending upward in North
America
U.S. is developing an 'Open Ocean' Policy on aquaculture
to develop industry off-shore
Demand exceeds supply
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XXX FISH
4.3 Market Analysis
4.3.1 Past Performance
Arctic Char have been commercially farmed for less than 20 years, a relatively short
period of time, when compared to Salmon and Trout which have been farmed for
decades. Due to steep declines in traditional wild fisheries and the relatively small size of
the Char farming sector, present demand for Char is much larger than the available
supply. Demand for Arctic char has been steadily increasing over the past decade as
people realized the health benefits of these species.
4.3.2 Markets
Major markets, to which Arctic Char are sold, consist mainly of wholesalers and
distributors who sell to the white tablecloth restaurants. There is no known competition of
Arctic Char in Saskatchewan, but domestic competition exists in Manitoba, Prince
Edward Island, the Yukon Territory, and the North West Territories, with a small
percentage of production in New Brunswick, Newfoundland and Nova Scotia. The only
known inland fish farms producing Arctic Char are located in Manitoba and the Yukon.
Production from the other provinces is obtained from the Pacific or Atlantic oceans.
The fish market is global, therefore it does not matter which market a producer chooses to
sell into. Prices are determined through global consumption and demand patterns for the
product. Fish and seafood commodity prices are generally set in U.S. currency and the
supply at any given time of year. According to the FAO, global fish stocks are not
keeping up with the demand being placed from the consumer, a market trend that will
impact future sales. Global fish production is approaching 130 million tonnes per year,
with 73% of that coming directly from the wild and 27% from aquaculture (FAO, 1998).
Currently, wild stocks appear to be leveling off in their capacity to produce, leaving any
future growth to be supplied by aquaculture (FAO, 1998). The FAO reports that fish
production and consumption is growing at 5% per year, with more than 75% of that
growth achieved through the efforts of the aquaculture industry (FAO, 1998). Also, the
North American population is becoming increasingly health conscious. Fish are being
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XXX FISH
promoted as a food source for healthier living, largely due to the lower level of saturated
fats and higher levels of omega-3 fatty acids as compared to typical red meats.
Arctic Char is considered a delicacy and as such is most often available in white
tablecloth restaurants. Considering that the number of white tablecloth restaurants in
New York is very high they will constitute the target market. Also the convenience of
the Fish Market located in New York is a key location for wholesalers to buy premium
seafood product and distribute to key buyers primarily around New York City. New York
restaurants are a major part of the state’s seafood industry by virtue of the value that they
add to each fish and seafood product that they purchase, prepare and sell. This activity
makes a substantial contribution to the economy of the state and is a significant source of
employment. Because of the large number of restaurants in New York and the high value
of the products that they sell, the portion of this industry directly dependent on seafood
sales makes it the largest sector of the New York seafood industry.
There are only a small number of fish farms in Canada and there are even less producing
Arctic Char. For this reason XXX FISH is able to obtain a relatively high price for Arctic
Char, the demand simply outweighs the supply. There are two fish farms that would be
primary competitors to XXX FISH.
Agassiz fish farms located in Winnipeg Manitoba market Arctic Char under the brand
name “Ice Char”. It is an indoor aquaculture system similar to XXX FISH. They offer
whole fish, fillets and portion cuts. Wholesale commercial clients usually order fresh
product shipped on ice in Styrofoam boxes, with inner poly liners. Fillets are generally
shipped in approximately 10 lb packs and whole fish in 30 or 50 lb packs. All shipping
boxes are individually labeled, with processing date, lot number, product type and other
related information. At the present Agassiz sells to commercial users, wholesalers and
distributors. Fish are processed for confirmed orders in the amount required only and
insist on 24 hours notice to ensure freshness.
4.4 Competition
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XXX FISH
Table 4.4.1 Summary of Direct Competition in Canada
XXX FISH Competitors (Canada)
Attractions
Price Can $/lb
Agassiz Fish Farms
-Marketed as Ice Char
Sold as:“Ice Char”
-CFIA
inspected
and $7/ lb
Winnipeg, Manitoba
HACCP approved
Can
(Agassiz Arctic Char, 2005) -Generally wholesalers
-“white char”
Icy Waters
-Meet Canadian Department
Sold as: “Yukon Gold”
of Fisheries and Oceans $7/ lb
Whitehorse, Yukon
Fish Health Protection Can
(Icy Water, 2005)
Regulations.
-Constant supply
-Nutritious and healthy
“pink char”
XXX FISHs
-Meet CFIA policies
“Yukon Gold”
-Similar to Icy Waters
$7/ lb
Saskatchewan
-High quality arctic char
Can
-Constant supply
Nutritious and healthy
-Ultimate taste
“pink char”
Yukon gold is the trade name for the species of arctic char developed by Icy Waters. The
genus Salvelinus alpinus has been bred in captivity on the outskirts of Whitehorse for the
past 12 years. It is a pink colored char which fetches a higher price than the white or
regular colored char that Agassiz produce. This brand of char is unique, and total
worldwide production is estimated at only 5 million pounds per year. Because of its
limited availability it is primarily marketed for fine dining and special occasions. The
Yukon Gold arctic char have a pink color similar to salmon and buyers are willing to pay
more for this. This particular strain of char has been selected over the years to contain
high levels of omega 3 fatty acids. These are essential fatty acids which are proven to
combat heart disease.
XXX FISH will have advantages over Agassiz and Icy Waters. The Yukon Gold strain
has a pink colour which is more attractive than the white or normal coloured char. It also
contains higher levels of omega 3 fatty acids than Agassiz “Ice Char”. Due to the fact
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XXX FISH
that XXX FISH will be purchasing and raising the eyed ova from Yukon Gold char, the
only advantage will be location. 5H will be closer to markets and transportation costs
will be lower. Although there will be some competition it is not likely to disrupt the
market demand. Many more fish farms would need to be established before any change
in price would be noticed thus the demand will remain high for some time.
4.5 Product and Services
Arctic Char is highly recommended by nutritionists and dieticians for its high availability
of nutrients. As well it is packed with protein and is very low in fat and calories. As a
result, XXX FISH product is serving the customers nutritional health and well-being for a
sustainable lifestyle.
Table 4.5.1
Nutritional Information of Arctic Char per 100 grams
Calories
Protein
Fat
Saturated Fat
Sodium
Cholesterol
Omega-3 Fatty Acids
(Agassiz Aqua Farms, 2005)
137
21.25g
5.05g
1.56g
185mg
48mg
33.44g
The product consists of a fish carcass with one cut along the ventral side and the internal
organs removed. No scaling or head removal is required for this market. The key features
of XXX FISH’s Arctic Char over the competition is that 5H will have a facility that
maintains constant water temperature year-round, and with that it can produce a constant
supply for the consumer at any time of the year, maintaining consistency in the quality of
the product. The flesh color also has a key role in the premium char market. The reddish
flesh color acquires the highest premium and is the desired product of the high class
restaurants. Therefore the product of XXX FISH products will contain the red flesh color
which is a result of astaxanthin in the feed, a completely natural product derived from
krill and shrimp. As well XXX FISH will be monitored by an environmental control
system where water quality and biological safety measures are optimally maintained,
thereby producing a premium fish with the best possible characteristics.
4.6 Marketing Strategy
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XXX FISH
4.6.1 Sales and Profit Objectives
The goal of XXX FISH is to sell 46750 lbs of fresh, dressed Artic Char through the Fish
Market in New York, and to be profitable by year two. This goal takes into account that
our production cycle will not have been completed until year 2, so profits will be low in
year one.
4.6.2 Channels of Distribution
XXX FISH will be using a broker to distribute the fish. Their vast experience in the
market will aid XXX FISH in the establishment of sales and connections in the seafood
market. Wild West Steelhead is charging 5% commission on sales for broker activities.
As Artic Char is not in direct competition with the Steelhead, there is no conflict of
interest. Trout produced by Wild West Steelhead are sold as panfry and to low end
restaurants, while the Artic Char are high end fish considered a white table cloth delicacy.
Competitors in the market use brokers and wholesalers to sell their fish. As 5H is not
able to supply large amounts of fish, XXX FISH will also use the broker system. The
broker will sell to a wholesaler thus reducing the risk associated with contracts made with
wholesalers for production of XXX FISH.
Larger competitors use the wholesaler
directly, eliminating the cost of brokers, but a firm must be large enough to guarantee a
certain level of production to meet the demand, if production levels are not met, fines and
penalties are assessed.
XXX FISH, as stated previously will target the New York restaurant market. Using
brokers and wholesalers is the easiest way to gain access to the Fish Market as using
direct sales staff would be much more costly than the broker. In 2002 there were 276
seafood wholesale plants in New York, 50 of which were located at the Fish Market
(New York Seafood Council, 2005). With 46750 lbs of fish at $7 CDN/lbs and 5%
commission, the broker (Dean Foss, 2005) will earn $17,024 in 2008. As many of the
restaurants use the wholesalers in the Fish Market already, doing direct sales to gain
access to the restaurants would be time consuming and costly.
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XXX FISH
Direct sales using internet would never reach the New York restaurants, but it may reach
other people across North America. This option would eliminate the broker cost, but
would require further processing to fillets, cooking or freezing and foil packing to
eliminate the chance of spoilage during delivery to customers. There would also be a
need to increase the price to pay for the small shipment size and increased processing.
Using direct sales with sales staff or the internet would cost more than the broker as it
would require full time labor to get the results that the broker can produce.
Another option is to sell a portion of the fish locally, right out of Wild West Steelhead.
Taking orders by phone and internet for local pickup could reduce the cost of brokers but
it would be a minor part of the business as this would see very low volumes.
4.7 Pricing Policy
XXX FISH is assuming a market based price. Price in the market of other high end fish
is examined and applied to the Artic Char. This price sets XXX FISH in a position to be
profitable but not priced out of the market.
XXX FISH is serving a small niche market with a limited supply and will control the
price and supply. The price must be set high enough to make a profit but at a level that
will sell the volume, with little to no carryover. Competitor products which have higher
supplies that vary over the course of the season use the classic supply and demand model
to discover prices.
When supplies are high, prices drop, and vice versa, due to
seasonality of the catch. With XXX FISH supply being constant the price can be set and
remain relatively steady. As the price of other fish fluctuate, so must the price of Arctic
Char, though to a lesser degree. The goal of an average price of $7 CDN is attainable,
since this is the average price demanded by the most direct competitors. In addition, 5H
offers a superior product and is charging the same price, therefore XXX FISH should see
little change in demand and therefore little change in price.
As XXX FISH will only be selling its products in one market there is no need to have
different prices for the different markets. The portion of fish being sold locally will also
Comm 492.3 College of Agriculture and College of Commerce University of Saskatchewan
37
XXX FISH
be sold at $7 CDN per pound, and represent a very small portion of the sales
If
expansion into new markets occurred, there would be a chance to differentiate; currently
plans are to service only one market.
Discounts will not need to be offered, as the supply of Artic Char from XXX FISH is
constant and has no seasonality. Spikes in production cause fluctuations in the price of
wild fish, a situation which will not happen as drastically in the production of Arctic
Char. The price of 5H Artic Char will fluctuate to a lesser degree, having less extreme
peaks and valleys, as it must follow the peaks and valleys of the wild fish market to be
competitive at all times. Though demand may fluctuate, the supply of Arctic Char is still
lower than the average demand. Prices can be maintained over time as long as there is
not a flood of Arctic Char into the market. As well, due to the increasing demand for fish,
the demand should be there considering the current undersupply of fish.
Due to the nature of the exporting business to the United States XXX FISH will be
sensitive to fluctuations in the exchange rate. Revenues depend largely on the exchange
rate and as such if the rate increases to $1.00, the income of XXX FISH will decrease
(see appendix A).
4.8 Select Market/Product/Service Mix
The business of XXX FISH is to service the niche market that wants to buy premium,
high end fish, and sell it for a premium price. Aquaculture accounts for 29% (26.4
million tonnes) of food fish production in the world (FAO, 1998). Fulton Fish Market
handles 218.3 million tones of fish per year (New York Seafood Council, 2005). XXX
FISH is producing just over 21 tonnes of fish to market which is an incredibly small
portion of the market. Due to the relatively small size of the market, and lack of
competitors, the biggest threat to XXX FISH is the introduction of new firms to the
market who might sell the fish for less. For this reason XXX FISH is producing red flesh
Arctic Char, which is the highest quality Arctic Char on the market. Also the large
capital investment needed to produce fish in aquaculture environment and the specialized
Comm 492.3 College of Agriculture and College of Commerce University of Saskatchewan
38
XXX FISH
environment needed to handle Artic Char, create a deterrent to entering the market,
keeping many firms who may try to enter, out of the market.
4.9 Selling and advertising
Because of the present high demand for Arctic Char, the sales and marketing plan is
relatively simple.
To ensure continued demand XXX FISH will strive to provide
excellent quality to the end user.
By maintaining a high quality product a strong
customer base can be created and sustained.
A simple web site will be constructed to provide information on the species, the
nutritional quality, farm information, recipes and a contact for any inquiries.
An
emphasis will be placed on the high quality of XXX FISH Arctic Char, explaining the
farming process from egg to adult. The main purpose of the website is to make XXX
FISH more accessible to the market rather than being perceived as an ambiguous
Canadian fish producer. Wild West Steelhead will be discussed and linked to the website
as they are the processing and shipping facility for XXX FISH. Inquiries through the
website will be directed to the aquaculture manager or the president.
Sales and advertising initiatives will be the responsibility of the aquaculture manager and
president. The focus of the sales plan is to provide a consistent supply of fresh Arctic
Char to the target market in New York. By keeping high quality and consistent supply,
XXX FISH will retain, and possibly increase, market share. Maintaining an amiable
relationship with Wild West Steelhead will be critical to the sales of XXX FISH. Wild
West Steelhead is responsible for the processing, transport and contract arrangement of
XXX FISH and as such is an essential part of the distribution channel from XXX FISH to
the restaurants of New York. Because Wild West Steelhead is handling the finished
product, private sales of the fish will be low.
Personal promotion will be the best way to sell the Arctic Char to the wholesaler in the
fish market. The demand for Arctic Char will create promotion of XXX FISH within
itself as the wholesaler needs more than he already has. Because XXX FISH Arctic Char
Comm 492.3 College of Agriculture and College of Commerce University of Saskatchewan
39
XXX FISH
is a Canadian product, it will have pristine and pure connotations in the U.S. market. The
‘Northern’ qualities of the Arctic Char will be the most emphasized quality of the fish.
As well, the high nutritional and low fat contents of the Char will be highlighted in the
promotion of the product.
4.10 Marketing Plan Budget
The marketing plan budget is quite small as little physical promotion will be required. As
such, no extra sales staff will be required. The president and aquaculture manager will be
responsible for the marketing of the fish. A website will be constructed for an annual fee
of $2000.00 to provide information about the product. As well, the president and
aquaculture manager will each receive business cards at a cost of $600.00 (Staples
Business Depot) for any personal contact they may have with potential wholesalers or
customers.
Table 4.10.1 Promotional budget
Promotion and Sales
Website with email addresses
$2000.00
Business Cards for aquaculture
$600.00
manager and president
$2600.00
Total promotional budget
Comm 492.3 College of Agriculture and College of Commerce University of Saskatchewan
40
XXX FISH
FINANCIAL PLAN
Comm 492.3 College of Agriculture and College of Commerce University of Saskatchewan
41
XXX FISH
5.0 Financing Budget
Capital cost investment in XXX FISH Farm is approximately $680,000. Due to the high
capital investment required, internal financing by a single person or small group of
people is difficult. As such, $230,000 will be financed as long term debt and $450,000
will be financed through shares.
Table 5.0.1 Breakdown of financing
Long Term Debt
Shareholder’s Equity
Total Financing
$230,000
$450,000
$680,000
5.0.1 Debt Financing
Long term debt will be financed by a financial institution such as a Credit Union or Farm
Credit Canada at a rate of 8.0%.
5.0.2 Equity Financing
Of the required $680,000, $450,000 will be acquired through shares. 1000 shares will be
sold at a price of $450/share to the community and interested parties. Lambert Hering
will be purchasing the initial 111 shares at a price of $49,950. The remaining $630,050
will be available to the general public at the aforementioned price.
5.0.3 Dividend Policy
Dividends will be paid out when the beginning cash is greater than working capital. The
dividend factor is 1.00 which pays out 100% of the retained earnings. The dividends will
be paid out based on the division of shares for each shareholder. Dividend payments are
possible because there is no plan to expand in the future. As well due to a low rate of
return this policy was created to entice investors.
Table 5.0.3.1 Dividend schedule for XXX FISH for 10 years
2007
-
2008
-
2009
-
2010
45497
2011
64695
2012
57745
2013
52924
2014
49398
Comm 492.3 College of Agriculture and College of Commerce University of Saskatchewan
2015
2016
46926
45315
42
XXX FISH
5.1 Economic Forecast
The potential business is assuming a 2% inflation rate which is spread across the ten year
projection for revenue, salaries, and expenses. Growth in sales does not exceed the
inflation rate since the facility is limited to its current production until all debt is
compensated. Growth in inputs and expenses are inflated at 2%, but could be subject to
change since the ingredient prices in the feed may change, but this is impossible to
predict, therefore an average was used. Wages are not changed throughout the entire ten
year projection except for inflation. An important reason for that is to make the company
as profitable as possible, and given that the business is a family operation, the employees
of XXX FISH are willing to sacrifice some of their income for the business. The 8%
interest rate on debt should not change over ten years since it is locked in through the
lender.
5.2 Projections of Income Statements, Balance Sheets and Cash Flow
Total sales revenue for year one are $81,813 with cost of goods sold at $43,838 and
administrative and marketing expenses at $138,475 in 2007. Due to the nature of the
business, a net loss in retained earnings of $100,500 will be realized in the first year. The
first tank of fish will start January 1, 2007 and allowing for nine months of growth fish
will be available to ship on October 1, 2007. Thus, nine months of expenses will be
incurred before any revenue is realized. As well, no income tax will be incurred in the
first year due to the negative retained earnings.
There are few direct material costs involved in producing the Arctic Char. Eyed ova and
feed are the only raw materials at a cost of $1800 for eyed ova and $19,500 for feed in
year one. Direct labour costs include one wage labourer being paid $20.82/hr for 1000
hours/year totaling $20,820. In terms of manufacturing overhead, land taxes are $63 and
capital cost allowance is $41,077 for year one, for a total of $75,996.
Comm 492.3 College of Agriculture and College of Commerce University of Saskatchewan
43
XXX FISH
Table 5.2.1 Summary of financial results for 10 years
Year
Total Revenue
Cost of Goods Sold
Gross Margin
Expenses
Net Income Before Tax
Income Tax
Net Income After Tax
Net Cash Flow to Equity
Year
Total Revenue
Cost of Goods Sold
Gross Margin
Expenses
Net Income Before Tax
Income Tax
Net Income After Tax
Net Cash Flow to Equity
2007
2008
2009
2010
2011
81,813
43,838
37,975
138,475
(100,500)
0
(100,500)
11,270
333,795
131,578
201,217
136,605
65,611
0
65,611
89,115
340,471
174,502
165,969
136,447
29,522
0
29,522
78,013
347,280
178,111
169,170
136,242
32,927
2,756
30,171
67,306
354,226
181,801
172,425
135,986
36,439
3,644
32,795
60,449
2012
2013
2014
2015
2016
361,310
185,576
175,735
135,673
40,062
4,006
35,056
55,718
368,537
189,437
179,100
135,298
43,801
4,380
39,421
52,279
375,907
193,387
182,520
134,857
47,663
4,766
42,897
49,893
383,426
197,430
185,996
134,342
51,654
5,165
46,489
48,366
391,094
201,567
189,527
133,746
55,781
5,578
50,203
73,963
Net Present Value
Internal Rate of Return
External Rate of Return
(210,160)
5%
3%
Projected financial results are shown in table 5.2.1. Values produced are based on the
expected economic model for XXX FISH. For further detail refer to appendix B.
Comm 492.3 College of Agriculture and College of Commerce University of Saskatchewan
44
XXX FISH
5.3 Ratio Analysis
Table 5.3.1 Summary of financial ratio’s pertaining to XXX FISH
Ratio
Company Average
1. Liquidity Ratios
Current Ratio
Quick Ratio
68
70.6
2. Activity Ratios
Inventory Turnover
1.3
Accounts Receivable Turnover
24.2
Accounts Payable Turnover
47.9
Fixed Assets Turnover
0.58
Total Assets Turnover
0.61
Fixed Assets/$1,000 Sales
$765
Total Assets/$1,000 Sales
$1675
Total Wages/Sales
32%
3. Leverage Ratios
Debt Ratio
31%
Debt/Equity
45%
4. Profitability Ratios
Gross Profit Margin
49%
Net Profit Margin
-0.2%
Return on Assets
5.1%
Return on Equity
6.9%
Comm 492.3 College of Agriculture and College of Commerce University of Saskatchewan
45
XXX FISH
5.4 Unit Cost of Production
Table 5.4.1 Unit cost of production ($/lb)
Unit Cost per Pound
Eggs
Feed
Total Unit Cost of Direct Materials
Direct Labour
Overhead
Total Unit Cost of Labour and
Unit Cost of Production
Selling and Administration
Total Unit Cost of Production
Expected Average Selling Price per lb
Margin per lb
Total Units Sold
$
$
$
$
$
$
$
$
$
$
$
2007
0.15
1.67
1.82
2.01
6.50
8.51
10.33
11.85
22.18
7.00
(15.18)
11688
$
$
$
$
$
$
$
$
$
$
$
2009
0.04
0.87
0.91
0.52
2.35
2.87
3.79
2.92
6.70
7.28
0.58
46750
$
$
$
$
$
$
$
$
$
$
$
2011
0.04
0.90
0.96
0.54
2.45
2.99
3.96
2.91
6.85
7.58
0.72
46750
$
$
$
$
$
$
$
$
$
$
$
2013
0.04
0.94
1.00
0.57
2.54
3.11
4.11
2.89
7.00
7.88
0.88
46750
Unit cost of production is calculated from direct costs. Values obtained resulted from
total costs divided by total production of 46,750lbs. The negative value in year one is due
to a reduction in sales as compared to succeeding years. Year one production is 25% of
the following years.
5.6 Sensitivity Analysis
Table 5.6.1 Critical variables isolated to yield IRR = 0
Critical Value
Feeding Costs (2008)
Selling Price
Sales (lbs)
Exchange rate $CDN/$US
Long Term Debt Rate
Manager wage
Base Case
$39,780
$7.00
11688
$0.84
8.00%
$50,000
IRR = 0%
$54,725
$6.67
11132
$0.88
14.00%
$63,945
Allowable %
Change
28%
-5%
-5%
5%
75%
28%
According to table 5.6.1, the critical variables for XXX FISH were selling price and
quantity of sales. The variables were determined by setting the IRR to 0% using the goal
seek function in Microsoft excel. The other variables require a change to large to set the
IRR to 0%.
Comm 492.3 College of Agriculture and College of Commerce University of Saskatchewan
46
$
$
$
$
$
$
$
$
$
$
$
2015
0.04
0.98
1.05
0.59
2.65
3.23
4.28
2.87
7.16
8.20
1.04
46750
XXX FISH
60000
Pounds of Arctic Char Sold
50000
40000
30000
20000
10000
0
1
2
3
4
5
6
7
8
9
10
Year
Base Case
Cash
Net Income
NPV
Figure 5.6.1 Breakeven scenarios based on pounds of Char sold
Due to the negative net present value, sales of Char must increase above capacity to
create a ‘zero’ net present value. The breakeven scenario for cash increases above
production in the first year because production is for only 4 months of sales as compared
to 12 months. To find the breakeven point in net income, production is below the base
case.
Comm 492.3 College of Agriculture and College of Commerce University of Saskatchewan
47
XXX FISH
18
16
14
Price per pound
12
10
8
6
4
2
0
1
2
3
4
5
6
7
8
9
10
Year
Base Case
Cash
Net Income
NPV
Figure 5.6.2 Breakeven scenarios based on $/lb of Char
In order to avoid the net loss in the first year the price of Char would need to more than
double. After the first year, only a small drop in price would result in the net income
break even point. In order to achieve a breakeven net present value the price has to be
above the base case. This situation resulted due to the required rate of return of 20% and
a realized internal rate of return of 5%.
Table 5.6.2 Values of critical variables for main scenarios 2008
Variable
Quantity of
Sales (lbs)
Price/lbs
% of Base
Worst
Case
42075
$6.30
90%
Base
Case
Best
Case
46750
$7.00
100%
51425
$7.70
110%
These values are presented for 2008 as this is the first full year of production. Changes of
10% in these values will create large variances in the internal rate of return.
Comm 492.3 College of Agriculture and College of Commerce University of Saskatchewan
48
XXX FISH
15%
13%
13%
10%
5%
5%
5%
Worst Case
IRR
Base Case
Best Case
0%
Quantity of Sales
Price/lbs
-5%
-7%
-7%
-10%
Figure 5.6.3 Comparison of different scenarios using base case of 100% and
changing variables by 10%
A 10% loss in quantity sold or price received per pound results in a - 7% internal rate of
return. This displays the high risk associated with intensive aquaculture. To create an
internal rate of return of 0%, the selling price and quantity sold can only decrease by 5%
and the exchange rate can only increase by 5%. This shows that the critical variables for
XXX FISH are the price received in Canadian dollars and the quantity sold.
5.7 Risk Analysis
Intensive aquaculture is inherently high in risk as is the case for XXX FISH. Major
sources of risk for the operation include the fact that the company is not diversified, and
the only product being produced involves a greater level of risk than other aquaculture
options. Only producing one product does not hedge the risk associated with having an
undiversified portfolio. Focus is centered on one rather than many markets which allows
for little flexibility in the event of poor market conditions. Dependence on the
Comm 492.3 College of Agriculture and College of Commerce University of Saskatchewan
49
XXX FISH
U.S./Canadian exchange rate as an export business puts XXX FISH at risk to rate
volatility.
Due to the low rate of return, small changes in critical variables can have a negative
impact on XXX FISH financially. A large portion of the operations rely on an outside
source, thus risk assumed by that source will also, in effect, influence XXX FISH. The
dividend policy includes a 100% payout, leaving very little retained earnings within the
company.
As a result, very little room is left for upgrades, errors or disaster.
Comm 492.3 College of Agriculture and College of Commerce University of Saskatchewan
50
XXX FISH
CONCLUSION
Comm 492.3 College of Agriculture and College of Commerce University of Saskatchewan
51
XXX FISH
6.0 Conclusion
Several key issues were discovered while researching aquaculture and XXX FISH. An
intensive aquaculture operation requires a body of water in close proximity, preferably a
large, river fed lake. The increased cost of piping in fresh water, and storing wastes is an
unnecessary cost due to the location of the barn.
Contained aquaculture requires
immense capital costs, large investors are required to purchase the needed equipment, but
in the end, margins become tight. Intensive, contained aquaculture becomes more cost
effective when producing a high priced product, however. This high risk involved in the
intensive aquaculture, combined with the tight margins, creates a financially uncertain
situation. XXX FISH creates an internal rate of return of only 5%, and an external rate of
return of only 3.3%. These returns are not nearly high enough to attract investors to the
company, with such high risk involved. Unless capital costs can be reduced and cost of
goods sold can be brought down, the potential for business startup looks bleak.
Comm 492.3 College of Agriculture and College of Commerce University of Saskatchewan
52
XXX FISH
REFERENCES
Comm 492.3 College of Agriculture and College of Commerce University of Saskatchewan
53
XXX FISH
Agassiz Acrtic Char, 2005. Homepage, http://www.agassizaquafarms.com/. Accessed
November 10 2005.
Canadian Aquaculture Industry Alliance (CAIA) “Portrait of Sakatchewan Aquaculture
Industry” http://www.aquaculture.ca/English/IndustryProfile/CAIA_SASK.html
Accessed September 28, 2005.
Canadian Aquaculture Institute, 2005. http://www.upei.ca/~cai/. Accessed on November
8, 2005.
Drew, Murray. University of Saskatchewan. Physical appointment, October 11, 2005.
FAO Corporate Document Repository “The Kyoto Declaration and Plan of Action, and
summaries of technical papers presented: 1995. International Conference on the
Sustainable Contribution of Fisheries to Food Security. Kyoto, Japan”,
http://www.fao.org/DOCREP/006/AC442E/AC442E00.HTM Accessed on
November 10th 2005.
FAO, 1998. The state of the world fisheries and aquaculture Part 1
Foss, Dean. Wild West Steelhead. Facility Tour. October 6, 2005.
Icy Waters,2005. Homepage, http://www.icywaters.com/products/pro_icy.htm. Accessed
November 10 2005
Lanteigne, Stephen. 2002. Aqua KE Government Documents “The Current Status and
Potential of the Canadian Aquaculture Industry”.
http://govdocs.aquake.org/cgi/reprint/2004/410/4100160.pdf. Accessed
September 28, 2005
Comm 492.3 College of Agriculture and College of Commerce University of Saskatchewan
54
XXX FISH
Malaspina University – college, 2005. Fisheries and aquaculture technology program.
http://www.mala.ca/calendar/Technology/fisheries.asp. Accessed November 8,
2005.
Masser , Michael P, Rakocy, James and. Losordo, Thomas M. 1999 Recirculating
Aquaculture Tank Production Systems Management of Recirculating Systems.
http://www.agctr.lsu.edu/NR/rdonlyres/407F8829-8E96-48E3-9ECFB410075F5929/302/Management_recirc.pdf Accessed September 28, 2005.
New York Seafood Council, 2004. http://www.nyseafood.org/ Accessed on November 9,
2005.
Nova Scotia Fisheries Council, 2005. Aquaculture Career Information.
http://www.fishjobs.ca/info/aquaculture.asp. Accessed November 8, 2005.
PEI Ag and Forestry. Agdex 888/485. “Agricultural business profile on land-based fish
farming of arctic char”. July, 2000.
Pisces TT, 2005. Aquaculture careers, people working in aquaculture.
http://www.piscestt.com/pisces/careers/default_en.asp. Accessed
November 8, 2005.
Queensland Government. 2004. Recirculation System.
http://www.dpi.qld.gov.au/fishweb/2701.html. Accessed September 28, 2005.
Saskatchewan Food and Rural Revitalization(SFRR) “Aquaculture Opportunities in
Saskatchewan”,
http://www.agr.gov.sk.ca/docs/livestock/specialized/Aquaculture.pdf Accessed
September 28, 2005.
Comm 492.3 College of Agriculture and College of Commerce University of Saskatchewan
55
XXX FISH
Saskatchewan Agriculture Farm and Food Report, “Fish Farming as a form of diversification”,
1999, http://news.farmca.com/octdec1999/fish_farming.html Accessed September 28,
2005
Service Canada’s Labour Market Information Service, 2005. Labour market information:
wages and salaries. http://lmi-imt.hrdcdrhc.gc.ca/standard.asp?ppid=81&lcode=E&prov=47&gaid=24598&occ=2221&j
ob=&search_key=1&search_type=&employer_potential=&new_search=.
Accessed November 8, 2005.
Comm 492.3 College of Agriculture and College of Commerce University of Saskatchewan
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XXX FISH
APPENDIX A
Comm 492.3 College of Agriculture and College of Commerce University of Saskatchewan
57
XXX FISH
Currency Exchange Sensitivity Analysis
Income Before Taxes
US/Can Exchange Rate
0.70
0.71
0.72
0.73
0.74
0.75
0.76
0.77
0.78
0.79
0.80
0.81
0.82
0.83
0.84
0.85
0.86
0.87
0.88
0.89
0.90
0.91
0.92
0.93
0.94
0.95
0.96
0.97
0.98
0.99
1.00
Income CDN$
$392,700.00
$387,169.01
$381,791.67
$376,561.64
$371,472.97
$366,520.00
$361,697.37
$357,000.00
$352,423.08
$347,962.03
$343,612.50
$339,370.37
$335,231.71
$331,192.77
$327,250.00
$323,400.00
$319,639.53
$315,965.52
$312,375.00
$308,865.17
$305,433.33
$302,076.92
$298,793.48
$295,580.65
$292,436.17
$289,357.89
$286,343.75
$283,391.75
$280,500.00
$277,666.67
$274,890.00
Price-Fulton Market (US$)
Production per year (lbs)
$5.88 (US$)
46750
XXX FISH must attain a price of $5.88 US ($7.00 CDN) to be profitable at 0.84
exchange rate.
Comm 492.3 College of Agriculture and College of Commerce University of Saskatchewan
58
XXX FISH
APPENDIX B
Comm 492.3 College of Agriculture and College of Commerce University of Saskatchewan
59
XXX FISH
5H Fish
Statement of Income and Retained Earnings
For the year ended December 31
2007
Sales Revenue:
Total
81,813
Cost of Goods Sold
Gross Margin
Administration and Marketing Expenses
Marketing Expenses
Administration Salaries
Interest on Long Term Debt
Total Admin & Marketing Expenses
Income Before Taxes
Income Taxes
Net Income (Loss)
Beginning Retained Earnings
Net Income (Loss)
Dividends
End Retained Earnings
2008
2009
2010
2011
2012
2013
2014
2015
2016
333,795
340,471
347,280
354,226
361,310
368,537
375,907
383,426
391,094
43,838
37,975
131,578
202,217
174,502
165,969
178,111
169,170
181,801
172,425
185,576
175,735
189,437
179,100
193,387
182,520
197,430
185,996
201,567
189,527
32,888
87,188
18,400
138,475
31,695
87,188
17,722
136,605
32,269
87,188
16,990
136,447
32,855
87,188
16,200
136,242
33,452
87,188
15,346
135,986
34,061
87,188
14,424
135,673
34,682
87,188
13,429
135,298
35,316
87,188
12,353
134,857
35,962
87,188
11,192
134,342
36,621
87,188
9,938
133,746
(100,500)
(100,500)
65,611
65,611
29,522
29,522
32,927
2,756
30,171
36,439
3,644
32,795
40,062
4,006
36,056
43,801
4,380
39,421
47,663
4,766
42,897
51,654
5,165
46,489
55,781
5,578
50,203
(100,500)
(100,500)
(100,500)
65,611
(34,889)
(34,889)
29,522
(5,368)
(5,368)
30,171
45,497
(20,693)
(20,693)
32,795
64,695
(52,593)
(52,593)
36,056
57,745
(74,282)
(74,282)
39,421
52,924
(87,785)
(87,785)
42,897
49,398
(94,286)
(94,286)
46,489
46,926
(94,723)
(94,723)
50,203
45,315
(89,835)
Comm 492.3 College of Agriculture and College of Commerce University of Saskatchewan
60
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Balance Sheet
as at December 31
Assets
Current Assets:
Cash
Accounts Receivable
Total Inventories
Total Current Assets
2008
2009
11,270
12,590
76,924
100,784
100,385
12,842
118,727
231,954
178,399
13,099
121,192
312,689
514,521
(41,077)
1
473,445
514,521
(115,413)
1
399,109
574,229
631,063
651,033
625,308
582,119
3,200
3,572
3,901
4,171
Long-Term Liabilities
Long Term Debt
221,529
212,381
202,500
Total Liabilities
224,729
215,952
450,000
(100,500)
349,500
574,229
Long-Term Assets:
Buildings, Machinery & Equipment
Accumulated C.C.A.
Land
Total Long-Term Assets
Total Assets
Liabilities
Current Liabilities:
Accounts Payable
Owner Equity
Owner Equity
Retained Earnings
Total Owner Equity
Total Liabilities & Owner Equity
2007
2010
2011
2012
2013
2014
2015
2016
200,207
13,361
123,712
337,280
195,961
13,628
126,291
335,880
193,934
13,900
128,930
336,765
193,289
14,178
131,631
339,098
193,784
14,462
134,395
342,641
195,224
14,751
137,226
347,200
197,452
15,046
140,124
352,622
514,521
(332,190)
1
182,332
514,521
(356,584)
1
157,938
514,521
(377,106)
1
137,416
514,521
(394,431)
1
120,091
548,191
521,431
500,579
484,616
472,713
4,407
4,614
4,799
4,966
5,119
5,261
191,830
180,305
167,859
154,417
139,899
124,220
107,287
206,401
196,001
184,712
172,473
159,216
144,865
129,340
112,548
450,000
(34,889)
415,111
450,000
(5,368)
444,632
450,000
(20,693)
429,307
450,000
(52,593)
397,407
450,000
(74,282)
375,718
450,000
(87,785)
362,215
450,000
(94,286)
355,714
450,000
(94,723)
355,277
450,000
(89,835)
360,165
631,063
651,033
625,308
582,119
548,191
521,431
500,579
484,616
472,713
514,521
514,521
514,521
514,521
(176,177) (226,495) (268,283) (303,096)
1
1
1
1
338,345
288,027
246,239
211,426
Comm 492.3 College of Agriculture and College of Commerce University of Saskatchewan
61
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Statement of Cash Flow
For the year ended December 31
2007
Cash In-Flow From (Used-In) Operating Activities:
Net Income (Loss)
(100,500)
Depreciation
41,077
Change in Accounts Payable
3,200
Change in Accounts Receivable
(12,590)
Change in Inventory
(76,924)
Net Cash From (Used-In) Operations
(145,737)
2008
2009
2010
2011
2012
2013
2014
2015
2016
65,611
74,336
371
(252)
(41,804)
98,263
29,522
60,764
329
(257)
(2,464)
87,894
30,171
50,317
271
(262)
(2,521)
77,976
32,795
41,789
235
(267)
(2,579)
71,973
36,056
34,813
207
(273)
(2,639)
68,164
39,421
29,094
185
(278)
(2,701)
65,721
42,897
24,394
167
(284)
(2,764)
64,410
46,489
20,522
153
(289)
(2,830)
64,045
50,203
17,324
142
(295)
(2,898)
64,476
Cash In-Flow From (Used-In) Financial Activities:
Owner Equity
Long Term Debt
Dividends
Net Cash From (Used-In) Financial Activities
450,000
221,529
671,529
(9,148)
(9,148)
(514,521)
(1)
(514,522)
-
(9,880) (10,671) (11,524) (12,446) (13,442) (14,517) (15,679) (16,933)
(45,497) (64,695) (57,745) (52,924) (49,398) (46,926) (45,315)
(9,880) (56,168) (76,219) (70,191) (66,366) (63,916) (62,605) (62,248)
Cash In-Flow From (Used-In) Investment Activities:
Buildings, Machinery & Equipment
Land
Net Cash From (Used-In) Investment Activities
Increase (Decrease) in Cash
Beginning Cash
Ending Cash
Net Present Value of Equity Investment
11,270
11,270
89,115
11,270
100,385
78,013
100,385
178,399
21,809
178,399
200,207
-
-
-
-
-
(4,246) (2,027)
(645)
495
1,440
200,207 195,961 193,934 193,289 193,784
195,961 193,934 193,289 193,784 195,224
2,228
195,224
197,452
$ (210,652)
Internal Rate of Return on Equity Investment
5%
External Rate of Return on Equity Investment
3%
Comm 492.3 College of Agriculture and College of Commerce University of Saskatchewan
62
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Schedule 1: Economic Forecast
Long Term Debt Interest Rate
Rate of Inflation (expenses)
2007
8.0%
2.0%
2008
8.0%
2.0%
2009
8.0%
2.0%
2010
8.0%
2.0%
2011
8.0%
2.0%
Comm 492.3 College of Agriculture and College of Commerce University of Saskatchewan
2012
8.0%
2.0%
2013
8.0%
2.0%
2014
8.0%
2.0%
2015
8.0%
2.0%
2016
8.0%
2.0%
63
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Schedule 2: Revenues
Growth in Selling Prices (%)
Product Item #1
Quantity of Sales (units)
Product Item #1
Total Quantity
Selling Prices (per unit)
Product Item #1
Sales Revenue
Product Item #1
Total Revenue
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2.0%
2.0%
2.0%
2.0%
2.0%
2.0%
2.0%
2.0%
2.0%
2.0%
11,688
11,688
46,750
46,750
46,750
46,750
46,750
46,750
46,750
46,750
46,750
46,750
46,750
46,750
46,750
46,750
46,750
46,750
46,750
46,750
7.00
7.14
7.28
7.43
7.58
7.73
7.88
8.04
8.20
8.37
81,813
81,813
333,795
333,795
340,471
340,471
347,280
347,280
354,226
354,226
361,310
361,310
368,537
368,537
375,907
375,907
383,426
383,426
391,094
391,094
Comm 492.3 College of Agriculture and College of Commerce University of Saskatchewan
64
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Schedule 3: Cost of Goods Produced
Direct Expenses
Directly Attributed to
Product Item #1
Yukon Gold Eyed Ova
Feed
Total Direct Expenses
Direct Labour Costs
Salary Labour
Wage Labour
Total Direct Labour
Total Benefits
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
1
1,800
19,500
21,301
1
1,944
39,780
41,725
1
2,100
40,576
42,676
1
2,267
41,387
43,656
1
2,449
42,215
44,665
1
2,645
43,059
45,705
1
2,856
43,920
46,778
1
3,085
44,799
47,885
1
3,332
45,695
49,027
1
3,598
46,609
50,208
20,820
20,820
2,644
21,236
21,236
2,697
21,661
21,661
2,751
22,094
22,094
2,806
22,536
22,536
2,862
22,987
22,987
2,919
23,447
23,447
2,978
23,916
23,916
3,037
24,394
24,394
3,098
24,882
24,882
3,160
23,464
23,933
24,412
24,900
25,398
25,906
26,424
26,953
27,492
28,042
Variable Overhead Costs
Water
Electricity
Brokerage Fees
Processing Costs
Total Variable Overhead Cost
9,816
7,200
4,091
13,750
34,857
20,025
14,688
17,024
14,025
65,761
20,425
14,982
17,364
14,306
67,076
20,834
15,281
17,711
14,592
68,418
21,250
15,587
18,066
14,883
69,786
21,675
15,899
18,427
15,181
71,182
22,109
16,217
18,795
15,485
72,606
22,551
16,541
19,171
15,794
74,058
23,002
16,872
19,555
16,110
75,539
23,462
17,209
19,946
16,433
77,050
Fixed Overhead Costs
Property Taxes
Capital Cost Allowance
Total Fixed Overhead Cost
Total Overhead Costs
63
41,077
41,140
75,996
64
41,899
41,962
107,724
65
42,737
42,802
109,878
66
43,591
43,658
112,076
68
44,463
44,531
114,317
69
45,352
45,421
116,603
70
46,259
46,330
118,935
72
47,185
47,256
121,314
73
48,128
48,202
123,740
75
49,091
49,166
126,215
21,301
23,464
75,996
120,761
41,725
23,933
107,724
173,382
42,676
24,412
109,878
176,966
43,656
24,900
112,076
180,632
44,665
25,398
114,317
184,380
45,705
25,906
116,603
188,215
46,778
26,424
118,935
192,138
47,885
26,953
121,314
196,152
49,027
27,492
123,740
200,260
50,208
28,042
126,215
204,465
Total Direct Labour & Benefits
Cost of Goods Produced
Total Direct Expenses
Total Direct Labour & Benefits
Total Overhead Costs
Total Cost of Goods Produced
Comm 492.3 College of Agriculture and College of Commerce University of Saskatchewan
65
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Schedule 4: Cost of Goods Sold
2007
Beginning Inventory
Cost of Goods Produced
Cost of Goods Available for Sale
Ending Inventory
Cost of Goods Sold
120,761
120,761
76,924
43,838
2008
76,924
173,382
250,306
118,727
131,578
2009
118,727
176,966
295,694
121,192
174,502
2010
121,192
180,632
301,823
123,712
178,111
Comm 492.3 College of Agriculture and College of Commerce University of Saskatchewan
2011
123,712
184,380
308,093
126,291
181,801
2012
126,291
188,215
314,506
128,930
185,576
2013
128,930
192,138
321,068
131,631
189,437
2014
131,631
196,152
327,783
134,395
193,387
2015
134,395
200,260
334,655
137,226
197,430
2016
137,226
204,465
341,691
140,124
201,567
66
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Schedule 5: Administration & Marketing Expenses
Salary and Wages
Total Annual Salaries
Secretarial (Salaried)
Manager
Total Salaries
Total Benefits for Salary Employees
Total Salaries, Wages & Benefits
Marketing Expenses
Shipping Costs to N.Y.
Website Construction and Maintenance
Truck and Trailer rental
Business Cards
Accounting Fees
Lawyer Fees
Total Marketing Expense
Summary of Administration & Marketing Expenses
Administration Salaries & Wages
Marketing Expenses
Interest on Long Term Debt
Total Administration & Marketing Expenses
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
30,000
50,000
80,000
7,188
87,188
30,000
50,000
80,000
7,188
87,188
30,000
50,000
80,000
7,188
87,188
30,000
50,000
80,000
7,188
87,188
30,000
50,000
80,000
7,188
87,188
30,000
50,000
80,000
7,188
87,188
30,000
50,000
80,000
7,188
87,188
30,000
50,000
80,000
7,188
87,188
30,000
50,000
80,000
7,188
87,188
30,000
50,000
80,000
7,188
87,188
1688
2,000
15,600
600
1,800
1,200
32,887.50
11921
250
15,912
612
1,800
1,200
31,695.25
12160
255
16,230
624
1,800
1,200
32,269.16
12403
260
16,555
637
1,800
1,200
32,854.54
12651
265
16,886
649
1,800
1,200
33,451.63
12904
271
17,224
662
1,800
1,200
34,060.66
13162
276
17,568
676
1,800
1,200
34,681.87
13425
282
17,919
689
1,800
1,200
35,315.51
13694
287
18,278
703
1,800
1,200
35,961.82
13968
293
18,643
717
1,800
1,200
36,621.06
87,188
32,888
18,400
138,475
87,188
31,695
17,722
136,605
87,188
32,269
16,990
136,447
87,188
32,855
16,200
136,242
87,188
33,452
15,346
135,986
87,188
34,061
14,424
135,673
87,188
34,682
13,429
135,298
87,188
35,316
12,353
134,857
87,188
35,962
11,192
134,342
87,188
36,621
9,938
133,746
Comm 492.3 College of Agriculture and College of Commerce University of Saskatchewan
67
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Schedule 6: Capital Budget
Land
Piping: Class 2
Piping
Total Piping: Class 2
Building and Infrastructure: Class 06
Fish Barn
Geo thermal system
Electrical Installation
Water Installation
Landscaping and lagoon
Building Construction
Engineering Costs
Total Class 06
Production Equipment: Class 08
Hatching Troughs
Oxygen Generator
Oxygen Compressor
Oxygen Injector
Drum Filter
Bio Filter
Degasser
UV Filter
Tanks
Back Up Generator
Water Quality Tester
Oxygen Sensor
Monitors
Water Pumps
Ice Machine
Office Equipment and Furniture
Transport Tubs
Total Class 08
Miscellaneous Equipment <$200: Class 12
Computer, printer, monitor
Total Class 12
2007
2008
2009
2010
2012
2013
2014
2015
2016
-
-
-
-
-
-
-
-
-
10,000
10,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
68
-
-
-
-
-
-
-
-
1
100,000
1,200
54,000
15,500
22,800
6,000
199,501
1,200
10,000
1,000
8,800
40,450
46,500
1,740
12,000
127,920
18,000
3000
1,000
2,950
17,200
5,000
1,500
5,260
303,520
1,500
1,500
Total Equipment Costs
514,521
Comm 492.3 College of Agriculture and College of Commerce University of Saskatchewan
Total Land & Equipment
2011
1
514,522
-
-
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Schedule 7: Financing Budget
Long Term Debt
Owner Equity
Total Debt & Owner Equity
Schedule 8: Long Term Debt
Beginning Balance
Addition
Interest
Debt Payment
Ending Balance
Schedule 9: Capital Cost Allowance
Class 02: Piping
Beginning Balance
Additions
Disposals
Capital Cost Allowance
Ending Balance
Class 06: Buildings and Infrastructure
Beginning Balance
Additions
Disposals
Capital Cost Allowance
Ending Balance
Class 08: Production Equipment
Beginning Balance
Additions
Disposals
Capital Cost Allowance
Ending Balance
Class 12: Miscellaneous Equipment
Beginning Balance
Additions
Disposals
Capital Cost Allowance
Ending Balance
Total CCA Expense
2007
230,000
450,000
680,000
2008
-
2009
-
2010
-
2011
-
-
-
-
-
-
230,000
18,400
26,871
221,529
221,529
17,722
26,871
212,381
212,381
16,990
26,871
202,500
202,500
16,200
26,871
191,830
191,830
15,346
26,871
180,305
180,305
14,424
26,871
167,859
167,859
13,429
26,871
154,417
154,417
12,353
26,871
139,899
139,899
11,192
26,871
124,220
124,220
9,938
26,871
107,287
10,000
300
9,700
9,700
970
8,730
8,730
873
7,857
7,857
786
7,071
7,071
707
6,364
6,364
636
5,728
5,728
573
5,155
5,155
515
4,639
4,639
464
4,176
4,176
418
3,758
199,501
9,975
189,526
189,526
18,953
170,573
170,573
17,057
153,516
153,516
15,352
138,164
138,164
13,816
124,348
124,348
12,435
111,913
111,913
11,191
100,722
100,722
10,072
90,650
90,650
9,065
81,585
81,585
8,158
73,426
303,520
30,352
273,168
273,168
54,634
218,534
218,534
43,707
174,828
174,828
34,966
139,862
139,862
27,972
111,890
111,890
22,378
89,512
89,512
17,902
71,609
71,609
14,322
57,287
57,287
11,457
45,830
45,830
9,166
36,664
1,500
750
750
41,077
750
750
74,336
60,764
50,317
41,789
34,813
29,094
24,394
20,522
17,324
Comm 492.3 College of Agriculture and College of Commerce University of Saskatchewan
2012
2013
2014
2015
2016
69
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Statement of Working Capital
Current Assets
Accounts Receivable
Raw Inventory
Inventory in progress
Finished Inventory
Accounts Payable
Total Working Capital
2007
12,590
1,603
72,973
2,348
3,200
92,714
Inventory
270 days
2008
12,842
3,270
112,086
3,371
3,572
135,141
2009
13,099
3,335
114,416
3,441
3,901
138,191
2010
13,361
3,402
116,798
3,512
4,171
141,244
2011
13,628
3,470
119,236
3,585
4,407
144,326
2012
13,900
3,539
121,731
3,660
4,614
147,445
2013
14,178
3,610
124,285
3,736
4,799
150,608
2014
14,462
3,682
126,899
3,814
4,966
153,823
2015
14,751
3,756
129,576
3,894
5,119
157,096
2016
15,046
3,831
132,317
3,976
5,261
160,431
Accounts
Receivable
14 days
CCC = 254 days
Accounts
Payable
30 days
Comm 492.3 College of Agriculture and College of Commerce University of Saskatchewan
70
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Schedule 10: Income Tax
Income Before Taxes
Accumulated Loss Carry forward
Loss Carry forward Used
Taxable Income
Federal Tax @ 21%
Federal Surtax @ 1.12%
Small Bus Tax Credit @16% up to $300K
Capital Tax @0.6% of CTB over $15M
Provincial Tax @5% up to $300,000, 17%
Total Taxes
2007
(100,500)
(100,500)
-
2008
65,611
(100,500)
(65,611)
-
2009
29,522
(34,889)
(29,522)
-
2010
32,927
(5,368)
(5,368)
27,560
2011
36,439
36,439
2012
40,062
40,062
2013
43,801
43,801
2014
47,663
47,663
2015
51,654
51,654
2016
55,781
55,781
5,788
(4,410)
1,378
7,652
(5,830)
1,822
8,413
(6,410)
2,003
9,198
(7,008)
2,190
10,009
(7,626)
2,383
10,847
(8,265)
2,583
11,714
(8,925)
2,789
Comm 492.3 College of Agriculture and College of Commerce University of Saskatchewan
71
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Schedule 11: Ratio Analysis
Liquidity Ratios
Current Ratio
Activity and Operating Ratios
Total Asset Turnover
Operating Expenses
Direct Expenses/Sales
Product Item #1
Direct Labour/Sales
Product Item #1
Overhead/Sales
Selling and Administration/Sales
Leverage Ratios
Debt Ratio
Debt to Equity
Profitability Ratios
Gross Profit Margin
Net Profit Margin
Return on Total Assets
Return on Equity
Net Profit Margin *
Return on Total Assets *
Return on Equity *
* Using net income before tax
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
31
65
80
81
76
73
71
69
68
67
0.14
0.53
0.52
0.56
0.61
0.66
0.71
0.75
0.79
0.83
26.0%
12.5%
12.5%
12.6%
12.6%
12.6%
12.7%
12.7%
12.8%
12.8%
28.7%
92.9%
106.6%
7.2%
32.3%
26.1%
7.2%
32.3%
25.6%
7.2%
32.3%
25.1%
7.2%
32.3%
24.6%
7.2%
32.3%
24.1%
7.2%
32.3%
23.7%
7.2%
32.3%
23.2%
7.2%
32.3%
22.7%
7.2%
32.3%
22.3%
39.1%
64.3%
34.2%
52.0%
31.7%
46.4%
31.3%
45.7%
31.7%
46.5%
31.5%
45.9%
30.5%
44.0%
28.9%
40.7%
26.7%
36.4%
23.8%
31.2%
46.4%
-122.8%
-17.5%
-28.8%
-122.8%
-17.5%
-28.8%
60.6%
19.7%
10.4%
15.8%
19.7%
10.4%
15.8%
48.7%
8.7%
4.5%
6.6%
8.7%
4.5%
6.6%
48.7%
8.7%
4.8%
7.0%
9.5%
5.3%
7.7%
48.7%
9.3%
5.6%
8.3%
10.3%
6.3%
9.2%
48.6%
10.0%
6.6%
9.6%
11.1%
7.3%
10.7%
48.6%
10.7%
7.6%
10.9%
11.9%
8.4%
12.1%
48.6%
11.4%
8.6%
12.1%
12.7%
9.5%
13.4%
48.5%
12.1%
9.6%
13.1%
13.5%
10.7%
14.5%
48.5%
12.8%
10.6%
13.9%
14.3%
11.8%
15.5%
Comm 492.3 College of Agriculture and College of Commerce University of Saskatchewan
72
XXX FISH
5H Fish
Schedule 12: Unit Cost Analysis
Unit Cost Analysis ($ per unit produced)
Product Item #1
2007
1.82
2008
0.89
2009
0.91
2010
0.93
2011
0.96
2012
0.98
2013
1.00
Unit Cost of Direct Labour
Product Item #1
2.01
0.51
0.52
0.53
0.54
0.55
0.57
0.58
0.59
0.60
Unit Cost of Overhead
Product Item #1
6.50
2.30
2.35
2.40
2.45
2.49
2.54
2.59
2.65
2.70
10.33
3.71
3.79
3.86
3.94
4.03
4.11
4.20
4.28
4.37
11.85
2.92
2.92
2.91
2.91
2.90
2.89
2.88
2.87
2.86
22.18
6.63
6.70
6.78
6.85
6.93
7.00
7.08
7.16
7.23
-15.18
0.51
0.58
0.65
0.72
0.80
0.88
0.96
1.04
1.13
Total Unit Cost of Production for
Product Item #1
Unit Administration & Marketing Cost
Product Item #1
Total Unit Cost
Product Item #1
Unit Margin
Product Item #1
Comm 492.3 College of Agriculture and College of Commerce University of Saskatchewan
2014 2015
1.02 1.05
2016
1.07
73
XXX FISH
5H Fish
Schedule 13: Investment Analysis
Required Return on Equity
Present Value of Equity Investment
Equity Investment
Present Value of Equity Investment
Present Value of Equity Returns
Net Cash Flows to Equity
Dividends
Salvage Value
Total Net Cash Flow to Equity
Present Value of Net Cash Flows
Total Cash Flows to Equity
Net Present Value of Equity Investment
Internal Rate of Return on Equity Investment
2007
20%
2008
2009
2010
2011
2012
2013
450,000
450,000
-
-
-
-
-
11,270
11,270
89,115
89,115
78,013
78,013
21,809
45,497
67,306
(4,246)
64,695
60,449
(2,027)
57,745
55,718
239,348
-
-
-
-
-
11,270
89,115
78,013
67,306
60,449
-
-
45,497
45,497
64,695
64,695
2014
-
2015
2016
-
-
-
495
49,398
49,893
1,440
46,926
48,366
2,228
45,315
26,420
73,963
-
-
-
-
55,718
52,279
49,893
48,366
73,963
57,745
57,745
52,924
52,924
49,398
49,398
46,926
46,926
45,315
223,872
269,186
(645)
52,924
52,279
(210,652)
5%
External Rate of Return on Equity Investment
Equity Investment
Dividends
Salvage Value
Total to Equity Investor
External Rate of Return on Equity Investment
3%
Comm 492.3 College of Agriculture and College of Commerce University of Saskatchewan
74