Posted: November 14th, 2022

ENTR4055 Case Study #2: Stress Tests

College of Online Education ENTR4055
Johnson & Wales University
ENTR4055 Case Study #2: Stress Tests
Using the information you have developed for the financial plan you started last week, consider
the following stress tests and stress mitigation techniques. Keep in mind that one of the most
common sources of business failure is undercapitalization. In simple terms, running out of cash
before the business can become sustainable.
This assignment is due via the Assignment Link by 11: 59 PM Eastern, on the due date.
Instructions
In the form of a memo to your investors and lenders, outline the ways in which you will
approach and mitigate the stress risks of your business.
Your paper needs to present the following:
• Describe your fixed costs and what, if anything you could/do to lower them if your
revenue projections are not being met.
• Describe your variable costs and what, if anything, you could do to lower them if your
revenue projections are not being met.
• Describe how long it would take and at what cost to restart your business following a
natural disaster that impacted the physical location of your business. Assume that you
had sufficient insurance coverage to restore the building and replace any damaged
inventory – but all other costs are on you.
• At what point do you reach breakeven on an annual basis?
• If you were to look at a forecast month by month, how many months would it take you
to breakeven, and what would your cumulative loss be at that point? Have you
considered this in your working capital model? If not, you need to change it. Even if
you broke even in the first year, it is highly probable that it could take you several or
many months to breakeven – and you need to be able to have the cash to fund those
cumulative losses.
It is highly recommended that you do some research in order to support your conclusions. To
the extent you use credible sources to support your positions, please assure you cite them in a
references page at the end of your paper in APA Format.
College of Online Education ENTR4055
Johnson & Wales University
Format requirements:
• Microsoft Word
• 12 Point Font
• Margins 1.5 inch top and bottom, 1 inch left and right.
• No grammatical nor spelling errors
• Minimum 3 pages.
• References page in APA format.
Grading
This assignment will be graded based on the following rubric. You may view the rubric by
clicking on the assignment link as well as downloading the attached rubric in the assignment
link.
Criteria Meets Criteria
100%
Approaching
Criteria
80%
Needs
Improvement
50%
Unacceptable
0%
Fixed Costs
20%
Description of fixed
costs and
recommendation to
lower them are
comprehensive and
well thought out.
Description of fixed
costs and
recommendation to
lower them are good
though not
comprehensive.
Recommendations to
lower them are fairly
well thought out,
though all may not
be achievable.
Description of fixed
costs and
recommendation to
lower them are not
comprehensive.
Recommendations
to lower them not
well thought out.
Not Submitted
Variable
Costs
20%
Description of
variable costs and
recommendation to
lower them are
comprehensive and
well thought out.
Description of
variable costs and
recommendation to
lower them are good
though not
comprehensive.
Recommendations to
lower them are fairly
well thought out,
though all may not
be achievable.
Description of
variable costs and
recommendation to
lower them are not
comprehensive.
Recommendations
to lower them not
well thought out.
Not Submitted
Restart
15%
Description of the
restart timing and
the associated costs
are comprehensive
and well thought
out.
Description of the
restart timing is
good. Associated
costs are fairly well
thought out.
Description of the
restart timing is
poor. Associated
costs are not well
thought out.
Not Submitted
College of Online Education ENTR4055
Johnson & Wales University
Criteria Meets Criteria
100%
Approaching
Criteria
80%
Needs
Improvement
50%
Unacceptable
0%
Breakeven
15%
Breakeven
calculation by
month and the total
cumulative loss are
reasonable and
correct based on
the annual forecast.
Breakeven
calculation by month
is correct, total
cumulative losses are
correct, but this data
does not balance to
the annual forecast.
Breakeven
calculation is
incorrect.
Cumulative losses
are incorrect.
Not Submitted
Support
15%
Where appropriate,
the items above are
supported by
credible facts and
data.
Occasionally, items
above are supported
by fairly credible
facts and data.
Rarely is any
position supported
by cited credible
facts and data.
Not Submitted
Format
15%
Professional language
presented in the form
of a memo to
lenders/investors. No
grammatical or
spelling errors.
References page are
in APA format.
Generally, though not
always professional
language presented in
the form of a memo to
lenders/investors. No
grammatical or spelling
errors. References
page are in APA format
with occasional citation
errors.
Slang and/or
unprofessional
language used.
Inappropriately
formatted for
communication to the
required audience.
Grammatical or
spelling errors. No
references page or not
in APA format.
Not Submitted

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