GetMyFood, Inc. has developed an application for cell phones aimed toward consumers who live in more rural areas where there are few delivery options for take-out food.   The app connects local taxi...


GetMyFood, Inc. has developed an application for cell phones aimed toward consumers who live in more rural areas where there are few delivery options for take-out food.   The app connects local taxi drivers with the larger restaurant food delivery services in nearby areas to extend the range of home meal delivery service.


The company expects to generate revenues of $2000 (figures in thousands) in the first year (2020) with a general costs of services sold of $1200 (figures in thousands.) The company expects to see a sharp increase in the revenues earned after the first year as the new service gains recognition but believes that the life-cycle of the product will be relatively short as market research has shown that the business model will be most successful in areas that are more rural but still relatively close to larger population centers. Given the general demographic trend in population growth, the company believes that their target market will diminish over time as more standard delivery services become available.


The company estimates the following growth rate for revenue, costs, and SG&A over the next five years:

















































Growth Rate for Selected Items



2019



2020



2021



2022



2023



2024



Revenue Growth



5%



15%



10%



3%



CGS



3%



4%



2%



2%



SG&A (% of Revenue)



28%



27%



26%



24%



20%



The have also forecasted the following items for working capital:



























































Selected Projections (Figures in thousands)



2019



2020



2021



2022



2023



2024



A/R



300



325



310



295



250



A/P



200



230



240



220



210



Inventory



50



65



40



30



20



Depreciation



100



113



117



104



115



Taxes are assumed to be 34% per year. The initial outlay for software development is estimated to be $1000.


You have been hired as a financial consultant to determine the estimated free cash flows to the firm for GetMyFood, Inc.


May 19, 2022
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