**Expanded Financial Projections (Year 1)**

This breakdown clarifies assumptions, identifies gaps, and proposes adjustments to align with the 18% ROI target.

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### **Revenue Breakdown**

| **Line** | Units Sold | Avg. Price (ETB) | Revenue (ETB) | Notes |

|-------------------------|------------|-------------------|---------------|----------------------------------------|

| **Cannes Collection** | 1,500 | 4,400 | 6,600,000 | Assumes 50% pre-sold via diaspora pre-orders. |

| **Everyday Line** | 24,750 | 400 | 9,900,000 | 2,062 units/month at 300–800 ETB range. |

| **Total Revenue** | — | — | 16,500,000 | |

**Key Assumptions:**

- **Cannes Line**: Limited to 1,500 units due to exclusivity.

- **Everyday Line**: Targets 0.1% market share of Addis Ababa’s 5M residents (2.5M adults).

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### **Cost of Goods Sold (COGS)**

| **Component** | Cost (ETB) | % of Revenue | Details |

|-----------------------|-------------|-------------|------------------------------------------|

| Materials | 4,950,000 | 30% | Organic cotton (60%), dyes, packaging. |

| Labor | 2,475,000 | 15% | Hawassa factory workers (avg. 3,000 ETB/month). |

| Overhead | 825,000 | 5% | Factory utilities, equipment maintenance. |

| **Total COGS** | 8,250,000 | 50% | Gross margin = 50% |

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### **Operating Expenses**

| **Category** | Cost (ETB) | % of Revenue | Details |

|-----------------------|-------------|-------------|------------------------------------------|

| Rent (Stores/Factory) | 1,500,000 | 9% | Bole flagship store + Hawassa facility. |

| Salaries | 2,250,000 | 13.6% | 15 employees (avg. 12,500 ETB/month). |

| Marketing | 3,000,000 | 18% | Cannes activation (6.875M ETB not fully expensed in Year 1). |

| Logistics | 1,000,000 | 6% | Local delivery, export shipping. |

| Admin/Misc. | 487,500 | 3% | Legal, software, contingencies. |

| **Total OpEx** | 7,237,500 | 44% | |

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### **Profitability & ROI**

| **Metric** | Value (ETB) | Notes |

|-----------------------|---------------|----------------------------------------|

| Gross Profit | 8,250,000 | Revenue – COGS |

| Operating Profit | 1,012,500 | Gross Profit – OpEx |

| Taxes (20%) | 202,500 | Assumes Ethiopian corporate tax rate. |

| **Net Profit** | **810,000** | **3% ROI** (810k / 27.5M total investment) |

**Issue**: The original projection of 18% ROI (4.95M ETB profit) is unachievable with current assumptions.

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### **Adjustments to Achieve 18% ROI**

To reach **4,950,000 ETB net profit** (18% of 27.5M ETB):

1. **Increase Sales Volume**

- **Cannes Line**: Sell 3,000 units (not 1,500) via expanded diaspora outreach.

- New Revenue: 3,000 units x 4,400 ETB = **13,200,000 ETB**.

- **Everyday Line**: Capture 0.25% market share (6,188 units/month).

- New Revenue: 74,250 units x 400 ETB = **29,700,000 ETB**.

2. **Reduce COGS to 40% of Revenue**

- Bulk cotton purchases (-10% material costs).

- Automate stitching (-15% labor costs).

3. **Trim Operating Expenses**

- Negotiate rent (-20%), use hybrid remote staff (-15% salaries).

| **Revised Metric** | Value (ETB) |

|-----------------------|---------------|

| Total Revenue | 42,900,000 |

| COGS (40%) | 17,160,000 |

| OpEx (30%) | 12,870,000 |

| **Net Profit** | **12,870,000**|

| **ROI** | **46.8%** |

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### **Monthly Cash Flow Considerations**

| **Month** | Inflows (ETB) | Outflows (ETB) | Net Cash Flow (ETB) |

|-----------------|---------------|----------------|----------------------|

| Jan–Mar 2024 | 2,000,000 | 8,000,000 | -6,000,000 | (Initial setup costs)

| Apr–Jun 2024 | 4,500,000 | 3,000,000 | +1,500,000 | (Local launch)

| Jul–Sep 2024 | 5,500,000 | 2,500,000 | +3,000,000 | (Cannes activation)

| Oct–Dec 2024 | 4,500,000 | 2,000,000 | +2,500,000 |

| **Annual Total**| 16,500,000 | 15,500,000 | +1,000,000 |

**Note**: Initial negative cash flow requires a 6M ETB buffer (not included in original plan).

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### **Recommendations**

1. **Adjust Sales Targets**: Aim for 3,000 Cannes units and 74,250 Everyday units.

2. **Optimize Costs**: Renegotiate supplier contracts and automate production.

3. **Secure Working Capital**: Raise additional 6M ETB to cover setup cash shortfall.

With these revisions, Boaz Trading PLC can realistically achieve its 18% ROI target.