Two to Fly AviationConsultant1110 South Broad StreetPhiladelphia, Pennsylvania 19110 A BluJayAviation IncorporatedWren McKeemon & Brad Castanada10000 Worldwide International AirportChicago, Illinois 60666 Dear Ms. Wren McKeemon & Mr. Brad Castanada,: SUBJECT: Financial Counseling from Two to Fly AviationConsultant We here at Two to fly Aviation consulting would like to saythank you for trusting us to with your financial consultant needs for yourcompany.
The staff at two to fly aviation have many years of aviationbusiness and financial experience specialization and expertise to hand all ofyour finical consulting needs. This isour mind will you gives your business a unique advantage over your competitors. We will be able to provide unbiased insight and recommendationsthat are anchored in best practices of business to help get to the right answerfor our clients. This industry ispresents very complex water to navigate; and we will do our very best to helpget you thought these rough times.
With regards to the inquires you have sent to our team. We have gone through them with a fine-toothcomb and made recommendations on the following pages. We hope this will provide a clear pathforward. We’ve put together thefollowing recommendations and would welcome the opportunity to discuss these immediateconcerns with you. We hope that yourteam will trust us with you financial consulting needs now as well as in thefuture. Thank you, BluJay Aviation,Inc.; Please see invoice on page 6.
Yours truly,Michael McHugh Lead Financial ConsultantTwo to Fly Aviation (215)[email protected] Co. AcquisitionOpportunityWhile analyzing your growth strategy,we see that the acquisition of HNK Co.
is one of your chief concerns for yourfuture growth. This does present anopportunity that does seem very appealing and we here at Two to Fly want tomake sure you have all the pluses and minus of this prospect. We have reviewed the prospect and feel confidentthat acquiring the HNK Co. would be detrimental to the growth of yourcompany.
We do not recommend you acquirethis company for the following reasons:1) The financial report given has not been audited. We cannot be sure the accuracy of thesereports which we consider a red flag.2) The acquisition of the aforementioned shop will be a gain of $89,000 onmerchandise.
BluJay aviation is not aretail company and this will be likely be detrimental to the growth of yourcompany. This will be a a burdensomeamount to merchandise to sell and manage. We here at Two to Fly do not recommendacquiring of HNK Co.. This gift shop isa retail business which is immensely different from the aviation company youare trying to grow. The staffing andmanagement a retail space would take away from the growth strategy of BluJayAviation. Accounts Receivable BluJay Aviation’s growth capacity isbeing hindered by the slow collection on account receivable. This lack of cash flow will only continueunless something is done to help motivate your client base to pay bills in atimely fashion Two to fly would like to make the following recommendationsbased of the finances at the time of this report:Start by charging late fees ondelinquent accounts.
This will remindcustomers that allowing their account to go in the rears will cost moremoney. We feel that this could be a cashflow stimulate as well as prevent further delinquencies.We also noticed that BluJay Aviationdoes not have a mechanism to notify clients when the account has become late. We believe putting a system in place willfoster better communication between the client and BluJay Aviation with regardsto billing. This will go a long way tohelp alleviate some of the latepayments.
We Recommend that company startreviewing accounts lateness. Once you identifywho is either close or over 30 days past due, notify the clients and try tocollect on the minimum of these accounts. These accounts should be charged a 25-dollar late fee. Clients well past due could also be offered asettlement.
The balance on the accountcould be paid in full by paying a lesser amount. Finally, a 2% discount could be offered toclient’s who pay their full bill within 10 days of services rendered. Cessna 172 DepreciationAt the time of thisreport the biggest and most important asset at BluJay Aviation is the mainbread winner, your Cessna 172. Afterreviewing the last two years of finical statements we make the followingrecommendation on changing the life cycle of the Aircraft. With the knowreliability and your above standard maintenance record we feel that theAircrafts life cycle should be increase well beyond the current life cycle of15 years. According to your financials you bought your aircraft used at for$110,000.
00 three years ago. With anexpected residual value of $15,000.00 we established your straight-linedepreciation of the aircraft at $6333.
33 a year. By extending the life cycle of the aircraftto 20 year you would decrease the depreciation to $4750.00 a year and 25 yearswould be $3800 a year. We recommend you extendthe life of life cycle of the aircraft to 25 years, this will save you morethan $2533 a year. The recommendation would be to up the life cycle of the aircraftto 25 years. This will up your netincome by saving money on your depreciation cost by over $2500 a year.
Raven 44We recommend wait and raise the cash for the aircraft. Do not take on more investors issues stockwill raise money but will come with stockholder with voting rights on businessmatters. Another consequence of stockswill be the paying out of non-tax-deductible dividends.
This course of action will in turn lower theearnings per share for this BluJay aviation. We DO NOT RECOMMENDBluJay Aviation take on debt to purchase this aircraft. We recommend waiting to finance this aircraftwhen the finances of BluJay Aviation reflect an increased cash flowputting. At such time, the company wouldbe in a much better place with better operating rations to finance thisaircraft (Raven 44). INVOICETwo to Fly AviationConsulting 1110 South Broad StreetPhiladelphia, Pennsylvania 19110Phone:(215) [email protected] tax # 12345Invoice # 10January 23, 2018BluJayAviation IncorporatedWrenMcKeemon & Brad Castanada41Airpark Rd, Princeton, NJ 08540Attention: BluJayAviation, AccountingINVOICE FOR: Work Performed Hours Rate Total Finical consulting 86 hours $145.
00 $12470.00 Federal Tax 5% $623.50 State 10% $1247.00 TOTAL PAYABLE $14340.
50 Monthly Payments 18 months $796.69 TermsFirst payment to be paid within 21 business days of invoice date or pleaseinquire about the monthly payment option. Please make all checks payable to Twoto Fly Aviation consulting or Pay online at TwotoFly.com/payments. Unpaid balances accrue interestat 26.94% per annum, calculated monthly.
All work is complete! Thanks for your business.