General Freight Trucking Business Plan

Mike's Trucking Service

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Finance

7.0 Finance

Funding Requirements and Uses

The company is raising $125,000 for the purpose of financing equipment purchases to meet a growing demand for its services. The company management has reason to believe that an increased truck fleet wil assist the company in its effort to widen its market offering and increase sales.

7.1 Significant Assumptions

The following table highlights the important general assumptions of Mike's Trucking. Interest rates, tax rates, and personnel burden are based on conservative assumptions.

General Assumptions

General Assumptions
	2000	2001	2002
Plan Month	1	2	3
Current Interest Rate	10.00%	10.00%	10.00%
Long-term Interest Rate	10.00%	10.00%	10.00%
Tax Rate	25.42%	25.00%	25.42%
Sales on Credit %	20.00%	20.00%	20.00%
Other	0	0	0

7.2 Break-even Analysis

The break-even chart and table below indicate that 22 runs per month are necessary for the company to make enough to cover monthly expenses.

Break-even Analysis



Break-even Analysis

Break-even Analysis:
Monthly Units Break-even	22
Monthly Revenue Break-even	$4,375
Assumptions:
Average Per-Unit Revenue	$200.00
Average Per-Unit Variable Cost	$40.00
Estimated Monthly Fixed Cost	$3,500

7.3 Projected Profit and Loss

The table below summarizes our projected income statement for the first three years of plan implementation, fiscal years 2000, 2001, and 2002. As with the other tables, the Profit and Loss table is projected to be quite conservative. The detailed monthly projection can be found in the appendices.

Profit and Loss

Pro Forma Profit and Loss
	2000	2001	2002
Sales	$100,000	$250,000	$400,000
Direct Cost of Sales	$20,000	$50,000	$80,000
Other	$0	$0	$0
	------------	------------	------------
Total Cost of Sales	$20,000	$50,000	$80,000
Gross Margin	$80,000	$200,000	$320,000
Gross Margin %	80.00%	80.00%	80.00%
Expenses:
Payroll	$30,000	$50,000	$90,000
Sales and Marketing and Other Expenses	$7,080	$13,000	$18,500
Depreciation	$4,800	$5,000	$5,500
Depreciation	$0	$0	$0
Fuel & Maintenance	$6,000	$12,000	$20,000
Utilities	$2,400	$3,000	$3,500
Insurance	$4,800	$5,000	$6,000
Payroll Taxes	$4,500	$7,500	$13,500
Other	$0	$0	$0
	------------	------------	------------
Total Operating Expenses	$59,580	$95,500	$157,000
Profit Before Interest and Taxes	$20,420	$104,500	$163,000
Interest Expense	$12,218	$14,760	$13,360
Taxes Incurred	$2,024	$22,435	$38,034
Net Profit	$6,178	$67,305	$111,607
Net Profit/Sales	6.18%	26.92%	27.90%

7.4 Projected Cash Flow

The projected cash flow is presented in the chart and table below. The long-term loan in the amount of $125,000 is expected to be received in May, 2000, which is reflected in the increase of the long-term borrowing row for that month. The company is planning to purchase two trucks (one in June and one in August) in the first year of plan implementation, 2000; corresponding transactions are reflected in the capital expenditure rows. Monthly repayments on the $125,000 loan will be made in the amount of $1,500.

The monthly cash flow is presented in the illustration, with one bar representing cash flow per month, and the other the monthly balance. The annual cash flow can be found in the table below, and are in monthly detail in the appendices.

Cash



Cash Flow

Pro Forma Cash Flow
	2000	2001	2002
Cash Received
Cash from Operations:
Cash Sales	$80,000	$200,000	$320,000
Cash from Receivables	$27,067	$45,600	$75,600
Subtotal Cash from Operations	$107,067	$245,600	$395,600
Additional Cash Received
Sales Tax, VAT, HST/GST Received	$0	$0	$0
New Current Borrowing	$0	$0	$0
New Other Liabilities (interest-free)	$0	$0	$0
New Long-term Liabilities	$125,000	$0	$0
Sales of Other Current Assets	$0	$0	$0
Sales of Long-term Assets	$0	$0	$0
New Investment Received	$0	$0	$0
Subtotal Cash Received	$232,067	$245,600	$395,600
Expenditures	2000	2001	2002
Expenditures from Operations:
Cash Spending	$17,955	$12,020	$17,877
Payment of Accounts Payable	$69,853	$167,234	$263,479
Subtotal Spent on Operations	$87,808	$179,253	$281,356
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out	$0	$0	$0
Principal Repayment of Current Borrowing	$3,600	$7,000	$5,000
Other Liabilities Principal Repayment	$0	$0	$0
Long-term Liabilities Principal Repayment	$11,300	$8,000	$8,000
Purchase Other Current Assets	$0	$0	$0
Purchase Long-term Assets	$125,000	$0	$0
Dividends	$0	$0	$0
Subtotal Cash Spent	$227,708	$194,253	$294,356
Net Cash Flow	$4,358	$51,347	$101,244
Cash Balance	$4,858	$56,205	$157,450

7.5 Balance Sheets - Projected

The table below shows Mike's Trucking balance sheets for 2000-2002.

Balance Sheet

Pro Forma Balance Sheet
Assets
Current Assets	2000	2001	2002
Cash	$4,858	$56,205	$157,450
Accounts Receivable	$2,933	$7,333	$11,733
Other Current Assets	$0	$0	$0
Total Current Assets	$7,792	$63,539	$169,183
Long-term Assets
Long-term Assets	$165,000	$165,000	$165,000
Accumulated Depreciation	$8,800	$13,800	$19,300
Total Long-term Assets	$156,200	$151,200	$145,700
Total Assets	$163,992	$214,739	$314,883
Liabilities and Capital
Current Liabilities	2000	2001	2002
Accounts Payable	$4,714	$3,156	$4,693
Current Borrowing	$16,400	$9,400	$4,400
Other Current Liabilities	$500	$500	$500
Subtotal Current Liabilities	$21,614	$13,056	$9,593
Long-term Liabilities	$138,700	$130,700	$122,700
Total Liabilities	$160,314	$143,756	$132,293
Paid-in Capital	$0	$0	$0
Retained Earnings	($2,500)	$3,678	$70,983
Earnings	$6,178	$67,305	$111,607
Total Capital	$3,678	$70,983	$182,590
Total Liabilities and Capital	$163,992	$214,739	$314,883
Net Worth	$3,678	$70,983	$182,590

7.6 Untitled-2

The following table includes Industry Profile statistics for the trucking industry, as determined by the Standard Industry Classification (SIC) Index. The SIC Code for this plan is 4213, and the SIC Description is Trucking except local. These statistics show a comparison of industry standards and key ratios for this plan.

Ratios

Ratio Analysis
	2000	2001	2002	Industry Profile
Sales Growth	66.67%	150.00%	60.00%	5.60%
Percent of Total Assets
Accounts Receivable	1.79%	3.42%	3.73%	19.70%
Inventory	0.00%	0.00%	0.00%	1.00%
Other Current Assets	0.00%	0.00%	0.00%	22.30%
Total Current Assets	4.75%	29.59%	53.73%	43.00%
Long-term Assets	95.25%	70.41%	46.27%	57.00%
Total Assets	100.00%	100.00%	100.00%	100.00%
Current Liabilities	13.18%	6.08%	3.05%	30.80%
Long-term Liabilities	84.58%	60.86%	38.97%	27.00%
Total Liabilities	97.76%	66.94%	42.01%	57.80%
Net Worth	2.24%	33.06%	57.99%	42.20%
Percent of Sales
Sales	100.00%	100.00%	100.00%	100.00%
Gross Margin	80.00%	80.00%	80.00%	100.00%
Selling, General & Administrative Expenses	73.85%	53.08%	51.94%	82.10%
Advertising Expenses	1.20%	1.20%	1.25%	0.20%
Profit Before Interest and Taxes	20.42%	41.80%	40.75%	1.10%
Main Ratios
Current	0.36	4.87	17.64	1.32
Quick	0.36	4.87	17.64	1.07
Total Debt to Total Assets	97.76%	66.94%	42.01%	57.80%
Pre-tax Return on Net Worth	222.99%	126.42%	81.95%	2.50%
Pre-tax Return on Assets	5.00%	41.79%	47.52%	6.00%
Additional Ratios	2000	2001	2002
Net Profit Margin	6.18%	26.92%	27.90%	n.a
Return on Equity	167.97%	94.82%	61.12%	n.a
Activity Ratios
Accounts Receivable Turnover	6.82	6.82	6.82	n.a
Collection Days	50	37	43	n.a
Inventory Turnover	0.00	0.00	0.00	n.a
Accounts Payable Turnover	15.08	52.50	56.47	n.a
Payment Days	63	9	5	n.a
Total Asset Turnover	0.61	1.16	1.27	n.a
Debt Ratios
Debt to Net Worth	43.59	2.03	0.72	n.a
Current Liab. to Liab.	0.13	0.09	0.07	n.a
Liquidity Ratios
Net Working Capital	($13,822)	$50,483	$159,590	n.a
Interest Coverage	1.67	7.08	12.20	n.a
Additional Ratios
Assets to Sales	1.64	0.86	0.79	n.a
Current Debt/Total Assets	13%	6%	3%	n.a
Acid Test	0.22	4.31	16.41	n.a
Sales/Net Worth	27.19	3.52	2.19	n.a
Dividend Payout	0.00	0.00	0.00	n.a