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Business Plan Pro Table Wizards guide you step by step through then financials to produce solid numbers, charts and tables that are preferred by banks, lenders, and the SBA. It even does the math for you, just plug in your numbers and the software will do the rest!
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7.0 Finance
The company is seeking $500,000 for expansion purposes. The use of funds will be broken down as follows:
| Marketing of new product lines |
$30,000 |
| Growth into new markets |
$50,000 |
| Purchasing additional equipment |
$270,000 |
| Working Capital |
$100,000 |
| Other (Debt Management) |
$50,000 |
7.1 Projected Profit and Loss
The table below provides Machine Tooling's projected income statements for 2000-2002.
Profit and Loss
| Pro Forma Profit and Loss |
| | 2000 | 2001 | 2002 |
| Sales | $1,960,000 | $4,060,000 | $5,260,000 |
| Direct Costs of Goods | $400,000 | $827,000 | $1,069,000 |
| Other | $0 | $0 | $0 |
| | ------------ | ------------ | ------------ |
| Cost of Goods Sold | $400,000 | $827,000 | $1,069,000 |
| Gross Margin | $1,560,000 | $3,233,000 | $4,191,000 |
| Gross Margin % | 79.59% | 79.63% | 79.68% |
| Expenses: | | | |
| Payroll | $635,040 | $910,000 | $1,000,000 |
| Sales and Marketing and Other Expenses | $167,900 | $220,000 | $265,000 |
| Depreciation | $9,996 | $30,000 | $40,000 |
| Quality Assurance | $93,800 | $104,000 | $125,000 |
| General & Administrative | $96,000 | $124,000 | $174,000 |
| Manufacturing & Engineering | $129,600 | $130,000 | $175,000 |
| Machining & Systems Building | $86,400 | $100,000 | $110,000 |
| Payroll Taxes | $95,256 | $136,500 | $150,000 |
| Other | $0 | $0 | $0 |
| | ------------ | ------------ | ------------ |
| Total Operating Expenses | $1,313,992 | $1,754,500 | $2,039,000 |
| Profit Before Interest and Taxes | $246,008 | $1,478,500 | $2,152,000 |
| Interest Expense | $47,705 | $29,150 | $12,470 |
| Taxes Incurred | $50,410 | $362,338 | $543,797 |
| Net Profit | $147,893 | $1,087,013 | $1,595,733 |
| Net Profit/Sales | 7.55% | 26.77% | 30.34% |
7.2 Projected Cash Flow
The company's projected cash flow statements are presented below.
- The existing short-term liabilities ($50,000 in total) are paid out in ten monthly payments of $5,000 each starting in March, 2000.
- The $500,000 long-term loan is expected to be secured in January, 2000 (two payments of $250,000 each are expected in January and February). This loan will be repaid quarterly over three years.
- In April, $50,000 from the expected loan will be used to completely repay the existing long-term obligations.
- After that, in May and June, 2000, the company will purchase additional equipment and buildings in the total amount of $270,000.
- In years 2001 and 2002, further capital expenditures in the amount of $200,000 and $300,000, respectively, are planned to accommodate for increased sales. In both cases, "ten year, straight-line" depreciation is assumed.
Cash
Cash Flow
| Pro Forma Cash Flow |
| | 2000 | 2001 | 2002 |
| | | | |
| Cash Received | | | |
| Cash from Operations: | | | |
| Cash Sales | $490,000 | $1,015,000 | $1,315,000 |
| Cash from Receivables | $1,352,925 | $2,780,277 | $3,793,730 |
| Subtotal Cash from Operations | $1,842,925 | $3,795,277 | $5,108,730 |
| | | | |
| 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 | $500,000 | $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 | $2,342,925 | $3,795,277 | $5,108,730 |
| | | | |
| Expenditures | 2000 | 2001 | 2002 |
| Expenditures from Operations: | | | |
| Cash Spending | $138,658 | $224,124 | $284,739 |
| Payment of Accounts Payable | $1,704,746 | $2,814,733 | $3,386,897 |
| Subtotal Spent on Operations | $1,843,404 | $3,038,857 | $3,671,636 |
| | | | |
| Additional Cash Spent | | | |
| Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 |
| Principal Repayment of Current Borrowing | $50,000 | $0 | $0 |
| Other Liabilities Principal Repayment | $0 | $0 | $0 |
| Long-term Liabilities Principal Repayment | $175,100 | $166,800 | $166,800 |
| Purchase Other Current Assets | $0 | $0 | $0 |
| Purchase Long-term Assets | $270,000 | $200,000 | $300,000 |
| Dividends | $0 | $0 | $0 |
| Subtotal Cash Spent | $2,338,504 | $3,405,657 | $4,138,436 |
| | | | |
| Net Cash Flow | $4,421 | $389,620 | $970,294 |
| Cash Balance | $64,421 | $454,041 | $1,424,335 |
7.3 Balance Sheets - Projected
The company's projected balance sheets for 2000-2002 are presented below.
Balance Sheet
| Pro Forma Balance Sheet |
| | | | |
| Assets | | | |
| Current Assets | 2000 | 2001 | 2002 |
| Cash | $64,421 | $454,041 | $1,424,335 |
| Accounts Receivable | $247,075 | $511,798 | $663,069 |
| Inventory | $135,600 | $280,353 | $362,391 |
| Other Current Assets | $15,000 | $15,000 | $15,000 |
| Total Current Assets | $462,096 | $1,261,192 | $2,464,794 |
| Long-term Assets | | | |
| Long-term Assets | $370,000 | $570,000 | $870,000 |
| Accumulated Depreciation | $39,996 | $69,996 | $109,996 |
| Total Long-term Assets | $330,004 | $500,004 | $760,004 |
| Total Assets | $792,100 | $1,761,196 | $3,224,798 |
| | | | |
| Liabilities and Capital | | | |
| Current Liabilities | 2000 | 2001 | 2002 |
| Accounts Payable | $79,307 | $128,191 | $162,860 |
| Current Borrowing | $0 | $0 | $0 |
| Other Current Liabilities | $10,000 | $10,000 | $10,000 |
| Subtotal Current Liabilities | $89,307 | $138,191 | $172,860 |
| | | | |
| Long-term Liabilities | $374,900 | $208,100 | $41,300 |
| Total Liabilities | $464,207 | $346,291 | $214,160 |
| | | | |
| Paid-in Capital | $50,000 | $50,000 | $50,000 |
| Retained Earnings | $130,000 | $277,893 | $1,364,905 |
| Earnings | $147,893 | $1,087,013 | $1,595,733 |
| Total Capital | $327,893 | $1,414,905 | $3,010,638 |
| Total Liabilities and Capital | $792,100 | $1,761,196 | $3,224,798 |
| Net Worth | $327,893 | $1,414,905 | $3,010,638 |
7.4 Untitled-2
The following table gives a detailed ratio analysis for Machine Tooling. The last column, Industry Profiles, is derived from the general machine industry, as described by the Standard Industry Classification (SIC) Index code 3569, General Industrial Machinery, NEC.
Ratios
| Ratio Analysis |
| | 2000 | 2001 | 2002 | Industry Profile |
| Sales Growth | 30.67% | 107.14% | 29.56% | -0.50% |
| | | | | |
| Percent of Total Assets | | | | |
| Accounts Receivable | 31.19% | 29.06% | 20.56% | 24.80% |
| Inventory | 17.12% | 15.92% | 11.24% | 26.10% |
| Other Current Assets | 1.89% | 0.85% | 0.47% | 24.20% |
| Total Current Assets | 58.34% | 71.61% | 76.43% | 75.10% |
| Long-term Assets | 41.66% | 28.39% | 23.57% | 24.90% |
| Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
| | | | | |
| Current Liabilities | 11.27% | 7.85% | 5.36% | 35.70% |
| Long-term Liabilities | 47.33% | 11.82% | 1.28% | 18.50% |
| Total Liabilities | 58.60% | 19.66% | 6.64% | 54.20% |
| Net Worth | 41.40% | 80.34% | 93.36% | 45.80% |
| | | | | |
| Percent of Sales | | | | |
| Sales | 100.00% | 100.00% | 100.00% | 100.00% |
| Gross Margin | 79.59% | 79.63% | 79.68% | 35.80% |
| Selling, General & Administrative Expenses | 72.00% | 52.86% | 49.17% | 20.80% |
| Advertising Expenses | 2.27% | 1.60% | 1.33% | 0.70% |
| Profit Before Interest and Taxes | 12.55% | 36.42% | 40.91% | 4.00% |
| | | | | |
| Main Ratios | | | | |
| Current | 5.17 | 9.13 | 14.26 | 2.20 |
| Quick | 3.66 | 7.10 | 12.16 | 1.15 |
| Total Debt to Total Assets | 58.60% | 19.66% | 6.64% | 54.20% |
| Pre-tax Return on Net Worth | 60.48% | 102.43% | 71.07% | 7.30% |
| Pre-tax Return on Assets | 25.04% | 82.29% | 66.35% | 16.00% |
| | | | | |
| Additional Ratios | 2000 | 2001 | 2002 | |
| Net Profit Margin | 7.55% | 26.77% | 30.34% | n.a |
| Return on Equity | 45.10% | 76.83% | 53.00% | n.a |
| | | | | |
| Activity Ratios | | | | |
| Accounts Receivable Turnover | 5.95 | 5.95 | 5.95 | n.a |
| Collection Days | 59 | 45 | 54 | n.a |
| Inventory Turnover | 3.00 | 3.98 | 3.33 | n.a |
| Accounts Payable Turnover | 21.55 | 22.34 | 21.01 | n.a |
| Payment Days | 21 | 13 | 16 | n.a |
| Total Asset Turnover | 2.47 | 2.31 | 1.63 | n.a |
| | | | | |
| Debt Ratios | | | | |
| Debt to Net Worth | 1.42 | 0.24 | 0.07 | n.a |
| Current Liab. to Liab. | 0.19 | 0.40 | 0.81 | n.a |
| | | | | |
| Liquidity Ratios | | | | |
| Net Working Capital | $372,789 | $1,123,001 | $2,291,934 | n.a |
| Interest Coverage | 5.16 | 50.72 | 172.57 | n.a |
| | | | | |
| Additional Ratios | | | | |
| Assets to Sales | 0.40 | 0.43 | 0.61 | n.a |
| Current Debt/Total Assets | 11% | 8% | 5% | n.a |
| Acid Test | 0.89 | 3.39 | 8.33 | n.a |
| Sales/Net Worth | 5.98 | 2.87 | 1.75 | n.a |
| Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |
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