Agriculture Farm Business Plan

Botanical Bounty

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Financial Plan

The following sections will outline important financial information.

7.1 Important Assumptions

The following table details important Financial Assumptions.

General Assumptions
2003 2004 2005
Plan Month 1 2 3
Current Interest Rate 10.00% 10.00% 10.00%
Long-term Interest Rate 4.00% 4.00% 4.00%
Tax Rate 30.00% 30.00% 30.00%
Other 0 0 0

7.2 Break-even Analysis

The Break-even Analysis is shown below.

Break-even Analysis
Monthly Revenue Break-even $13,770
Assumptions:
Average Percent Variable Cost 8%
Estimated Monthly Fixed Cost $12,737

7.3 Projected Profit and Loss

The following table and charts show the Projected Profit and Loss.

Pro Forma Profit and Loss
2003 2004 2005
Sales $84,839 $190,835 $216,613
Direct Cost of Sales $6,363 $14,313 $16,246
Other Costs of Goods $0 $0 $0
Total Cost of Sales $6,363 $14,313 $16,246
Gross Margin $78,476 $176,522 $200,367
Gross Margin % 92.50% 92.50% 92.50%
Expenses
Payroll $87,000 $92,000 $97,000
Sales and Marketing and Other Expenses $10,000 $12,000 $14,000
Depreciation $6,996 $6,996 $6,996
Mortgage $24,000 $24,000 $24,000
Utilities $7,000 $7,000 $7,000
Insurance $2,400 $2,400 $2,400
Payroll Taxes $13,050 $13,800 $14,550
Other $2,400 $2,400 $2,400
Total Operating Expenses $152,846 $160,596 $168,346
Profit Before Interest and Taxes ($74,370) $15,926 $32,021
EBITDA ($67,374) $22,922 $39,017
Interest Expense $3,908 $3,640 $3,280
Taxes Incurred $0 $3,686 $8,623
Net Profit ($78,278) $8,600 $20,119
Net Profit/Sales -92.27% 4.51% 9.29%

7.4 Projected Cash Flow

The following table and chart display the Projected Cash Flow, including our purchase of new equipment, and the loan (and principal repayment) related to the farm's expansion.

Pro Forma Cash Flow
2003 2004 2005
Cash Received
Cash from Operations
Cash Sales $21,210 $47,709 $54,153
Cash from Receivables $58,575 $126,816 $158,493
Subtotal Cash from Operations $79,785 $174,525 $212,647
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 $100,000 $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 $179,785 $174,525 $212,647
Expenditures 2003 2004 2005
Expenditures from Operations
Cash Spending $87,000 $92,000 $97,000
Bill Payments $77,335 $81,273 $91,737
Subtotal Spent on Operations $164,335 $173,273 $188,737
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $10
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $5,000 $8,000 $10,000
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $35,000 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $204,335 $181,273 $198,747
Net Cash Flow ($24,550) ($6,748) $13,900
Cash Balance $10,450 $3,702 $17,601

7.5 Projected Balance Sheet

The Projected Balance Sheet table appears below.

Pro Forma Balance Sheet
2003 2004 2005
Assets
Current Assets
Cash $10,450 $3,702 $17,601
Accounts Receivable $13,054 $29,364 $33,330
Other Current Assets $4,000 $4,000 $4,000
Total Current Assets $27,504 $37,066 $54,932
Long-term Assets
Long-term Assets $70,000 $70,000 $70,000
Accumulated Depreciation $13,996 $20,992 $27,988
Total Long-term Assets $56,004 $49,008 $42,012
Total Assets $83,508 $86,074 $96,944
Liabilities and Capital 2003 2004 2005
Current Liabilities
Accounts Payable $4,876 $6,842 $7,603
Current Borrowing $0 $0 ($10)
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $4,876 $6,842 $7,593
Long-term Liabilities $95,000 $87,000 $77,000
Total Liabilities $99,876 $93,842 $84,593
Paid-in Capital $0 $0 $0
Retained Earnings $61,910 ($16,368) ($7,768)
Earnings ($78,278) $8,600 $20,119
Total Capital ($16,368) ($7,768) $12,351
Total Liabilities and Capital $83,508 $86,074 $96,944
Net Worth ($16,368) ($7,768) $12,351

7.6 Business Ratios

Business ratios for Botanical Bounty. SIC industry class: Herb or spice farm, code 0139.9905.

Ratio Analysis
2003 2004 2005 Industry Profile
Sales Growth 82.45% 124.94% 13.51% 10.17%
Percent of Total Assets
Accounts Receivable 15.63% 34.11% 34.38% 7.31%
Other Current Assets 4.79% 4.65% 4.13% 27.46%
Total Current Assets 32.94% 43.06% 56.66% 44.97%
Long-term Assets 67.06% 56.94% 43.34% 55.03%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 5.84% 7.95% 7.83% 24.14%
Long-term Liabilities 113.76% 101.08% 79.43% 28.08%
Total Liabilities 119.60% 109.02% 87.26% 52.22%
Net Worth -19.60% -9.02% 12.74% 47.78%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 92.50% 92.50% 92.50% 47.84%
Selling, General & Administrative Expenses 191.95% 90.33% 85.38% 33.12%
Advertising Expenses 0.00% 0.00% 0.00% 0.26%
Profit Before Interest and Taxes -87.66% 8.35% 14.78% 0.82%
Main Ratios
Current 5.64 5.42 7.23 1.16
Quick 5.64 5.42 7.23 0.55
Total Debt to Total Assets 119.60% 109.02% 87.26% 0.86%
Pre-tax Return on Net Worth 478.24% -158.16% 232.70% 61.86%
Pre-tax Return on Assets -93.74% 14.27% 29.65% 2.24%
Additional Ratios 2003 2004 2005
Net Profit Margin -92.27% 4.51% 9.29% n.a
Return on Equity 0.00% 0.00% 162.89% n.a
Activity Ratios
Accounts Receivable Turnover 4.87 4.87 4.87 n.a
Collection Days 59 54 70 n.a
Accounts Payable Turnover 14.17 12.17 12.17 n.a
Payment Days 32 26 28 n.a
Total Asset Turnover 1.02 2.22 2.23 n.a
Debt Ratios
Debt to Net Worth 0.00 0.00 6.85 n.a
Current Liab. to Liab. 0.05 0.07 0.09 n.a
Liquidity Ratios
Net Working Capital $22,628 $30,224 $47,339 n.a
Interest Coverage -19.03 4.38 9.76 n.a
Additional Ratios
Assets to Sales 0.98 0.45 0.45 n.a
Current Debt/Total Assets 6% 8% 8% n.a
Acid Test 2.96 1.13 2.85 n.a
Sales/Net Worth 0.00 0.00 17.54 n.a
Dividend Payout 0.00 0.00 0.00 n.a
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General Assumptions
2003 2004 2005
Plan Month 1 2 3
Current Interest Rate 10.00% 10.00% 10.00%
Long-term Interest Rate 4.00% 4.00% 4.00%
Tax Rate 30.00% 30.00% 30.00%
Other 0 0 0
Break-even Analysis
Monthly Revenue Break-even $13,770
Assumptions:
Average Percent Variable Cost 8%
Estimated Monthly Fixed Cost $12,737
Pro Forma Profit and Loss
2003 2004 2005
Sales $84,839 $190,835 $216,613
Direct Cost of Sales $6,363 $14,313 $16,246
Other Costs of Goods $0 $0 $0
Total Cost of Sales $6,363 $14,313 $16,246
Gross Margin $78,476 $176,522 $200,367
Gross Margin % 92.50% 92.50% 92.50%
Expenses
Payroll $87,000 $92,000 $97,000
Sales and Marketing and Other Expenses $10,000 $12,000 $14,000
Depreciation $6,996 $6,996 $6,996
Mortgage $24,000 $24,000 $24,000
Utilities $7,000 $7,000 $7,000
Insurance $2,400 $2,400 $2,400
Payroll Taxes $13,050 $13,800 $14,550
Other $2,400 $2,400 $2,400
Total Operating Expenses $152,846 $160,596 $168,346
Profit Before Interest and Taxes ($74,370) $15,926 $32,021
EBITDA ($67,374) $22,922 $39,017
Interest Expense $3,908 $3,640 $3,280
Taxes Incurred $0 $3,686 $8,623
Net Profit ($78,278) $8,600 $20,119
Net Profit/Sales -92.27% 4.51% 9.29%
Pro Forma Cash Flow
2003 2004 2005
Cash Received
Cash from Operations
Cash Sales $21,210 $47,709 $54,153
Cash from Receivables $58,575 $126,816 $158,493
Subtotal Cash from Operations $79,785 $174,525 $212,647
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 $100,000 $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 $179,785 $174,525 $212,647
Expenditures 2003 2004 2005
Expenditures from Operations
Cash Spending $87,000 $92,000 $97,000
Bill Payments $77,335 $81,273 $91,737
Subtotal Spent on Operations $164,335 $173,273 $188,737
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $10
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $5,000 $8,000 $10,000
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $35,000 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $204,335 $181,273 $198,747
Net Cash Flow ($24,550) ($6,748) $13,900
Cash Balance $10,450 $3,702 $17,601
Pro Forma Balance Sheet
2003 2004 2005
Assets
Current Assets
Cash $10,450 $3,702 $17,601
Accounts Receivable $13,054 $29,364 $33,330
Other Current Assets $4,000 $4,000 $4,000
Total Current Assets $27,504 $37,066 $54,932
Long-term Assets
Long-term Assets $70,000 $70,000 $70,000
Accumulated Depreciation $13,996 $20,992 $27,988
Total Long-term Assets $56,004 $49,008 $42,012
Total Assets $83,508 $86,074 $96,944
Liabilities and Capital 2003 2004 2005
Current Liabilities
Accounts Payable $4,876 $6,842 $7,603
Current Borrowing $0 $0 ($10)
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $4,876 $6,842 $7,593
Long-term Liabilities $95,000 $87,000 $77,000
Total Liabilities $99,876 $93,842 $84,593
Paid-in Capital $0 $0 $0
Retained Earnings $61,910 ($16,368) ($7,768)
Earnings ($78,278) $8,600 $20,119
Total Capital ($16,368) ($7,768) $12,351
Total Liabilities and Capital $83,508 $86,074 $96,944
Net Worth ($16,368) ($7,768) $12,351
Ratio Analysis
2003 2004 2005 Industry Profile
Sales Growth 82.45% 124.94% 13.51% 10.17%
Percent of Total Assets
Accounts Receivable 15.63% 34.11% 34.38% 7.31%
Other Current Assets 4.79% 4.65% 4.13% 27.46%
Total Current Assets 32.94% 43.06% 56.66% 44.97%
Long-term Assets 67.06% 56.94% 43.34% 55.03%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 5.84% 7.95% 7.83% 24.14%
Long-term Liabilities 113.76% 101.08% 79.43% 28.08%
Total Liabilities 119.60% 109.02% 87.26% 52.22%
Net Worth -19.60% -9.02% 12.74% 47.78%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 92.50% 92.50% 92.50% 47.84%
Selling, General & Administrative Expenses 191.95% 90.33% 85.38% 33.12%
Advertising Expenses 0.00% 0.00% 0.00% 0.26%
Profit Before Interest and Taxes -87.66% 8.35% 14.78% 0.82%
Main Ratios
Current 5.64 5.42 7.23 1.16
Quick 5.64 5.42 7.23 0.55
Total Debt to Total Assets 119.60% 109.02% 87.26% 0.86%
Pre-tax Return on Net Worth 478.24% -158.16% 232.70% 61.86%
Pre-tax Return on Assets -93.74% 14.27% 29.65% 2.24%
Additional Ratios 2003 2004 2005
Net Profit Margin -92.27% 4.51% 9.29% n.a
Return on Equity 0.00% 0.00% 162.89% n.a
Activity Ratios
Accounts Receivable Turnover 4.87 4.87 4.87 n.a
Collection Days 59 54 70 n.a
Accounts Payable Turnover 14.17 12.17 12.17 n.a
Payment Days 32 26 28 n.a
Total Asset Turnover 1.02 2.22 2.23 n.a
Debt Ratios
Debt to Net Worth 0.00 0.00 6.85 n.a
Current Liab. to Liab. 0.05 0.07 0.09 n.a
Liquidity Ratios
Net Working Capital $22,628 $30,224 $47,339 n.a
Interest Coverage -19.03 4.38 9.76 n.a
Additional Ratios
Assets to Sales 0.98 0.45 0.45 n.a
Current Debt/Total Assets 6% 8% 8% n.a
Acid Test 2.96 1.13 2.85 n.a
Sales/Net Worth 0.00 0.00 17.54 n.a
Dividend Payout 0.00 0.00 0.00 n.a