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Art Packaging Installation Business Plan

Financial Plan

The following sections will outline important financial information.

7.1 Important Assumptions

The following table details important financial assumptions.

General Assumptions
Year 1 Year 2 Year 3
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 30.00% 30.00% 30.00%
Other 0 0 0

7.2 Break-even Analysis

The Break-even Analysis indicates that approximately $3,400 will be needed in monthly revenue to reach the break-even point.

Break-even Analysis
Monthly Revenue Break-even $2,936
Assumptions:
Average Percent Variable Cost 5%
Estimated Monthly Fixed Cost $2,789

7.3 Projected Profit and Loss

The following table will indicate projected profit and loss.

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $31,092 $56,700 $63,950
Direct Cost of Sales $1,555 $2,835 $3,198
Other Production Expenses $0 $0 $0
Total Cost of Sales $1,555 $2,835 $3,198
Gross Margin $29,538 $53,865 $60,753
Gross Margin % 95.00% 95.00% 95.00%
Expenses
Payroll $30,000 $35,000 $40,000
Sales and Marketing and Other Expenses $1,200 $1,200 $1,200
Depreciation $468 $468 $468
Leased Equipment $0 $0 $0
Licenses and Bonding $600 $600 $600
Insurance $1,200 $1,200 $1,200
Rent $0 $0 $0
Payroll Taxes $0 $0 $0
Other $0 $0 $0
Total Operating Expenses $33,468 $38,468 $43,468
Profit Before Interest and Taxes ($3,930) $15,397 $17,285
EBITDA ($3,462) $15,865 $17,753
Interest Expense $0 $0 $0
Taxes Incurred $0 $4,619 $5,185
Net Profit ($3,930) $10,778 $12,099
Net Profit/Sales -12.64% 19.01% 18.92%

7.4 Projected Cash Flow

The following chart and table will indicate projected cash flow.

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $31,092 $56,700 $63,950
Subtotal Cash from Operations $31,092 $56,700 $63,950
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 $0 $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 $31,092 $56,700 $63,950
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $30,000 $35,000 $40,000
Bill Payments $4,085 $10,065 $11,307
Subtotal Spent on Operations $34,085 $45,065 $51,307
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $0 $0 $0
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $34,085 $45,065 $51,307
Net Cash Flow ($2,992) $11,635 $12,644
Cash Balance $9,058 $20,693 $33,336

7.5 Projected Balance Sheet

The following table will indicate the projected balance sheet.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $9,058 $20,693 $33,336
Other Current Assets $0 $0 $0
Total Current Assets $9,058 $20,693 $33,336
Long-term Assets
Long-term Assets $0 $0 $0
Accumulated Depreciation $468 $936 $1,404
Total Long-term Assets ($468) ($936) ($1,404)
Total Assets $8,590 $19,757 $31,932
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $470 $859 $936
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $470 $859 $936
Long-term Liabilities $0 $0 $0
Total Liabilities $470 $859 $936
Paid-in Capital $15,000 $15,000 $15,000
Retained Earnings ($2,950) ($6,880) $3,898
Earnings ($3,930) $10,778 $12,099
Total Capital $8,120 $18,898 $30,997
Total Liabilities and Capital $8,590 $19,757 $31,932
Net Worth $8,120 $18,898 $30,997

7.6 Business Ratios

The following Ratios table compares our planned estimates with Standard Industry Code #7299

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 82.36% 12.79% 7.99%
Percent of Total Assets
Other Current Assets 0.00% 0.00% 0.00% 44.22%
Total Current Assets 105.45% 104.74% 104.40% 72.16%
Long-term Assets -5.45% -4.74% -4.40% 27.84%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 5.47% 4.35% 2.93% 31.22%
Long-term Liabilities 0.00% 0.00% 0.00% 11.80%
Total Liabilities 5.47% 4.35% 2.93% 43.02%
Net Worth 94.53% 95.65% 97.07% 56.98%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 95.00% 95.00% 95.00% 14.44%
Selling, General & Administrative Expenses 110.86% 79.70% 76.08% 7.72%
Advertising Expenses 0.00% 0.00% 0.00% 0.37%
Profit Before Interest and Taxes -12.64% 27.16% 27.03% 1.12%
Main Ratios
Current 19.27 24.08 35.63 1.68
Quick 19.27 24.08 35.63 1.40
Total Debt to Total Assets 5.47% 4.35% 2.93% 57.54%
Pre-tax Return on Net Worth -48.41% 81.48% 55.76% 3.81%
Pre-tax Return on Assets -45.76% 77.93% 54.13% 8.97%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -12.64% 19.01% 18.92% n.a
Return on Equity -48.41% 57.03% 39.03% n.a
Activity Ratios
Accounts Payable Turnover 9.69 12.17 12.17 n.a
Payment Days 27 23 29 n.a
Total Asset Turnover 3.62 2.87 2.00 n.a
Debt Ratios
Debt to Net Worth 0.06 0.05 0.03 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $8,588 $19,834 $32,401 n.a
Interest Coverage 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 0.28 0.35 0.50 n.a
Current Debt/Total Assets 5% 4% 3% n.a
Acid Test 19.27 24.08 35.63 n.a
Sales/Net Worth 3.83 3.00 2.06 n.a
Dividend Payout 0.00 0.00 0.00 n.a