Attorney Employment Agency Business Plan

Legal Associates Temp Agency

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Financial Plan

The following sections will outline financial assumption/projections.

7.1 Important Assumptions

The following table highlights some of the important financial assumptions for LATA.

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 25.42% 25.00% 25.42%
Other 0 0 0

7.2 Break-even Analysis

The Break-even Analysis table and chart below show the monthly break-even sales figure.

Break-even Analysis
Monthly Revenue Break-even $13,525
Assumptions:
Average Percent Variable Cost 0%
Estimated Monthly Fixed Cost $13,525

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 $106,223 $219,461 $235,955
Direct Cost of Sales $0 $0 $0
Other $0 $0 $0
Total Cost of Sales $0 $0 $0
Gross Margin $106,223 $219,461 $235,955
Gross Margin % 100.00% 100.00% 100.00%
Expenses
Payroll $115,680 $130,906 $141,500
Sales and Marketing and Other Expenses $3,000 $16,600 $16,600
Depreciation $1,668 $1,666 $1,666
Utilities $600 $600 $600
Insurance $6,000 $6,100 $6,200
Rent $18,000 $19,000 $19,500
Payroll Taxes $17,352 $19,636 $21,225
Other $0 $0 $0
Total Operating Expenses $162,300 $194,508 $207,291
Profit Before Interest and Taxes ($56,077) $24,953 $28,664
EBITDA ($54,409) $26,619 $30,330
Interest Expense $650 $975 $325
Taxes Incurred $0 $5,995 $7,203
Net Profit ($56,727) $17,984 $21,136
Net Profit/Sales -53.40% 8.19% 8.96%

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 $0 $0 $0
Cash from Receivables $69,063 $179,847 $230,185
Subtotal Cash from Operations $69,063 $179,847 $230,185
Additional Cash Received
Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $13,000 $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 $46,000 $0 $0
Subtotal Cash Received $128,063 $179,847 $230,185
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $115,680 $130,906 $141,500
Bill Payments $41,696 $67,148 $71,427
Subtotal Spent on Operations $157,376 $198,054 $212,927
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $0 $6,500 $6,500
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 $157,376 $204,554 $219,427
Net Cash Flow ($29,313) ($24,707) $10,758
Cash Balance $29,487 $4,780 $15,538

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 $29,487 $4,780 $15,538
Accounts Receivable $37,160 $76,774 $82,544
Other Current Assets $0 $0 $0
Total Current Assets $66,647 $81,554 $98,082
Long-term Assets
Long-term Assets $5,000 $5,000 $5,000
Accumulated Depreciation $1,668 $3,334 $5,000
Total Long-term Assets $3,332 $1,666 $0
Total Assets $69,979 $83,220 $98,082
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $3,906 $5,663 $5,889
Current Borrowing $13,000 $6,500 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $16,906 $12,163 $5,889
Long-term Liabilities $0 $0 $0
Total Liabilities $16,906 $12,163 $5,889
Paid-in Capital $111,000 $111,000 $111,000
Retained Earnings ($1,200) ($57,927) ($39,943)
Earnings ($56,727) $17,984 $21,136
Total Capital $53,073 $71,057 $92,193
Total Liabilities and Capital $69,979 $83,220 $98,082
Net Worth $53,073 $71,057 $92,193

7.6 Business Ratios

Business ratios for the years of this plan are shown below. Industry profile ratios based on the NAICS code 561310, Employment Placement Agencies, are shown for comparison.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 106.60% 7.52% 11.37%
Percent of Total Assets
Accounts Receivable 53.10% 92.25% 84.16% 10.25%
Other Current Assets 0.00% 0.00% 0.00% 50.16%
Total Current Assets 95.24% 98.00% 100.00% 64.49%
Long-term Assets 4.76% 2.00% 0.00% 35.51%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 24.16% 14.62% 6.00% 27.96%
Long-term Liabilities 0.00% 0.00% 0.00% 26.35%
Total Liabilities 24.16% 14.62% 6.00% 54.31%
Net Worth 75.84% 85.38% 94.00% 45.69%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 100.00% 100.00% 100.00% 100.00%
Selling, General & Administrative Expenses 153.40% 91.81% 90.99% 67.20%
Advertising Expenses 1.69% 0.18% 0.17% 1.87%
Profit Before Interest and Taxes -52.79% 11.37% 12.15% 3.25%
Main Ratios
Current 3.94 6.70 16.65 1.57
Quick 3.94 6.70 16.65 1.10
Total Debt to Total Assets 24.16% 14.62% 6.00% 63.70%
Pre-tax Return on Net Worth -106.88% 33.75% 30.74% 6.19%
Pre-tax Return on Assets -81.06% 28.81% 28.89% 17.06%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -53.40% 8.19% 8.96% n.a
Return on Equity -106.88% 25.31% 22.93% n.a
Activity Ratios
Accounts Receivable Turnover 2.86 2.86 2.86 n.a
Collection Days 54 95 123 n.a
Accounts Payable Turnover 11.68 12.17 12.17 n.a
Payment Days 27 25 29 n.a
Total Asset Turnover 1.52 2.64 2.41 n.a
Debt Ratios
Debt to Net Worth 0.32 0.17 0.06 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $49,741 $69,391 $92,193 n.a
Interest Coverage -86.27 25.59 88.20 n.a
Additional Ratios
Assets to Sales 0.66 0.38 0.42 n.a
Current Debt/Total Assets 24% 15% 6% n.a
Acid Test 1.74 0.39 2.64 n.a
Sales/Net Worth 2.00 3.09 2.56 n.a
Dividend Payout 0.00 0.00 0.00 n.a
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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 25.42% 25.00% 25.42%
Other 0 0 0
Break-even Analysis
Monthly Revenue Break-even $13,525
Assumptions:
Average Percent Variable Cost 0%
Estimated Monthly Fixed Cost $13,525
Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $106,223 $219,461 $235,955
Direct Cost of Sales $0 $0 $0
Other $0 $0 $0
Total Cost of Sales $0 $0 $0
Gross Margin $106,223 $219,461 $235,955
Gross Margin % 100.00% 100.00% 100.00%
Expenses
Payroll $115,680 $130,906 $141,500
Sales and Marketing and Other Expenses $3,000 $16,600 $16,600
Depreciation $1,668 $1,666 $1,666
Utilities $600 $600 $600
Insurance $6,000 $6,100 $6,200
Rent $18,000 $19,000 $19,500
Payroll Taxes $17,352 $19,636 $21,225
Other $0 $0 $0
Total Operating Expenses $162,300 $194,508 $207,291
Profit Before Interest and Taxes ($56,077) $24,953 $28,664
EBITDA ($54,409) $26,619 $30,330
Interest Expense $650 $975 $325
Taxes Incurred $0 $5,995 $7,203
Net Profit ($56,727) $17,984 $21,136
Net Profit/Sales -53.40% 8.19% 8.96%
Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $0 $0 $0
Cash from Receivables $69,063 $179,847 $230,185
Subtotal Cash from Operations $69,063 $179,847 $230,185
Additional Cash Received
Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $13,000 $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 $46,000 $0 $0
Subtotal Cash Received $128,063 $179,847 $230,185
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $115,680 $130,906 $141,500
Bill Payments $41,696 $67,148 $71,427
Subtotal Spent on Operations $157,376 $198,054 $212,927
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $0 $6,500 $6,500
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 $157,376 $204,554 $219,427
Net Cash Flow ($29,313) ($24,707) $10,758
Cash Balance $29,487 $4,780 $15,538
Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $29,487 $4,780 $15,538
Accounts Receivable $37,160 $76,774 $82,544
Other Current Assets $0 $0 $0
Total Current Assets $66,647 $81,554 $98,082
Long-term Assets
Long-term Assets $5,000 $5,000 $5,000
Accumulated Depreciation $1,668 $3,334 $5,000
Total Long-term Assets $3,332 $1,666 $0
Total Assets $69,979 $83,220 $98,082
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $3,906 $5,663 $5,889
Current Borrowing $13,000 $6,500 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $16,906 $12,163 $5,889
Long-term Liabilities $0 $0 $0
Total Liabilities $16,906 $12,163 $5,889
Paid-in Capital $111,000 $111,000 $111,000
Retained Earnings ($1,200) ($57,927) ($39,943)
Earnings ($56,727) $17,984 $21,136
Total Capital $53,073 $71,057 $92,193
Total Liabilities and Capital $69,979 $83,220 $98,082
Net Worth $53,073 $71,057 $92,193
Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 106.60% 7.52% 11.37%
Percent of Total Assets
Accounts Receivable 53.10% 92.25% 84.16% 10.25%
Other Current Assets 0.00% 0.00% 0.00% 50.16%
Total Current Assets 95.24% 98.00% 100.00% 64.49%
Long-term Assets 4.76% 2.00% 0.00% 35.51%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 24.16% 14.62% 6.00% 27.96%
Long-term Liabilities 0.00% 0.00% 0.00% 26.35%
Total Liabilities 24.16% 14.62% 6.00% 54.31%
Net Worth 75.84% 85.38% 94.00% 45.69%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 100.00% 100.00% 100.00% 100.00%
Selling, General & Administrative Expenses 153.40% 91.81% 90.99% 67.20%
Advertising Expenses 1.69% 0.18% 0.17% 1.87%
Profit Before Interest and Taxes -52.79% 11.37% 12.15% 3.25%
Main Ratios
Current 3.94 6.70 16.65 1.57
Quick 3.94 6.70 16.65 1.10
Total Debt to Total Assets 24.16% 14.62% 6.00% 63.70%
Pre-tax Return on Net Worth -106.88% 33.75% 30.74% 6.19%
Pre-tax Return on Assets -81.06% 28.81% 28.89% 17.06%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -53.40% 8.19% 8.96% n.a
Return on Equity -106.88% 25.31% 22.93% n.a
Activity Ratios
Accounts Receivable Turnover 2.86 2.86 2.86 n.a
Collection Days 54 95 123 n.a
Accounts Payable Turnover 11.68 12.17 12.17 n.a
Payment Days 27 25 29 n.a
Total Asset Turnover 1.52 2.64 2.41 n.a
Debt Ratios
Debt to Net Worth 0.32 0.17 0.06 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $49,741 $69,391 $92,193 n.a
Interest Coverage -86.27 25.59 88.20 n.a
Additional Ratios
Assets to Sales 0.66 0.38 0.42 n.a
Current Debt/Total Assets 24% 15% 6% n.a
Acid Test 1.74 0.39 2.64 n.a
Sales/Net Worth 2.00 3.09 2.56 n.a
Dividend Payout 0.00 0.00 0.00 n.a