Artemide Auditing & Consulting AG

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Auditing and Consulting Business Plan

Financial Plan

The following sections include the annual estimates for the standard set of financial tables. Detailed monthly pro-forma tables are included in the appendix.

7.1 Important Assumptions

This information is presented in the table below.

General Assumptions
2003 2004 2005
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 25.00% 25.00% 25.00%
Other 0 0 0

7.2 Key Financial Indicators

The Benchmark chart below uses index values to compare past and future financial indicators. The bars show relative change, not absolute values.

7.3 Break-even Analysis

With our average monthly fixed costs, Artemide will surpass break even consistently throughout the next year of operations.

Break-even Analysis
Monthly Revenue Break-even $9,744
Assumptions:
Average Percent Variable Cost 16%
Estimated Monthly Fixed Cost $8,185

7.4 Projected Profit and Loss

The projected profit and loss information is presented in the table and charts below.

Pro Forma Profit and Loss
2003 2004 2005
Sales $160,977 $193,172 $231,807
Direct Cost of Sales $25,758 $29,622 $34,065
Other $0 $0 $0
Total Cost of Sales $25,758 $29,622 $34,065
Gross Margin $135,219 $163,551 $197,742
Gross Margin % 84.00% 84.67% 85.30%
Expenses
Payroll $72,000 $77,000 $86,000
Sales and Marketing and Other Expenses $6,897 $9,500 $13,000
Depreciation $2,400 $2,500 $2,500
Leased Equipment (incl. office rental) $2,400 $2,500 $3,000
Utilities (incl. office furniture, etc.) $1,800 $2,000 $2,500
Insurance $1,200 $1,500 $2,000
Rent $0 $0 $0
Payroll Taxes $11,520 $12,320 $13,760
Other $0 $0 $0
Total Operating Expenses $98,217 $107,320 $122,760
Profit Before Interest and Taxes $37,003 $56,231 $74,982
EBITDA $39,403 $58,731 $77,482
Interest Expense $0 $0 $0
Taxes Incurred $9,251 $14,058 $18,745
Net Profit $27,752 $42,173 $56,236
Net Profit/Sales 17.24% 21.83% 24.26%

7.5 Projected Cash Flow

The projected cash flow and cash balance information is presented in the chart and table below.

Pro Forma Cash Flow
2003 2004 2005
Cash Received
Cash from Operations
Cash Sales $0 $0 $0
Cash from Receivables $149,782 $188,617 $226,341
Subtotal Cash from Operations $149,782 $188,617 $226,341
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 $149,782 $188,617 $226,341
Expenditures 2003 2004 2005
Expenditures from Operations
Cash Spending $72,000 $77,000 $86,000
Bill Payments $66,312 $69,717 $85,791
Subtotal Spent on Operations $138,312 $146,717 $171,791
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $2,895 $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 $24,000 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $165,207 $146,717 $171,791
Net Cash Flow ($15,425) $41,901 $54,550
Cash Balance $77,226 $119,126 $173,676

7.6 Projected Balance Sheet

The projected balance sheet information is presented in the table below.

Pro Forma Balance Sheet
2003 2004 2005
Assets
Current Assets
Cash $77,226 $119,126 $173,676
Accounts Receivable $22,776 $27,331 $32,797
Other Current Assets $1,158 $1,158 $1,158
Total Current Assets $101,160 $147,616 $207,632
Long-term Assets
Long-term Assets $30,948 $30,948 $30,948
Accumulated Depreciation $2,400 $4,900 $7,400
Total Long-term Assets $28,548 $26,048 $23,548
Total Assets $129,708 $173,664 $231,180
Liabilities and Capital 2003 2004 2005
Current Liabilities
Accounts Payable $4,094 $5,877 $7,156
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $4,094 $5,877 $7,156
Long-term Liabilities $0 $0 $0
Total Liabilities $4,094 $5,877 $7,156
Paid-in Capital $5,000 $5,000 $5,000
Retained Earnings $92,862 $120,614 $162,787
Earnings $27,752 $42,173 $56,236
Total Capital $125,614 $167,787 $224,023
Total Liabilities and Capital $129,708 $173,664 $231,180
Net Worth $125,614 $167,787 $224,023

7.7 Business Ratios

Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 8721.01 - Auditing services, are shown for comparison.

Ratio Analysis
2003 2004 2005 Industry Profile
Sales Growth -0.72% 20.00% 20.00% 8.60%
Percent of Total Assets
Accounts Receivable 17.56% 15.74% 14.19% 24.40%
Other Current Assets 0.89% 0.67% 0.50% 46.70%
Total Current Assets 77.99% 85.00% 89.81% 74.90%
Long-term Assets 22.01% 15.00% 10.19% 25.10%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 3.16% 3.38% 3.10% 42.80%
Long-term Liabilities 0.00% 0.00% 0.00% 17.20%
Total Liabilities 3.16% 3.38% 3.10% 60.00%
Net Worth 96.84% 96.62% 96.90% 40.00%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 84.00% 84.67% 85.30% 0.00%
Selling, General & Administrative Expenses 66.89% 62.95% 61.14% 83.50%
Advertising Expenses 2.05% 2.07% 2.59% 1.20%
Profit Before Interest and Taxes 22.99% 29.11% 32.35% 2.60%
Main Ratios
Current 24.71 25.12 29.01 1.59
Quick 24.71 25.12 29.01 1.26
Total Debt to Total Assets 3.16% 3.38% 3.10% 60.00%
Pre-tax Return on Net Worth 29.46% 33.51% 33.47% 4.40%
Pre-tax Return on Assets 28.53% 32.38% 32.43% 10.90%
Additional Ratios 2003 2004 2005
Net Profit Margin 17.24% 21.83% 24.26% n.a
Return on Equity 22.09% 25.13% 25.10% n.a
Activity Ratios
Accounts Receivable Turnover 7.07 7.07 7.07 n.a
Collection Days 59 47 47 n.a
Accounts Payable Turnover 14.37 12.17 12.17 n.a
Payment Days 33 25 27 n.a
Total Asset Turnover 1.24 1.11 1.00 n.a
Debt Ratios
Debt to Net Worth 0.03 0.04 0.03 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $97,066 $141,739 $200,475 n.a
Interest Coverage 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 0.81 0.90 1.00 n.a
Current Debt/Total Assets 3% 3% 3% n.a
Acid Test 19.15 20.47 24.43 n.a
Sales/Net Worth 1.28 1.15 1.03 n.a
Dividend Payout 0.00 0.00 0.00 n.a