Business Cashflow Solutions, Inc.

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Automated Accounting Business Plan

Financial Plan

Business Cashflow Solutions, Inc. is seeking a $23,634 financial package, based on assumptions of a loan financed at 9.5% interest for a 3-year term. The following projections reflect this loan amount.

7.1 Important Assumptions

General assumptions for this plan are on the following table.

General Assumptions
Year 1 Year 2 Year 3
Plan Month 1 2 3
Current Interest Rate 9.50% 9.50% 9.50%
Long-term Interest Rate 9.50% 9.50% 9.50%
Tax Rate 25.42% 25.00% 25.42%
Other 0 0 0

7.2 Break-even Analysis

Our Break-even Analysis is shown below.

Break-even Analysis
Monthly Revenue Break-even $1,198
Assumptions:
Average Percent Variable Cost 0%
Estimated Monthly Fixed Cost $1,198

7.3 Key Financial Indicators

The following benchmark chart indicates our key financial indicators for the first three years. We foresee major growth in sales, with only the normal inflation rates affecting our day to day operating expenses. There is a significant increase in operating costs for the Fiscal Years 2001 and 2002, attributed to the start of payroll for the principals.

7.4 Projected Profit and Loss

The financial plan depends on carefully researched operating expenses. Actual cost was used in calculating these expenses.

It is important to note that the Projected Profit and loss does not reflect any cost of sales. These costs are included in our actual operating expenses. The main reason this is so is that many of the services we provide have virtually no direct cost, as they are paid to our company as commissions.

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $38,000 $109,700 $120,000
Direct Cost of Sales $0 $0 $0
Other $0 $0 $0
Total Cost of Sales $0 $0 $0
Gross Margin $38,000 $109,700 $120,000
Gross Margin % 100.00% 100.00% 100.00%
Expenses
Payroll $4,800 $57,600 $81,600
Sales and Marketing and Other Expenses $9,312 $10,350 $13,950
Depreciation $0 $0 $0
Leased Equipment $0 $0 $0
Utilities $0 $0 $0
Insurance $207 $228 $261
Rent $0 $0 $0
Payroll Taxes $60 $720 $1,020
Other $0 $0 $0
Total Operating Expenses $14,379 $68,898 $96,831
Profit Before Interest and Taxes $23,621 $40,802 $23,169
EBITDA $23,621 $40,802 $23,169
Interest Expense $1,778 $951 $260
Taxes Incurred $5,403 $9,963 $5,823
Net Profit $16,441 $29,888 $17,087
Net Profit/Sales 43.26% 27.25% 14.24%

7.5 Projected Cash Flow

The following table shows cash flow for the first three years, and the chart illustrates monthly cash flow in the first year. Monthly cash flow projections are included in the appendix.

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $38,000 $109,700 $120,000
Cash from Receivables $0 $0 $0
Subtotal Cash from Operations $38,000 $109,700 $120,000
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 $38,000 $109,700 $120,000
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $4,800 $57,600 $81,600
Bill Payments $15,780 $21,366 $21,387
Subtotal Spent on Operations $20,580 $78,966 $102,987
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $9,084 $9,084 $5,466
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 $29,664 $88,050 $108,453
Net Cash Flow $8,336 $21,650 $11,547
Cash Balance $13,836 $35,487 $47,033

7.6 Projected Balance Sheet

The balance sheet in the following table shows a healthy increase in total capital and net worth. The monthly estimates are included in the appendix.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $13,836 $35,487 $47,033
Accounts Receivable $0 $0 $0
Other Current Assets $5,885 $5,885 $5,885
Total Current Assets $19,721 $41,372 $52,918
Long-term Assets
Long-term Assets $0 $0 $0
Accumulated Depreciation $0 $0 $0
Total Long-term Assets $0 $0 $0
Total Assets $19,721 $41,372 $52,918
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $980 $1,826 $1,752
Current Borrowing $14,550 $5,466 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $15,530 $7,292 $1,752
Long-term Liabilities $0 $0 $0
Total Liabilities $15,530 $7,292 $1,752
Paid-in Capital $10,000 $10,000 $10,000
Retained Earnings ($22,249) ($5,808) $24,080
Earnings $16,441 $29,888 $17,087
Total Capital $4,192 $34,080 $51,167
Total Liabilities and Capital $19,721 $41,372 $52,918
Net Worth $4,192 $34,080 $51,167

7.7 Business Ratios

The following table shows the projected businesses ratios. We expect to maintain healthy ratios for profitability, risk, and return. These ratios have been determined by the 7389 industry, as found in the Standard Industry Code (SIC) Index.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 188.68% 9.39% 8.20%
Percent of Total Assets
Accounts Receivable 0.00% 0.00% 0.00% 26.30%
Other Current Assets 29.84% 14.22% 11.12% 44.20%
Total Current Assets 100.00% 100.00% 100.00% 74.30%
Long-term Assets 0.00% 0.00% 0.00% 25.70%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 78.75% 17.62% 3.31% 49.00%
Long-term Liabilities 0.00% 0.00% 0.00% 13.80%
Total Liabilities 78.75% 17.62% 3.31% 62.80%
Net Worth 21.25% 82.38% 96.69% 37.20%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 100.00% 100.00% 100.00% 0.00%
Selling, General & Administrative Expenses 56.89% 78.17% 92.59% 81.40%
Advertising Expenses 11.21% 4.56% 6.67% 1.70%
Profit Before Interest and Taxes 62.16% 37.19% 19.31% 2.10%
Main Ratios
Current 1.27 5.67 30.21 1.49
Quick 1.27 5.67 30.21 1.17
Total Debt to Total Assets 78.75% 17.62% 3.31% 62.80%
Pre-tax Return on Net Worth 521.11% 116.93% 44.77% 4.20%
Pre-tax Return on Assets 110.76% 96.32% 43.29% 11.30%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 43.26% 27.25% 14.24% n.a
Return on Equity 392.22% 87.70% 33.39% n.a
Activity Ratios
Accounts Receivable Turnover 0.00 0.00 0.00 n.a
Collection Days 0 0 0 n.a
Accounts Payable Turnover 17.11 12.17 12.17 n.a
Payment Days 27 23 31 n.a
Total Asset Turnover 1.93 2.65 2.27 n.a
Debt Ratios
Debt to Net Worth 3.70 0.21 0.03 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $4,192 $34,080 $51,167 n.a
Interest Coverage 13.29 42.92 89.24 n.a
Additional Ratios
Assets to Sales 0.52 0.38 0.44 n.a
Current Debt/Total Assets 79% 18% 3% n.a
Acid Test 1.27 5.67 30.21 n.a
Sales/Net Worth 9.07 3.22 2.35 n.a
Dividend Payout 0.00 0.00 0.00 n.a