The Two Wheeled Oracle

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Bicycle Courier Business Plan

Financial Plan

The following sections will outline the important financial data.

7.1 Important Assumptions

The following table details important financial assumptions for The Oracle.

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 indicates what The Oracle will need to achieve in monthly revenue to reach their break-even point.

Break-even Analysis
Monthly Revenue Break-even $19,155
Assumptions:
Average Percent Variable Cost 2%
Estimated Monthly Fixed Cost $18,772

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 $173,300 $285,712 $306,679
Direct Cost of Sales $3,466 $5,714 $6,134
Other $0 $0 $0
Total Cost of Sales $3,466 $5,714 $6,134
Gross Margin $169,834 $279,998 $300,545
Gross Margin % 98.00% 98.00% 98.00%
Expenses
Payroll $177,360 $183,360 $189,360
Sales and Marketing and Other Expenses $3,000 $3,000 $3,000
Depreciation $1,500 $1,500 $1,500
Cellular service $4,200 $4,200 $4,200
Utilities $1,200 $1,200 $1,200
Insurance $1,800 $1,800 $1,800
Rent $9,600 $9,000 $9,000
Payroll Taxes $26,604 $27,504 $28,404
Other $0 $0 $0
Total Operating Expenses $225,264 $231,564 $238,464
Profit Before Interest and Taxes ($55,430) $48,434 $62,081
EBITDA ($53,930) $49,934 $63,581
Interest Expense $4,517 $3,596 $2,546
Taxes Incurred $0 $11,210 $15,132
Net Profit ($59,947) $33,629 $44,404
Net Profit/Sales -34.59% 11.77% 14.48%

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 $43,325 $71,428 $76,670
Cash from Receivables $96,883 $192,819 $226,006
Subtotal Cash from Operations $140,208 $264,247 $302,675
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 $140,208 $264,247 $302,675
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $177,360 $183,360 $189,360
Bill Payments $49,882 $66,203 $71,071
Subtotal Spent on Operations $227,242 $249,563 $260,431
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 $9,055 $9,976 $11,026
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $236,297 $259,539 $271,457
Net Cash Flow ($96,089) $4,707 $31,218
Cash Balance $5,111 $9,818 $41,036

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 $5,111 $9,818 $41,036
Accounts Receivable $33,092 $54,557 $58,561
Other Current Assets $0 $0 $0
Total Current Assets $38,203 $64,375 $99,597
Long-term Assets
Long-term Assets $7,500 $7,500 $7,500
Accumulated Depreciation $1,500 $3,000 $4,500
Total Long-term Assets $6,000 $4,500 $3,000
Total Assets $44,203 $68,875 $102,597
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $4,505 $5,525 $5,870
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $4,505 $5,525 $5,870
Long-term Liabilities $40,945 $30,969 $19,942
Total Liabilities $45,450 $36,494 $25,812
Paid-in Capital $60,000 $60,000 $60,000
Retained Earnings ($1,300) ($61,247) ($27,618)
Earnings ($59,947) $33,629 $44,404
Total Capital ($1,247) $32,382 $76,785
Total Liabilities and Capital $44,203 $68,875 $102,597
Net Worth ($1,247) $32,382 $76,785

7.6 Business Ratios

The following table contains important business ratios from the courier services industry, SIC 4513, as determined by the Standard Industry Classification (SIC) Index.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 64.87% 7.34% 4.50%
Percent of Total Assets
Accounts Receivable 74.86% 79.21% 57.08% 27.40%
Other Current Assets 0.00% 0.00% 0.00% 21.80%
Total Current Assets 86.43% 93.47% 97.08% 50.30%
Long-term Assets 13.57% 6.53% 2.92% 49.70%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 10.19% 8.02% 5.72% 29.80%
Long-term Liabilities 92.63% 44.96% 19.44% 27.90%
Total Liabilities 102.82% 52.99% 25.16% 57.70%
Net Worth -2.82% 47.01% 74.84% 42.30%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 98.00% 98.00% 98.00% 100.00%
Selling, General & Administrative Expenses 132.59% 86.23% 83.44% 79.50%
Advertising Expenses 0.69% 0.42% 0.39% 0.20%
Profit Before Interest and Taxes -31.98% 16.95% 20.24% 1.30%
Main Ratios
Current 8.48 11.65 16.97 1.64
Quick 8.48 11.65 16.97 1.43
Total Debt to Total Assets 102.82% 52.99% 25.16% 57.70%
Pre-tax Return on Net Worth 4807.12% 138.47% 77.54% 2.50%
Pre-tax Return on Assets -135.62% 65.10% 58.03% 5.90%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -34.59% 11.77% 14.48% n.a
Return on Equity 0.00% 103.85% 57.83% n.a
Activity Ratios
Accounts Receivable Turnover 3.93 3.93 3.93 n.a
Collection Days 56 75 90 n.a
Accounts Payable Turnover 12.07 12.17 12.17 n.a
Payment Days 27 27 29 n.a
Total Asset Turnover 3.92 4.15 2.99 n.a
Debt Ratios
Debt to Net Worth 0.00 1.13 0.34 n.a
Current Liab. to Liab. 0.10 0.15 0.23 n.a
Liquidity Ratios
Net Working Capital $33,698 $58,850 $93,728 n.a
Interest Coverage -12.27 13.47 24.39 n.a
Additional Ratios
Assets to Sales 0.26 0.24 0.33 n.a
Current Debt/Total Assets 10% 8% 6% n.a
Acid Test 1.13 1.78 6.99 n.a
Sales/Net Worth 0.00 8.82 3.99 n.a
Dividend Payout 0.00 0.00 0.00 n.a