Concrete Installation

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Building Construction Business Plan

Financial Plan

The following sections describe the financials for Concrete Installation.

7.1 Projected Cash Flow

Projected cash flow statements for FY2000-2002 are provided below.

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $175,000 $262,500 $393,750
Cash from Receivables $436,500 $743,250 $1,114,875
Subtotal Cash from Operations $611,500 $1,005,750 $1,508,625
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 $611,500 $1,005,750 $1,508,625
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $43,478 $43,478 $52,174
Bill Payments $575,604 $783,028 $1,046,580
Subtotal Spent on Operations $619,082 $826,506 $1,098,754
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 $105,000 $100,000 $100,000
Dividends $0 $0 $0
Subtotal Cash Spent $724,082 $926,506 $1,198,754
Net Cash Flow ($112,582) $79,244 $309,871
Cash Balance $19,418 $98,662 $408,533

7.2 Break-even Analysis

During the first year of operations, the break-even sales volume is estimated as shown below.

Break-even Analysis
Monthly Revenue Break-even $24,706
Assumptions:
Average Percent Variable Cost 64%
Estimated Monthly Fixed Cost $8,894

7.3 Projected Profit and Loss

Concrete Installation is in the early stage of development, thus initial projections have only been made on accounts that are believed to most drive the income statement. 

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $700,000 $1,050,000 $1,575,000
Direct Cost of Sales $448,000 $558,750 $698,437
Other $50,000 $50,000 $50,000
Total Cost of Sales $498,000 $608,750 $748,437
Gross Margin $202,000 $441,250 $826,563
Gross Margin % 28.86% 42.02% 52.48%
Expenses
Payroll $43,478 $43,478 $52,174
Sales and Marketing and Other Expenses $28,600 $77,000 $112,000
Depreciation $3,600 $5,000 $6,000
Gasoline and oil $2,030 $4,000 $5,000
Telephone $1,500 $2,400 $2,400
Utilities $6,000 $6,000 $6,500
Insurance $9,000 $9,000 $9,000
Rent $6,000 $6,500 $7,000
Payroll Taxes $6,522 $6,522 $7,826
Other $0 $0 $0
Total Operating Expenses $106,730 $159,900 $207,900
Profit Before Interest and Taxes $95,270 $281,350 $618,663
EBITDA $98,870 $286,350 $624,663
Interest Expense $0 $0 $0
Taxes Incurred $23,621 $70,338 $157,243
Net Profit $71,650 $211,013 $461,419
Net Profit/Sales 10.24% 20.10% 29.30%

7.4 Projected Balance Sheet

The table below provides Concrete Installation's projected balance sheets for 2000-2002.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $19,418 $98,662 $408,533
Accounts Receivable $88,500 $132,750 $199,125
Inventory $42,240 $52,682 $65,853
Other Current Assets $30,000 $30,000 $30,000
Total Current Assets $180,158 $314,094 $703,510
Long-term Assets
Long-term Assets $125,000 $225,000 $325,000
Accumulated Depreciation $3,600 $8,600 $14,600
Total Long-term Assets $121,400 $216,400 $310,400
Total Assets $301,558 $530,494 $1,013,910
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $47,908 $65,832 $87,828
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $47,908 $65,832 $87,828
Long-term Liabilities $0 $0 $0
Total Liabilities $47,908 $65,832 $87,828
Paid-in Capital $215,000 $215,000 $215,000
Retained Earnings ($33,000) $38,650 $249,663
Earnings $71,650 $211,013 $461,419
Total Capital $253,650 $464,663 $926,082
Total Liabilities and Capital $301,558 $530,494 $1,013,910
Net Worth $253,650 $464,663 $926,082

7.5 Business Ratios

The following table presents important ratios from the concrete work industry, as determined by the Standard Industry Classification (SIC) Index code 1771.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 50.00% 50.00% 7.50%
Percent of Total Assets
Accounts Receivable 29.35% 25.02% 19.64% 30.90%
Inventory 14.01% 9.93% 6.49% 6.30%
Other Current Assets 9.95% 5.66% 2.96% 29.80%
Total Current Assets 59.74% 59.21% 69.39% 67.00%
Long-term Assets 40.26% 40.79% 30.61% 33.00%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 15.89% 12.41% 8.66% 43.50%
Long-term Liabilities 0.00% 0.00% 0.00% 14.10%
Total Liabilities 15.89% 12.41% 8.66% 57.60%
Net Worth 84.11% 87.59% 91.34% 42.40%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 28.86% 42.02% 52.48% 29.40%
Selling, General & Administrative Expenses 18.65% 21.93% 23.02% 15.50%
Advertising Expenses 3.29% 6.67% 6.35% 0.30%
Profit Before Interest and Taxes 13.61% 26.80% 39.28% 2.40%
Main Ratios
Current 3.76 4.77 8.01 1.55
Quick 2.88 3.97 7.26 1.17
Total Debt to Total Assets 15.89% 12.41% 8.66% 57.60%
Pre-tax Return on Net Worth 37.56% 60.55% 66.80% 6.50%
Pre-tax Return on Assets 31.59% 53.04% 61.02% 15.40%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 10.24% 20.10% 29.30% n.a
Return on Equity 28.25% 45.41% 49.82% n.a
Activity Ratios
Accounts Receivable Turnover 5.93 5.93 5.93 n.a
Collection Days 57 51 51 n.a
Inventory Turnover 10.91 11.77 11.78 n.a
Accounts Payable Turnover 13.01 12.17 12.17 n.a
Payment Days 27 26 26 n.a
Total Asset Turnover 2.32 1.98 1.55 n.a
Debt Ratios
Debt to Net Worth 0.19 0.14 0.09 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $132,250 $248,263 $615,682 n.a
Interest Coverage 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 0.43 0.51 0.64 n.a
Current Debt/Total Assets 16% 12% 9% n.a
Acid Test 1.03 1.95 4.99 n.a
Sales/Net Worth 2.76 2.26 1.70 n.a
Dividend Payout 0.00 0.00 0.00 n.a