Child Care Business Plan

The Toddler Warehouse

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Financial Plan

The following sections will outline the important financial details.

7.1 Important Assumptions

The following tables shows some financial assumptions for The Toddler Warehouse.

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 is needed in monthly revenue to break even.

Break-even Analysis
Monthly Revenue Break-even $18,669
Assumptions:
Average Percent Variable Cost 2%
Estimated Monthly Fixed Cost $18,296

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 $174,425 $335,458 $351,254
Direct Cost of Sales $3,489 $6,709 $7,025
Other $0 $0 $0
Total Cost of Sales $3,489 $6,709 $7,025
Gross Margin $170,937 $328,749 $344,229
Gross Margin % 98.00% 98.00% 98.00%
Expenses
Payroll $163,000 $216,000 $222,000
Sales and Marketing and Other Expenses $1,800 $0 $0
Depreciation $0 $0 $0
Licenses $1,200 $1,200 $1,200
Utilities $2,100 $2,100 $2,100
Mortgage $24,000 $24,000 $24,000
Insurance $3,000 $3,000 $3,000
Payroll Taxes $24,450 $32,400 $33,300
Other $0 $0 $0
Total Operating Expenses $219,550 $278,700 $285,600
Profit Before Interest and Taxes ($48,614) $50,049 $58,629
EBITDA ($48,614) $50,049 $58,629
Interest Expense $0 $0 $0
Taxes Incurred $0 $12,512 $14,902
Net Profit ($48,614) $37,537 $43,727
Net Profit/Sales -27.87% 11.19% 12.45%

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 $174,425 $335,458 $351,254
Subtotal Cash from Operations $174,425 $335,458 $351,254
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 $174,425 $335,458 $351,254
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $163,000 $216,000 $222,000
Bill Payments $54,442 $80,784 $85,230
Subtotal Spent on Operations $217,442 $296,784 $307,230
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 $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $217,442 $296,784 $307,230
Net Cash Flow ($43,017) $38,674 $44,024
Cash Balance $6,233 $44,906 $88,930

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 $6,233 $44,906 $88,930
Other Current Assets $0 $0 $0
Total Current Assets $6,233 $44,906 $88,930
Long-term Assets
Long-term Assets $33,600 $33,600 $33,600
Accumulated Depreciation $0 $0 $0
Total Long-term Assets $33,600 $33,600 $33,600
Total Assets $39,833 $78,506 $122,530
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $5,596 $6,733 $7,030
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $5,596 $6,733 $7,030
Long-term Liabilities $0 $0 $0
Total Liabilities $5,596 $6,733 $7,030
Paid-in Capital $85,000 $85,000 $85,000
Retained Earnings ($2,150) ($50,764) ($13,227)
Earnings ($48,614) $37,537 $43,727
Total Capital $34,237 $71,773 $115,501
Total Liabilities and Capital $39,833 $78,506 $122,530
Net Worth $34,237 $71,773 $115,501

7.6 Business Ratios

Business ratios for the years of this plan are shown in the table below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 8351, Child Day Care Services, are shown for comparison.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 92.32% 4.71% 9.50%
Percent of Total Assets
Other Current Assets 0.00% 0.00% 0.00% 26.80%
Total Current Assets 15.65% 57.20% 72.58% 44.70%
Long-term Assets 84.35% 42.80% 27.42% 55.30%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 14.05% 8.58% 5.74% 31.80%
Long-term Liabilities 0.00% 0.00% 0.00% 31.00%
Total Liabilities 14.05% 8.58% 5.74% 62.80%
Net Worth 85.95% 91.42% 94.26% 37.20%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 98.00% 98.00% 98.00% 0.00%
Selling, General & Administrative Expenses 125.87% 86.81% 85.48% 75.60%
Advertising Expenses 1.03% 0.00% 0.00% 0.70%
Profit Before Interest and Taxes -27.87% 14.92% 16.69% 2.60%
Main Ratios
Current 1.11 6.67 12.65 1.27
Quick 1.11 6.67 12.65 1.14
Total Debt to Total Assets 14.05% 8.58% 5.74% 62.80%
Pre-tax Return on Net Worth -141.99% 69.73% 50.76% 5.40%
Pre-tax Return on Assets -122.04% 63.75% 47.85% 14.60%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -27.87% 11.19% 12.45% n.a
Return on Equity -141.99% 52.30% 37.86% n.a
Activity Ratios
Accounts Payable Turnover 10.73 12.17 12.17 n.a
Payment Days 27 27 29 n.a
Total Asset Turnover 4.38 4.27 2.87 n.a
Debt Ratios
Debt to Net Worth 0.16 0.09 0.06 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $636 $38,173 $81,901 n.a
Interest Coverage 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 0.23 0.23 0.35 n.a
Current Debt/Total Assets 14% 9% 6% n.a
Acid Test 1.11 6.67 12.65 n.a
Sales/Net Worth 5.09 4.67 3.04 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 $18,669
Assumptions:
Average Percent Variable Cost 2%
Estimated Monthly Fixed Cost $18,296
Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $174,425 $335,458 $351,254
Direct Cost of Sales $3,489 $6,709 $7,025
Other $0 $0 $0
Total Cost of Sales $3,489 $6,709 $7,025
Gross Margin $170,937 $328,749 $344,229
Gross Margin % 98.00% 98.00% 98.00%
Expenses
Payroll $163,000 $216,000 $222,000
Sales and Marketing and Other Expenses $1,800 $0 $0
Depreciation $0 $0 $0
Licenses $1,200 $1,200 $1,200
Utilities $2,100 $2,100 $2,100
Mortgage $24,000 $24,000 $24,000
Insurance $3,000 $3,000 $3,000
Payroll Taxes $24,450 $32,400 $33,300
Other $0 $0 $0
Total Operating Expenses $219,550 $278,700 $285,600
Profit Before Interest and Taxes ($48,614) $50,049 $58,629
EBITDA ($48,614) $50,049 $58,629
Interest Expense $0 $0 $0
Taxes Incurred $0 $12,512 $14,902
Net Profit ($48,614) $37,537 $43,727
Net Profit/Sales -27.87% 11.19% 12.45%
Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $174,425 $335,458 $351,254
Subtotal Cash from Operations $174,425 $335,458 $351,254
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 $174,425 $335,458 $351,254
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $163,000 $216,000 $222,000
Bill Payments $54,442 $80,784 $85,230
Subtotal Spent on Operations $217,442 $296,784 $307,230
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 $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $217,442 $296,784 $307,230
Net Cash Flow ($43,017) $38,674 $44,024
Cash Balance $6,233 $44,906 $88,930
Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $6,233 $44,906 $88,930
Other Current Assets $0 $0 $0
Total Current Assets $6,233 $44,906 $88,930
Long-term Assets
Long-term Assets $33,600 $33,600 $33,600
Accumulated Depreciation $0 $0 $0
Total Long-term Assets $33,600 $33,600 $33,600
Total Assets $39,833 $78,506 $122,530
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $5,596 $6,733 $7,030
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $5,596 $6,733 $7,030
Long-term Liabilities $0 $0 $0
Total Liabilities $5,596 $6,733 $7,030
Paid-in Capital $85,000 $85,000 $85,000
Retained Earnings ($2,150) ($50,764) ($13,227)
Earnings ($48,614) $37,537 $43,727
Total Capital $34,237 $71,773 $115,501
Total Liabilities and Capital $39,833 $78,506 $122,530
Net Worth $34,237 $71,773 $115,501
Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 92.32% 4.71% 9.50%
Percent of Total Assets
Other Current Assets 0.00% 0.00% 0.00% 26.80%
Total Current Assets 15.65% 57.20% 72.58% 44.70%
Long-term Assets 84.35% 42.80% 27.42% 55.30%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 14.05% 8.58% 5.74% 31.80%
Long-term Liabilities 0.00% 0.00% 0.00% 31.00%
Total Liabilities 14.05% 8.58% 5.74% 62.80%
Net Worth 85.95% 91.42% 94.26% 37.20%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 98.00% 98.00% 98.00% 0.00%
Selling, General & Administrative Expenses 125.87% 86.81% 85.48% 75.60%
Advertising Expenses 1.03% 0.00% 0.00% 0.70%
Profit Before Interest and Taxes -27.87% 14.92% 16.69% 2.60%
Main Ratios
Current 1.11 6.67 12.65 1.27
Quick 1.11 6.67 12.65 1.14
Total Debt to Total Assets 14.05% 8.58% 5.74% 62.80%
Pre-tax Return on Net Worth -141.99% 69.73% 50.76% 5.40%
Pre-tax Return on Assets -122.04% 63.75% 47.85% 14.60%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -27.87% 11.19% 12.45% n.a
Return on Equity -141.99% 52.30% 37.86% n.a
Activity Ratios
Accounts Payable Turnover 10.73 12.17 12.17 n.a
Payment Days 27 27 29 n.a
Total Asset Turnover 4.38 4.27 2.87 n.a
Debt Ratios
Debt to Net Worth 0.16 0.09 0.06 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $636 $38,173 $81,901 n.a
Interest Coverage 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 0.23 0.23 0.35 n.a
Current Debt/Total Assets 14% 9% 6% n.a
Acid Test 1.11 6.67 12.65 n.a
Sales/Net Worth 5.09 4.67 3.04 n.a
Dividend Payout 0.00 0.00 0.00 n.a