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Children's Educational Toys Business Plan

Financial Plan

The following sections will outline important financial information.

8.1 Important Assumptions

The following table details important financial assumptions.

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 30.00% 30.00% 30.00%
Other 0 0 0

8.2 Break-even Analysis

The Break-even Analysis indicates that $30,290 will be needed in monthly revenue to reach the break-even point.

Break-even Analysis
Monthly Revenue Break-even $18,596
Assumptions:
Average Percent Variable Cost 40%
Estimated Monthly Fixed Cost $11,158

8.3 Projected Profit and Loss

The following table and charts will indicate Projected Profit and Loss.

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $124,505 $367,556 $475,601
Direct Cost of Sales $49,802 $147,022 $190,240
Other Costs of Goods $0 $0 $0
Total Cost of Sales $49,802 $147,022 $190,240
Gross Margin $74,703 $220,534 $285,361
Gross Margin % 60.00% 60.00% 60.00%
Expenses
Payroll $98,000 $128,000 $156,000
Sales and Marketing and Other Expenses $4,200 $4,200 $4,200
Depreciation $1,992 $1,992 $1,992
Rent $7,200 $7,200 $7,200
Utilities $3,600 $3,600 $3,600
Insurance $3,000 $3,000 $3,000
Payroll Taxes $14,700 $19,200 $23,400
Other $1,200 $1,200 $1,200
Total Operating Expenses $133,892 $168,392 $200,592
Profit Before Interest and Taxes ($59,189) $52,142 $84,769
EBITDA ($57,197) $54,134 $86,761
Interest Expense $0 $0 $0
Taxes Incurred $0 $15,642 $25,431
Net Profit ($59,189) $36,499 $59,338
Net Profit/Sales -47.54% 9.93% 12.48%

8.4 Projected Cash Flow

The following table and chart will indicate Projected Cash Flow.

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $31,126 $91,889 $118,900
Cash from Receivables $66,011 $222,242 $332,951
Subtotal Cash from Operations $97,137 $314,131 $451,852
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 $97,137 $314,131 $451,852
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $98,000 $128,000 $156,000
Bill Payments $74,351 $193,890 $253,569
Subtotal Spent on Operations $172,351 $321,890 $409,569
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 $172,351 $321,890 $409,569
Net Cash Flow ($75,213) ($7,759) $42,283
Cash Balance $41,387 $33,628 $75,911

8.5 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 $41,387 $33,628 $75,911
Accounts Receivable $27,367 $80,792 $104,541
Other Current Assets $0 $0 $0
Total Current Assets $68,754 $114,420 $180,452
Long-term Assets
Long-term Assets $10,000 $10,000 $10,000
Accumulated Depreciation $1,992 $3,984 $5,976
Total Long-term Assets $8,008 $6,016 $4,024
Total Assets $76,762 $120,436 $184,476
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $9,351 $16,526 $21,228
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $9,351 $16,526 $21,228
Long-term Liabilities $0 $0 $0
Total Liabilities $9,351 $16,526 $21,228
Paid-in Capital $140,000 $140,000 $140,000
Retained Earnings ($13,400) ($72,589) ($36,090)
Earnings ($59,189) $36,499 $59,338
Total Capital $67,411 $103,910 $163,248
Total Liabilities and Capital $76,762 $120,436 $184,476
Net Worth $67,411 $103,910 $163,248

8.6 Business Ratios

The following chart offers Business Ratios for this company as well as the industry averages.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 195.21% 29.40% 3.34%
Percent of Total Assets
Accounts Receivable 35.65% 67.08% 56.67% 16.20%
Other Current Assets 0.00% 0.00% 0.00% 23.64%
Total Current Assets 89.57% 95.00% 97.82% 79.15%
Long-term Assets 10.43% 5.00% 2.18% 20.85%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 12.18% 13.72% 11.51% 36.32%
Long-term Liabilities 0.00% 0.00% 0.00% 15.56%
Total Liabilities 12.18% 13.72% 11.51% 51.88%
Net Worth 87.82% 86.28% 88.49% 48.12%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 60.00% 60.00% 60.00% 34.87%
Selling, General & Administrative Expenses 107.54% 50.07% 47.52% 22.04%
Advertising Expenses 0.00% 0.00% 0.00% 1.89%
Profit Before Interest and Taxes -47.54% 14.19% 17.82% 1.46%
Main Ratios
Current 7.35 6.92 8.50 1.95
Quick 7.35 6.92 8.50 0.75
Total Debt to Total Assets 12.18% 13.72% 11.51% 59.08%
Pre-tax Return on Net Worth -87.80% 50.18% 51.93% 3.36%
Pre-tax Return on Assets -77.11% 43.29% 45.95% 8.20%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -47.54% 9.93% 12.48% n.a
Return on Equity -87.80% 35.13% 36.35% n.a
Activity Ratios
Accounts Receivable Turnover 3.41 3.41 3.41 n.a
Collection Days 56 72 95 n.a
Accounts Payable Turnover 8.95 12.17 12.17 n.a
Payment Days 27 23 27 n.a
Total Asset Turnover 1.62 3.05 2.58 n.a
Debt Ratios
Debt to Net Worth 0.14 0.16 0.13 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $59,403 $97,894 $159,224 n.a
Interest Coverage 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 0.62 0.33 0.39 n.a
Current Debt/Total Assets 12% 14% 12% n.a
Acid Test 4.43 2.03 3.58 n.a
Sales/Net Worth 1.85 3.54 2.91 n.a
Dividend Payout 0.00 0.00 0.00 n.a