ChemSafe

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Cleaning Products Business Plan

Financial Plan

The following is the financial plan for ChemSafe.

7.1 Break-even Analysis

The monthly break-even point is approximately $26,200.

Break-even Analysis
Monthly Revenue Break-even $26,291
Assumptions:
Average Percent Variable Cost 23%
Estimated Monthly Fixed Cost $20,155

7.2 Projected Profit and Loss

The following table and charts will highlight projected profit and loss for the next three years.

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $362,500 $422,000 $504,000
Direct Cost of Sales $84,600 $104,000 $119,000
Other Production Expenses $0 $0 $0
Total Cost of Sales $84,600 $104,000 $119,000
Gross Margin $277,900 $318,000 $385,000
Gross Margin % 76.66% 75.36% 76.39%
Expenses
Payroll $147,600 $162,000 $174,000
Sales and Marketing and Other Expenses $18,000 $36,000 $46,000
Depreciation $2,880 $2,880 $2,880
Leased Equipment $0 $0 $0
Utilities $6,000 $6,000 $6,000
Insurance $6,000 $6,000 $6,000
Rent $36,000 $36,000 $36,000
Payroll Taxes $25,380 $27,000 $28,800
Other $0 $0 $0
Total Operating Expenses $241,860 $275,880 $299,680
Profit Before Interest and Taxes $36,040 $42,120 $85,320
EBITDA $38,920 $45,000 $88,200
Interest Expense $9,589 $8,176 $6,535
Taxes Incurred $7,935 $10,183 $23,636
Net Profit $18,516 $23,761 $55,150
Net Profit/Sales 5.11% 5.63% 10.94%

7.3 Projected Cash Flow

The following table and chart highlight the projected cash flow for three years.

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $181,250 $211,000 $252,000
Cash from Receivables $140,433 $204,300 $242,767
Subtotal Cash from Operations $321,683 $415,300 $494,767
Additional Cash Received
Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $6,000 $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 $327,683 $415,300 $494,767
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $147,600 $162,000 $174,000
Bill Payments $178,786 $238,011 $270,914
Subtotal Spent on Operations $326,386 $400,011 $444,914
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $1,500 $3,000 $1,500
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $14,160 $14,160 $14,160
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $342,046 $417,171 $460,574
Net Cash Flow ($14,363) ($1,871) $34,193
Cash Balance $25,837 $23,966 $58,159

7.4 Projected Balance Sheet

The following table highlights the projected balance sheet for three years.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $25,837 $23,966 $58,159
Accounts Receivable $40,817 $47,516 $56,749
Inventory $11,660 $14,334 $16,401
Other Current Assets $0 $0 $0
Total Current Assets $78,314 $85,816 $131,309
Long-term Assets
Long-term Assets $50,000 $50,000 $50,000
Accumulated Depreciation $2,880 $5,760 $8,640
Total Long-term Assets $47,120 $44,240 $41,360
Total Assets $125,434 $130,056 $172,669
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $21,378 $19,400 $22,524
Current Borrowing $4,500 $1,500 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $25,878 $20,900 $22,524
Long-term Liabilities $85,840 $71,680 $57,520
Total Liabilities $111,718 $92,580 $80,044
Paid-in Capital $163,000 $163,000 $163,000
Retained Earnings ($167,800) ($149,284) ($125,524)
Earnings $18,516 $23,761 $55,150
Total Capital $13,716 $37,476 $92,626
Total Liabilities and Capital $125,434 $130,056 $172,669
Net Worth $13,716 $37,476 $92,626

7.5 Business Ratios

Business ratios for the years of this plan are shown below.  Industry profile ratios based on the Standard Industrial Classification (SIC) code 2842, Polishes and Sanitation Goods, are shown for comparison.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 16.41% 19.43% 1.10%
Percent of Total Assets
Accounts Receivable 32.54% 36.54% 32.87% 25.90%
Inventory 9.30% 11.02% 9.50% 17.80%
Other Current Assets 0.00% 0.00% 0.00% 39.70%
Total Current Assets 62.43% 65.98% 76.05% 83.40%
Long-term Assets 37.57% 34.02% 23.95% 16.60%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 20.63% 16.07% 13.04% 29.10%
Long-term Liabilities 68.43% 55.11% 33.31% 23.60%
Total Liabilities 89.07% 71.18% 46.36% 52.70%
Net Worth 10.93% 28.82% 53.64% 47.30%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 76.66% 75.36% 76.39% 41.60%
Selling, General & Administrative Expenses 75.66% 72.66% 67.94% 23.00%
Advertising Expenses 3.31% 7.11% 7.94% 2.80%
Profit Before Interest and Taxes 9.94% 9.98% 16.93% 5.00%
Main Ratios
Current 3.03 4.11 5.83 2.51
Quick 2.58 3.42 5.10 1.51
Total Debt to Total Assets 89.07% 71.18% 46.36% 52.70%
Pre-tax Return on Net Worth 192.85% 90.57% 85.06% 7.20%
Pre-tax Return on Assets 21.09% 26.10% 45.63% 15.30%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 5.11% 5.63% 10.94% n.a
Return on Equity 135.00% 63.40% 59.54% n.a
Activity Ratios
Accounts Receivable Turnover 4.44 4.44 4.44 n.a
Collection Days 56 76 76 n.a
Inventory Turnover 10.35 8.00 7.74 n.a
Accounts Payable Turnover 9.36 12.17 12.17 n.a
Payment Days 27 32 28 n.a
Total Asset Turnover 2.89 3.24 2.92 n.a
Debt Ratios
Debt to Net Worth 8.15 2.47 0.86 n.a
Current Liab. to Liab. 0.23 0.23 0.28 n.a
Liquidity Ratios
Net Working Capital $52,436 $64,916 $108,786 n.a
Interest Coverage 3.76 5.15 13.06 n.a
Additional Ratios
Assets to Sales 0.35 0.31 0.34 n.a
Current Debt/Total Assets 21% 16% 13% n.a
Acid Test 1.00 1.15 2.58 n.a
Sales/Net Worth 26.43 11.26 5.44 n.a
Dividend Payout 0.00 0.00 0.00 n.a