The following sections are the financial projections for Fosse COmmercial Contractors for the next three years. These tables represent a conservative estimate of revenues, expenses, and growth. We do not anticipate a significant increase in profits until 2006, as we will need time to penetrate our new market. We plan on basing dividend payouts on overall performance and health of the company and may decide to retain such earnings for future growth.
The following is our estimate of our financial assumptions based on previous experience.
Our break even analysis is based on average monthly fixed costs, which in turn, is based on historical figures, plus our average price per product. This estimate is also based on experience, however because of our wide range of potential projects, its accuracy lessens. The average variable costs are based on industry standards.
The following is our best estimate of future revenues and costs, based on current market trends, past performance, and perceived revenue of our new target market. Readers will note that overall profits are quite low for 2004-2006. This is because we estimate we will be paying higher labor costs immediately and the overall revenues will lag somewhat. We will also have fewer initial clients as we attempt to exert our presence in the commercial contracting market. However, we have anticipated this by buffering ourselves with sufficient cash reserves, and we estimate a significant increase in profitability within five years.
We do not expect to have any serious cash flow problems in the future. We plan on having all short-term debts paid off in 2007 and long-term debts by 2012. The declining cash account during the period covered by this plan, and is to be expected as we build our new customer base. Once we reach a sufficient volume of sales, we will take advantages of economies of scale to decrease costs and improve profit margin.
The following is a presentation of assets and liabilities. Because we have low debt, our net worth is higher than other comparable companies.
The following is a presentation of industry standard ratios vs. our own projections. Our SIC industry class is currently Commercial and office building, new construction - 1542.0101. For the most part, we follow the industry averages. We expect to see higher growths than average over the next two years due to our new ventures. Also our company is relatively debt-free, meaning we have higher than average net worth.