Convenience Store Soda Fountain Business Plan

The Coffee Break

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Financial Plan

The following sections will outline the important financial assumptions, key financial indicators, break-even analysis, profit and loss, cash flow, balance sheet, and key ratios.

7.1 Important Assumptions

The following table highlights some of the more important financial assumptions for The Coffee Break.

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 can be seen in the chart and table below.

Break-even Analysis
Monthly Revenue Break-even $12,904
Assumptions:
Average Percent Variable Cost 45%
Estimated Monthly Fixed Cost $7,044

7.3 Projected Profit and Loss

The Coffee Break's profit and loss statement can be found in the table below.

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $218,000 $250,000 $269,000
Direct Cost of Sales $99,000 $105,000 $110,000
Other $0 $0 $0
Total Cost of Sales $99,000 $105,000 $110,000
Gross Margin $119,000 $145,000 $159,000
Gross Margin % 54.59% 58.00% 59.11%
Expenses
Payroll $49,440 $53,629 $56,220
Sales and Marketing and Other Expenses $4,572 $5,550 $6,800
Depreciation $0 $0 $0
Insurance $5,100 $5,200 $5,400
Rent $18,000 $19,800 $21,780
Utilities $0 $0 $0
Leased Equipment $0 $0 $0
Payroll Taxes $7,416 $8,044 $8,433
Other $0 $0 $0
Total Operating Expenses $84,528 $92,223 $98,633
Profit Before Interest and Taxes $34,472 $52,777 $60,367
EBITDA $34,472 $52,777 $60,367
Interest Expense $4,323 $3,125 $1,875
Taxes Incurred $7,406 $12,413 $14,867
Net Profit $22,743 $37,239 $43,626
Net Profit/Sales 10.43% 14.90% 16.22%

7.4 Projected Cash Flow

The following chart and table present the cash flow assumptions for The Coffee Break.

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $218,000 $250,000 $269,000
Subtotal Cash from Operations $218,000 $250,000 $269,000
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 $218,000 $250,000 $269,000
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $49,440 $53,629 $56,220
Bill Payments $105,740 $160,580 $168,839
Subtotal Spent on Operations $155,180 $214,209 $225,059
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $12,500 $12,500 $12,500
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 $167,680 $226,709 $237,559
Net Cash Flow $50,320 $23,291 $31,441
Cash Balance $52,820 $76,111 $107,552

7.5 Business Ratios

The following table contains important ratios for the convenience stores industry, as determined by the Standard Industry Classification (SIC) Index code, 5411, Grocery Store (convenience).

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 14.68% 7.60% 5.50%
Percent of Total Assets
Inventory 15.78% 12.12% 9.28% 24.20%
Other Current Assets 0.00% 0.00% 0.00% 29.80%
Total Current Assets 100.00% 100.00% 100.00% 59.40%
Long-term Assets 0.00% 0.00% 0.00% 40.60%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 82.07% 44.02% 22.31% 33.90%
Long-term Liabilities 0.00% 0.00% 0.00% 23.20%
Total Liabilities 82.07% 44.02% 22.31% 57.10%
Net Worth 17.93% 55.98% 77.69% 42.90%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 54.59% 58.00% 59.11% 21.90%
Selling, General & Administrative Expenses 45.39% 44.54% 44.56% 14.70%
Advertising Expenses 1.98% 2.10% 2.40% 0.90%
Profit Before Interest and Taxes 15.81% 21.11% 22.44% 0.70%
Main Ratios
Current 1.22 2.27 4.48 1.57
Quick 1.03 2.00 4.07 0.60
Total Debt to Total Assets 82.07% 44.02% 22.31% 57.10%
Pre-tax Return on Net Worth 268.15% 102.41% 63.50% 3.60%
Pre-tax Return on Assets 48.07% 57.33% 49.34% 8.50%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 10.43% 14.90% 16.22% n.a
Return on Equity 202.28% 76.81% 47.36% n.a
Activity Ratios
Inventory Turnover 8.34 10.29 10.23 n.a
Accounts Payable Turnover 8.57 12.17 12.17 n.a
Payment Days 27 31 29 n.a
Total Asset Turnover 3.48 2.89 2.27 n.a
Debt Ratios
Debt to Net Worth 4.58 0.79 0.29 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $11,243 $48,482 $92,108 n.a
Interest Coverage 7.97 16.89 32.20 n.a
Additional Ratios
Assets to Sales 0.29 0.35 0.44 n.a
Current Debt/Total Assets 82% 44% 22% n.a
Acid Test 1.03 2.00 4.07 n.a
Sales/Net Worth 19.39 5.16 2.92 n.a
Dividend Payout 0.00 0.00 0.00 n.a

7.6 Projected Balance Sheet

The Balance Sheet below provides numbers that are important to the financial well-being of The Coffee Break.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $52,820 $76,111 $107,552
Inventory $9,900 $10,500 $11,000
Other Current Assets $0 $0 $0
Total Current Assets $62,720 $86,611 $118,552
Long-term Assets
Long-term Assets $0 $0 $0
Accumulated Depreciation $0 $0 $0
Total Long-term Assets $0 $0 $0
Total Assets $62,720 $86,611 $118,552
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $13,977 $13,129 $13,944
Current Borrowing $37,500 $25,000 $12,500
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $51,477 $38,129 $26,444
Long-term Liabilities $0 $0 $0
Total Liabilities $51,477 $38,129 $26,444
Paid-in Capital $216,000 $216,000 $216,000
Retained Earnings ($227,500) ($204,757) ($167,518)
Earnings $22,743 $37,239 $43,626
Total Capital $11,243 $48,482 $92,108
Total Liabilities and Capital $62,720 $86,611 $118,552
Net Worth $11,243 $48,482 $92,108
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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 $12,904
Assumptions:
Average Percent Variable Cost 45%
Estimated Monthly Fixed Cost $7,044
Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $218,000 $250,000 $269,000
Direct Cost of Sales $99,000 $105,000 $110,000
Other $0 $0 $0
Total Cost of Sales $99,000 $105,000 $110,000
Gross Margin $119,000 $145,000 $159,000
Gross Margin % 54.59% 58.00% 59.11%
Expenses
Payroll $49,440 $53,629 $56,220
Sales and Marketing and Other Expenses $4,572 $5,550 $6,800
Depreciation $0 $0 $0
Insurance $5,100 $5,200 $5,400
Rent $18,000 $19,800 $21,780
Utilities $0 $0 $0
Leased Equipment $0 $0 $0
Payroll Taxes $7,416 $8,044 $8,433
Other $0 $0 $0
Total Operating Expenses $84,528 $92,223 $98,633
Profit Before Interest and Taxes $34,472 $52,777 $60,367
EBITDA $34,472 $52,777 $60,367
Interest Expense $4,323 $3,125 $1,875
Taxes Incurred $7,406 $12,413 $14,867
Net Profit $22,743 $37,239 $43,626
Net Profit/Sales 10.43% 14.90% 16.22%
Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $218,000 $250,000 $269,000
Subtotal Cash from Operations $218,000 $250,000 $269,000
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 $218,000 $250,000 $269,000
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $49,440 $53,629 $56,220
Bill Payments $105,740 $160,580 $168,839
Subtotal Spent on Operations $155,180 $214,209 $225,059
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $12,500 $12,500 $12,500
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 $167,680 $226,709 $237,559
Net Cash Flow $50,320 $23,291 $31,441
Cash Balance $52,820 $76,111 $107,552
Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 14.68% 7.60% 5.50%
Percent of Total Assets
Inventory 15.78% 12.12% 9.28% 24.20%
Other Current Assets 0.00% 0.00% 0.00% 29.80%
Total Current Assets 100.00% 100.00% 100.00% 59.40%
Long-term Assets 0.00% 0.00% 0.00% 40.60%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 82.07% 44.02% 22.31% 33.90%
Long-term Liabilities 0.00% 0.00% 0.00% 23.20%
Total Liabilities 82.07% 44.02% 22.31% 57.10%
Net Worth 17.93% 55.98% 77.69% 42.90%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 54.59% 58.00% 59.11% 21.90%
Selling, General & Administrative Expenses 45.39% 44.54% 44.56% 14.70%
Advertising Expenses 1.98% 2.10% 2.40% 0.90%
Profit Before Interest and Taxes 15.81% 21.11% 22.44% 0.70%
Main Ratios
Current 1.22 2.27 4.48 1.57
Quick 1.03 2.00 4.07 0.60
Total Debt to Total Assets 82.07% 44.02% 22.31% 57.10%
Pre-tax Return on Net Worth 268.15% 102.41% 63.50% 3.60%
Pre-tax Return on Assets 48.07% 57.33% 49.34% 8.50%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 10.43% 14.90% 16.22% n.a
Return on Equity 202.28% 76.81% 47.36% n.a
Activity Ratios
Inventory Turnover 8.34 10.29 10.23 n.a
Accounts Payable Turnover 8.57 12.17 12.17 n.a
Payment Days 27 31 29 n.a
Total Asset Turnover 3.48 2.89 2.27 n.a
Debt Ratios
Debt to Net Worth 4.58 0.79 0.29 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $11,243 $48,482 $92,108 n.a
Interest Coverage 7.97 16.89 32.20 n.a
Additional Ratios
Assets to Sales 0.29 0.35 0.44 n.a
Current Debt/Total Assets 82% 44% 22% n.a
Acid Test 1.03 2.00 4.07 n.a
Sales/Net Worth 19.39 5.16 2.92 n.a
Dividend Payout 0.00 0.00 0.00 n.a
Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $52,820 $76,111 $107,552
Inventory $9,900 $10,500 $11,000
Other Current Assets $0 $0 $0
Total Current Assets $62,720 $86,611 $118,552
Long-term Assets
Long-term Assets $0 $0 $0
Accumulated Depreciation $0 $0 $0
Total Long-term Assets $0 $0 $0
Total Assets $62,720 $86,611 $118,552
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $13,977 $13,129 $13,944
Current Borrowing $37,500 $25,000 $12,500
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $51,477 $38,129 $26,444
Long-term Liabilities $0 $0 $0
Total Liabilities $51,477 $38,129 $26,444
Paid-in Capital $216,000 $216,000 $216,000
Retained Earnings ($227,500) ($204,757) ($167,518)
Earnings $22,743 $37,239 $43,626
Total Capital $11,243 $48,482 $92,108
Total Liabilities and Capital $62,720 $86,611 $118,552
Net Worth $11,243 $48,482 $92,108