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SIC 5411 Food Stores - Grocery stores
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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 |
