The Shipping Centre

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Direct Mail and Shipping Business Plan

Financial Plan

The following sections will outline important financial information.

7.1 Important Assumptions

The following table highlights important 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 25.42% 25.00% 25.42%
Other 0 0 0

7.2 Break-even Analysis

The Break-even Analysis indicates what The Shipping Centre must achieve in monthly sales to break even.

Break-even Analysis
Monthly Revenue Break-even $16,314
Assumptions:
Average Percent Variable Cost 42%
Estimated Monthly Fixed Cost $9,418

7.3 Projected Profit and Loss

The following table will indicate projected profit and loss.

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $239,854 $424,470 $458,091
Direct Cost of Sales $101,383 $185,217 $200,821
Other $0 $0 $0
Total Cost of Sales $101,383 $185,217 $200,821
Gross Margin $138,471 $239,253 $257,270
Gross Margin % 57.73% 56.37% 56.16%
Expenses
Payroll $66,720 $77,400 $80,700
Sales and Marketing and Other Expenses $3,900 $3,900 $3,900
Depreciation $350 $4,200 $4,200
Leased Equipment $0 $0 $0
Utilities $1,500 $1,500 $1,500
DSL $540 $540 $540
Rent $30,000 $30,000 $30,000
Payroll Taxes $10,008 $11,610 $12,105
Other $0 $0 $0
Total Operating Expenses $113,018 $129,150 $132,945
Profit Before Interest and Taxes $25,453 $110,103 $124,325
EBITDA $25,803 $114,303 $128,525
Interest Expense $0 $0 $0
Taxes Incurred $6,052 $27,526 $31,599
Net Profit $19,401 $82,577 $92,726
Net Profit/Sales 8.09% 19.45% 20.24%

7.4 Projected Cash Flow

The following chart and table will indicate projected cash flow.

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $239,854 $424,470 $458,091
Subtotal Cash from Operations $239,854 $424,470 $458,091
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 $239,854 $424,470 $458,091
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $66,720 $77,400 $80,700
Bill Payments $132,722 $259,560 $278,807
Subtotal Spent on Operations $199,442 $336,960 $359,507
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 $199,442 $336,960 $359,507
Net Cash Flow $40,412 $87,510 $98,584
Cash Balance $54,412 $141,922 $240,506

7.5 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 $54,412 $141,922 $240,506
Other Current Assets $0 $0 $0
Total Current Assets $54,412 $141,922 $240,506
Long-term Assets
Long-term Assets $14,200 $14,200 $14,200
Accumulated Depreciation $350 $4,550 $8,750
Total Long-term Assets $13,850 $9,650 $5,450
Total Assets $68,262 $151,572 $245,956
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $20,661 $21,394 $23,052
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $20,661 $21,394 $23,052
Long-term Liabilities $0 $0 $0
Total Liabilities $20,661 $21,394 $23,052
Paid-in Capital $30,000 $30,000 $30,000
Retained Earnings ($1,800) $17,601 $100,178
Earnings $19,401 $82,577 $92,726
Total Capital $47,601 $130,178 $222,904
Total Liabilities and Capital $68,262 $151,572 $245,956
Net Worth $47,601 $130,178 $222,904

7.6 Business Ratios

The following table compares the standard business ratios for the Private Mail Centers industry, NAICS code 561431 against the ratios calculated for the financial forecasts of this plan.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 76.97% 7.92% 10.93%
Percent of Total Assets
Other Current Assets 0.00% 0.00% 0.00% 46.15%
Total Current Assets 79.71% 93.63% 97.78% 76.67%
Long-term Assets 20.29% 6.37% 2.22% 23.33%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 30.27% 14.11% 9.37% 40.41%
Long-term Liabilities 0.00% 0.00% 0.00% 17.31%
Total Liabilities 30.27% 14.11% 9.37% 57.72%
Net Worth 69.73% 85.89% 90.63% 42.28%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 57.73% 56.37% 56.16% 100.00%
Selling, General & Administrative Expenses 59.50% 41.48% 40.04% 76.26%
Advertising Expenses 0.50% 0.28% 0.26% 2.58%
Profit Before Interest and Taxes 10.61% 25.94% 27.14% 1.39%
Main Ratios
Current 2.63 6.63 10.43 1.42
Quick 2.63 6.63 10.43 1.14
Total Debt to Total Assets 30.27% 14.11% 9.37% 67.09%
Pre-tax Return on Net Worth 53.47% 84.58% 55.78% 3.47%
Pre-tax Return on Assets 37.29% 72.64% 50.55% 10.56%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 8.09% 19.45% 20.24% n.a
Return on Equity 40.76% 63.43% 41.60% n.a
Activity Ratios
Accounts Payable Turnover 7.42 12.17 12.17 n.a
Payment Days 27 29 29 n.a
Total Asset Turnover 3.51 2.80 1.86 n.a
Debt Ratios
Debt to Net Worth 0.43 0.16 0.10 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $33,751 $120,528 $217,454 n.a
Interest Coverage 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 0.28 0.36 0.54 n.a
Current Debt/Total Assets 30% 14% 9% n.a
Acid Test 2.63 6.63 10.43 n.a
Sales/Net Worth 5.04 3.26 2.06 n.a
Dividend Payout 0.00 0.00 0.00 n.a