Gaian Adventure Fabric and Notions

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Ecommerce Fabric Store Business Plan

Financial Plan

The following sections will outline important financial information.

8.1 Break-even Analysis

The following table and chart show our Break-even Analysis for the first year.

Break-even Analysis
Monthly Revenue Break-even $11,761
Assumptions:
Average Percent Variable Cost 50%
Estimated Monthly Fixed Cost $5,935

8.2 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 $129,270 $196,891 $220,715
Direct Cost of Sales $64,040 $88,601 $99,322
Other Production Expenses $0 $0 $0
Total Cost of Sales $64,040 $88,601 $99,322
Gross Margin $65,229 $108,290 $121,393
Gross Margin % 50.46% 55.00% 55.00%
Expenses
Payroll $48,800 $55,200 $55,200
Sales and Marketing and Other Expenses $600 $600 $600
Depreciation $0 $0 $0
Leased Equipment $696 $696 $696
Phone line + DSL + web site maintenance $3,000 $3,000 $3,000
Insurance $1,800 $1,800 $1,800
Rent $9,000 $9,000 $9,000
Payroll Taxes $7,320 $8,280 $8,280
Other $0 $0 $0
Total Operating Expenses $71,216 $78,576 $78,576
Profit Before Interest and Taxes ($5,987) $29,714 $42,817
EBITDA ($5,987) $29,714 $42,817
Interest Expense $0 $0 $0
Taxes Incurred $0 $8,914 $12,845
Net Profit ($5,987) $20,800 $29,972
Net Profit/Sales -4.63% 10.56% 13.58%

8.3 Important Assumptions

The following table details important financial 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 30.00% 30.00% 30.00%
Other 0 0 0

8.4 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 $129,270 $196,891 $220,715
Subtotal Cash from Operations $129,270 $196,891 $220,715
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 $129,270 $196,891 $220,715
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $48,800 $55,200 $55,200
Bill Payments $84,738 $128,492 $136,505
Subtotal Spent on Operations $133,538 $183,692 $191,705
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 $133,538 $183,692 $191,705
Net Cash Flow ($4,269) $13,199 $29,010
Cash Balance $16,631 $29,830 $58,840

8.5 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 $16,631 $29,830 $58,840
Inventory $11,701 $16,188 $18,147
Other Current Assets $0 $0 $0
Total Current Assets $28,332 $46,018 $76,987
Long-term Assets
Long-term Assets $3,500 $3,500 $3,500
Accumulated Depreciation $0 $0 $0
Total Long-term Assets $3,500 $3,500 $3,500
Total Assets $31,832 $49,518 $80,487
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $13,419 $10,305 $11,302
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $13,419 $10,305 $11,302
Long-term Liabilities $0 $0 $0
Total Liabilities $13,419 $10,305 $11,302
Paid-in Capital $38,000 $38,000 $38,000
Retained Earnings ($13,600) ($19,587) $1,213
Earnings ($5,987) $20,800 $29,972
Total Capital $18,413 $39,213 $69,186
Total Liabilities and Capital $31,832 $49,518 $80,487
Net Worth $18,413 $39,213 $69,186

8.6 Business Ratios

The following table outlines some of the more important ratios from the Sewing, Needlework and Piece Goods industry. The final column, Industry Profile, details specific ratios based on the industry as it is classified by the Standard Industry Classification (SIC) code, 5131.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 52.31% 12.10% 10.40%
Percent of Total Assets
Inventory 36.76% 32.69% 22.55% 36.20%
Other Current Assets 0.00% 0.00% 0.00% 26.40%
Total Current Assets 89.00% 92.93% 95.65% 88.50%
Long-term Assets 11.00% 7.07% 4.35% 11.50%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 42.15% 20.81% 14.04% 42.20%
Long-term Liabilities 0.00% 0.00% 0.00% 8.80%
Total Liabilities 42.15% 20.81% 14.04% 51.00%
Net Worth 57.85% 79.19% 85.96% 49.00%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 50.46% 55.00% 55.00% 24.50%
Selling, General & Administrative Expenses 55.09% 44.44% 41.42% 15.40%
Advertising Expenses 0.46% 0.30% 0.27% 0.90%
Profit Before Interest and Taxes -4.63% 15.09% 19.40% 1.70%
Main Ratios
Current 2.11 4.47 6.81 2.14
Quick 1.24 2.89 5.21 0.94
Total Debt to Total Assets 42.15% 20.81% 14.04% 51.00%
Pre-tax Return on Net Worth -32.51% 75.78% 61.89% 4.30%
Pre-tax Return on Assets -18.81% 60.01% 53.20% 8.90%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -4.63% 10.56% 13.58% n.a
Return on Equity -32.51% 53.04% 43.32% n.a
Activity Ratios
Inventory Turnover 10.91 6.35 5.79 n.a
Accounts Payable Turnover 7.31 12.17 12.17 n.a
Payment Days 27 35 29 n.a
Total Asset Turnover 4.06 3.98 2.74 n.a
Debt Ratios
Debt to Net Worth 0.73 0.26 0.16 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $14,913 $35,713 $65,686 n.a
Interest Coverage 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 0.25 0.25 0.36 n.a
Current Debt/Total Assets 42% 21% 14% n.a
Acid Test 1.24 2.89 5.21 n.a
Sales/Net Worth 7.02 5.02 3.19 n.a
Dividend Payout 0.00 0.00 0.00 n.a