Energy Conservation Business Plan

Green Power Consultancy

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Financial Plan

The following sections will outline the important Financial Assumptions.

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

Break-even Analysis

The Break-even Analysis is indicated below.

Break-even Analysis
Monthly Revenue Break-even $7,333
Assumptions:
Average Percent Variable Cost 9%
Estimated Monthly Fixed Cost $6,641

Projected Profit and Loss

The following table and charts will indicate Projected Profit and Loss.

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $87,047 $202,343 $238,402
Direct Cost of Sales $8,212 $29,779 $35,086
Other Costs of Sales $0 $0 $0
Total Cost of Sales $8,212 $29,779 $35,086
Gross Margin $78,835 $172,565 $203,317
Gross Margin % 90.57% 85.28% 85.28%
Expenses
Payroll $52,600 $93,000 $122,000
Sales and Marketing and Other Expenses $4,800 $4,800 $4,800
Depreciation $1,800 $1,800 $1,800
Rent $6,000 $6,000 $6,000
Utilities $2,400 $2,400 $2,400
Insurance $2,400 $2,400 $2,400
Payroll Taxes $7,890 $13,950 $18,300
Other $1,800 $1,800 $1,800
Total Operating Expenses $79,690 $126,150 $159,500
Profit Before Interest and Taxes ($855) $46,415 $43,817
EBITDA $945 $48,215 $45,617
Interest Expense $0 $0 $0
Taxes Incurred $0 $13,924 $13,145
Net Profit ($855) $32,490 $30,672
Net Profit/Sales -0.98% 16.06% 12.87%

Projected Cash Flow

The following table and chart indicate Projected Cash Flow.

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $87,047 $202,343 $238,402
Subtotal Cash from Operations $87,047 $202,343 $238,402
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 $87,047 $202,343 $238,402
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $52,600 $93,000 $122,000
Bill Payments $30,707 $71,679 $83,201
Subtotal Spent on Operations $83,307 $164,679 $205,201
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 $83,307 $164,679 $205,201
Net Cash Flow $3,740 $37,664 $33,201
Cash Balance $27,590 $65,254 $98,456

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 $27,590 $65,254 $98,456
Other Current Assets $0 $0 $0
Total Current Assets $27,590 $65,254 $98,456
Long-term Assets
Long-term Assets $9,000 $9,000 $9,000
Accumulated Depreciation $1,800 $3,600 $5,400
Total Long-term Assets $7,200 $5,400 $3,600
Total Assets $34,790 $70,654 $102,056
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $2,795 $6,169 $6,898
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $2,795 $6,169 $6,898
Long-term Liabilities $0 $0 $0
Total Liabilities $2,795 $6,169 $6,898
Paid-in Capital $40,000 $40,000 $40,000
Retained Earnings ($7,150) ($8,005) $24,485
Earnings ($855) $32,490 $30,672
Total Capital $31,995 $64,485 $95,157
Total Liabilities and Capital $34,790 $70,654 $102,056
Net Worth $31,995 $64,485 $95,157

Business Ratios

The following table contains typical Business Ratios of both Green Power as well as the industry as a whole.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth n.a. 132.45% 17.82% 8.18%
Percent of Total Assets
Other Current Assets 0.00% 0.00% 0.00% 41.37%
Total Current Assets 79.30% 92.36% 96.47% 75.36%
Long-term Assets 20.70% 7.64% 3.53% 24.64%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 8.03% 8.73% 6.76% 31.49%
Long-term Liabilities 0.00% 0.00% 0.00% 16.85%
Total Liabilities 8.03% 8.73% 6.76% 48.34%
Net Worth 91.97% 91.27% 93.24% 51.66%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 90.57% 85.28% 85.28% 100.00%
Selling, General & Administrative Expenses 91.55% 69.23% 72.42% 82.59%
Advertising Expenses 0.00% 0.00% 0.00% 1.16%
Profit Before Interest and Taxes -0.98% 22.94% 18.38% 1.47%
Main Ratios
Current 9.87 10.58 14.27 1.93
Quick 9.87 10.58 14.27 1.50
Total Debt to Total Assets 8.03% 8.73% 6.76% 3.09%
Pre-tax Return on Net Worth -2.67% 71.98% 46.05% 59.56%
Pre-tax Return on Assets -2.46% 65.69% 42.93% 7.63%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -0.98% 16.06% 12.87% n.a
Return on Equity -2.67% 50.38% 32.23% n.a
Activity Ratios
Accounts Payable Turnover 11.99 12.17 12.17 n.a
Payment Days 27 22 28 n.a
Total Asset Turnover 2.50 2.86 2.34 n.a
Debt Ratios
Debt to Net Worth 0.09 0.10 0.07 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $24,795 $59,085 $91,557 n.a
Interest Coverage 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 0.40 0.35 0.43 n.a
Current Debt/Total Assets 8% 9% 7% n.a
Acid Test 9.87 10.58 14.27 n.a
Sales/Net Worth 2.72 3.14 2.51 n.a
Dividend Payout 0.00 0.00 0.00 n.a
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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 30.00% 30.00% 30.00%
Other 0 0 0
Break-even Analysis
Monthly Revenue Break-even $7,333
Assumptions:
Average Percent Variable Cost 9%
Estimated Monthly Fixed Cost $6,641
Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $87,047 $202,343 $238,402
Direct Cost of Sales $8,212 $29,779 $35,086
Other Costs of Sales $0 $0 $0
Total Cost of Sales $8,212 $29,779 $35,086
Gross Margin $78,835 $172,565 $203,317
Gross Margin % 90.57% 85.28% 85.28%
Expenses
Payroll $52,600 $93,000 $122,000
Sales and Marketing and Other Expenses $4,800 $4,800 $4,800
Depreciation $1,800 $1,800 $1,800
Rent $6,000 $6,000 $6,000
Utilities $2,400 $2,400 $2,400
Insurance $2,400 $2,400 $2,400
Payroll Taxes $7,890 $13,950 $18,300
Other $1,800 $1,800 $1,800
Total Operating Expenses $79,690 $126,150 $159,500
Profit Before Interest and Taxes ($855) $46,415 $43,817
EBITDA $945 $48,215 $45,617
Interest Expense $0 $0 $0
Taxes Incurred $0 $13,924 $13,145
Net Profit ($855) $32,490 $30,672
Net Profit/Sales -0.98% 16.06% 12.87%
Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $87,047 $202,343 $238,402
Subtotal Cash from Operations $87,047 $202,343 $238,402
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 $87,047 $202,343 $238,402
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $52,600 $93,000 $122,000
Bill Payments $30,707 $71,679 $83,201
Subtotal Spent on Operations $83,307 $164,679 $205,201
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 $83,307 $164,679 $205,201
Net Cash Flow $3,740 $37,664 $33,201
Cash Balance $27,590 $65,254 $98,456
Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $27,590 $65,254 $98,456
Other Current Assets $0 $0 $0
Total Current Assets $27,590 $65,254 $98,456
Long-term Assets
Long-term Assets $9,000 $9,000 $9,000
Accumulated Depreciation $1,800 $3,600 $5,400
Total Long-term Assets $7,200 $5,400 $3,600
Total Assets $34,790 $70,654 $102,056
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $2,795 $6,169 $6,898
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $2,795 $6,169 $6,898
Long-term Liabilities $0 $0 $0
Total Liabilities $2,795 $6,169 $6,898
Paid-in Capital $40,000 $40,000 $40,000
Retained Earnings ($7,150) ($8,005) $24,485
Earnings ($855) $32,490 $30,672
Total Capital $31,995 $64,485 $95,157
Total Liabilities and Capital $34,790 $70,654 $102,056
Net Worth $31,995 $64,485 $95,157
Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth n.a. 132.45% 17.82% 8.18%
Percent of Total Assets
Other Current Assets 0.00% 0.00% 0.00% 41.37%
Total Current Assets 79.30% 92.36% 96.47% 75.36%
Long-term Assets 20.70% 7.64% 3.53% 24.64%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 8.03% 8.73% 6.76% 31.49%
Long-term Liabilities 0.00% 0.00% 0.00% 16.85%
Total Liabilities 8.03% 8.73% 6.76% 48.34%
Net Worth 91.97% 91.27% 93.24% 51.66%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 90.57% 85.28% 85.28% 100.00%
Selling, General & Administrative Expenses 91.55% 69.23% 72.42% 82.59%
Advertising Expenses 0.00% 0.00% 0.00% 1.16%
Profit Before Interest and Taxes -0.98% 22.94% 18.38% 1.47%
Main Ratios
Current 9.87 10.58 14.27 1.93
Quick 9.87 10.58 14.27 1.50
Total Debt to Total Assets 8.03% 8.73% 6.76% 3.09%
Pre-tax Return on Net Worth -2.67% 71.98% 46.05% 59.56%
Pre-tax Return on Assets -2.46% 65.69% 42.93% 7.63%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -0.98% 16.06% 12.87% n.a
Return on Equity -2.67% 50.38% 32.23% n.a
Activity Ratios
Accounts Payable Turnover 11.99 12.17 12.17 n.a
Payment Days 27 22 28 n.a
Total Asset Turnover 2.50 2.86 2.34 n.a
Debt Ratios
Debt to Net Worth 0.09 0.10 0.07 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $24,795 $59,085 $91,557 n.a
Interest Coverage 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 0.40 0.35 0.43 n.a
Current Debt/Total Assets 8% 9% 7% n.a
Acid Test 9.87 10.58 14.27 n.a
Sales/Net Worth 2.72 3.14 2.51 n.a
Dividend Payout 0.00 0.00 0.00 n.a