Circuit Fitness Importing

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Fitness Equipment Business Plan

Financial Plan

The following sections will outline important financial information.

8.1 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

8.2 Break-even Analysis

The Break-even Analysis indicates that approximately $41,600 will be needed in monthly revenue to reach the break even point.

Break-even Analysis
Monthly Revenue Break-even $41,669
Assumptions:
Average Percent Variable Cost 66%
Estimated Monthly Fixed Cost $14,012

8.3 Projected Profit and Loss

The following table and charts illustrate the projected profit and loss.

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $433,206 $1,020,900 $1,260,750
Direct Cost of Sales $287,536 $677,612 $836,810
Other Costs of Goods $0 $0 $0
Total Cost of Sales $287,536 $677,612 $836,810
Gross Margin $145,670 $343,288 $423,940
Gross Margin % 33.63% 33.63% 33.63%
Expenses
Payroll $101,600 $172,200 $207,200
Sales and Marketing and Other Expenses $31,500 $31,500 $35,000
Depreciation $3,000 $3,000 $3,000
Rent $12,000 $12,000 $12,000
Utilities $3,000 $3,000 $3,000
Insurance $1,800 $1,800 $1,800
Payroll Taxes $15,240 $25,830 $31,080
Other $0 $0 $0
Total Operating Expenses $168,140 $249,330 $293,080
Profit Before Interest and Taxes ($22,470) $93,958 $130,860
EBITDA ($19,470) $96,958 $133,860
Interest Expense $7,764 $6,457 $5,123
Taxes Incurred $0 $26,250 $37,721
Net Profit ($30,234) $61,251 $88,016
Net Profit/Sales -6.98% 6.00% 6.98%

8.4 Projected Cash Flow

The following chart and table show the projected cash flow.

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $216,603 $510,450 $630,375
Cash from Receivables $142,682 $410,168 $589,448
Subtotal Cash from Operations $359,285 $920,618 $1,219,823
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 $359,285 $920,618 $1,219,823
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $101,600 $172,200 $207,200
Bill Payments $327,255 $808,471 $963,605
Subtotal Spent on Operations $428,855 $980,671 $1,170,805
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 $13,793 $13,282 $13,392
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $442,647 $993,953 $1,184,197
Net Cash Flow ($83,362) ($73,335) $35,626
Cash Balance $83,738 $10,402 $46,028

8.5 Projected Balance Sheet

The following table presents the projected balance sheet.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $83,738 $10,402 $46,028
Accounts Receivable $73,921 $174,203 $215,131
Inventory $25,349 $59,738 $73,773
Other Current Assets $0 $0 $0
Total Current Assets $183,008 $244,344 $334,932
Long-term Assets
Long-term Assets $15,000 $15,000 $15,000
Accumulated Depreciation $3,000 $6,000 $9,000
Total Long-term Assets $12,000 $9,000 $6,000
Total Assets $195,008 $253,344 $340,932
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $56,935 $67,302 $80,266
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $56,935 $67,302 $80,266
Long-term Liabilities $71,207 $57,925 $44,533
Total Liabilities $128,142 $125,227 $124,799
Paid-in Capital $115,000 $115,000 $115,000
Retained Earnings ($17,900) ($48,134) $13,117
Earnings ($30,234) $61,251 $88,016
Total Capital $66,866 $128,117 $216,133
Total Liabilities and Capital $195,008 $253,344 $340,932
Net Worth $66,866 $128,117 $216,133

8.6 Business Ratios

Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 5941, Sporting good (exercise apparatus)-retail, are shown for comparison. We are an importer of European equipment into the U.S., and we retail the equipment to the end user...gyms and health clubs, as well as to independent distributors.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 135.66% 23.49% 4.01%
Percent of Total Assets
Accounts Receivable 37.91% 68.76% 63.10% 15.71%
Inventory 13.00% 23.58% 21.64% 39.55%
Other Current Assets 0.00% 0.00% 0.00% 24.92%
Total Current Assets 93.85% 96.45% 98.24% 80.18%
Long-term Assets 6.15% 3.55% 1.76% 19.82%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 29.20% 26.57% 23.54% 40.00%
Long-term Liabilities 36.52% 22.86% 13.06% 14.33%
Total Liabilities 65.71% 49.43% 36.61% 54.33%
Net Worth 34.29% 50.57% 63.39% 45.67%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 33.63% 33.63% 33.63% 31.56%
Selling, General & Administrative Expenses 40.61% 27.63% 26.64% 19.76%
Advertising Expenses 0.00% 0.00% 0.00% 1.49%
Profit Before Interest and Taxes -5.19% 9.20% 10.38% 1.66%
Main Ratios
Current 3.21 3.63 4.17 1.80
Quick 2.77 2.74 3.25 0.69
Total Debt to Total Assets 65.71% 49.43% 36.61% 3.82%
Pre-tax Return on Net Worth -45.22% 68.30% 58.18% 59.54%
Pre-tax Return on Assets -15.50% 34.54% 36.88% 9.44%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -6.98% 6.00% 6.98% n.a
Return on Equity -45.22% 47.81% 40.72% n.a
Activity Ratios
Accounts Receivable Turnover 2.93 2.93 2.93 n.a
Collection Days 55 89 113 n.a
Inventory Turnover 24.00 15.93 12.54 n.a
Accounts Payable Turnover 6.75 12.17 12.17 n.a
Payment Days 27 28 28 n.a
Total Asset Turnover 2.22 4.03 3.70 n.a
Debt Ratios
Debt to Net Worth 1.92 0.98 0.58 n.a
Current Liab. to Liab. 0.44 0.54 0.64 n.a
Liquidity Ratios
Net Working Capital $126,073 $177,042 $254,666 n.a
Interest Coverage -2.89 14.55 25.54 n.a
Additional Ratios
Assets to Sales 0.45 0.25 0.27 n.a
Current Debt/Total Assets 29% 27% 24% n.a
Acid Test 1.47 0.15 0.57 n.a
Sales/Net Worth 6.48 7.97 5.83 n.a
Dividend Payout 0.00 0.00 0.00 n.a