Yeti Cards & Gifts

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Gift Novelty Souvenir Shop Business Plan

Financial Plan

The following sections outline important financial information.

8.1 Important Assumptions

The following table details important financial assumptions.

General Assumptions
2003 2004 2005
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 $9,500 will be needed in monthly revenue to reach the break-even point.

Break-even Analysis
Monthly Revenue Break-even $9,500
Assumptions:
Average Percent Variable Cost 35%
Estimated Monthly Fixed Cost $6,175

8.3 Projected Cash Flow

The following chart and table show projected cash flow.

Pro Forma Cash Flow
2003 2004 2005
Cash Received
Cash from Operations
Cash Sales $128,269 $169,520 $180,434
Subtotal Cash from Operations $128,269 $169,520 $180,434
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 $20,000 $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 $148,269 $169,520 $180,434
Expenditures 2003 2004 2005
Expenditures from Operations
Cash Spending $40,392 $51,872 $53,872
Bill Payments $68,546 $107,359 $110,062
Subtotal Spent on Operations $108,938 $159,231 $163,934
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 $2,464 $3,180 $3,180
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $15,000 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $126,402 $162,411 $167,114
Net Cash Flow $21,867 $7,109 $13,320
Cash Balance $34,230 $41,339 $54,659

8.4 Projected Profit and Loss

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

Pro Forma Profit and Loss
2003 2004 2005
Sales $128,269 $169,520 $180,434
Direct Cost of Sales $44,894 $59,332 $63,152
Other Production Expenses $0 $0 $0
Total Cost of Sales $44,894 $59,332 $63,152
Gross Margin $83,375 $110,188 $117,282
Gross Margin % 65.00% 65.00% 65.00%
Expenses
Payroll $40,392 $51,872 $53,872
Sales and Marketing and Other Expenses $6,000 $6,000 $6,000
Depreciation $2,751 $3,000 $3,000
Leased Equipment $0 $0 $0
Utilities $3,300 $4,200 $4,200
Insurance $4,200 $5,400 $5,400
Rent $10,200 $13,200 $13,200
Payroll Taxes $6,059 $7,781 $8,081
Other $1,200 $1,200 $1,200
Total Operating Expenses $74,101 $92,653 $94,953
Profit Before Interest and Taxes $9,274 $17,535 $22,329
EBITDA $12,024 $20,535 $25,329
Interest Expense $2,898 $3,095 $2,777
Taxes Incurred $1,913 $4,332 $5,866
Net Profit $4,463 $10,108 $13,687
Net Profit/Sales 3.48% 5.96% 7.59%

8.5 Projected Balance Sheet

The following table present the projected balance sheet.

Pro Forma Balance Sheet
2003 2004 2005
Assets
Current Assets
Cash $34,230 $41,339 $54,659
Inventory $5,982 $7,906 $8,415
Other Current Assets $0 $0 $0
Total Current Assets $40,212 $49,245 $63,074
Long-term Assets
Long-term Assets $20,000 $20,000 $20,000
Accumulated Depreciation $5,502 $8,502 $11,502
Total Long-term Assets $14,498 $11,498 $8,498
Total Assets $54,711 $60,743 $71,572
Liabilities and Capital 2003 2004 2005
Current Liabilities
Accounts Payable $9,646 $8,750 $9,073
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $9,646 $8,750 $9,073
Long-term Liabilities $32,536 $29,356 $26,176
Total Liabilities $42,182 $38,106 $35,249
Paid-in Capital $0 $0 $0
Retained Earnings $8,066 $12,529 $22,637
Earnings $4,463 $10,108 $13,687
Total Capital $12,529 $22,637 $36,324
Total Liabilities and Capital $54,711 $60,743 $71,572
Net Worth $12,529 $22,637 $36,324

8.7 Business Ratios

The following table shows standard business ratios for Yeti Cards and Gifts. Industry Profile ratios are shown for comparison. Our Standard Industrial Classification (SIC) industry class and code are: Gift, novelty, and souvenir shop - 5947.

Ratio Analysis
2003 2004 2005 Industry Profile
Sales Growth 28.00% 32.16% 6.44% 3.34%
Percent of Total Assets
Inventory 10.93% 13.02% 11.76% 40.42%
Other Current Assets 0.00% 0.00% 0.00% 23.99%
Total Current Assets 73.50% 81.07% 88.13% 80.29%
Long-term Assets 26.50% 18.93% 11.87% 19.71%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 17.63% 14.41% 12.68% 36.19%
Long-term Liabilities 59.47% 48.33% 36.57% 15.42%
Total Liabilities 77.10% 62.73% 49.25% 51.61%
Net Worth 22.90% 37.27% 50.75% 48.39%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 65.00% 65.00% 65.00% 37.74%
Selling, General & Administrative Expenses 0.00% 0.00% 0.00% 23.72%
Advertising Expenses 0.00% 0.00% 0.00% 2.14%
Profit Before Interest and Taxes 7.23% 10.34% 12.38% 1.65%
Main Ratios
Current 4.17 5.63 6.95 1.98
Quick 3.55 4.72 6.02 0.74
Total Debt to Total Assets 77.10% 62.73% 49.25% 3.65%
Pre-tax Return on Net Worth 50.88% 63.79% 53.83% 58.19%
Pre-tax Return on Assets 11.65% 23.77% 27.32% 8.72%
Additional Ratios 2003 2004 2005
Net Profit Margin 3.48% 5.96% 7.59% n.a
Return on Equity 35.62% 44.65% 37.68% n.a
Activity Ratios
Inventory Turnover 8.57 8.54 7.74 n.a
Accounts Payable Turnover 7.69 12.17 12.17 n.a
Payment Days 29 32 29 n.a
Total Asset Turnover 2.34 2.79 2.52 n.a
Debt Ratios
Debt to Net Worth 3.37 1.68 0.97 n.a
Current Liab. to Liab. 0.23 0.23 0.26 n.a
Liquidity Ratios
Net Working Capital $30,566 $40,494 $54,001 n.a
Interest Coverage 3.20 5.67 8.04 n.a
Additional Ratios
Assets to Sales 0.43 0.36 0.40 n.a
Current Debt/Total Assets 18% 14% 13% n.a
Acid Test 3.55 4.72 6.02 n.a
Sales/Net Worth 10.24 7.49 4.97 n.a
Dividend Payout 0.00 0.00 0.00 n.a