The Metolius Agency

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Graphic Design 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 $7,000 will be needed in monthly revenue to reach the break-even point.

Break-even Analysis
Monthly Revenue Break-even $7,053
Assumptions:
Average Percent Variable Cost 3%
Estimated Monthly Fixed Cost $6,841

8.3 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 $69,397 $125,251 $145,392
Direct Cost of Sales $2,082 $3,758 $4,362
Other Production Expenses $0 $0 $0
Total Cost of Sales $2,082 $3,758 $4,362
Gross Margin $67,316 $121,493 $141,030
Gross Margin % 97.00% 97.00% 97.00%
Expenses
Payroll $59,280 $76,560 $76,560
Sales and Marketing and Other Expenses $2,820 $2,820 $2,820
Depreciation $2,400 $2,400 $2,400
Website maintenance $600 $600 $600
Insurance $900 $900 $900
Rent $7,200 $7,200 $7,200
Payroll Taxes $8,892 $11,484 $11,484
Other $0 $0 $0
Total Operating Expenses $82,092 $101,964 $101,964
Profit Before Interest and Taxes ($14,776) $19,529 $39,066
EBITDA ($12,376) $21,929 $41,466
Interest Expense $0 $0 $0
Taxes Incurred $0 $5,859 $11,720
Net Profit ($14,776) $13,670 $27,347
Net Profit/Sales -21.29% 10.91% 18.81%

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 $69,397 $125,251 $145,392
Subtotal Cash from Operations $69,397 $125,251 $145,392
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 $69,397 $125,251 $145,392
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $59,280 $76,560 $76,560
Bill Payments $20,322 $32,111 $38,554
Subtotal Spent on Operations $79,602 $108,671 $115,114
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 $79,602 $108,671 $115,114
Net Cash Flow ($10,205) $16,580 $30,278
Cash Balance $11,995 $28,575 $58,853

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 $11,995 $28,575 $58,853
Other Current Assets $0 $0 $0
Total Current Assets $11,995 $28,575 $58,853
Long-term Assets
Long-term Assets $19,800 $19,800 $19,800
Accumulated Depreciation $2,400 $4,800 $7,200
Total Long-term Assets $17,400 $15,000 $12,600
Total Assets $29,395 $43,575 $71,453
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $2,172 $2,681 $3,213
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $2,172 $2,681 $3,213
Long-term Liabilities $0 $0 $0
Total Liabilities $2,172 $2,681 $3,213
Paid-in Capital $43,000 $43,000 $43,000
Retained Earnings ($1,000) ($15,776) ($2,106)
Earnings ($14,776) $13,670 $27,347
Total Capital $27,224 $40,894 $68,240
Total Liabilities and Capital $29,395 $43,575 $71,453
Net Worth $27,224 $40,894 $68,240

8.6 Business Ratios

The following table compares standard business ratios with the Standard Industry Code #7336, Graphic Design Services.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 80.48% 16.08% 9.02%
Percent of Total Assets
Other Current Assets 0.00% 0.00% 0.00% 52.57%
Total Current Assets 40.81% 65.58% 82.37% 76.45%
Long-term Assets 59.19% 34.42% 17.63% 23.55%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 7.39% 6.15% 4.50% 34.45%
Long-term Liabilities 0.00% 0.00% 0.00% 23.62%
Total Liabilities 7.39% 6.15% 4.50% 58.07%
Net Worth 92.61% 93.85% 95.50% 41.93%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 97.00% 97.00% 97.00% 100.00%
Selling, General & Administrative Expenses 118.29% 86.09% 78.19% 77.05%
Advertising Expenses 1.47% 0.81% 0.70% 1.42%
Profit Before Interest and Taxes -21.29% 15.59% 26.87% 0.83%
Main Ratios
Current 5.52 10.66 18.32 1.51
Quick 5.52 10.66 18.32 1.13
Total Debt to Total Assets 7.39% 6.15% 4.50% 66.33%
Pre-tax Return on Net Worth -54.28% 47.76% 57.25% 2.06%
Pre-tax Return on Assets -50.27% 44.82% 54.67% 6.12%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -21.29% 10.91% 18.81% n.a
Return on Equity -54.28% 33.43% 40.07% n.a
Activity Ratios
Accounts Payable Turnover 10.36 12.17 12.17 n.a
Payment Days 27 27 28 n.a
Total Asset Turnover 2.36 2.87 2.03 n.a
Debt Ratios
Debt to Net Worth 0.08 0.07 0.05 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $9,824 $25,894 $55,640 n.a
Interest Coverage 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 0.42 0.35 0.49 n.a
Current Debt/Total Assets 7% 6% 4% n.a
Acid Test 5.52 10.66 18.32 n.a
Sales/Net Worth 2.55 3.06 2.13 n.a
Dividend Payout 0.00 0.00 0.00 n.a