Cranium Filament Reductions

Start your own business plan »

Hair Salon Business Plan

Financial Plan

The following sections will outline the important financial data.

7.1 Important Assumptions

The following table details important financial assumptions for Cranium Filament Reductions.

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

7.2 Break-even Analysis

The Break-even Analysis indicates what Cranium must achieve in monthly revenue to reach the break even point.

Break-even Analysis
Monthly Revenue Break-even $31,511
Assumptions:
Average Percent Variable Cost 16%
Estimated Monthly Fixed Cost $26,579

7.3 Projected Profit and Loss

The following table and chart shows the projected profit and loss for Cranium Filament Reductions.

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $277,143 $504,802 $525,337
Direct Cost of Sales $43,379 $79,013 $82,227
Other Production Expenses $0 $0 $0
Total Cost of Sales $43,379 $79,013 $82,227
Gross Margin $233,764 $425,790 $443,111
Gross Margin % 84.35% 84.35% 84.35%
Expenses
Payroll $251,600 $275,200 $279,200
Sales and Marketing and Other Expenses $1,442 $0 $0
Depreciation $1,464 $1,464 $1,464
Leased Equipment $0 $0 $0
Utilities $1,200 $1,200 $1,200
Insurance $1,500 $1,500 $1,500
Rent $24,000 $24,000 $24,000
Payroll Taxes $37,740 $41,280 $41,880
Other $0 $0 $0
Total Operating Expenses $318,946 $344,644 $349,244
Profit Before Interest and Taxes ($85,182) $81,146 $93,867
EBITDA ($83,718) $82,610 $95,331
Interest Expense $4,500 $4,500 $4,500
Taxes Incurred $0 $22,994 $26,810
Net Profit ($89,682) $53,652 $62,557
Net Profit/Sales -32.36% 10.63% 11.91%

7.4 Projected Cash Flow

The following table and chart shows the projected cash flow for Cranium Filament Reductions.

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $277,143 $504,802 $525,337
Subtotal Cash from Operations $277,143 $504,802 $525,337
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 $277,143 $504,802 $525,337
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $251,600 $275,200 $279,200
Bill Payments $101,816 $172,090 $181,489
Subtotal Spent on Operations $353,416 $447,290 $460,689
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 $353,416 $447,290 $460,689
Net Cash Flow ($76,273) $57,513 $64,648
Cash Balance $20,307 $77,820 $142,467

7.5 Projected Balance Sheet

The following table and chart shows the projected balance sheet for Cranium Filament Reductions.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $20,307 $77,820 $142,467
Other Current Assets $0 $0 $0
Total Current Assets $20,307 $77,820 $142,467
Long-term Assets
Long-term Assets $7,320 $7,320 $7,320
Accumulated Depreciation $1,464 $2,928 $4,392
Total Long-term Assets $5,856 $4,392 $2,928
Total Assets $26,163 $82,212 $145,395
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $11,945 $14,341 $14,968
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $11,945 $14,341 $14,968
Long-term Liabilities $45,000 $45,000 $45,000
Total Liabilities $56,945 $59,341 $59,968
Paid-in Capital $60,000 $60,000 $60,000
Retained Earnings ($1,100) ($90,782) ($37,130)
Earnings ($89,682) $53,652 $62,557
Total Capital ($30,782) $22,870 $85,427
Total Liabilities and Capital $26,163 $82,212 $145,395
Net Worth ($30,782) $22,870 $85,427

7.6 Business Ratios

Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 7231, Beauty Shops, are shown for comparison.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 82.14% 4.07% 7.50%
Percent of Total Assets
Other Current Assets 0.00% 0.00% 0.00% 36.10%
Total Current Assets 77.62% 94.66% 97.99% 52.40%
Long-term Assets 22.38% 5.34% 2.01% 47.60%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 45.65% 17.44% 10.30% 31.90%
Long-term Liabilities 172.00% 54.74% 30.95% 26.80%
Total Liabilities 217.65% 72.18% 41.25% 58.70%
Net Worth -117.65% 27.82% 58.75% 41.30%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 84.35% 84.35% 84.35% 0.00%
Selling, General & Administrative Expenses 116.65% 73.64% 72.26% 73.40%
Advertising Expenses 0.52% #VALUE! #VALUE! 2.50%
Profit Before Interest and Taxes -30.74% 16.07% 17.87% 3.20%
Main Ratios
Current 1.70 5.43 9.52 1.79
Quick 1.70 5.43 9.52 1.34
Total Debt to Total Assets 217.65% 72.18% 41.25% 58.70%
Pre-tax Return on Net Worth 291.35% 335.13% 104.61% 5.20%
Pre-tax Return on Assets -342.78% 93.23% 61.46% 12.50%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -32.36% 10.63% 11.91% n.a
Return on Equity 0.00% 234.59% 73.23% n.a
Activity Ratios
Accounts Payable Turnover 9.52 12.17 12.17 n.a
Payment Days 27 27 29 n.a
Total Asset Turnover 10.59 6.14 3.61 n.a
Debt Ratios
Debt to Net Worth 0.00 2.59 0.70 n.a
Current Liab. to Liab. 0.21 0.24 0.25 n.a
Liquidity Ratios
Net Working Capital $8,362 $63,478 $127,499 n.a
Interest Coverage -18.93 18.03 20.86 n.a
Additional Ratios
Assets to Sales 0.09 0.16 0.28 n.a
Current Debt/Total Assets 46% 17% 10% n.a
Acid Test 1.70 5.43 9.52 n.a
Sales/Net Worth 0.00 22.07 6.15 n.a
Dividend Payout 0.00 0.00 0.00 n.a