Inline Hockey Service Business Plan

The Skate Zone

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Financial Plan

The following sections describe the financial information of The Skate Zone.

Important Assumptions

The detailed assumptions to the company's financial projections can be found in the table below.

General Assumptions
Year 1 Year 2 Year 3
Plan Month 1 2 3
Current Interest Rate 8.50% 8.50% 8.50%
Long-term Interest Rate 8.50% 8.50% 8.50%
Tax Rate 2.50% 0.00% 2.50%
Other 0 0 0

Projected Profit and Loss

The following table contains the profit and loss information for The Skate Zone.

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $181,500 $271,500 $410,000
Direct Cost of Sales $38,500 $57,500 $87,500
Other $0 $0 $0
Total Cost of Sales $38,500 $57,500 $87,500
Gross Margin $143,000 $214,000 $322,500
Gross Margin % 78.79% 78.82% 78.66%
Expenses
Payroll $83,750 $101,600 $127,500
Sales and Marketing and Other Expenses $32,000 $42,700 $75,000
Depreciation $12,000 $20,000 $25,000
Telephone $1,800 $1,800 $2,000
Cleaning Supplies $3,000 $4,000 $7,500
Contract Referees $3,000 $3,000 $6,000
Payroll Taxes $12,563 $15,240 $19,125
Other $0 $0 $0
Total Operating Expenses $148,113 $188,340 $262,125
Profit Before Interest and Taxes ($5,113) $25,660 $60,375
EBITDA $6,888 $45,660 $85,375
Interest Expense $28,535 $27,379 $25,551
Taxes Incurred $0 $0 $871
Net Profit ($33,647) ($1,719) $33,953
Net Profit/Sales -18.54% -0.63% 8.28%

Projected Cash Flow

A summary of The Skate Zone's cash flow projections for the next three years is found in the table below.

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $181,500 $271,500 $410,000
Subtotal Cash from Operations $181,500 $271,500 $410,000
Additional Cash Received
Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $0 $22,000 $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 $2,000 $0 $0
Subtotal Cash Received $183,500 $293,500 $410,000
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $83,750 $101,600 $127,500
Bill Payments $112,137 $153,311 $221,968
Subtotal Spent on Operations $195,887 $254,911 $349,468
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $15,000
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $26,400 $25,000 $25,000
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $20,000 $20,000
Dividends $0 $0 $0
Subtotal Cash Spent $222,287 $299,911 $409,468
Net Cash Flow ($38,787) ($6,411) $532
Cash Balance $9,213 $2,802 $3,334

Projected Balance Sheet

The Skate Zone's projected Balance Sheet follows.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $9,213 $2,802 $3,334
Inventory $6,050 $8,223 $12,750
Other Current Assets $0 $0 $0
Total Current Assets $15,263 $11,025 $16,084
Long-term Assets
Long-term Assets $405,000 $425,000 $445,000
Accumulated Depreciation $12,000 $32,000 $57,000
Total Long-term Assets $393,000 $393,000 $388,000
Total Assets $408,263 $404,025 $404,084
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $12,160 $12,640 $18,746
Current Borrowing $0 $22,000 $7,000
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $12,160 $34,640 $25,746
Long-term Liabilities $323,600 $298,600 $273,600
Total Liabilities $335,760 $333,240 $299,346
Paid-in Capital $119,000 $119,000 $119,000
Retained Earnings ($12,850) ($46,497) ($48,216)
Earnings ($33,647) ($1,719) $33,953
Total Capital $72,503 $70,785 $104,738
Total Liabilities and Capital $408,263 $404,025 $404,084
Net Worth $72,503 $70,785 $104,738

Business Ratios

Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 7941, Sporting and Recreation Goods industry, are shown for comparison.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth n.a. 49.59% 51.01% 15.90%
Percent of Total Assets
Inventory 1.48% 2.04% 3.16% 2.80%
Other Current Assets 0.00% 0.00% 0.00% 34.10%
Total Current Assets 3.74% 2.73% 3.98% 45.20%
Long-term Assets 96.26% 97.27% 96.02% 54.80%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 2.98% 8.57% 6.37% 39.60%
Long-term Liabilities 79.26% 73.91% 67.71% 24.80%
Total Liabilities 82.24% 82.48% 74.08% 64.40%
Net Worth 17.76% 17.52% 25.92% 35.60%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 78.79% 78.82% 78.66% 0.00%
Selling, General & Administrative Expenses 83.16% 70.54% 64.27% 79.30%
Advertising Expenses 7.05% 4.79% 3.66% 2.10%
Profit Before Interest and Taxes -2.82% 9.45% 14.73% 2.10%
Main Ratios
Current 1.26 0.32 0.62 1.18
Quick 0.76 0.08 0.13 0.85
Total Debt to Total Assets 82.24% 82.48% 74.08% 64.40%
Pre-tax Return on Net Worth -46.41% -2.43% 33.25% 2.10%
Pre-tax Return on Assets -8.24% -0.43% 8.62% 5.90%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -18.54% -0.63% 8.28% n.a
Return on Equity -46.41% -2.43% 32.42% n.a
Activity Ratios
Inventory Turnover 10.44 8.06 8.34 n.a
Accounts Payable Turnover 9.90 12.17 12.17 n.a
Payment Days 28 29 25 n.a
Total Asset Turnover 0.44 0.67 1.01 n.a
Debt Ratios
Debt to Net Worth 4.63 4.71 2.86 n.a
Current Liab. to Liab. 0.04 0.10 0.09 n.a
Liquidity Ratios
Net Working Capital $3,103 ($23,615) ($9,662) n.a
Interest Coverage -0.18 0.94 2.36 n.a
Additional Ratios
Assets to Sales 2.25 1.49 0.99 n.a
Current Debt/Total Assets 3% 9% 6% n.a
Acid Test 0.76 0.08 0.13 n.a
Sales/Net Worth 2.50 3.84 3.91 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 8.50% 8.50% 8.50%
Long-term Interest Rate 8.50% 8.50% 8.50%
Tax Rate 2.50% 0.00% 2.50%
Other 0 0 0
Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $181,500 $271,500 $410,000
Direct Cost of Sales $38,500 $57,500 $87,500
Other $0 $0 $0
Total Cost of Sales $38,500 $57,500 $87,500
Gross Margin $143,000 $214,000 $322,500
Gross Margin % 78.79% 78.82% 78.66%
Expenses
Payroll $83,750 $101,600 $127,500
Sales and Marketing and Other Expenses $32,000 $42,700 $75,000
Depreciation $12,000 $20,000 $25,000
Telephone $1,800 $1,800 $2,000
Cleaning Supplies $3,000 $4,000 $7,500
Contract Referees $3,000 $3,000 $6,000
Payroll Taxes $12,563 $15,240 $19,125
Other $0 $0 $0
Total Operating Expenses $148,113 $188,340 $262,125
Profit Before Interest and Taxes ($5,113) $25,660 $60,375
EBITDA $6,888 $45,660 $85,375
Interest Expense $28,535 $27,379 $25,551
Taxes Incurred $0 $0 $871
Net Profit ($33,647) ($1,719) $33,953
Net Profit/Sales -18.54% -0.63% 8.28%
Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $181,500 $271,500 $410,000
Subtotal Cash from Operations $181,500 $271,500 $410,000
Additional Cash Received
Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $0 $22,000 $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 $2,000 $0 $0
Subtotal Cash Received $183,500 $293,500 $410,000
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $83,750 $101,600 $127,500
Bill Payments $112,137 $153,311 $221,968
Subtotal Spent on Operations $195,887 $254,911 $349,468
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $15,000
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $26,400 $25,000 $25,000
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $20,000 $20,000
Dividends $0 $0 $0
Subtotal Cash Spent $222,287 $299,911 $409,468
Net Cash Flow ($38,787) ($6,411) $532
Cash Balance $9,213 $2,802 $3,334
Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $9,213 $2,802 $3,334
Inventory $6,050 $8,223 $12,750
Other Current Assets $0 $0 $0
Total Current Assets $15,263 $11,025 $16,084
Long-term Assets
Long-term Assets $405,000 $425,000 $445,000
Accumulated Depreciation $12,000 $32,000 $57,000
Total Long-term Assets $393,000 $393,000 $388,000
Total Assets $408,263 $404,025 $404,084
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $12,160 $12,640 $18,746
Current Borrowing $0 $22,000 $7,000
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $12,160 $34,640 $25,746
Long-term Liabilities $323,600 $298,600 $273,600
Total Liabilities $335,760 $333,240 $299,346
Paid-in Capital $119,000 $119,000 $119,000
Retained Earnings ($12,850) ($46,497) ($48,216)
Earnings ($33,647) ($1,719) $33,953
Total Capital $72,503 $70,785 $104,738
Total Liabilities and Capital $408,263 $404,025 $404,084
Net Worth $72,503 $70,785 $104,738
Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth n.a. 49.59% 51.01% 15.90%
Percent of Total Assets
Inventory 1.48% 2.04% 3.16% 2.80%
Other Current Assets 0.00% 0.00% 0.00% 34.10%
Total Current Assets 3.74% 2.73% 3.98% 45.20%
Long-term Assets 96.26% 97.27% 96.02% 54.80%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 2.98% 8.57% 6.37% 39.60%
Long-term Liabilities 79.26% 73.91% 67.71% 24.80%
Total Liabilities 82.24% 82.48% 74.08% 64.40%
Net Worth 17.76% 17.52% 25.92% 35.60%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 78.79% 78.82% 78.66% 0.00%
Selling, General & Administrative Expenses 83.16% 70.54% 64.27% 79.30%
Advertising Expenses 7.05% 4.79% 3.66% 2.10%
Profit Before Interest and Taxes -2.82% 9.45% 14.73% 2.10%
Main Ratios
Current 1.26 0.32 0.62 1.18
Quick 0.76 0.08 0.13 0.85
Total Debt to Total Assets 82.24% 82.48% 74.08% 64.40%
Pre-tax Return on Net Worth -46.41% -2.43% 33.25% 2.10%
Pre-tax Return on Assets -8.24% -0.43% 8.62% 5.90%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -18.54% -0.63% 8.28% n.a
Return on Equity -46.41% -2.43% 32.42% n.a
Activity Ratios
Inventory Turnover 10.44 8.06 8.34 n.a
Accounts Payable Turnover 9.90 12.17 12.17 n.a
Payment Days 28 29 25 n.a
Total Asset Turnover 0.44 0.67 1.01 n.a
Debt Ratios
Debt to Net Worth 4.63 4.71 2.86 n.a
Current Liab. to Liab. 0.04 0.10 0.09 n.a
Liquidity Ratios
Net Working Capital $3,103 ($23,615) ($9,662) n.a
Interest Coverage -0.18 0.94 2.36 n.a
Additional Ratios
Assets to Sales 2.25 1.49 0.99 n.a
Current Debt/Total Assets 3% 9% 6% n.a
Acid Test 0.76 0.08 0.13 n.a
Sales/Net Worth 2.50 3.84 3.91 n.a
Dividend Payout 0.00 0.00 0.00 n.a