Kid's Clothing Store Business Plan

SmokeJumpers

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Financial Plan

The following is the financial plan for SmokeJumpers.

Break-even Analysis

The monthly break-even point is shown in the table and chart below.

Break-even Analysis
Monthly Revenue Break-even $15,228
Assumptions:
Average Percent Variable Cost 26%
Estimated Monthly Fixed Cost $11,270

Projected Profit and Loss

The following table and chart details the projected profit and loss for three years.

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $196,650 $242,000 $275,000
Direct Cost of Sales $51,110 $62,000 $73,000
Other Production Expenses $0 $0 $0
Total Cost of Sales $51,110 $62,000 $73,000
Gross Margin $145,540 $180,000 $202,000
Gross Margin % 74.01% 74.38% 73.45%
Expenses
Payroll $54,000 $62,000 $70,000
Sales and Marketing and Other Expenses $30,000 $40,000 $50,000
Depreciation $7,140 $7,140 $7,140
Leased Equipment $0 $0 $0
Utilities $6,000 $6,000 $6,000
Insurance $6,000 $6,000 $6,000
Rent $24,000 $24,000 $24,000
Payroll Taxes $8,100 $9,300 $10,500
Other $0 $0 $0
Total Operating Expenses $135,240 $154,440 $173,640
Profit Before Interest and Taxes $10,300 $25,560 $28,360
EBITDA $17,440 $32,700 $35,500
Interest Expense $4,480 $3,560 $2,600
Taxes Incurred $1,746 $6,600 $7,728
Net Profit $4,074 $15,400 $18,032
Net Profit/Sales 2.07% 6.36% 6.56%

Projected Cash Flow

The following table and chart presents the projected cash flow for three years.

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $196,650 $242,000 $275,000
Subtotal Cash from Operations $196,650 $242,000 $275,000
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 $196,650 $242,000 $275,000
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $54,000 $62,000 $70,000
Bill Payments $122,893 $167,509 $182,158
Subtotal Spent on Operations $176,893 $229,509 $252,158
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 $9,600 $9,600 $9,600
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $186,493 $239,109 $261,758
Net Cash Flow $10,157 $2,891 $13,242
Cash Balance $50,157 $53,048 $66,290

Projected Balance Sheet

The following table dislays the projected balance sheet for three years.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $50,157 $53,048 $66,290
Inventory $3,465 $20,879 $23,861
Other Current Assets $900 $900 $900
Total Current Assets $54,522 $74,827 $91,051
Long-term Assets
Long-term Assets $5,000 $5,000 $5,000
Accumulated Depreciation $7,140 $14,280 $21,420
Total Long-term Assets ($2,140) ($9,280) ($16,420)
Total Assets $52,382 $65,547 $74,631
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $7,008 $14,373 $15,025
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $7,008 $14,373 $15,025
Long-term Liabilities $40,400 $30,800 $21,200
Total Liabilities $47,408 $45,173 $36,225
Paid-in Capital $10,000 $10,000 $10,000
Retained Earnings ($9,100) ($5,026) $10,374
Earnings $4,074 $15,400 $18,032
Total Capital $4,974 $20,374 $38,406
Total Liabilities and Capital $52,382 $65,547 $74,631
Net Worth $4,974 $20,374 $38,406

Business Ratios

Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 5999, Miscellaneous Retail Stores, are shown for comparison.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth n.a. 23.06% 13.64% 6.30%
Percent of Total Assets
Inventory 6.61% 31.85% 31.97% 39.30%
Other Current Assets 1.72% 1.37% 1.21% 23.90%
Total Current Assets 104.09% 114.16% 122.00% 80.10%
Long-term Assets -4.09% -14.16% -22.00% 19.90%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 13.38% 21.93% 20.13% 46.00%
Long-term Liabilities 77.13% 46.99% 28.41% 14.00%
Total Liabilities 90.50% 68.92% 48.54% 60.00%
Net Worth 9.50% 31.08% 51.46% 40.00%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 74.01% 74.38% 73.45% 34.10%
Selling, General & Administrative Expenses 71.94% 68.02% 66.90% 19.80%
Advertising Expenses 15.26% 16.53% 18.18% 2.60%
Profit Before Interest and Taxes 5.24% 10.56% 10.31% 1.10%
Main Ratios
Current 7.78 5.21 6.06 1.77
Quick 7.29 3.75 4.47 0.67
Total Debt to Total Assets 90.50% 68.92% 48.54% 60.00%
Pre-tax Return on Net Worth 117.01% 107.98% 67.07% 2.60%
Pre-tax Return on Assets 11.11% 33.56% 34.52% 6.50%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 2.07% 6.36% 6.56% n.a
Return on Equity 81.91% 75.59% 46.95% n.a
Activity Ratios
Inventory Turnover 3.60 5.09 3.26 n.a
Accounts Payable Turnover 14.97 12.17 12.17 n.a
Payment Days 34 22 29 n.a
Total Asset Turnover 3.75 3.69 3.68 n.a
Debt Ratios
Debt to Net Worth 9.53 2.22 0.94 n.a
Current Liab. to Liab. 0.15 0.32 0.41 n.a
Liquidity Ratios
Net Working Capital $47,514 $60,454 $76,026 n.a
Interest Coverage 2.30 7.18 10.91 n.a
Additional Ratios
Assets to Sales 0.27 0.27 0.27 n.a
Current Debt/Total Assets 13% 22% 20% n.a
Acid Test 7.29 3.75 4.47 n.a
Sales/Net Worth 39.54 11.88 7.16 n.a
Dividend Payout 0.00 0.00 0.00 n.a
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Break-even Analysis
Monthly Revenue Break-even $15,228
Assumptions:
Average Percent Variable Cost 26%
Estimated Monthly Fixed Cost $11,270
Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $196,650 $242,000 $275,000
Direct Cost of Sales $51,110 $62,000 $73,000
Other Production Expenses $0 $0 $0
Total Cost of Sales $51,110 $62,000 $73,000
Gross Margin $145,540 $180,000 $202,000
Gross Margin % 74.01% 74.38% 73.45%
Expenses
Payroll $54,000 $62,000 $70,000
Sales and Marketing and Other Expenses $30,000 $40,000 $50,000
Depreciation $7,140 $7,140 $7,140
Leased Equipment $0 $0 $0
Utilities $6,000 $6,000 $6,000
Insurance $6,000 $6,000 $6,000
Rent $24,000 $24,000 $24,000
Payroll Taxes $8,100 $9,300 $10,500
Other $0 $0 $0
Total Operating Expenses $135,240 $154,440 $173,640
Profit Before Interest and Taxes $10,300 $25,560 $28,360
EBITDA $17,440 $32,700 $35,500
Interest Expense $4,480 $3,560 $2,600
Taxes Incurred $1,746 $6,600 $7,728
Net Profit $4,074 $15,400 $18,032
Net Profit/Sales 2.07% 6.36% 6.56%
Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $196,650 $242,000 $275,000
Subtotal Cash from Operations $196,650 $242,000 $275,000
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 $196,650 $242,000 $275,000
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $54,000 $62,000 $70,000
Bill Payments $122,893 $167,509 $182,158
Subtotal Spent on Operations $176,893 $229,509 $252,158
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 $9,600 $9,600 $9,600
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $186,493 $239,109 $261,758
Net Cash Flow $10,157 $2,891 $13,242
Cash Balance $50,157 $53,048 $66,290
Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $50,157 $53,048 $66,290
Inventory $3,465 $20,879 $23,861
Other Current Assets $900 $900 $900
Total Current Assets $54,522 $74,827 $91,051
Long-term Assets
Long-term Assets $5,000 $5,000 $5,000
Accumulated Depreciation $7,140 $14,280 $21,420
Total Long-term Assets ($2,140) ($9,280) ($16,420)
Total Assets $52,382 $65,547 $74,631
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $7,008 $14,373 $15,025
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $7,008 $14,373 $15,025
Long-term Liabilities $40,400 $30,800 $21,200
Total Liabilities $47,408 $45,173 $36,225
Paid-in Capital $10,000 $10,000 $10,000
Retained Earnings ($9,100) ($5,026) $10,374
Earnings $4,074 $15,400 $18,032
Total Capital $4,974 $20,374 $38,406
Total Liabilities and Capital $52,382 $65,547 $74,631
Net Worth $4,974 $20,374 $38,406
Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth n.a. 23.06% 13.64% 6.30%
Percent of Total Assets
Inventory 6.61% 31.85% 31.97% 39.30%
Other Current Assets 1.72% 1.37% 1.21% 23.90%
Total Current Assets 104.09% 114.16% 122.00% 80.10%
Long-term Assets -4.09% -14.16% -22.00% 19.90%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 13.38% 21.93% 20.13% 46.00%
Long-term Liabilities 77.13% 46.99% 28.41% 14.00%
Total Liabilities 90.50% 68.92% 48.54% 60.00%
Net Worth 9.50% 31.08% 51.46% 40.00%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 74.01% 74.38% 73.45% 34.10%
Selling, General & Administrative Expenses 71.94% 68.02% 66.90% 19.80%
Advertising Expenses 15.26% 16.53% 18.18% 2.60%
Profit Before Interest and Taxes 5.24% 10.56% 10.31% 1.10%
Main Ratios
Current 7.78 5.21 6.06 1.77
Quick 7.29 3.75 4.47 0.67
Total Debt to Total Assets 90.50% 68.92% 48.54% 60.00%
Pre-tax Return on Net Worth 117.01% 107.98% 67.07% 2.60%
Pre-tax Return on Assets 11.11% 33.56% 34.52% 6.50%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 2.07% 6.36% 6.56% n.a
Return on Equity 81.91% 75.59% 46.95% n.a
Activity Ratios
Inventory Turnover 3.60 5.09 3.26 n.a
Accounts Payable Turnover 14.97 12.17 12.17 n.a
Payment Days 34 22 29 n.a
Total Asset Turnover 3.75 3.69 3.68 n.a
Debt Ratios
Debt to Net Worth 9.53 2.22 0.94 n.a
Current Liab. to Liab. 0.15 0.32 0.41 n.a
Liquidity Ratios
Net Working Capital $47,514 $60,454 $76,026 n.a
Interest Coverage 2.30 7.18 10.91 n.a
Additional Ratios
Assets to Sales 0.27 0.27 0.27 n.a
Current Debt/Total Assets 13% 22% 20% n.a
Acid Test 7.29 3.75 4.47 n.a
Sales/Net Worth 39.54 11.88 7.16 n.a
Dividend Payout 0.00 0.00 0.00 n.a