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Write Bike
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Financial Plan
The following sections will outline important financial information.
7.1 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 |
7.2 Break-even Analysis
The Break-even Analysis indicates what monthly revenue will be needed to reach the break-even point.
| Break-even Analysis | |
| Monthly Revenue Break-even | $3,333 |
| Assumptions: | |
| Average Percent Variable Cost | 0% |
| Estimated Monthly Fixed Cost | $3,333 |
7.3 Projected Profit and Loss
The following table and charts displays Projected Profit and Loss.
| Pro Forma Profit and Loss | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | $37,241 | $58,450 | $68,478 |
| Direct Cost of Sales | $0 | $0 | $0 |
| Other Costs of Sales | $0 | $0 | $0 |
| Total Cost of Sales | $0 | $0 | $0 |
| Gross Margin | $37,241 | $58,450 | $68,478 |
| Gross Margin % | 100.00% | 100.00% | 100.00% |
| Expenses | |||
| Payroll | $31,000 | $40,000 | $44,000 |
| Account Name | $0 | $0 | $0 |
| Depreciation | $996 | $996 | $996 |
| Rent | $3,000 | $3,000 | $3,000 |
| Utilities | $1,200 | $1,200 | $1,200 |
| Insurance | $900 | $900 | $900 |
| Payroll Taxes | $0 | $0 | $0 |
| Travel, trade shows. other expenses | $2,900 | $3,000 | $4,000 |
| Total Operating Expenses | $39,996 | $49,096 | $54,096 |
| Profit Before Interest and Taxes | ($2,755) | $9,354 | $14,382 |
| EBITDA | ($1,759) | $10,350 | $15,378 |
| Interest Expense | $0 | $0 | $0 |
| Taxes Incurred | $0 | $2,806 | $4,315 |
| Net Profit | ($2,755) | $6,548 | $10,068 |
| Net Profit/Sales | -7.40% | 11.20% | 14.70% |
7.4 Projected Cash Flow
The following table and chart presents the Projected Cash Flow.
| Pro Forma Cash Flow | |||
| Year 1 | Year 2 | Year 3 | |
| Cash Received | |||
| Cash from Operations | |||
| Cash Sales | $37,241 | $58,450 | $68,478 |
| Subtotal Cash from Operations | $37,241 | $58,450 | $68,478 |
| 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 | $37,241 | $58,450 | $68,478 |
| Expenditures | Year 1 | Year 2 | Year 3 |
| Expenditures from Operations | |||
| Cash Spending | $31,000 | $40,000 | $44,000 |
| Bill Payments | $7,493 | $10,517 | $13,209 |
| Subtotal Spent on Operations | $38,493 | $50,517 | $57,209 |
| 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 | $38,493 | $50,517 | $57,209 |
| Net Cash Flow | ($1,252) | $7,933 | $11,270 |
| Cash Balance | $7,949 | $15,881 | $27,151 |
7.5 Projected Balance Sheet
The following table shows the Projected Balance Sheet.
| Pro Forma Balance Sheet | |||
| Year 1 | Year 2 | Year 3 | |
| Assets | |||
| Current Assets | |||
| Cash | $7,949 | $15,881 | $27,151 |
| Other Current Assets | $0 | $0 | $0 |
| Total Current Assets | $7,949 | $15,881 | $27,151 |
| Long-term Assets | |||
| Long-term Assets | $5,000 | $5,000 | $5,000 |
| Accumulated Depreciation | $996 | $1,992 | $2,988 |
| Total Long-term Assets | $4,004 | $3,008 | $2,012 |
| Total Assets | $11,953 | $18,889 | $29,163 |
| Liabilities and Capital | Year 1 | Year 2 | Year 3 |
| Current Liabilities | |||
| Accounts Payable | $508 | $896 | $1,103 |
| Current Borrowing | $0 | $0 | $0 |
| Other Current Liabilities | $0 | $0 | $0 |
| Subtotal Current Liabilities | $508 | $896 | $1,103 |
| Long-term Liabilities | $0 | $0 | $0 |
| Total Liabilities | $508 | $896 | $1,103 |
| Paid-in Capital | $15,000 | $15,000 | $15,000 |
| Retained Earnings | ($800) | ($3,555) | $2,993 |
| Earnings | ($2,755) | $6,548 | $10,068 |
| Total Capital | $11,445 | $17,993 | $28,060 |
| Total Liabilities and Capital | $11,953 | $18,889 | $29,163 |
| Net Worth | $11,445 | $17,993 | $28,060 |
7.6 Business Ratios
Business Ratios for Write Bike are shown in the table below using the NAICS code 711510 for Independent Writers.
| Ratio Analysis | ||||
| Year 1 | Year 2 | Year 3 | Industry Profile | |
| Sales Growth | 0.00% | 56.95% | 17.16% | 11.74% |
| Percent of Total Assets | ||||
| Other Current Assets | 0.00% | 0.00% | 0.00% | 49.83% |
| Total Current Assets | 66.50% | 84.08% | 93.10% | 79.65% |
| Long-term Assets | 33.50% | 15.92% | 6.90% | 20.35% |
| Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
| Current Liabilities | 4.25% | 4.75% | 3.78% | 34.02% |
| Long-term Liabilities | 0.00% | 0.00% | 0.00% | 21.07% |
| Total Liabilities | 4.25% | 4.75% | 3.78% | 55.09% |
| Net Worth | 95.75% | 95.25% | 96.22% | 44.91% |
| Percent of Sales | ||||
| Sales | 100.00% | 100.00% | 100.00% | 100.00% |
| Gross Margin | 100.00% | 100.00% | 100.00% | 100.00% |
| Selling, General & Administrative Expenses | 107.40% | 88.80% | 85.30% | 75.93% |
| Advertising Expenses | 0.00% | 0.00% | 0.00% | 2.60% |
| Profit Before Interest and Taxes | -7.40% | 16.00% | 21.00% | 1.62% |
| Main Ratios | ||||
| Current | 15.66 | 17.72 | 24.63 | 1.69 |
| Quick | 15.66 | 17.72 | 24.63 | 1.37 |
| Total Debt to Total Assets | 4.25% | 4.75% | 3.78% | 60.72% |
| Pre-tax Return on Net Worth | -24.07% | 51.99% | 51.25% | 5.11% |
| Pre-tax Return on Assets | -23.05% | 49.52% | 49.32% | 13.02% |
| Additional Ratios | Year 1 | Year 2 | Year 3 | |
| Net Profit Margin | -7.40% | 11.20% | 14.70% | n.a |
| Return on Equity | -24.07% | 36.39% | 35.88% | n.a |
| Activity Ratios | ||||
| Accounts Payable Turnover | 15.76 | 12.17 | 12.17 | n.a |
| Payment Days | 27 | 23 | 27 | n.a |
| Total Asset Turnover | 3.12 | 3.09 | 2.35 | n.a |
| Debt Ratios | ||||
| Debt to Net Worth | 0.04 | 0.05 | 0.04 | n.a |
| Current Liab. to Liab. | 1.00 | 1.00 | 1.00 | n.a |
| Liquidity Ratios | ||||
| Net Working Capital | $7,441 | $14,985 | $26,048 | n.a |
| Interest Coverage | 0.00 | 0.00 | 0.00 | n.a |
| Additional Ratios | ||||
| Assets to Sales | 0.32 | 0.32 | 0.43 | n.a |
| Current Debt/Total Assets | 4% | 5% | 4% | n.a |
| Acid Test | 15.66 | 17.72 | 24.63 | n.a |
| Sales/Net Worth | 3.25 | 3.25 | 2.44 | n.a |
| Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |
