Magazine Journalist Business Plan

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
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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
Break-even Analysis
Monthly Revenue Break-even $3,333
Assumptions:
Average Percent Variable Cost 0%
Estimated Monthly Fixed Cost $3,333
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%
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
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
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