Malone's Maternity

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Maternity Clothing Business Plan

Financial Plan

The following sections 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 Projected Cash Flow

The following chart and table show the Projected Cash Flow.

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $113,315 $283,122 $339,917
Subtotal Cash from Operations $113,315 $283,122 $339,917
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 $113,315 $283,122 $339,917
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $68,400 $94,000 $98,000
Bill Payments $93,011 $178,225 $208,176
Subtotal Spent on Operations $161,411 $272,225 $306,176
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 $161,411 $272,225 $306,176
Net Cash Flow ($48,096) $10,897 $33,741
Cash Balance $3,454 $14,350 $48,092

7.3 Break-even Analysis

The Break-even Analysis indicates what will be needed in monthly revenue to achieve the break-even point.

Break-even Analysis
Monthly Revenue Break-even $17,160
Assumptions:
Average Percent Variable Cost 40%
Estimated Monthly Fixed Cost $10,296

7.4 Projected Profit and Loss

The following table and charts illustrate the Projected Profit and Loss.

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $113,315 $283,122 $339,917
Direct Cost of Sales $45,326 $113,249 $135,967
Other Costs of Goods $0 $0 $0
Total Cost of Sales $45,326 $113,249 $135,967
Gross Margin $67,989 $169,873 $203,950
Gross Margin % 60.00% 60.00% 60.00%
Expenses
Payroll $68,400 $94,000 $98,000
Sales and Marketing and Other Expenses $4,200 $4,400 $4,600
Depreciation $3,792 $3,792 $3,792
Rent $30,000 $30,900 $31,827
Utilities $3,000 $3,090 $3,120
Insurance $2,400 $2,400 $2,400
Payroll Taxes $10,260 $14,100 $14,700
Other $1,500 $1,500 $1,500
Total Operating Expenses $123,552 $154,182 $159,939
Profit Before Interest and Taxes ($55,563) $15,691 $44,011
EBITDA ($51,771) $19,483 $47,803
Interest Expense $0 $0 $0
Taxes Incurred $0 $4,707 $13,203
Net Profit ($55,563) $10,984 $30,808
Net Profit/Sales -49.03% 3.88% 9.06%

7.5 Projected Balance Sheet

The following table presents the Projected Balance Sheet.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $3,454 $14,350 $48,092
Inventory $6,119 $15,288 $18,355
Other Current Assets $3,500 $3,500 $3,500
Total Current Assets $13,073 $33,138 $69,947
Long-term Assets
Long-term Assets $19,000 $19,000 $19,000
Accumulated Depreciation $3,792 $7,584 $11,376
Total Long-term Assets $15,208 $11,416 $7,624
Total Assets $28,281 $44,554 $77,571
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $9,793 $15,083 $17,292
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $9,793 $15,083 $17,292
Long-term Liabilities $0 $0 $0
Total Liabilities $9,793 $15,083 $17,292
Paid-in Capital $140,000 $140,000 $140,000
Retained Earnings ($65,950) ($121,513) ($110,529)
Earnings ($55,563) $10,984 $30,808
Total Capital $18,487 $29,471 $60,279
Total Liabilities and Capital $28,281 $44,554 $77,571
Net Worth $18,487 $29,471 $60,279

7.6 Business Ratios

The following table indicates Business Ratios specific to Malone's Maternity and to the industry. Their NAICS industry class is currently Woman's clothing including, Maternity clothing 448120. Please note that the variance in gross margin between Malone's Maternity and the industry as a whole can be explained by the fact that Malone's Maternity is a high-end boutique that enjoys above industry margins.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 149.85% 20.06% -10.29%
Percent of Total Assets
Inventory 21.64% 34.31% 23.66% 41.71%
Other Current Assets 12.38% 7.86% 4.51% 22.42%
Total Current Assets 46.22% 74.38% 90.17% 89.70%
Long-term Assets 53.78% 25.62% 9.83% 10.30%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 34.63% 33.85% 22.29% 43.23%
Long-term Liabilities 0.00% 0.00% 0.00% 13.53%
Total Liabilities 34.63% 33.85% 22.29% 56.76%
Net Worth 65.37% 66.15% 77.71% 43.24%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 60.00% 60.00% 60.00% 23.67%
Selling, General & Administrative Expenses 109.03% 56.12% 50.94% 14.57%
Advertising Expenses 0.00% 0.00% 0.00% 0.75%
Profit Before Interest and Taxes -49.03% 5.54% 12.95% 0.35%
Main Ratios
Current 1.33 2.20 4.05 1.84
Quick 0.71 1.18 2.98 0.72
Total Debt to Total Assets 34.63% 33.85% 22.29% 1.03%
Pre-tax Return on Net Worth -300.55% 53.24% 73.01% 61.46%
Pre-tax Return on Assets -196.47% 35.22% 56.74% 2.68%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -49.03% 3.88% 9.06% n.a
Return on Equity -300.55% 37.27% 51.11% n.a
Activity Ratios
Inventory Turnover 10.91 10.58 8.08 n.a
Accounts Payable Turnover 10.50 12.17 12.17 n.a
Payment Days 27 25 28 n.a
Total Asset Turnover 4.01 6.35 4.38 n.a
Debt Ratios
Debt to Net Worth 0.53 0.51 0.29 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $3,279 $18,055 $52,655 n.a
Interest Coverage 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 0.25 0.16 0.23 n.a
Current Debt/Total Assets 35% 34% 22% n.a
Acid Test 0.71 1.18 2.98 n.a
Sales/Net Worth 6.13 9.61 5.64 n.a
Dividend Payout 0.00 0.00 0.00 n.a