MLM Cleaning Products Business Plan

Earthly Clean

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Financial Plan

The following section will outline important financial information.

8.1 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

8.2 Break-even Analysis

The Break-even Analysis indicates that approximately $3,500 is needed in monthly revenue to reach the break-even point.

Break-even Analysis
Monthly Revenue Break-even $3,542
Assumptions:
Average Percent Variable Cost 30%
Estimated Monthly Fixed Cost $2,480

8.3 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 $19,911 $38,826 $71,827
Direct Cost of Sales $5,973 $11,648 $21,548
Other Costs of Goods $0 $0 $0
Total Cost of Sales $5,973 $11,648 $21,548
Gross Margin $13,937 $27,178 $50,279
Gross Margin % 70.00% 70.00% 70.00%
Expenses
Payroll $20,000 $24,000 $24,000
Sales and Marketing and Other Expenses $2,400 $0 $0
Depreciation $996 $996 $996
Rent $1,800 $1,800 $1,800
Utilities $660 $660 $660
Insurance $900 $900 $900
Payroll Taxes $3,000 $3,600 $3,600
Total Operating Expenses $29,756 $31,956 $31,956
Profit Before Interest and Taxes ($15,819) ($4,778) $18,323
EBITDA ($14,823) ($3,782) $19,319
Interest Expense $1,903 $1,730 $1,550
Taxes Incurred $0 $0 $5,032
Net Profit ($17,721) ($6,508) $11,741
Net Profit/Sales -89.00% -16.76% 16.35%

8.4 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 $4,978 $9,706 $17,957
Cash from Receivables $9,199 $23,672 $44,367
Subtotal Cash from Operations $14,177 $33,379 $62,324
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 $14,177 $33,379 $62,324
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $20,000 $24,000 $24,000
Bill Payments $14,499 $20,803 $33,878
Subtotal Spent on Operations $34,499 $44,803 $57,878
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 $1,800 $1,800 $1,800
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $36,299 $46,603 $59,678
Net Cash Flow ($22,122) ($13,225) $2,646
Cash Balance $13,738 $514 $3,160

8.5 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 $13,738 $514 $3,160
Accounts Receivable $5,734 $11,181 $20,685
Other Current Assets $0 $0 $0
Total Current Assets $19,472 $11,694 $23,844
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 $23,476 $14,702 $25,856
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $2,137 $1,672 $2,884
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $2,137 $1,672 $2,884
Long-term Liabilities $18,200 $16,400 $14,600
Total Liabilities $20,337 $18,072 $17,484
Paid-in Capital $30,000 $30,000 $30,000
Retained Earnings ($9,140) ($26,861) ($33,369)
Earnings ($17,721) ($6,508) $11,741
Total Capital $3,139 ($3,369) $8,372
Total Liabilities and Capital $23,476 $14,702 $25,856
Net Worth $3,139 ($3,369) $8,372

8.6 Business Ratios

The following table details specific Business Ratios for Earthly Clean. While Earthly Clean sells cleaning products, the organizational structure of multi-level merchandising falls within the Standard Industrial Classification code system under Nonstore Retailers - Direct Selling Establishments. We most closely match SIC industry class: Party-plan merchandising - 5963.9907

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 95.00% 85.00% 2.88%
Percent of Total Assets
Accounts Receivable 24.42% 76.05% 80.00% 18.38%
Other Current Assets 0.00% 0.00% 0.00% 22.11%
Total Current Assets 82.94% 79.54% 92.22% 78.80%
Long-term Assets 17.06% 20.46% 7.78% 21.20%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 9.10% 11.37% 11.15% 34.69%
Long-term Liabilities 77.53% 111.55% 56.47% 13.42%
Total Liabilities 86.63% 122.92% 67.62% 48.11%
Net Worth 13.37% -22.92% 32.38% 51.89%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 70.00% 70.00% 70.00% 38.83%
Selling, General & Administrative Expenses 158.62% 38.79% 30.20% 25.49%
Advertising Expenses 0.00% 0.00% 0.00% 1.97%
Profit Before Interest and Taxes -79.45% -12.31% 25.51% 2.02%
Main Ratios
Current 9.11 7.00 8.27 2.01
Quick 9.11 7.00 8.27 0.79
Total Debt to Total Assets 86.63% 122.92% 67.62% 55.49%
Pre-tax Return on Net Worth -564.56% 193.17% 200.35% 3.89%
Pre-tax Return on Assets -75.49% -44.26% 64.87% 8.75%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -89.00% -16.76% 16.35% n.a
Return on Equity -564.56% 0.00% 140.24% n.a
Activity Ratios
Accounts Receivable Turnover 2.60 2.60 2.60 n.a
Collection Days 54 106 108 n.a
Accounts Payable Turnover 7.78 12.17 12.17 n.a
Payment Days 27 34 24 n.a
Total Asset Turnover 0.85 2.64 2.78 n.a
Debt Ratios
Debt to Net Worth 6.48 0.00 2.09 n.a
Current Liab. to Liab. 0.11 0.09 0.16 n.a
Liquidity Ratios
Net Working Capital $17,335 $10,023 $20,960 n.a
Interest Coverage -8.31 -2.76 11.82 n.a
Additional Ratios
Assets to Sales 1.18 0.38 0.36 n.a
Current Debt/Total Assets 9% 11% 11% n.a
Acid Test 6.43 0.31 1.10 n.a
Sales/Net Worth 6.34 0.00 8.58 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 $3,542
Assumptions:
Average Percent Variable Cost 30%
Estimated Monthly Fixed Cost $2,480
Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $19,911 $38,826 $71,827
Direct Cost of Sales $5,973 $11,648 $21,548
Other Costs of Goods $0 $0 $0
Total Cost of Sales $5,973 $11,648 $21,548
Gross Margin $13,937 $27,178 $50,279
Gross Margin % 70.00% 70.00% 70.00%
Expenses
Payroll $20,000 $24,000 $24,000
Sales and Marketing and Other Expenses $2,400 $0 $0
Depreciation $996 $996 $996
Rent $1,800 $1,800 $1,800
Utilities $660 $660 $660
Insurance $900 $900 $900
Payroll Taxes $3,000 $3,600 $3,600
Total Operating Expenses $29,756 $31,956 $31,956
Profit Before Interest and Taxes ($15,819) ($4,778) $18,323
EBITDA ($14,823) ($3,782) $19,319
Interest Expense $1,903 $1,730 $1,550
Taxes Incurred $0 $0 $5,032
Net Profit ($17,721) ($6,508) $11,741
Net Profit/Sales -89.00% -16.76% 16.35%
Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $4,978 $9,706 $17,957
Cash from Receivables $9,199 $23,672 $44,367
Subtotal Cash from Operations $14,177 $33,379 $62,324
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 $14,177 $33,379 $62,324
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $20,000 $24,000 $24,000
Bill Payments $14,499 $20,803 $33,878
Subtotal Spent on Operations $34,499 $44,803 $57,878
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 $1,800 $1,800 $1,800
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $36,299 $46,603 $59,678
Net Cash Flow ($22,122) ($13,225) $2,646
Cash Balance $13,738 $514 $3,160
Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $13,738 $514 $3,160
Accounts Receivable $5,734 $11,181 $20,685
Other Current Assets $0 $0 $0
Total Current Assets $19,472 $11,694 $23,844
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 $23,476 $14,702 $25,856
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $2,137 $1,672 $2,884
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $2,137 $1,672 $2,884
Long-term Liabilities $18,200 $16,400 $14,600
Total Liabilities $20,337 $18,072 $17,484
Paid-in Capital $30,000 $30,000 $30,000
Retained Earnings ($9,140) ($26,861) ($33,369)
Earnings ($17,721) ($6,508) $11,741
Total Capital $3,139 ($3,369) $8,372
Total Liabilities and Capital $23,476 $14,702 $25,856
Net Worth $3,139 ($3,369) $8,372
Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 95.00% 85.00% 2.88%
Percent of Total Assets
Accounts Receivable 24.42% 76.05% 80.00% 18.38%
Other Current Assets 0.00% 0.00% 0.00% 22.11%
Total Current Assets 82.94% 79.54% 92.22% 78.80%
Long-term Assets 17.06% 20.46% 7.78% 21.20%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 9.10% 11.37% 11.15% 34.69%
Long-term Liabilities 77.53% 111.55% 56.47% 13.42%
Total Liabilities 86.63% 122.92% 67.62% 48.11%
Net Worth 13.37% -22.92% 32.38% 51.89%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 70.00% 70.00% 70.00% 38.83%
Selling, General & Administrative Expenses 158.62% 38.79% 30.20% 25.49%
Advertising Expenses 0.00% 0.00% 0.00% 1.97%
Profit Before Interest and Taxes -79.45% -12.31% 25.51% 2.02%
Main Ratios
Current 9.11 7.00 8.27 2.01
Quick 9.11 7.00 8.27 0.79
Total Debt to Total Assets 86.63% 122.92% 67.62% 55.49%
Pre-tax Return on Net Worth -564.56% 193.17% 200.35% 3.89%
Pre-tax Return on Assets -75.49% -44.26% 64.87% 8.75%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -89.00% -16.76% 16.35% n.a
Return on Equity -564.56% 0.00% 140.24% n.a
Activity Ratios
Accounts Receivable Turnover 2.60 2.60 2.60 n.a
Collection Days 54 106 108 n.a
Accounts Payable Turnover 7.78 12.17 12.17 n.a
Payment Days 27 34 24 n.a
Total Asset Turnover 0.85 2.64 2.78 n.a
Debt Ratios
Debt to Net Worth 6.48 0.00 2.09 n.a
Current Liab. to Liab. 0.11 0.09 0.16 n.a
Liquidity Ratios
Net Working Capital $17,335 $10,023 $20,960 n.a
Interest Coverage -8.31 -2.76 11.82 n.a
Additional Ratios
Assets to Sales 1.18 0.38 0.36 n.a
Current Debt/Total Assets 9% 11% 11% n.a
Acid Test 6.43 0.31 1.10 n.a
Sales/Net Worth 6.34 0.00 8.58 n.a
Dividend Payout 0.00 0.00 0.00 n.a