Water Factory

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MLM Water Filter Business Plan

Financial Plan

The following sections will outline the important financial details.

Important Assumptions

The following table details the 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 25.42% 25.00% 25.42%
Other 0 0 0

Break-even Analysis

The Break-even Analysis indicates what is needed in monthly revenue to break even.

Break-even Analysis
Monthly Revenue Break-even $7,025
Assumptions:
Average Percent Variable Cost 47%
Estimated Monthly Fixed Cost $3,699

Projected Profit and Loss

The following table indicates projected profit and loss.

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $41,280 $93,301 $102,421
Direct Cost of Sales $19,546 $38,927 $41,274
Other $0 $0 $0
Total Cost of Sales $19,546 $38,927 $41,274
Gross Margin $21,735 $54,374 $61,148
Gross Margin % 52.65% 58.28% 59.70%
Expenses
Payroll $36,000 $36,000 $36,000
Sales and Marketing and Other Expenses $600 $600 $600
Depreciation $768 $768 $764
Leased Equipment $0 $0 $0
Utilities $900 $900 $900
Insurance $720 $720 $720
Rent $0 $0 $0
Payroll Taxes $5,400 $5,400 $5,400
Other $0 $0 $0
Total Operating Expenses $44,388 $44,388 $44,384
Profit Before Interest and Taxes ($22,654) $9,986 $16,764
EBITDA ($21,886) $10,754 $17,528
Interest Expense $0 $0 $0
Taxes Incurred $0 $2,497 $4,261
Net Profit ($22,654) $7,490 $12,503
Net Profit/Sales -54.88% 8.03% 12.21%

Projected Cash Flow

The following chart and table will indicate projected cash flow.

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $41,280 $93,301 $102,421
Subtotal Cash from Operations $41,280 $93,301 $102,421
Additional Cash Received
Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $0 $0 $0
New Other Liabilities (interest-free) $5,000 $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 $46,280 $93,301 $102,421
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $36,000 $36,000 $36,000
Bill Payments $23,711 $48,467 $52,816
Subtotal Spent on Operations $59,711 $84,467 $88,816
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 $2,500 $2,500
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 $59,711 $86,967 $91,316
Net Cash Flow ($13,431) $6,334 $11,105
Cash Balance $1,669 $8,003 $19,108

Projected Balance Sheet

The following table will indicate the projected balance sheet.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $1,669 $8,003 $19,108
Other Current Assets $0 $0 $0
Total Current Assets $1,669 $8,003 $19,108
Long-term Assets
Long-term Assets $2,300 $2,300 $2,300
Accumulated Depreciation $768 $1,536 $2,300
Total Long-term Assets $1,532 $764 $0
Total Assets $3,201 $8,767 $19,108
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $3,455 $4,031 $4,369
Current Borrowing $0 $0 $0
Other Current Liabilities $5,000 $2,500 $0
Subtotal Current Liabilities $8,455 $6,531 $4,369
Long-term Liabilities $0 $0 $0
Total Liabilities $8,455 $6,531 $4,369
Paid-in Capital $18,000 $18,000 $18,000
Retained Earnings ($600) ($23,254) ($15,764)
Earnings ($22,654) $7,490 $12,503
Total Capital ($5,254) $2,236 $14,739
Total Liabilities and Capital $3,201 $8,767 $19,108
Net Worth ($5,253) $2,236 $14,739

Business Ratios

The following table contains ratios from the home water purification equipment industry, as determined by the Standard Industry Classification (SIC) Index code 3589, Service Industry Machinery, Not Elsewhere Classified.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth n.a. 126.02% 9.77% 8.10%
Percent of Total Assets
Other Current Assets 0.00% 0.00% 0.00% 25.80%
Total Current Assets 52.15% 91.29% 100.00% 72.50%
Long-term Assets 47.85% 8.71% 0.00% 27.50%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 264.10% 74.50% 22.86% 35.50%
Long-term Liabilities 0.00% 0.00% 0.00% 21.30%
Total Liabilities 264.10% 74.50% 22.86% 56.80%
Net Worth -164.10% 25.50% 77.14% 43.20%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 52.65% 58.28% 59.70% 32.10%
Selling, General & Administrative Expenses 94.45% 45.91% 43.48% 17.80%
Advertising Expenses 0.00% 0.00% 0.00% 0.90%
Profit Before Interest and Taxes -54.88% 10.70% 16.37% 3.40%
Main Ratios
Current 0.20 1.23 4.37 2.12
Quick 0.20 1.23 4.37 1.20
Total Debt to Total Assets 264.10% 74.50% 22.86% 56.80%
Pre-tax Return on Net Worth 431.21% 446.60% 113.74% 4.50%
Pre-tax Return on Assets -707.62% 113.90% 87.73% 10.40%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -54.88% 8.03% 12.21% n.a
Return on Equity 0.00% 334.95% 84.83% n.a
Activity Ratios
Accounts Payable Turnover 7.86 12.17 12.17 n.a
Payment Days 27 28 29 n.a
Total Asset Turnover 12.89 10.64 5.36 n.a
Debt Ratios
Debt to Net Worth 0.00 2.92 0.30 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital ($6,785) $1,472 $14,739 n.a
Interest Coverage 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 0.08 0.09 0.19 n.a
Current Debt/Total Assets 264% 74% 23% n.a
Acid Test 0.20 1.23 4.37 n.a
Sales/Net Worth 0.00 41.73 6.95 n.a
Dividend Payout 0.00 0.00 0.00 n.a