Mopeds Rental Business Plan

University Mopeds

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Financial Plan

All of the monies necessary for the start-up of this business will come from the owners. It will be entirely self-financed. The owners will not draw a salary, but will receive payments for their investments as University Mopeds generates cash flow.

7.1 Important Assumptions

The following table outlines the general assumptions for University Mopeds.

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 8.50% 8.50% 8.50%
Tax Rate 30.00% 30.00% 30.00%
Other 0 0 0

7.2 Key Financial Indicators

The following chart gives the benchmarks planned for University Mopeds.

7.3 Break-even Analysis

The following chart and table outline the Break-even Analysis.

Break-even Analysis
Monthly Units Break-even 1,053
Monthly Revenue Break-even $23,686
Assumptions:
Average Per-Unit Revenue $22.50
Average Per-Unit Variable Cost $5.50
Estimated Monthly Fixed Cost $17,896

7.4 Projected Profit and Loss

The following table shows the projected Profit and Loss.

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $476,955 $607,500 $675,000
Direct Cost of Sales $116,589 $297,000 $335,000
Other $0 $0 $0
Total Cost of Sales $116,589 $297,000 $335,000
Gross Margin $360,366 $310,500 $340,000
Gross Margin % 75.56% 51.11% 50.37%
Expenses
Payroll $75,000 $82,500 $90,750
Sales and Marketing and Other Expenses $900 $1,100 $1,300
Depreciation $100,000 $100,000 $100,000
Leased Equipment $600 $600 $600
Utilities $600 $650 $700
Insurance $2,400 $2,800 $3,200
Rent $24,000 $28,000 $30,000
Payroll Taxes $11,250 $12,375 $13,613
Other $0 $0 $0
Total Operating Expenses $214,750 $228,025 $240,163
Profit Before Interest and Taxes $145,616 $82,475 $99,838
EBITDA $245,616 $182,475 $199,838
Interest Expense $28,596 $24,876 $21,011
Taxes Incurred $35,106 $17,280 $23,648
Net Profit $81,914 $40,319 $55,178
Net Profit/Sales 17.17% 6.64% 8.17%

7.5 Projected Cash Flow

The following chart and table are the projected Cash Flow.

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $476,955 $607,500 $675,000
Subtotal Cash from Operations $476,955 $607,500 $675,000
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 $476,955 $607,500 $675,000
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $75,000 $82,500 $90,750
Bill Payments $142,534 $360,154 $427,552
Subtotal Spent on Operations $217,534 $442,654 $518,302
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $0 $40,000 $0
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $19,898 $21,941 $21,941
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $100,000 $100,000
Dividends $0 $0 $0
Subtotal Cash Spent $237,432 $604,596 $640,243
Net Cash Flow $239,523 $2,904 $34,757
Cash Balance $272,623 $275,527 $310,285

7.6 Projected Balance Sheet

The Balance Sheet table follows.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $272,623 $275,527 $310,285
Inventory $4,993 $12,719 $14,347
Other Current Assets $50,000 $50,000 $50,000
Total Current Assets $327,616 $338,247 $374,631
Long-term Assets
Long-term Assets $300,000 $400,000 $500,000
Accumulated Depreciation $100,000 $200,000 $300,000
Total Long-term Assets $200,000 $200,000 $200,000
Total Assets $527,616 $538,247 $574,631
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $0 $32,253 $35,400
Current Borrowing $40,000 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $40,000 $32,253 $35,400
Long-term Liabilities $280,102 $258,161 $236,219
Total Liabilities $320,102 $290,413 $271,619
Paid-in Capital $130,000 $130,000 $130,000
Retained Earnings ($4,400) $77,514 $117,833
Earnings $81,914 $40,319 $55,178
Total Capital $207,514 $247,833 $303,012
Total Liabilities and Capital $527,616 $538,247 $574,631
Net Worth $207,514 $247,833 $303,012

7.7 Business Ratios

The standard ratios shown are for SIC code 7359, other nonclassified rental businesses.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 27.37% 11.11% 7.90%
Percent of Total Assets
Inventory 0.95% 2.36% 2.50% 3.40%
Other Current Assets 9.48% 9.29% 8.70% 45.10%
Total Current Assets 62.09% 62.84% 65.20% 74.30%
Long-term Assets 37.91% 37.16% 34.80% 25.70%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 7.58% 5.99% 6.16% 42.00%
Long-term Liabilities 53.09% 47.96% 41.11% 15.70%
Total Liabilities 60.67% 53.96% 47.27% 57.70%
Net Worth 39.33% 46.04% 52.73% 42.30%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 75.56% 51.11% 50.37% 0.00%
Selling, General & Administrative Expenses 57.15% 44.00% 41.61% 82.90%
Advertising Expenses 0.19% 0.18% 0.19% 1.00%
Profit Before Interest and Taxes 30.53% 13.58% 14.79% 2.60%
Main Ratios
Current 8.19 10.49 10.58 1.68
Quick 8.07 10.09 10.18 1.33
Total Debt to Total Assets 60.67% 53.96% 47.27% 57.70%
Pre-tax Return on Net Worth 56.39% 23.24% 26.01% 4.80%
Pre-tax Return on Assets 22.18% 10.70% 13.72% 11.40%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 17.17% 6.64% 8.17% n.a
Return on Equity 39.47% 16.27% 18.21% n.a
Activity Ratios
Inventory Turnover 3.69 33.54 24.75 n.a
Accounts Payable Turnover 0.00 12.17 12.17 n.a
Payment Days 32 15 29 n.a
Total Asset Turnover 0.90 1.13 1.17 n.a
Debt Ratios
Debt to Net Worth 1.54 1.17 0.90 n.a
Current Liab. to Liab. 0.12 0.11 0.13 n.a
Liquidity Ratios
Net Working Capital $287,616 $305,994 $339,231 n.a
Interest Coverage 5.09 3.32 4.75 n.a
Additional Ratios
Assets to Sales 1.11 0.89 0.85 n.a
Current Debt/Total Assets 8% 6% 6% n.a
Acid Test 8.07 10.09 10.18 n.a
Sales/Net Worth 2.30 2.45 2.23 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 8.50% 8.50% 8.50%
Tax Rate 30.00% 30.00% 30.00%
Other 0 0 0
Break-even Analysis
Monthly Units Break-even 1,053
Monthly Revenue Break-even $23,686
Assumptions:
Average Per-Unit Revenue $22.50
Average Per-Unit Variable Cost $5.50
Estimated Monthly Fixed Cost $17,896
Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $476,955 $607,500 $675,000
Direct Cost of Sales $116,589 $297,000 $335,000
Other $0 $0 $0
Total Cost of Sales $116,589 $297,000 $335,000
Gross Margin $360,366 $310,500 $340,000
Gross Margin % 75.56% 51.11% 50.37%
Expenses
Payroll $75,000 $82,500 $90,750
Sales and Marketing and Other Expenses $900 $1,100 $1,300
Depreciation $100,000 $100,000 $100,000
Leased Equipment $600 $600 $600
Utilities $600 $650 $700
Insurance $2,400 $2,800 $3,200
Rent $24,000 $28,000 $30,000
Payroll Taxes $11,250 $12,375 $13,613
Other $0 $0 $0
Total Operating Expenses $214,750 $228,025 $240,163
Profit Before Interest and Taxes $145,616 $82,475 $99,838
EBITDA $245,616 $182,475 $199,838
Interest Expense $28,596 $24,876 $21,011
Taxes Incurred $35,106 $17,280 $23,648
Net Profit $81,914 $40,319 $55,178
Net Profit/Sales 17.17% 6.64% 8.17%
Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $476,955 $607,500 $675,000
Subtotal Cash from Operations $476,955 $607,500 $675,000
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 $476,955 $607,500 $675,000
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $75,000 $82,500 $90,750
Bill Payments $142,534 $360,154 $427,552
Subtotal Spent on Operations $217,534 $442,654 $518,302
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $0 $40,000 $0
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $19,898 $21,941 $21,941
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $100,000 $100,000
Dividends $0 $0 $0
Subtotal Cash Spent $237,432 $604,596 $640,243
Net Cash Flow $239,523 $2,904 $34,757
Cash Balance $272,623 $275,527 $310,285
Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $272,623 $275,527 $310,285
Inventory $4,993 $12,719 $14,347
Other Current Assets $50,000 $50,000 $50,000
Total Current Assets $327,616 $338,247 $374,631
Long-term Assets
Long-term Assets $300,000 $400,000 $500,000
Accumulated Depreciation $100,000 $200,000 $300,000
Total Long-term Assets $200,000 $200,000 $200,000
Total Assets $527,616 $538,247 $574,631
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $0 $32,253 $35,400
Current Borrowing $40,000 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $40,000 $32,253 $35,400
Long-term Liabilities $280,102 $258,161 $236,219
Total Liabilities $320,102 $290,413 $271,619
Paid-in Capital $130,000 $130,000 $130,000
Retained Earnings ($4,400) $77,514 $117,833
Earnings $81,914 $40,319 $55,178
Total Capital $207,514 $247,833 $303,012
Total Liabilities and Capital $527,616 $538,247 $574,631
Net Worth $207,514 $247,833 $303,012
Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 27.37% 11.11% 7.90%
Percent of Total Assets
Inventory 0.95% 2.36% 2.50% 3.40%
Other Current Assets 9.48% 9.29% 8.70% 45.10%
Total Current Assets 62.09% 62.84% 65.20% 74.30%
Long-term Assets 37.91% 37.16% 34.80% 25.70%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 7.58% 5.99% 6.16% 42.00%
Long-term Liabilities 53.09% 47.96% 41.11% 15.70%
Total Liabilities 60.67% 53.96% 47.27% 57.70%
Net Worth 39.33% 46.04% 52.73% 42.30%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 75.56% 51.11% 50.37% 0.00%
Selling, General & Administrative Expenses 57.15% 44.00% 41.61% 82.90%
Advertising Expenses 0.19% 0.18% 0.19% 1.00%
Profit Before Interest and Taxes 30.53% 13.58% 14.79% 2.60%
Main Ratios
Current 8.19 10.49 10.58 1.68
Quick 8.07 10.09 10.18 1.33
Total Debt to Total Assets 60.67% 53.96% 47.27% 57.70%
Pre-tax Return on Net Worth 56.39% 23.24% 26.01% 4.80%
Pre-tax Return on Assets 22.18% 10.70% 13.72% 11.40%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 17.17% 6.64% 8.17% n.a
Return on Equity 39.47% 16.27% 18.21% n.a
Activity Ratios
Inventory Turnover 3.69 33.54 24.75 n.a
Accounts Payable Turnover 0.00 12.17 12.17 n.a
Payment Days 32 15 29 n.a
Total Asset Turnover 0.90 1.13 1.17 n.a
Debt Ratios
Debt to Net Worth 1.54 1.17 0.90 n.a
Current Liab. to Liab. 0.12 0.11 0.13 n.a
Liquidity Ratios
Net Working Capital $287,616 $305,994 $339,231 n.a
Interest Coverage 5.09 3.32 4.75 n.a
Additional Ratios
Assets to Sales 1.11 0.89 0.85 n.a
Current Debt/Total Assets 8% 6% 6% n.a
Acid Test 8.07 10.09 10.18 n.a
Sales/Net Worth 2.30 2.45 2.23 n.a
Dividend Payout 0.00 0.00 0.00 n.a