Last Frontier Market

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Organic Food Store Business Plan

Financial Plan

The following is the Financial Plan for the Last Frontier Market.

7.1 Break-even Analysis

The monthly break-even point is $32,277.

Break-even Analysis
Monthly Revenue Break-even $32,277
Assumptions:
Average Percent Variable Cost 30%
Estimated Monthly Fixed Cost $22,493

7.2 Projected Profit and Loss

The following table and charts highlight the projected profit and loss for three years.

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $423,000 $470,000 $520,000
Direct Cost of Sales $128,220 $150,000 $175,000
Other Production Expenses $0 $0 $0
Total Cost of Sales $128,220 $150,000 $175,000
Gross Margin $294,780 $320,000 $345,000
Gross Margin % 69.69% 68.09% 66.35%
Expenses
Payroll $199,200 $218,000 $236,000
Sales and Marketing and Other Expenses $7,000 $10,000 $13,000
Depreciation $1,440 $1,440 $1,440
Leased Equipment $0 $0 $0
Utilities $4,800 $4,800 $4,800
Insurance $6,000 $6,000 $6,000
Rent $21,600 $21,600 $21,600
Payroll Taxes $29,880 $32,700 $35,400
Other $0 $0 $0
Total Operating Expenses $269,920 $294,540 $318,240
Profit Before Interest and Taxes $24,860 $25,460 $26,760
EBITDA $26,300 $26,900 $28,200
Interest Expense $4,459 $3,501 $2,501
Taxes Incurred $6,120 $6,588 $7,278
Net Profit $14,281 $15,372 $16,981
Net Profit/Sales 3.38% 3.27% 3.27%

7.3 Projected Cash Flow

The following table and chart highlight the projected cash flow for three years.

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $105,750 $117,500 $130,000
Cash from Receivables $251,575 $345,203 $382,237
Subtotal Cash from Operations $357,325 $462,703 $512,237
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 $4,000 $0 $0
Subtotal Cash Received $361,325 $462,703 $512,237
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $199,200 $218,000 $236,000
Bill Payments $186,715 $237,222 $263,081
Subtotal Spent on Operations $385,915 $455,222 $499,081
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 $9,996 $9,996 $9,996
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $395,911 $465,218 $509,077
Net Cash Flow ($34,586) ($2,515) $3,160
Cash Balance $7,614 $5,099 $8,259

7.4 Projected Balance Sheet

The following table highlights the projected balance sheet for three years.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $7,614 $5,099 $8,259
Accounts Receivable $65,675 $72,972 $80,735
Other Current Assets $0 $0 $0
Total Current Assets $73,289 $78,071 $88,994
Long-term Assets
Long-term Assets $10,000 $10,000 $10,000
Accumulated Depreciation $1,440 $2,880 $4,320
Total Long-term Assets $8,560 $7,120 $5,680
Total Assets $81,849 $85,191 $94,674
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $21,364 $19,331 $21,828
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $21,364 $19,331 $21,828
Long-term Liabilities $40,004 $30,008 $20,012
Total Liabilities $61,368 $49,339 $41,840
Paid-in Capital $84,000 $84,000 $84,000
Retained Earnings ($77,800) ($63,519) ($48,147)
Earnings $14,281 $15,372 $16,981
Total Capital $20,481 $35,853 $52,834
Total Liabilities and Capital $81,849 $85,191 $94,674
Net Worth $20,481 $35,853 $52,834

7.5 Business Ratios

Business ratios for the years of this plan are shown below.  Industry profile ratios based on the Standard Industrial Classification (SIC) code 5149, Groceries and Related Products, are shown for comparison.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 11.11% 10.64% 4.60%
Percent of Total Assets
Accounts Receivable 80.24% 85.66% 85.28% 33.30%
Other Current Assets 0.00% 0.00% 0.00% 20.90%
Total Current Assets 89.54% 91.64% 94.00% 80.20%
Long-term Assets 10.46% 8.36% 6.00% 19.80%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 26.10% 22.69% 23.06% 45.20%
Long-term Liabilities 48.88% 35.22% 21.14% 10.00%
Total Liabilities 74.98% 57.92% 44.19% 55.20%
Net Worth 25.02% 42.08% 55.81% 44.80%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 69.69% 68.09% 66.35% 44.10%
Selling, General & Administrative Expenses 66.31% 64.81% 63.08% 26.70%
Advertising Expenses 1.65% 2.13% 2.50% 0.70%
Profit Before Interest and Taxes 5.88% 5.42% 5.15% 0.80%
Main Ratios
Current 3.43 4.04 4.08 1.69
Quick 3.43 4.04 4.08 1.01
Total Debt to Total Assets 74.98% 57.92% 44.19% 55.20%
Pre-tax Return on Net Worth 99.61% 61.25% 45.92% 3.60%
Pre-tax Return on Assets 24.93% 25.78% 25.62% 8.00%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 3.38% 3.27% 3.27% n.a
Return on Equity 69.73% 42.87% 32.14% n.a
Activity Ratios
Accounts Receivable Turnover 4.83 4.83 4.83 n.a
Collection Days 57 72 72 n.a
Accounts Payable Turnover 9.74 12.17 12.17 n.a
Payment Days 27 32 28 n.a
Total Asset Turnover 5.17 5.52 5.49 n.a
Debt Ratios
Debt to Net Worth 3.00 1.38 0.79 n.a
Current Liab. to Liab. 0.35 0.39 0.52 n.a
Liquidity Ratios
Net Working Capital $51,925 $58,741 $67,166 n.a
Interest Coverage 5.58 7.27 10.70 n.a
Additional Ratios
Assets to Sales 0.19 0.18 0.18 n.a
Current Debt/Total Assets 26% 23% 23% n.a
Acid Test 0.36 0.26 0.38 n.a
Sales/Net Worth 20.65 13.11 9.84 n.a
Dividend Payout 0.00 0.00 0.00 n.a