Sigmund's Gourmet Pasta

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Pasta Italian Restaurant Business Plan

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Financial Plan

The following sections will 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 Break-even Analysis

The following topic and table shows our Break-even Analysis.

Break-even Analysis
Monthly Revenue Break-even $31,017
Assumptions:
Average Percent Variable Cost 45%
Estimated Monthly Fixed Cost $17,059

7.3 Projected Profit and Loss

The following table will indicate projected profit and loss.

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $279,415 $707,301 $770,608
Direct Cost of Sales $125,737 $318,286 $346,773
Other Production Expenses $0 $0 $0
Total Cost of Sales $125,737 $318,286 $346,773
Gross Margin $153,678 $389,016 $423,834
Gross Margin % 55.00% 55.00% 55.00%
Expenses
Payroll $166,912 $272,160 $279,720
Sales and Marketing and Other Expenses $2,400 $2,400 $2,400
Depreciation $15,000 $15,000 $15,000
Leased Equipment $0 $0 $0
Utilities $0 $0 $0
Insurance $2,400 $3,600 $3,600
Rent $18,000 $36,000 $36,000
Payroll Taxes $0 $0 $0
Other $0 $0 $0
Total Operating Expenses $204,712 $329,160 $336,720
Profit Before Interest and Taxes ($51,034) $59,856 $87,114
EBITDA ($36,034) $74,856 $102,114
Interest Expense $8,000 $8,000 $8,000
Taxes Incurred $0 $15,557 $23,734
Net Profit ($59,034) $36,299 $55,380
Net Profit/Sales -21.13% 5.13% 7.19%

7.4 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 $279,415 $707,301 $770,608
Subtotal Cash from Operations $279,415 $707,301 $770,608
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 $279,415 $707,301 $770,608
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $166,912 $272,160 $279,720
Bill Payments $136,690 $372,140 $417,494
Subtotal Spent on Operations $303,602 $644,300 $697,214
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 $303,602 $644,300 $697,214
Net Cash Flow ($24,187) $63,001 $73,394
Cash Balance $63,713 $126,714 $200,107

7.5 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 $63,713 $126,714 $200,107
Other Current Assets $0 $0 $0
Total Current Assets $63,713 $126,714 $200,107
Long-term Assets
Long-term Assets $75,000 $75,000 $75,000
Accumulated Depreciation $15,000 $30,000 $45,000
Total Long-term Assets $60,000 $45,000 $30,000
Total Assets $123,713 $171,714 $230,107
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $19,846 $31,549 $34,562
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $19,846 $31,549 $34,562
Long-term Liabilities $80,000 $80,000 $80,000
Total Liabilities $99,846 $111,549 $114,562
Paid-in Capital $85,000 $85,000 $85,000
Retained Earnings ($2,100) ($61,134) ($24,835)
Earnings ($59,034) $36,299 $55,380
Total Capital $23,866 $60,165 $115,545
Total Liabilities and Capital $123,713 $171,714 $230,107
Net Worth $23,866 $60,165 $115,545

7.6 Business Ratios

The following table outlines some of the more important ratios from the restaurant industry. The final column, Industry Profile, details specific ratios based on the industry as it is classified by the Standard Industry Classification (SIC) code, 5812, Eating Places.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 153.14% 8.95% 7.60%
Percent of Total Assets
Other Current Assets 0.00% 0.00% 0.00% 35.60%
Total Current Assets 51.50% 73.79% 86.96% 43.70%
Long-term Assets 48.50% 26.21% 13.04% 56.30%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 16.04% 18.37% 15.02% 32.70%
Long-term Liabilities 64.67% 46.59% 34.77% 28.50%
Total Liabilities 80.71% 64.96% 49.79% 61.20%
Net Worth 19.29% 35.04% 50.21% 38.80%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 55.00% 55.00% 55.00% 60.50%
Selling, General & Administrative Expenses 91.28% 55.14% 51.74% 39.80%
Advertising Expenses 0.43% 0.17% 0.16% 3.20%
Profit Before Interest and Taxes -18.26% 8.46% 11.30% 0.70%
Main Ratios
Current 3.21 4.02 5.79 0.98
Quick 3.21 4.02 5.79 0.65
Total Debt to Total Assets 80.71% 64.96% 49.79% 61.20%
Pre-tax Return on Net Worth -247.35% 86.19% 68.47% 1.70%
Pre-tax Return on Assets -47.72% 30.20% 34.38% 4.30%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -21.13% 5.13% 7.19% n.a
Return on Equity -247.35% 60.33% 47.93% n.a
Activity Ratios
Accounts Payable Turnover 7.89 12.17 12.17 n.a
Payment Days 27 24 29 n.a
Total Asset Turnover 2.26 4.12 3.35 n.a
Debt Ratios
Debt to Net Worth 4.18 1.85 0.99 n.a
Current Liab. to Liab. 0.20 0.28 0.30 n.a
Liquidity Ratios
Net Working Capital $43,866 $95,165 $165,545 n.a
Interest Coverage -6.38 7.48 10.89 n.a
Additional Ratios
Assets to Sales 0.44 0.24 0.30 n.a
Current Debt/Total Assets 16% 18% 15% n.a
Acid Test 3.21 4.02 5.79 n.a
Sales/Net Worth 11.71 11.76 6.67 n.a
Dividend Payout 0.00 0.00 0.00 n.a