Water Tubes Plumbing

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Plumbing Business Plan

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 Break-even Analysis indicates what will be needed in monthly revenue to reach the break-even point.

Break-even Analysis
Monthly Revenue Break-even $11,520
Assumptions:
Average Percent Variable Cost 10%
Estimated Monthly Fixed Cost $10,368

7.3 Projected Profit and Loss

The following table and charts present the projected profit and loss.

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $133,858 $190,752 $215,330
Direct Cost of Sales $13,386 $19,075 $21,533
Other Production Expenses $0 $0 $0
Total Cost of Sales $13,386 $19,075 $21,533
Gross Margin $120,472 $171,677 $193,797
Gross Margin % 90.00% 90.00% 90.00%
Expenses
Payroll $98,400 $112,960 $122,960
Sales and Marketing and Other Expenses $1,800 $1,800 $1,800
Depreciation $3,456 $3,456 $3,456
Insurance/ License/ Bonds $6,000 $5,000 $4,000
Rent $0 $0 $0
Payroll Taxes $14,760 $16,944 $18,444
Other $0 $0 $0
Total Operating Expenses $124,416 $140,160 $150,660
Profit Before Interest and Taxes ($3,944) $31,517 $43,137
EBITDA ($488) $34,973 $46,593
Interest Expense $0 $0 $0
Taxes Incurred $0 $9,455 $12,941
Net Profit ($3,944) $22,062 $30,196
Net Profit/Sales -2.95% 11.57% 14.02%

7.4 Projected Cash Flow

The following chart and table display the projected cash flow.

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $133,858 $190,752 $215,330
Subtotal Cash from Operations $133,858 $190,752 $215,330
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 $133,858 $190,752 $215,330
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $98,400 $112,960 $122,960
Bill Payments $32,139 $51,785 $58,188
Subtotal Spent on Operations $130,539 $164,745 $181,148
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 $130,539 $164,745 $181,148
Net Cash Flow $3,319 $26,007 $34,182
Cash Balance $22,969 $48,976 $83,158

7.5 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 $22,969 $48,976 $83,158
Other Current Assets $0 $0 $0
Total Current Assets $22,969 $48,976 $83,158
Long-term Assets
Long-term Assets $24,000 $24,000 $24,000
Accumulated Depreciation $3,456 $6,912 $10,368
Total Long-term Assets $20,544 $17,088 $13,632
Total Assets $43,513 $66,064 $96,790
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $3,807 $4,297 $4,826
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $3,807 $4,297 $4,826
Long-term Liabilities $0 $0 $0
Total Liabilities $3,807 $4,297 $4,826
Paid-in Capital $44,000 $44,000 $44,000
Retained Earnings ($350) ($4,294) $17,768
Earnings ($3,944) $22,062 $30,196
Total Capital $39,706 $61,768 $91,964
Total Liabilities and Capital $43,513 $66,064 $96,790
Net Worth $39,706 $61,768 $91,964

7.6 Business Ratios

The company's projected business ratios are provided in the table below.  The final column, Industry Profile, shows significant ratios for the Plumbing, Heating, Air-conditioning industry, as determined by the Standard Industry Classification (SIC) Index code 1711.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 42.50% 12.88% 6.60%
Percent of Total Assets
Other Current Assets 0.00% 0.00% 0.00% 29.30%
Total Current Assets 52.79% 74.13% 85.92% 84.40%
Long-term Assets 47.21% 25.87% 14.08% 15.60%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 8.75% 6.50% 4.99% 47.20%
Long-term Liabilities 0.00% 0.00% 0.00% 9.10%
Total Liabilities 8.75% 6.50% 4.99% 56.30%
Net Worth 91.25% 93.50% 95.01% 43.70%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 90.00% 90.00% 90.00% 26.50%
Selling, General & Administrative Expenses 92.95% 78.43% 75.98% 14.60%
Advertising Expenses 0.45% 0.31% 0.28% 0.40%
Profit Before Interest and Taxes -2.95% 16.52% 20.03% 2.20%
Main Ratios
Current 6.03 11.40 17.23 1.87
Quick 6.03 11.40 17.23 1.47
Total Debt to Total Assets 8.75% 6.50% 4.99% 56.30%
Pre-tax Return on Net Worth -9.93% 51.02% 46.91% 6.80%
Pre-tax Return on Assets -9.06% 47.71% 44.57% 15.50%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -2.95% 11.57% 14.02% n.a
Return on Equity -9.93% 35.72% 32.83% n.a
Activity Ratios
Accounts Payable Turnover 9.44 12.17 12.17 n.a
Payment Days 27 28 28 n.a
Total Asset Turnover 3.08 2.89 2.22 n.a
Debt Ratios
Debt to Net Worth 0.10 0.07 0.05 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $19,162 $44,680 $78,332 n.a
Interest Coverage 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 0.33 0.35 0.45 n.a
Current Debt/Total Assets 9% 7% 5% n.a
Acid Test 6.03 11.40 17.23 n.a
Sales/Net Worth 3.37 3.09 2.34 n.a
Dividend Payout 0.00 0.00 0.00 n.a