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Public Relations Business Plan

Financial Plan

The following sections will outline important financial information.

8.1 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

8.2 Key Financial Indicators

The following table outlines the key financial indictors.

8.3 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 $11,725
Assumptions:
Average Percent Variable Cost 5%
Estimated Monthly Fixed Cost $11,139

8.4 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 $94,714 $220,517 $245,865
Direct Cost of Sales $4,736 $11,026 $12,293
Other Production Expenses $0 $0 $0
Total Cost of Sales $4,736 $11,026 $12,293
Gross Margin $89,978 $209,492 $233,572
Gross Margin % 95.00% 95.00% 95.00%
Expenses
Payroll $104,640 $131,520 $155,000
Sales and Marketing and Other Expenses $4,200 $4,200 $4,200
Depreciation $732 $732 $732
Leased Equipment $0 $0 $0
Utilities $1,200 $1,200 $1,200
Insurance $1,200 $1,200 $1,200
Rent $6,000 $6,000 $6,000
Payroll Taxes $15,696 $19,728 $23,250
Other $0 $0 $0
Total Operating Expenses $133,668 $164,580 $191,582
Profit Before Interest and Taxes ($43,690) $44,912 $41,990
EBITDA ($42,958) $45,644 $42,722
Interest Expense $0 $0 $0
Taxes Incurred $0 $13,473 $12,597
Net Profit ($43,690) $31,438 $29,393
Net Profit/Sales -46.13% 14.26% 11.95%

8.5 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 $33,150 $77,181 $86,053
Cash from Receivables $43,071 $118,773 $154,863
Subtotal Cash from Operations $76,221 $195,954 $240,916
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 $76,221 $195,954 $240,916
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $104,640 $131,520 $155,000
Bill Payments $29,966 $55,222 $60,419
Subtotal Spent on Operations $134,606 $186,742 $215,419
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 $134,606 $186,742 $215,419
Net Cash Flow ($58,385) $9,212 $25,497
Cash Balance $1,465 $10,676 $36,174

8.6 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 $1,465 $10,676 $36,174
Accounts Receivable $18,493 $43,057 $48,006
Other Current Assets $0 $0 $0
Total Current Assets $19,958 $53,733 $84,180
Long-term Assets
Long-term Assets $3,700 $3,700 $3,700
Accumulated Depreciation $732 $1,464 $2,196
Total Long-term Assets $2,968 $2,236 $1,504
Total Assets $22,926 $55,969 $85,684
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $3,066 $4,671 $4,992
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $3,066 $4,671 $4,992
Long-term Liabilities $0 $0 $0
Total Liabilities $3,066 $4,671 $4,992
Paid-in Capital $66,000 $66,000 $66,000
Retained Earnings ($2,450) ($46,140) ($14,702)
Earnings ($43,690) $31,438 $29,393
Total Capital $19,860 $51,298 $80,691
Total Liabilities and Capital $22,926 $55,969 $85,684
Net Worth $19,860 $51,298 $80,691

8.7 Business Ratios

Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 8743, Public Relations Service, are shown for comparison.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 132.82% 11.49% 8.60%
Percent of Total Assets
Accounts Receivable 80.67% 76.93% 56.03% 24.20%
Other Current Assets 0.00% 0.00% 0.00% 44.30%
Total Current Assets 87.05% 96.00% 98.24% 72.50%
Long-term Assets 12.95% 4.00% 1.76% 27.50%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 13.37% 8.35% 5.83% 45.00%
Long-term Liabilities 0.00% 0.00% 0.00% 17.00%
Total Liabilities 13.37% 8.35% 5.83% 62.00%
Net Worth 86.63% 91.65% 94.17% 38.00%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 95.00% 95.00% 95.00% 0.00%
Selling, General & Administrative Expenses 141.13% 80.74% 83.05% 79.40%
Advertising Expenses 2.53% 1.09% 0.98% 1.20%
Profit Before Interest and Taxes -46.13% 20.37% 17.08% 2.40%
Main Ratios
Current 6.51 11.50 16.86 1.71
Quick 6.51 11.50 16.86 1.36
Total Debt to Total Assets 13.37% 8.35% 5.83% 62.00%
Pre-tax Return on Net Worth -219.99% 87.55% 52.04% 5.10%
Pre-tax Return on Assets -190.57% 80.24% 49.01% 13.50%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -46.13% 14.26% 11.95% n.a
Return on Equity -219.99% 61.28% 36.43% n.a
Activity Ratios
Accounts Receivable Turnover 3.33 3.33 3.33 n.a
Collection Days 55 78 104 n.a
Accounts Payable Turnover 10.78 12.17 12.17 n.a
Payment Days 27 25 29 n.a
Total Asset Turnover 4.13 3.94 2.87 n.a
Debt Ratios
Debt to Net Worth 0.15 0.09 0.06 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $16,892 $49,062 $79,187 n.a
Interest Coverage 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 0.24 0.25 0.35 n.a
Current Debt/Total Assets 13% 8% 6% n.a
Acid Test 0.48 2.29 7.25 n.a
Sales/Net Worth 4.77 4.30 3.05 n.a
Dividend Payout 0.00 0.00 0.00 n.a