The personnel burden is very low because benefits are not paid to part-timers. And the short-term interest rate is extraordinarily low because of Mr. Brinkman's long-standing relationship with High Desert Credit Union.
A Break-even Analysis table has been completed on the basis of average costs/prices. With fixed costs, average sales, and average variable costs, the table and chart show what we need per month to break-even.
We are positioning ourselves in the market as a medium risk concern with steady cash flows. Accounts payable is paid at the end of each month, while sales are in cash, giving the Dollar Store an excellent cash structure. Fifty percent of cash above a TBA amount will be invested into semi-liquid stock portfolios to decrease the opportunity cost of cash held.
We predict advertising costs will go down in the next three years. We will be able to find what has worked well for us and concentrate on those advertising methods. Normally, a start-up concern will operate with negative profits through the first two years. We will avoid that kind of operating loss by knowing our target markets.
All of our tables will be updated monthly to reflect past performance and future assumptions. Future assumptions will not be based on past performance but rather on economic cycle activity, regional industry strength, and future cash flow possibilities. We expect solid growth in net worth beyond the year 2006.
We expect our net profit margin and gross margin, to increase steadily over the three-year period. Our net working capital will increase handsomely by year three, proving that we have the cash flows to remain a going concern. The following table shows these important financial ratios, based upon NAICS industry code 452112, Discount Department Stores.