Clara's Hardware Store

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Retail Hardware Store Business Plan

Financial Plan

The following is the financial plan for Clara's Hardware.

7.1 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 $964,000 $1,090,000 $1,240,000
Subtotal Cash from Operations $964,000 $1,090,000 $1,240,000
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 $964,000 $1,090,000 $1,240,000
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $240,000 $265,500 $292,000
Bill Payments $648,662 $734,676 $847,507
Subtotal Spent on Operations $888,662 $1,000,176 $1,139,507
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 $30,000 $30,000 $30,000
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $918,662 $1,030,176 $1,169,507
Net Cash Flow $45,338 $59,824 $70,493
Cash Balance $166,338 $226,162 $296,655

7.2 Break-even Analysis

The monthly sales break-even point is $65,133.

Break-even Analysis
Monthly Revenue Break-even $65,133
Assumptions:
Average Percent Variable Cost 49%
Estimated Monthly Fixed Cost $33,107

7.3 Projected Profit and Loss

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

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $964,000 $1,090,000 $1,240,000
Direct Cost of Sales $474,000 $500,000 $612,000
Other Production Expenses $0 $0 $0
Total Cost of Sales $474,000 $500,000 $612,000
Gross Margin $490,000 $590,000 $628,000
Gross Margin % 50.83% 54.13% 50.65%
Expenses
Payroll $240,000 $265,500 $292,000
Sales and Marketing and Other Expenses $75,000 $100,000 $100,000
Depreciation $4,284 $4,285 $4,285
Leased Equipment $0 $0 $0
Utilities $6,000 $6,000 $6,000
Insurance $0 $0 $0
Rent $36,000 $36,000 $36,000
Payroll Taxes $36,000 $39,825 $43,800
Other $0 $0 $0
Total Operating Expenses $397,284 $451,610 $482,085
Profit Before Interest and Taxes $92,716 $138,390 $145,915
EBITDA $97,000 $142,675 $150,200
Interest Expense $13,375 $10,500 $7,500
Taxes Incurred $23,802 $38,367 $41,525
Net Profit $55,539 $89,523 $96,891
Net Profit/Sales 5.76% 8.21% 7.81%

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 $166,338 $226,162 $296,655
Inventory $46,200 $48,734 $59,651
Other Current Assets $0 $0 $0
Total Current Assets $212,538 $274,896 $356,305
Long-term Assets
Long-term Assets $30,000 $30,000 $30,000
Accumulated Depreciation $4,284 $8,569 $12,854
Total Long-term Assets $25,716 $21,431 $17,146
Total Assets $238,254 $296,327 $373,451
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $61,715 $60,265 $70,499
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $61,715 $60,265 $70,499
Long-term Liabilities $120,000 $90,000 $60,000
Total Liabilities $181,715 $150,265 $130,499
Paid-in Capital $80,000 $80,000 $80,000
Retained Earnings ($79,000) ($23,461) $66,062
Earnings $55,539 $89,523 $96,891
Total Capital $56,539 $146,062 $242,952
Total Liabilities and Capital $238,254 $296,327 $373,451
Net Worth $56,539 $146,062 $242,952

7.5 Ratios

Business ratios for the years of this plan are shown below.  Industry profile ratios based on the Standard Industrial Classification (SIC) code 5251, Hardware Stores, are shown for comparison.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 13.07% 13.76% 6.00%
Percent of Total Assets
Inventory 19.39% 16.45% 15.97% 48.50%
Other Current Assets 0.00% 0.00% 0.00% 20.20%
Total Current Assets 89.21% 92.77% 95.41% 79.70%
Long-term Assets 10.79% 7.23% 4.59% 20.30%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 25.90% 20.34% 18.88% 37.60%
Long-term Liabilities 50.37% 30.37% 16.07% 19.70%
Total Liabilities 76.27% 50.71% 34.94% 57.30%
Net Worth 23.73% 49.29% 65.06% 42.70%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 50.83% 54.13% 50.65% 33.80%
Selling, General & Administrative Expenses 45.07% 45.92% 42.83% 21.10%
Advertising Expenses 7.78% 9.17% 8.06% 1.90%
Profit Before Interest and Taxes 9.62% 12.70% 11.77% 1.10%
Main Ratios
Current 3.44 4.56 5.05 2.24
Quick 2.70 3.75 4.21 0.58
Total Debt to Total Assets 76.27% 50.71% 34.94% 57.30%
Pre-tax Return on Net Worth 140.33% 87.56% 56.97% 2.20%
Pre-tax Return on Assets 33.30% 43.16% 37.06% 5.30%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 5.76% 8.21% 7.81% n.a
Return on Equity 98.23% 61.29% 39.88% n.a
Activity Ratios
Inventory Turnover 10.91 10.53 11.29 n.a
Accounts Payable Turnover 11.51 12.17 12.17 n.a
Payment Days 27 30 28 n.a
Total Asset Turnover 4.05 3.68 3.32 n.a
Debt Ratios
Debt to Net Worth 3.21 1.03 0.54 n.a
Current Liab. to Liab. 0.34 0.40 0.54 n.a
Liquidity Ratios
Net Working Capital $150,823 $214,631 $285,806 n.a
Interest Coverage 6.93 13.18 19.46 n.a
Additional Ratios
Assets to Sales 0.25 0.27 0.30 n.a
Current Debt/Total Assets 26% 20% 19% n.a
Acid Test 2.70 3.75 4.21 n.a
Sales/Net Worth 17.05 7.46 5.10 n.a
Dividend Payout 0.00 0.00 0.00 n.a