Sports Clothing Retail Shop Business Plan

Male Gear Wear

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Financial Plan

The following sections will outline the key Financial Strategy for Male Gear Wear.

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 is needed in monthly revenue to reach the break-even point.

Break-even Analysis
Monthly Revenue Break-even $18,844
Assumptions:
Average Percent Variable Cost 40%
Estimated Monthly Fixed Cost $11,307

7.3 Projected Profit and Loss

The following table and charts show the Projected Profit and Loss.

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $133,893 $322,005 $470,831
Direct Cost of Sales $53,557 $128,802 $188,332
Other Costs of Goods $0 $0 $0
Total Cost of Sales $53,557 $128,802 $188,332
Gross Margin $80,336 $193,203 $282,498
Gross Margin % 60.00% 60.00% 60.00%
Expenses
Payroll $93,200 $116,000 $130,000
Sales and Marketing and Other Expenses $6,000 $6,000 $6,000
Depreciation $1,800 $1,800 $1,800
Rent $10,800 $11,000 $11,000
Utilities $3,600 $3,600 $3,600
Insurance $3,900 $4,500 $4,500
Payroll Taxes $13,980 $17,400 $19,500
Other $2,400 $2,400 $2,400
Total Operating Expenses $135,680 $162,700 $178,800
Profit Before Interest and Taxes ($55,344) $30,503 $103,698
EBITDA ($53,544) $32,303 $105,498
Interest Expense $0 $0 $0
Taxes Incurred $0 $9,151 $31,110
Net Profit ($55,344) $21,352 $72,589
Net Profit/Sales -41.33% 6.63% 15.42%

7.4 Projected Cash Flow

The following table and chart presents the Projected Cash Flow.

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $133,893 $322,005 $470,831
Subtotal Cash from Operations $133,893 $322,005 $470,831
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 $133,893 $322,005 $470,831
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $93,200 $116,000 $130,000
Bill Payments $89,861 $193,772 $270,272
Subtotal Spent on Operations $183,061 $309,772 $400,272
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 $183,061 $309,772 $400,272
Net Cash Flow ($49,168) $12,233 $70,559
Cash Balance $38,932 $51,165 $121,724

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 $38,932 $51,165 $121,724
Inventory $9,422 $22,660 $33,133
Other Current Assets $0 $0 $0
Total Current Assets $48,354 $73,825 $154,857
Long-term Assets
Long-term Assets $9,000 $9,000 $9,000
Accumulated Depreciation $1,800 $3,600 $5,400
Total Long-term Assets $7,200 $5,400 $3,600
Total Assets $55,554 $79,225 $158,457
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $13,798 $16,117 $22,760
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $13,798 $16,117 $22,760
Long-term Liabilities $0 $0 $0
Total Liabilities $13,798 $16,117 $22,760
Paid-in Capital $115,000 $115,000 $115,000
Retained Earnings ($17,900) ($73,244) ($51,892)
Earnings ($55,344) $21,352 $72,589
Total Capital $41,756 $63,108 $135,697
Total Liabilities and Capital $55,554 $79,225 $158,457
Net Worth $41,756 $63,108 $135,697

7.6 Business Ratios

The following table indicates key Business Ratios for this company as well as a relative comparison with known industry averages, based upon the NAICS industry code 448190, for Clothing Stores retailing lines of specialized clothes.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 140.49% 46.22% 5.27%
Percent of Total Assets
Inventory 16.96% 28.60% 20.91% 38.34%
Other Current Assets 0.00% 0.00% 0.00% 26.48%
Total Current Assets 87.04% 93.18% 97.73% 88.71%
Long-term Assets 12.96% 6.82% 2.27% 11.29%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 24.84% 20.34% 14.36% 37.92%
Long-term Liabilities 0.00% 0.00% 0.00% 12.86%
Total Liabilities 24.84% 20.34% 14.36% 50.78%
Net Worth 75.16% 79.66% 85.64% 49.22%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 60.00% 60.00% 60.00% 14.97%
Selling, General & Administrative Expenses 101.33% 49.59% 41.34% 6.56%
Advertising Expenses 0.00% 0.00% 0.00% 1.14%
Profit Before Interest and Taxes -41.33% 9.47% 22.02% 1.32%
Main Ratios
Current 3.50 4.58 6.80 2.10
Quick 2.82 3.17 5.35 0.86
Total Debt to Total Assets 24.84% 20.34% 14.36% 57.27%
Pre-tax Return on Net Worth -132.54% 48.33% 76.42% 4.00%
Pre-tax Return on Assets -99.62% 38.50% 65.44% 9.36%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -41.33% 6.63% 15.42% n.a
Return on Equity -132.54% 33.83% 53.49% n.a
Activity Ratios
Inventory Turnover 10.91 8.03 6.75 n.a
Accounts Payable Turnover 7.51 12.17 12.17 n.a
Payment Days 27 28 26 n.a
Total Asset Turnover 2.41 4.06 2.97 n.a
Debt Ratios
Debt to Net Worth 0.33 0.26 0.17 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $34,556 $57,708 $132,097 n.a
Interest Coverage 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 0.41 0.25 0.34 n.a
Current Debt/Total Assets 25% 20% 14% n.a
Acid Test 2.82 3.17 5.35 n.a
Sales/Net Worth 3.21 5.10 3.47 n.a
Dividend Payout 0.00 0.00 0.00 n.a
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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
Break-even Analysis
Monthly Revenue Break-even $18,844
Assumptions:
Average Percent Variable Cost 40%
Estimated Monthly Fixed Cost $11,307
Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $133,893 $322,005 $470,831
Direct Cost of Sales $53,557 $128,802 $188,332
Other Costs of Goods $0 $0 $0
Total Cost of Sales $53,557 $128,802 $188,332
Gross Margin $80,336 $193,203 $282,498
Gross Margin % 60.00% 60.00% 60.00%
Expenses
Payroll $93,200 $116,000 $130,000
Sales and Marketing and Other Expenses $6,000 $6,000 $6,000
Depreciation $1,800 $1,800 $1,800
Rent $10,800 $11,000 $11,000
Utilities $3,600 $3,600 $3,600
Insurance $3,900 $4,500 $4,500
Payroll Taxes $13,980 $17,400 $19,500
Other $2,400 $2,400 $2,400
Total Operating Expenses $135,680 $162,700 $178,800
Profit Before Interest and Taxes ($55,344) $30,503 $103,698
EBITDA ($53,544) $32,303 $105,498
Interest Expense $0 $0 $0
Taxes Incurred $0 $9,151 $31,110
Net Profit ($55,344) $21,352 $72,589
Net Profit/Sales -41.33% 6.63% 15.42%
Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $133,893 $322,005 $470,831
Subtotal Cash from Operations $133,893 $322,005 $470,831
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 $133,893 $322,005 $470,831
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $93,200 $116,000 $130,000
Bill Payments $89,861 $193,772 $270,272
Subtotal Spent on Operations $183,061 $309,772 $400,272
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 $183,061 $309,772 $400,272
Net Cash Flow ($49,168) $12,233 $70,559
Cash Balance $38,932 $51,165 $121,724
Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $38,932 $51,165 $121,724
Inventory $9,422 $22,660 $33,133
Other Current Assets $0 $0 $0
Total Current Assets $48,354 $73,825 $154,857
Long-term Assets
Long-term Assets $9,000 $9,000 $9,000
Accumulated Depreciation $1,800 $3,600 $5,400
Total Long-term Assets $7,200 $5,400 $3,600
Total Assets $55,554 $79,225 $158,457
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $13,798 $16,117 $22,760
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $13,798 $16,117 $22,760
Long-term Liabilities $0 $0 $0
Total Liabilities $13,798 $16,117 $22,760
Paid-in Capital $115,000 $115,000 $115,000
Retained Earnings ($17,900) ($73,244) ($51,892)
Earnings ($55,344) $21,352 $72,589
Total Capital $41,756 $63,108 $135,697
Total Liabilities and Capital $55,554 $79,225 $158,457
Net Worth $41,756 $63,108 $135,697
Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 140.49% 46.22% 5.27%
Percent of Total Assets
Inventory 16.96% 28.60% 20.91% 38.34%
Other Current Assets 0.00% 0.00% 0.00% 26.48%
Total Current Assets 87.04% 93.18% 97.73% 88.71%
Long-term Assets 12.96% 6.82% 2.27% 11.29%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 24.84% 20.34% 14.36% 37.92%
Long-term Liabilities 0.00% 0.00% 0.00% 12.86%
Total Liabilities 24.84% 20.34% 14.36% 50.78%
Net Worth 75.16% 79.66% 85.64% 49.22%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 60.00% 60.00% 60.00% 14.97%
Selling, General & Administrative Expenses 101.33% 49.59% 41.34% 6.56%
Advertising Expenses 0.00% 0.00% 0.00% 1.14%
Profit Before Interest and Taxes -41.33% 9.47% 22.02% 1.32%
Main Ratios
Current 3.50 4.58 6.80 2.10
Quick 2.82 3.17 5.35 0.86
Total Debt to Total Assets 24.84% 20.34% 14.36% 57.27%
Pre-tax Return on Net Worth -132.54% 48.33% 76.42% 4.00%
Pre-tax Return on Assets -99.62% 38.50% 65.44% 9.36%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -41.33% 6.63% 15.42% n.a
Return on Equity -132.54% 33.83% 53.49% n.a
Activity Ratios
Inventory Turnover 10.91 8.03 6.75 n.a
Accounts Payable Turnover 7.51 12.17 12.17 n.a
Payment Days 27 28 26 n.a
Total Asset Turnover 2.41 4.06 2.97 n.a
Debt Ratios
Debt to Net Worth 0.33 0.26 0.17 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $34,556 $57,708 $132,097 n.a
Interest Coverage 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 0.41 0.25 0.34 n.a
Current Debt/Total Assets 25% 20% 14% n.a
Acid Test 2.82 3.17 5.35 n.a
Sales/Net Worth 3.21 5.10 3.47 n.a
Dividend Payout 0.00 0.00 0.00 n.a