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Sports Memorabilia Business Plan

Financial Plan

The following sections outline important financial information.

7.1 Important Assumptions

The following table details important financial assumptions

General Assumptions
2003 2004 2005
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 Business Ratios

The following table indicates industry and business specific Business Ratios, based on NAICS code 448190, Clothing Stores offering specialized lines of garments.

Ratio Analysis
2003 2004 2005 Industry Profile
Sales Growth -10.61% 65.20% 28.16% 5.27%
Percent of Total Assets
Inventory 2.53% 3.79% 4.14% 38.34%
Other Current Assets 12.86% 13.52% 11.52% 26.48%
Total Current Assets 41.88% 50.49% 60.68% 88.71%
Long-term Assets 58.12% 49.51% 39.32% 11.29%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 4.07% 5.80% 5.83% 37.92%
Long-term Liabilities 3.75% 1.89% 0.31% 12.86%
Total Liabilities 7.82% 7.69% 6.14% 50.78%
Net Worth 92.18% 92.31% 93.86% 49.22%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 70.00% 70.00% 70.00% 14.97%
Selling, General & Administrative Expenses 77.62% 61.65% 56.25% 6.56%
Advertising Expenses 0.00% 0.00% 0.00% 1.14%
Profit Before Interest and Taxes -6.60% 12.55% 20.13% 1.32%
Main Ratios
Current 10.30 8.71 10.41 2.10
Quick 9.68 8.05 9.70 0.86
Total Debt to Total Assets 7.82% 7.69% 6.14% 57.27%
Pre-tax Return on Net Worth -5.40% 13.14% 23.15% 4.00%
Pre-tax Return on Assets -4.98% 12.13% 21.73% 9.36%
Additional Ratios 2003 2004 2005
Net Profit Margin -7.49% 8.50% 13.96% n.a
Return on Equity -5.40% 9.19% 16.21% n.a
Activity Ratios
Inventory Turnover 1.64 9.83 8.87 n.a
Accounts Payable Turnover 7.98 12.17 12.17 n.a
Payment Days 41 23 27 n.a
Total Asset Turnover 0.66 1.00 1.09 n.a
Debt Ratios
Debt to Net Worth 0.08 0.08 0.07 n.a
Current Liab. to Liab. 0.52 0.75 0.95 n.a
Liquidity Ratios
Net Working Capital $56,463 $73,403 $105,726 n.a
Interest Coverage -7.35 31.40 104.43 n.a
Additional Ratios
Assets to Sales 1.51 1.00 0.92 n.a
Current Debt/Total Assets 4% 6% 6% n.a
Acid Test 9.68 8.05 9.70 n.a
Sales/Net Worth 0.72 1.08 1.16 n.a
Dividend Payout 0.00 0.00 0.00 n.a

7.3 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 $9,047
Assumptions:
Average Percent Variable Cost 30%
Estimated Monthly Fixed Cost $6,333

7.4 Projected Profit and Loss

The following table and charts project Profit and Loss.

Pro Forma Profit and Loss
2003 2004 2005
Sales $99,218 $163,913 $210,065
Direct Cost of Sales $29,766 $49,174 $63,019
Other Costs of Goods $0 $0 $0
Total Cost of Sales $29,766 $49,174 $63,019
Gross Margin $69,453 $114,739 $147,045
Gross Margin % 70.00% 70.00% 70.00%
Expenses
Payroll $42,000 $57,800 $67,000
Sales and Marketing and Other Expenses $3,000 $3,000 $3,000
Depreciation $5,497 $5,500 $5,500
Rent $10,800 $10,800 $10,800
Utilities $5,400 $5,400 $5,400
Insurance $3,000 $3,000 $3,000
Payroll Taxes $6,300 $8,670 $10,050
Other $0 $0 $0
Total Operating Expenses $75,997 $94,170 $104,750
Profit Before Interest and Taxes ($6,544) $20,569 $42,295
EBITDA ($1,047) $26,069 $47,795
Interest Expense $890 $655 $405
Taxes Incurred $0 $5,974 $12,567
Net Profit ($7,434) $13,940 $29,323
Net Profit/Sales -7.49% 8.50% 13.96%

7.5 Projected Cash Flow

The following table and chart present Projected Cash Flow. Please note that there is a new investment received in January. This was an investment that Phil made into the business. Please also note a significant charge listed in January under purchase of long-term assets, the cost of buying out the lease and the existing business.

Pro Forma Cash Flow
2003 2004 2005
Cash Received
Cash from Operations
Cash Sales $99,218 $163,913 $210,065
Subtotal Cash from Operations $99,218 $163,913 $210,065
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 $85,000 $0 $0
Subtotal Cash Received $184,218 $163,913 $210,065
Expenditures 2003 2004 2005
Expenditures from Operations
Cash Spending $42,000 $57,800 $67,000
Bill Payments $42,054 $85,680 $108,281
Subtotal Spent on Operations $84,054 $143,480 $175,281
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 $2,400 $2,500 $2,500
Purchase Other Current Assets $1,200 $3,000 $0
Purchase Long-term Assets $65,000 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $152,654 $148,980 $177,781
Net Cash Flow $31,565 $14,933 $32,284
Cash Balance $39,565 $54,498 $86,781

7.6 Projected Balance Sheet

The following table displays the Projected Balance Sheet.

Pro Forma Balance Sheet
2003 2004 2005
Assets
Current Assets
Cash $39,565 $54,498 $86,781
Inventory $3,772 $6,231 $7,985
Other Current Assets $19,200 $22,200 $22,200
Total Current Assets $62,537 $82,929 $116,967
Long-term Assets
Long-term Assets $99,000 $99,000 $99,000
Accumulated Depreciation $12,197 $17,697 $23,197
Total Long-term Assets $86,803 $81,303 $75,803
Total Assets $149,340 $164,232 $192,770
Liabilities and Capital 2003 2004 2005
Current Liabilities
Accounts Payable $3,874 $7,326 $9,041
Current Borrowing $2,200 $2,200 $2,200
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $6,074 $9,526 $11,241
Long-term Liabilities $5,600 $3,100 $600
Total Liabilities $11,674 $12,626 $11,841
Paid-in Capital $85,000 $85,000 $85,000
Retained Earnings $60,100 $52,666 $66,606
Earnings ($7,434) $13,940 $29,323
Total Capital $137,666 $151,606 $180,929
Total Liabilities and Capital $149,340 $164,232 $192,770
Net Worth $137,666 $151,606 $180,929