Glass Dreams

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Stained Glass Gallery Business Plan

Financial Plan

The following sections outline the financial plan for Glass Dreams.

7.1 Break-even Analysis

The following table and chart show our monthly break-even point for the next year.

Break-even Analysis
Monthly Revenue Break-even $23,353
Assumptions:
Average Percent Variable Cost 20%
Estimated Monthly Fixed Cost $18,735

7.2 Projected Profit and Loss

The following table and charts are the projected profit and loss for three years.

Pro Forma Profit and Loss
2002 2003 2004
Sales $332,500 $360,000 $400,000
Direct Cost of Sales $65,750 $75,000 $88,000
Other Production Expenses $0 $0 $0
Total Cost of Sales $65,750 $75,000 $88,000
Gross Margin $266,750 $285,000 $312,000
Gross Margin % 80.23% 79.17% 78.00%
Expenses
Payroll $154,800 $160,000 $166,000
Sales and Marketing and Other Expenses $6,000 $6,000 $6,000
Depreciation $0 $0 $0
Leased Equipment $0 $0 $0
Utilities $4,800 $4,800 $4,800
Insurance $0 $0 $0
Rent $36,000 $36,000 $36,000
Payroll Taxes $23,220 $24,000 $24,900
Other $0 $0 $0
Total Operating Expenses $224,820 $230,800 $237,700
Profit Before Interest and Taxes $41,930 $54,200 $74,300
EBITDA $41,930 $54,200 $74,300
Interest Expense $4,415 $3,380 $2,300
Taxes Incurred $11,255 $15,246 $21,600
Net Profit $26,260 $35,574 $50,400
Net Profit/Sales 7.90% 9.88% 12.60%

7.3 Projected Cash Flow

The following table and chart are the projected cash flow for three years.

Pro Forma Cash Flow
2002 2003 2004
Cash Received
Cash from Operations
Cash Sales $332,500 $360,000 $400,000
Subtotal Cash from Operations $332,500 $360,000 $400,000
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 $332,500 $360,000 $400,000
Expenditures 2002 2003 2004
Expenditures from Operations
Cash Spending $154,800 $160,000 $166,000
Bill Payments $111,511 $164,044 $183,256
Subtotal Spent on Operations $266,311 $324,044 $349,256
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 $10,800 $10,800 $10,800
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $277,111 $334,844 $360,056
Net Cash Flow $55,389 $25,156 $39,944
Cash Balance $105,389 $130,545 $170,490

7.4 Projected Balance Sheet

The following table is the projected balance sheet for three years.

Pro Forma Balance Sheet
2002 2003 2004
Assets
Current Assets
Cash $105,389 $130,545 $170,490
Inventory $6,380 $7,278 $8,539
Other Current Assets $0 $0 $0
Total Current Assets $111,769 $137,823 $179,029
Long-term Assets
Long-term Assets $20,000 $20,000 $20,000
Accumulated Depreciation $3,000 $3,000 $3,000
Total Long-term Assets $17,000 $17,000 $17,000
Total Assets $128,769 $154,823 $196,029
Liabilities and Capital 2002 2003 2004
Current Liabilities
Accounts Payable $12,309 $13,588 $15,194
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $12,309 $13,588 $15,194
Long-term Liabilities $39,200 $28,400 $17,600
Total Liabilities $51,509 $41,988 $32,794
Paid-in Capital $0 $0 $0
Retained Earnings $51,000 $77,261 $112,835
Earnings $26,260 $35,574 $50,400
Total Capital $77,261 $112,835 $163,235
Total Liabilities and Capital $128,769 $154,823 $196,029
Net Worth $77,260 $112,835 $163,235

7.5 Business Ratios

Business ratios for the years of this plan are shown below.  Industry profile ratios based on the Standard Industrial Classification (SIC) code 7336, Commercial Art and Graphic Design, are shown for comparison.

Ratio Analysis
2002 2003 2004 Industry Profile
Sales Growth 27.88% 8.27% 11.11% 8.50%
Percent of Total Assets
Inventory 4.95% 4.70% 4.36% 5.30%
Other Current Assets 0.00% 0.00% 0.00% 44.20%
Total Current Assets 86.80% 89.02% 91.33% 69.00%
Long-term Assets 13.20% 10.98% 8.67% 31.00%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 9.56% 8.78% 7.75% 43.70%
Long-term Liabilities 30.44% 18.34% 8.98% 19.40%
Total Liabilities 40.00% 27.12% 16.73% 63.10%
Net Worth 60.00% 72.88% 83.27% 36.90%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 80.23% 79.17% 78.00% 0.00%
Selling, General & Administrative Expenses 72.33% 69.29% 65.40% 81.30%
Advertising Expenses 1.80% 1.67% 1.50% 1.00%
Profit Before Interest and Taxes 12.61% 15.06% 18.58% 1.70%
Main Ratios
Current 9.08 10.14 11.78 1.60
Quick 8.56 9.61 11.22 1.23
Total Debt to Total Assets 40.00% 27.12% 16.73% 63.10%
Pre-tax Return on Net Worth 48.56% 45.04% 44.11% 3.60%
Pre-tax Return on Assets 29.13% 32.82% 36.73% 9.80%
Additional Ratios 2002 2003 2004
Net Profit Margin 7.90% 9.88% 12.60% n.a
Return on Equity 33.99% 31.53% 30.88% n.a
Activity Ratios
Inventory Turnover 2.93 10.98 11.13 n.a
Accounts Payable Turnover 8.76 12.17 12.17 n.a
Payment Days 31 29 28 n.a
Total Asset Turnover 2.58 2.33 2.04 n.a
Debt Ratios
Debt to Net Worth 0.67 0.37 0.20 n.a
Current Liab. to Liab. 0.24 0.32 0.46 n.a
Liquidity Ratios
Net Working Capital $99,460 $124,235 $163,835 n.a
Interest Coverage 9.50 16.04 32.30 n.a
Additional Ratios
Assets to Sales 0.39 0.43 0.49 n.a
Current Debt/Total Assets 10% 9% 8% n.a
Acid Test 8.56 9.61 11.22 n.a
Sales/Net Worth 4.30 3.19 2.45 n.a
Dividend Payout 0.00 0.00 0.00 n.a