Taxi Business Plan

START YOUR OWN BUSINESS PLAN

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Financial Plan

The company is seeking $2.5 million of financing to fund the acquisition of Mighty Cab Association and its initial operations. This funding will cover the purchase of Mighty Cab, marketing, purchase of extra vehicles, software, and hardware.

7.1 Important Assumptions

The table below shows the key assumptions for City Taxi.

General Assumptions
1999 2000 2001
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 25.42% 25.00% 25.42%
Other 0 0 0

7.2 Break-even Analysis

City Taxi's Break-even Analysis indicates that the firm has a strong balance of costs and sales. The company estimates a monthly break-even sales volume of approximately $43,000, which will be reached by Fiscal Year (FY) 2000.

Break-even Analysis
Monthly Revenue Break-even $43,333
Assumptions:
Average Percent Variable Cost 32%
Estimated Monthly Fixed Cost $29,250

7.3 Projected Profit and Loss

City Taxi is in the early stage of development, thus initial projections have only been made on accounts that are believed to most drive the income statement.

Pro Forma Profit and Loss
1999 2000 2001
Sales $200,000 $1,500,000 $2,200,000
Direct Cost of Sales $65,000 $125,000 $100,000
Other $5,000 $10,000 $15,000
Total Cost of Sales $70,000 $135,000 $115,000
Gross Margin $130,000 $1,365,000 $2,085,000
Gross Margin % 65.00% 91.00% 94.77%
Expenses
Payroll $217,391 $521,739 $565,217
Sales and Marketing and Other Expenses $64,000 $164,000 $214,000
Depreciation $14,997 $17,500 $17,500
Research & Development $15,000 $25,000 $40,000
Utilities $2,000 $2,000 $2,000
Insurance $5,000 $5,000 $5,000
Payroll Taxes $32,609 $78,261 $84,783
Other $0 $0 $0
Total Operating Expenses $350,997 $813,500 $928,500
Profit Before Interest and Taxes ($220,997) $551,500 $1,156,500
EBITDA ($206,000) $569,000 $1,174,000
Interest Expense $3,337 $2,841 $2,084
Taxes Incurred $0 $137,165 $293,414
Net Profit ($224,334) $411,494 $861,002
Net Profit/Sales -112.17% 27.43% 39.14%

7.4 Projected Cash Flow

The table below outlines the company's cash flows for FY 1999-2001. The required $2.5 million will be spent to acquire Mighty Cab's operations ($1.25 million), as well as to purchase additional property ($250,000) and equipment ($200,000). An additional $500,000 will be spent on other short-term assets.

Pro Forma Cash Flow
1999 2000 2001
Cash Received
Cash from Operations
Cash Sales $200,000 $1,500,000 $2,200,000
Subtotal Cash from Operations $200,000 $1,500,000 $2,200,000
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 $2,500,000 $0 $0
Subtotal Cash Received $2,700,000 $1,500,000 $2,200,000
Expenditures 1999 2000 2001
Expenditures from Operations
Cash Spending $217,391 $521,739 $565,217
Bill Payments $200,095 $519,573 $739,266
Subtotal Spent on Operations $417,486 $1,041,312 $1,304,483
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $3,000 $3,000 $3,000
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $0 $4,181 $4,951
Purchase Other Current Assets $500,000 $0 $0
Purchase Long-term Assets $1,700,000 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $2,620,486 $1,048,493 $1,312,434
Net Cash Flow $79,514 $451,507 $887,566
Cash Balance $124,514 $576,021 $1,463,587

7.5 Projected Balance Sheet

The table below provides City Taxi's actual and projected balance sheets for 1999-2001.

Pro Forma Balance Sheet
1999 2000 2001
Assets
Current Assets
Cash $124,514 $576,021 $1,463,587
Other Current Assets $513,400 $513,400 $513,400
Total Current Assets $637,914 $1,089,421 $1,976,987
Long-term Assets
Long-term Assets $1,775,000 $1,775,000 $1,775,000
Accumulated Depreciation $24,997 $42,497 $59,997
Total Long-term Assets $1,750,003 $1,732,503 $1,715,003
Total Assets $2,387,917 $2,821,924 $3,691,990
Liabilities and Capital 1999 2000 2001
Current Liabilities
Accounts Payable $15,451 $45,145 $62,160
Current Borrowing $7,000 $4,000 $1,000
Other Current Liabilities $25,400 $25,400 $25,400
Subtotal Current Liabilities $47,851 $74,545 $88,560
Long-term Liabilities $25,000 $20,819 $15,868
Total Liabilities $72,851 $95,364 $104,428
Paid-in Capital $2,537,000 $2,537,000 $2,537,000
Retained Earnings $2,400 ($221,934) $189,560
Earnings ($224,334) $411,494 $861,002
Total Capital $2,315,066 $2,726,560 $3,587,562
Total Liabilities and Capital $2,387,917 $2,821,924 $3,691,990
Net Worth $2,315,066 $2,726,560 $3,587,562

7.6 Business Ratios

The following table contains important business ratios from the taxi cab industry, as determined by the Standard Industry Classification (SIC) Index #4121, Taxi Cabs.

Ratio Analysis
1999 2000 2001 Industry Profile
Sales Growth 100.00% 650.00% 46.67% 0.50%
Percent of Total Assets
Other Current Assets 21.50% 18.19% 13.91% 45.90%
Total Current Assets 26.71% 38.61% 53.55% 63.00%
Long-term Assets 73.29% 61.39% 46.45% 37.00%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 2.00% 2.64% 2.40% 29.10%
Long-term Liabilities 1.05% 0.74% 0.43% 27.00%
Total Liabilities 3.05% 3.38% 2.83% 56.10%
Net Worth 96.95% 96.62% 97.17% 43.90%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 65.00% 91.00% 94.77% 82.50%
Selling, General & Administrative Expenses 177.25% 63.59% 55.44% 58.00%
Advertising Expenses 25.00% 10.00% 9.09% 1.00%
Profit Before Interest and Taxes -110.50% 36.77% 52.57% 2.60%
Main Ratios
Current 13.33 14.61 22.32 1.58
Quick 13.33 14.61 22.32 1.22
Total Debt to Total Assets 3.05% 3.38% 2.83% 56.10%
Pre-tax Return on Net Worth -9.69% 20.12% 32.18% 3.60%
Pre-tax Return on Assets -9.39% 19.44% 31.27% 8.10%
Additional Ratios 1999 2000 2001
Net Profit Margin -112.17% 27.43% 39.14% n.a
Return on Equity -9.69% 15.09% 24.00% n.a
Activity Ratios
Accounts Payable Turnover 12.42 12.17 12.17 n.a
Payment Days 31 20 26 n.a
Total Asset Turnover 0.08 0.53 0.60 n.a
Debt Ratios
Debt to Net Worth 0.03 0.03 0.03 n.a
Current Liab. to Liab. 0.66 0.78 0.85 n.a
Liquidity Ratios
Net Working Capital $590,063 $1,014,876 $1,888,427 n.a
Interest Coverage -66.22 194.13 554.85 n.a
Additional Ratios
Assets to Sales 11.94 1.88 1.68 n.a
Current Debt/Total Assets 2% 3% 2% n.a
Acid Test 13.33 14.61 22.32 n.a
Sales/Net Worth 0.09 0.55 0.61 n.a
Dividend Payout 0.00 0.00 0.00 n.a