The financial plan of Panache Travel Group is detailed in the following sections. Preliminary estimates suggest that PTG will experience rapid growth and will increase in gross margin and sales volume. This is partly due to the vast market, but will be facilitated by increased marketing. Income estimates are based, in part, on anticipated revenues from accounts and clients that are secured by PTG prior to its acquisition of both Barkley Roberts Travel and Panache European Journeys. PTG will need sufficient cash to allow for a possible negative cash flow during start-up. It will also need investment to acquire the assets and liabilities of Barkley Roberts Travel and Panache European Journeys. Thus, the overall financial plan presents a conservative, but realistic, depiction of the financial position of PTG.
Panache Travel Group assumes the following:
The following chart indicates key financial indicators for the first three years for Panache Travel Group. Growth is expected in sales and a proportional increase in operating expenses during expansion.
The profit picture of Panache Travel Group improves as operations move into the second year. PTG anticipates improving its profitability dramatically by 2003. The annual estimates are included in the table below.
Cash flow projections are critical to our success. The monthly cash flow for 2001 is shown in the illustration, with one bar representing the cash flow per month and the other representing the monthly balance. The annual cash flow figures are included here in the following table.
The balance sheet indicates sustained and planned growth. Net worth improves considerably in years two and three and will provide Panache Travel Group with a strong financial position.
The following table shows the projected business ratios. Panache Travel Group expects to maintain healthy ratios for profitability, risk and return. Industry Profile ratios are also shown, based on Standard Industry Classification (SIC) code 4724, Travel Agencies.