Travel Agency Business Plan

Adventure Excursions Unlimited

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Financial Plan

The following subtopics will provide more financial information.

7.1 Projected Cash Flow

The following chart and table indicates projected cash flow.

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $600,000 $960,000 $1,120,000
Subtotal Cash from Operations $600,000 $960,000 $1,120,000
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 $600,000 $960,000 $1,120,000
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $368,000 $535,000 $615,000
Bill Payments $168,145 $245,468 $305,745
Subtotal Spent on Operations $536,145 $780,468 $920,745
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 $536,145 $780,468 $920,745
Net Cash Flow $63,855 $179,532 $199,255
Cash Balance $108,455 $287,987 $487,243

7.2 Important Assumptions

See the following table for general 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 25.42% 25.00% 25.42%
Other 0 0 0

7.3 Break-even Analysis

This Break-even Analysis table and chart, below, project the figures for monthly sales break even.

Break-even Analysis
Monthly Revenue Break-even $43,114
Assumptions:
Average Percent Variable Cost 11%
Estimated Monthly Fixed Cost $38,228

7.4 Projected Profit and Loss

The following table indicates the projected profit and loss.

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $600,000 $960,000 $1,120,000
Direct Cost of Sales $68,000 $120,000 $142,000
Other $0 $0 $0
Total Cost of Sales $68,000 $120,000 $142,000
Gross Margin $532,000 $840,000 $978,000
Gross Margin % 88.67% 87.50% 87.32%
Expenses
Payroll $368,000 $535,000 $615,000
Sales and Marketing and Other Expenses $21,000 $0 $0
Depreciation $4,332 $4,332 $4,332
Leased Equipment $0 $0 $0
Utilities $0 $0 $0
Insurance $4,800 $4,800 $4,800
Rent $5,400 $5,400 $5,400
Payroll Taxes $55,200 $80,250 $92,250
Other $0 $0 $0
Total Operating Expenses $458,732 $629,782 $721,782
Profit Before Interest and Taxes $73,268 $210,218 $256,218
EBITDA $77,600 $214,550 $260,550
Interest Expense $0 $0 $0
Taxes Incurred $17,825 $52,555 $65,122
Net Profit $55,443 $157,664 $191,096
Net Profit/Sales 9.24% 16.42% 17.06%

7.5 Projected Balance Sheet

The following table will indicate the projected balance sheet.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $108,455 $287,987 $487,243
Other Current Assets $0 $0 $0
Total Current Assets $108,455 $287,987 $487,243
Long-term Assets
Long-term Assets $13,000 $13,000 $13,000
Accumulated Depreciation $4,332 $8,664 $12,996
Total Long-term Assets $8,668 $4,336 $4
Total Assets $117,123 $292,323 $487,247
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $4,080 $21,617 $25,444
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $4,080 $21,617 $25,444
Long-term Liabilities $0 $0 $0
Total Liabilities $4,080 $21,617 $25,444
Paid-in Capital $60,000 $60,000 $60,000
Retained Earnings ($2,400) $53,043 $210,706
Earnings $55,443 $157,664 $191,096
Total Capital $113,043 $270,706 $461,802
Total Liabilities and Capital $117,123 $292,323 $487,247
Net Worth $113,043 $270,706 $461,802

7.6 Business Ratios

Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 4725, Tour Operators, are shown for comparison.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 60.00% 16.67% 4.00%
Percent of Total Assets
Other Current Assets 0.00% 0.00% 0.00% 42.80%
Total Current Assets 92.60% 98.52% 100.00% 65.80%
Long-term Assets 7.40% 1.48% 0.00% 34.20%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 3.48% 7.39% 5.22% 33.10%
Long-term Liabilities 0.00% 0.00% 0.00% 16.40%
Total Liabilities 3.48% 7.39% 5.22% 49.50%
Net Worth 96.52% 92.61% 94.78% 50.50%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 88.67% 87.50% 87.32% 40.10%
Selling, General & Administrative Expenses 79.51% 71.08% 70.16% 30.80%
Advertising Expenses 0.00% 0.00% 0.00% 0.80%
Profit Before Interest and Taxes 12.21% 21.90% 22.88% 1.20%
Main Ratios
Current 26.58 13.32 19.15 1.66
Quick 26.58 13.32 19.15 1.29
Total Debt to Total Assets 3.48% 7.39% 5.22% 49.50%
Pre-tax Return on Net Worth 64.81% 77.66% 55.48% 2.70%
Pre-tax Return on Assets 62.56% 71.91% 52.58% 5.30%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 9.24% 16.42% 17.06% n.a
Return on Equity 49.05% 58.24% 41.38% n.a
Activity Ratios
Accounts Payable Turnover 42.21 12.17 12.17 n.a
Payment Days 33 18 28 n.a
Total Asset Turnover 5.12 3.28 2.30 n.a
Debt Ratios
Debt to Net Worth 0.04 0.08 0.06 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $104,375 $266,370 $461,798 n.a
Interest Coverage 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 0.20 0.30 0.44 n.a
Current Debt/Total Assets 3% 7% 5% n.a
Acid Test 26.58 13.32 19.15 n.a
Sales/Net Worth 5.31 3.55 2.43 n.a
Dividend Payout 0.00 0.00 0.00 n.a
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Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $600,000 $960,000 $1,120,000
Subtotal Cash from Operations $600,000 $960,000 $1,120,000
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 $600,000 $960,000 $1,120,000
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $368,000 $535,000 $615,000
Bill Payments $168,145 $245,468 $305,745
Subtotal Spent on Operations $536,145 $780,468 $920,745
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 $536,145 $780,468 $920,745
Net Cash Flow $63,855 $179,532 $199,255
Cash Balance $108,455 $287,987 $487,243
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 25.42% 25.00% 25.42%
Other 0 0 0
Break-even Analysis
Monthly Revenue Break-even $43,114
Assumptions:
Average Percent Variable Cost 11%
Estimated Monthly Fixed Cost $38,228
Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $600,000 $960,000 $1,120,000
Direct Cost of Sales $68,000 $120,000 $142,000
Other $0 $0 $0
Total Cost of Sales $68,000 $120,000 $142,000
Gross Margin $532,000 $840,000 $978,000
Gross Margin % 88.67% 87.50% 87.32%
Expenses
Payroll $368,000 $535,000 $615,000
Sales and Marketing and Other Expenses $21,000 $0 $0
Depreciation $4,332 $4,332 $4,332
Leased Equipment $0 $0 $0
Utilities $0 $0 $0
Insurance $4,800 $4,800 $4,800
Rent $5,400 $5,400 $5,400
Payroll Taxes $55,200 $80,250 $92,250
Other $0 $0 $0
Total Operating Expenses $458,732 $629,782 $721,782
Profit Before Interest and Taxes $73,268 $210,218 $256,218
EBITDA $77,600 $214,550 $260,550
Interest Expense $0 $0 $0
Taxes Incurred $17,825 $52,555 $65,122
Net Profit $55,443 $157,664 $191,096
Net Profit/Sales 9.24% 16.42% 17.06%
Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $108,455 $287,987 $487,243
Other Current Assets $0 $0 $0
Total Current Assets $108,455 $287,987 $487,243
Long-term Assets
Long-term Assets $13,000 $13,000 $13,000
Accumulated Depreciation $4,332 $8,664 $12,996
Total Long-term Assets $8,668 $4,336 $4
Total Assets $117,123 $292,323 $487,247
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $4,080 $21,617 $25,444
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $4,080 $21,617 $25,444
Long-term Liabilities $0 $0 $0
Total Liabilities $4,080 $21,617 $25,444
Paid-in Capital $60,000 $60,000 $60,000
Retained Earnings ($2,400) $53,043 $210,706
Earnings $55,443 $157,664 $191,096
Total Capital $113,043 $270,706 $461,802
Total Liabilities and Capital $117,123 $292,323 $487,247
Net Worth $113,043 $270,706 $461,802
Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 60.00% 16.67% 4.00%
Percent of Total Assets
Other Current Assets 0.00% 0.00% 0.00% 42.80%
Total Current Assets 92.60% 98.52% 100.00% 65.80%
Long-term Assets 7.40% 1.48% 0.00% 34.20%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 3.48% 7.39% 5.22% 33.10%
Long-term Liabilities 0.00% 0.00% 0.00% 16.40%
Total Liabilities 3.48% 7.39% 5.22% 49.50%
Net Worth 96.52% 92.61% 94.78% 50.50%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 88.67% 87.50% 87.32% 40.10%
Selling, General & Administrative Expenses 79.51% 71.08% 70.16% 30.80%
Advertising Expenses 0.00% 0.00% 0.00% 0.80%
Profit Before Interest and Taxes 12.21% 21.90% 22.88% 1.20%
Main Ratios
Current 26.58 13.32 19.15 1.66
Quick 26.58 13.32 19.15 1.29
Total Debt to Total Assets 3.48% 7.39% 5.22% 49.50%
Pre-tax Return on Net Worth 64.81% 77.66% 55.48% 2.70%
Pre-tax Return on Assets 62.56% 71.91% 52.58% 5.30%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 9.24% 16.42% 17.06% n.a
Return on Equity 49.05% 58.24% 41.38% n.a
Activity Ratios
Accounts Payable Turnover 42.21 12.17 12.17 n.a
Payment Days 33 18 28 n.a
Total Asset Turnover 5.12 3.28 2.30 n.a
Debt Ratios
Debt to Net Worth 0.04 0.08 0.06 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $104,375 $266,370 $461,798 n.a
Interest Coverage 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 0.20 0.30 0.44 n.a
Current Debt/Total Assets 3% 7% 5% n.a
Acid Test 26.58 13.32 19.15 n.a
Sales/Net Worth 5.31 3.55 2.43 n.a
Dividend Payout 0.00 0.00 0.00 n.a