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Used Sports Equipment Store Business Plan

Financial Plan

The following sections will outline the important financial details.

7.1 Important Assumptions

The following table highlights some of the important financial 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

7.2 Break-even Analysis

The Break-even Analysis indicates that monthly revenue will need to be $15,760 to break even.

Break-even Analysis
Monthly Revenue Break-even $15,760
Assumptions:
Average Percent Variable Cost 50%
Estimated Monthly Fixed Cost $7,880

7.3 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 $234,770 $311,300 $344,081
Direct Cost of Sales $117,385 $155,650 $172,041
Other $0 $0 $0
Total Cost of Sales $117,385 $155,650 $172,041
Gross Margin $117,385 $155,650 $172,041
Gross Margin % 50.00% 50.00% 50.00%
Expenses
Payroll $61,440 $82,500 $90,000
Sales and Marketing and Other Expenses $2,400 $2,400 $2,400
Depreciation $1,200 $1,200 $1,300
Rent $18,000 $1,800 $1,800
Rent $804 $804 $804
Leased Equipment $0 $0 $0
Utilities $1,500 $1,500 $1,500
Payroll Taxes $9,216 $12,375 $13,500
Other $0 $0 $0
Total Operating Expenses $94,560 $102,579 $111,304
Profit Before Interest and Taxes $22,825 $53,071 $60,737
EBITDA $24,025 $54,271 $62,037
Interest Expense $0 $0 $0
Taxes Incurred $5,492 $13,268 $15,437
Net Profit $17,333 $39,803 $45,299
Net Profit/Sales 7.38% 12.79% 13.17%

7.4 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 $234,770 $311,300 $344,081
Subtotal Cash from Operations $234,770 $311,300 $344,081
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 $234,770 $311,300 $344,081
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $61,440 $82,500 $90,000
Bill Payments $150,306 $203,071 $208,991
Subtotal Spent on Operations $211,746 $285,571 $298,991
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 $211,746 $285,571 $298,991
Net Cash Flow $23,024 $25,729 $45,090
Cash Balance $37,174 $62,903 $107,993

7.5 Projected Balance Sheet

The following table indicates the projected balance sheet.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $37,174 $62,903 $107,993
Inventory $20,181 $26,760 $29,578
Other Current Assets $0 $0 $0
Total Current Assets $57,355 $89,663 $137,571
Long-term Assets
Long-term Assets $3,700 $3,700 $3,700
Accumulated Depreciation $1,200 $2,400 $3,700
Total Long-term Assets $2,500 $1,300 $0
Total Assets $59,855 $90,963 $137,571
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $24,672 $15,976 $17,285
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $24,672 $15,976 $17,285
Long-term Liabilities $0 $0 $0
Total Liabilities $24,672 $15,976 $17,285
Paid-in Capital $20,000 $20,000 $20,000
Retained Earnings ($2,150) $15,183 $54,987
Earnings $17,333 $39,803 $45,299
Total Capital $35,183 $74,987 $120,286
Total Liabilities and Capital $59,855 $90,963 $137,571
Net Worth $35,183 $74,987 $120,286

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 5932, Used Merchandise Stores, are shown for comparison.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 32.60% 10.53% 6.20%
Percent of Total Assets
Inventory 33.72% 29.42% 21.50% 40.70%
Other Current Assets 0.00% 0.00% 0.00% 23.80%
Total Current Assets 95.82% 98.57% 100.00% 80.80%
Long-term Assets 4.18% 1.43% 0.00% 19.20%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 41.22% 17.56% 12.56% 47.60%
Long-term Liabilities 0.00% 0.00% 0.00% 12.00%
Total Liabilities 41.22% 17.56% 12.56% 59.60%
Net Worth 58.78% 82.44% 87.44% 40.40%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 50.00% 50.00% 50.00% 31.00%
Selling, General & Administrative Expenses 43.09% 37.50% 37.00% 17.10%
Advertising Expenses 1.02% 0.77% 0.70% 1.80%
Profit Before Interest and Taxes 9.72% 17.05% 17.65% 1.40%
Main Ratios
Current 2.32 5.61 7.96 2.11
Quick 1.51 3.94 6.25 0.80
Total Debt to Total Assets 41.22% 17.56% 12.56% 59.60%
Pre-tax Return on Net Worth 64.87% 70.77% 50.49% 3.40%
Pre-tax Return on Assets 38.13% 58.34% 44.15% 8.40%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 7.38% 12.79% 13.17% n.a
Return on Equity 49.27% 53.08% 37.66% n.a
Activity Ratios
Inventory Turnover 10.91 6.63 6.11 n.a
Accounts Payable Turnover 7.09 12.17 12.17 n.a
Payment Days 27 38 29 n.a
Total Asset Turnover 3.92 3.42 2.50 n.a
Debt Ratios
Debt to Net Worth 0.70 0.21 0.14 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $32,683 $73,687 $120,286 n.a
Interest Coverage 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 0.25 0.29 0.40 n.a
Current Debt/Total Assets 41% 18% 13% n.a
Acid Test 1.51 3.94 6.25 n.a
Sales/Net Worth 6.67 4.15 2.86 n.a
Dividend Payout 0.00 0.00 0.00 n.a