Wholesale Bicycle Distributor Business Plan

Wheelie Deals

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Financial Plan

The following sections will outline important financial information.

Please note that under the Ratio table, in percentage of sales grouping, there is a bit of discrepancy between Wheelie Deals numbers and the industry average.  This is explained by different accounting procedures for expenses.

7.1 Important Assumptions

The following table details 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 30.00% 30.00% 30.00%
Other 0 0 0

7.2 Break-even Analysis

The Break-even Analysis indicates what will be needed in monthly revenue to reach the break-even point.

Break-even Analysis
Monthly Revenue Break-even $30,819
Assumptions:
Average Percent Variable Cost 50%
Estimated Monthly Fixed Cost $15,410

7.3 Projected Profit and Loss

The following table will indicate projected profit and loss.

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $308,944 $553,506 $602,999
Direct Cost of Sales $154,472 $276,753 $301,500
Other Production Expenses $0 $0 $0
Total Cost of Sales $154,472 $276,753 $301,500
Gross Margin $154,472 $276,753 $301,500
Gross Margin % 50.00% 50.00% 50.00%
Expenses
Payroll $106,400 $116,800 $127,176
Sales and Marketing and Other Expenses $2,400 $2,400 $2,400
Depreciation $4,956 $4,956 $4,956
Utilities $3,600 $3,600 $3,600
Insurance $3,600 $3,600 $3,600
Rent $48,000 $48,000 $48,000
Payroll Taxes $15,960 $17,520 $19,076
Other $0 $0 $0
Total Operating Expenses $184,916 $196,876 $208,808
Profit Before Interest and Taxes ($30,444) $79,877 $92,691
EBITDA ($25,488) $84,833 $97,647
Interest Expense $0 $0 $0
Taxes Incurred $0 $23,963 $27,807
Net Profit ($30,444) $55,914 $64,884
Net Profit/Sales -9.85% 10.10% 10.76%

7.4 Projected Cash Flow

The following chart and table will indicate projected cash flow.

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $308,944 $553,506 $602,999
Subtotal Cash from Operations $308,944 $553,506 $602,999
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 $308,944 $553,506 $602,999
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $106,400 $116,800 $127,176
Bill Payments $214,461 $380,032 $407,377
Subtotal Spent on Operations $320,861 $496,832 $534,553
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 $320,861 $496,832 $534,553
Net Cash Flow ($11,917) $56,674 $68,446
Cash Balance $17,033 $73,707 $142,153

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 $17,033 $73,707 $142,153
Inventory $18,253 $32,703 $35,627
Other Current Assets $0 $0 $0
Total Current Assets $35,287 $106,410 $177,781
Long-term Assets
Long-term Assets $24,750 $24,750 $24,750
Accumulated Depreciation $4,956 $9,912 $14,868
Total Long-term Assets $19,794 $14,838 $9,882
Total Assets $55,081 $121,248 $187,663
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $21,824 $32,078 $33,609
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $21,824 $32,078 $33,609
Long-term Liabilities $0 $0 $0
Total Liabilities $21,824 $32,078 $33,609
Paid-in Capital $65,000 $65,000 $65,000
Retained Earnings ($1,300) ($31,744) $24,170
Earnings ($30,444) $55,914 $64,884
Total Capital $33,256 $89,170 $154,054
Total Liabilities and Capital $55,081 $121,248 $187,663
Net Worth $33,256 $89,170 $154,054

7.6 Business Ratios

The following table outlines some of the more important ratios from the Sporting and Recreational Goods and Supplies Merchant Wholesale  industry. The final column, Industry Profile, details specific ratios based on the industry as it is classified by the NAICS code, 423910.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 79.16% 8.94% 11.50%
Percent of Total Assets
Inventory 33.14% 26.97% 18.98% 28.00%
Other Current Assets 0.00% 0.00% 0.00% 29.00%
Total Current Assets 64.06% 87.76% 94.73% 88.70%
Long-term Assets 35.94% 12.24% 5.27% 11.30%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 39.62% 26.46% 17.91% 38.00%
Long-term Liabilities 0.00% 0.00% 0.00% 9.00%
Total Liabilities 39.62% 26.46% 17.91% 47.00%
Net Worth 60.38% 73.54% 82.09% 53.00%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 50.00% 50.00% 50.00% 23.00%
Selling, General & Administrative Expenses 59.85% 39.90% 39.24% 14.80%
Advertising Expenses 0.39% 0.22% 0.20% 0.70%
Profit Before Interest and Taxes -9.85% 14.43% 15.37% 2.00%
Main Ratios
Current 1.62 3.32 5.29 2.19
Quick 0.78 2.30 4.23 1.22
Total Debt to Total Assets 39.62% 26.46% 17.91% 47.00%
Pre-tax Return on Net Worth -91.54% 89.58% 60.17% 5.30%
Pre-tax Return on Assets -55.27% 65.88% 49.39% 10.10%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -9.85% 10.10% 10.76% n.a
Return on Equity -91.54% 62.70% 42.12% n.a
Activity Ratios
Inventory Turnover 10.08 10.86 8.82 n.a
Accounts Payable Turnover 10.83 12.17 12.17 n.a
Payment Days 27 25 29 n.a
Total Asset Turnover 5.61 4.57 3.21 n.a
Debt Ratios
Debt to Net Worth 0.66 0.36 0.22 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $13,462 $74,332 $144,172 n.a
Interest Coverage 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 0.18 0.22 0.31 n.a
Current Debt/Total Assets 40% 26% 18% n.a
Acid Test 0.78 2.30 4.23 n.a
Sales/Net Worth 9.29 6.21 3.91 n.a
Dividend Payout 0.00 0.00 0.00 n.a
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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 30.00% 30.00% 30.00%
Other 0 0 0
Break-even Analysis
Monthly Revenue Break-even $30,819
Assumptions:
Average Percent Variable Cost 50%
Estimated Monthly Fixed Cost $15,410
Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $308,944 $553,506 $602,999
Direct Cost of Sales $154,472 $276,753 $301,500
Other Production Expenses $0 $0 $0
Total Cost of Sales $154,472 $276,753 $301,500
Gross Margin $154,472 $276,753 $301,500
Gross Margin % 50.00% 50.00% 50.00%
Expenses
Payroll $106,400 $116,800 $127,176
Sales and Marketing and Other Expenses $2,400 $2,400 $2,400
Depreciation $4,956 $4,956 $4,956
Utilities $3,600 $3,600 $3,600
Insurance $3,600 $3,600 $3,600
Rent $48,000 $48,000 $48,000
Payroll Taxes $15,960 $17,520 $19,076
Other $0 $0 $0
Total Operating Expenses $184,916 $196,876 $208,808
Profit Before Interest and Taxes ($30,444) $79,877 $92,691
EBITDA ($25,488) $84,833 $97,647
Interest Expense $0 $0 $0
Taxes Incurred $0 $23,963 $27,807
Net Profit ($30,444) $55,914 $64,884
Net Profit/Sales -9.85% 10.10% 10.76%
Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $308,944 $553,506 $602,999
Subtotal Cash from Operations $308,944 $553,506 $602,999
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 $308,944 $553,506 $602,999
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $106,400 $116,800 $127,176
Bill Payments $214,461 $380,032 $407,377
Subtotal Spent on Operations $320,861 $496,832 $534,553
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 $320,861 $496,832 $534,553
Net Cash Flow ($11,917) $56,674 $68,446
Cash Balance $17,033 $73,707 $142,153
Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $17,033 $73,707 $142,153
Inventory $18,253 $32,703 $35,627
Other Current Assets $0 $0 $0
Total Current Assets $35,287 $106,410 $177,781
Long-term Assets
Long-term Assets $24,750 $24,750 $24,750
Accumulated Depreciation $4,956 $9,912 $14,868
Total Long-term Assets $19,794 $14,838 $9,882
Total Assets $55,081 $121,248 $187,663
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $21,824 $32,078 $33,609
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $21,824 $32,078 $33,609
Long-term Liabilities $0 $0 $0
Total Liabilities $21,824 $32,078 $33,609
Paid-in Capital $65,000 $65,000 $65,000
Retained Earnings ($1,300) ($31,744) $24,170
Earnings ($30,444) $55,914 $64,884
Total Capital $33,256 $89,170 $154,054
Total Liabilities and Capital $55,081 $121,248 $187,663
Net Worth $33,256 $89,170 $154,054
Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 79.16% 8.94% 11.50%
Percent of Total Assets
Inventory 33.14% 26.97% 18.98% 28.00%
Other Current Assets 0.00% 0.00% 0.00% 29.00%
Total Current Assets 64.06% 87.76% 94.73% 88.70%
Long-term Assets 35.94% 12.24% 5.27% 11.30%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 39.62% 26.46% 17.91% 38.00%
Long-term Liabilities 0.00% 0.00% 0.00% 9.00%
Total Liabilities 39.62% 26.46% 17.91% 47.00%
Net Worth 60.38% 73.54% 82.09% 53.00%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 50.00% 50.00% 50.00% 23.00%
Selling, General & Administrative Expenses 59.85% 39.90% 39.24% 14.80%
Advertising Expenses 0.39% 0.22% 0.20% 0.70%
Profit Before Interest and Taxes -9.85% 14.43% 15.37% 2.00%
Main Ratios
Current 1.62 3.32 5.29 2.19
Quick 0.78 2.30 4.23 1.22
Total Debt to Total Assets 39.62% 26.46% 17.91% 47.00%
Pre-tax Return on Net Worth -91.54% 89.58% 60.17% 5.30%
Pre-tax Return on Assets -55.27% 65.88% 49.39% 10.10%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -9.85% 10.10% 10.76% n.a
Return on Equity -91.54% 62.70% 42.12% n.a
Activity Ratios
Inventory Turnover 10.08 10.86 8.82 n.a
Accounts Payable Turnover 10.83 12.17 12.17 n.a
Payment Days 27 25 29 n.a
Total Asset Turnover 5.61 4.57 3.21 n.a
Debt Ratios
Debt to Net Worth 0.66 0.36 0.22 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $13,462 $74,332 $144,172 n.a
Interest Coverage 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 0.18 0.22 0.31 n.a
Current Debt/Total Assets 40% 26% 18% n.a
Acid Test 0.78 2.30 4.23 n.a
Sales/Net Worth 9.29 6.21 3.91 n.a
Dividend Payout 0.00 0.00 0.00 n.a