Wholesale Food Manufacturer Business Plan

Jean's Tofu Delight

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Financial Plan

The following is the financial plan for Jean's Tofu Delight.

7.1 Break-even Analysis

The monthly break-even point is $71,689.

Break-even Analysis
Monthly Revenue Break-even $71,689
Assumptions:
Average Percent Variable Cost 23%
Estimated Monthly Fixed Cost $55,300

7.2 Projected Cash Flow

The following table and chart are the projected cash flow for three years.

Pro Forma Cash Flow
2002 2003 2004
Cash Received
Cash from Operations
Cash Sales $252,500 $290,000 $332,500
Cash from Receivables $690,000 $848,094 $972,673
Subtotal Cash from Operations $942,500 $1,138,094 $1,305,173
Additional Cash Received
Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $100,163 $0 $0
New Other Liabilities (interest-free) $36,000 $36,000 $36,000
New Long-term Liabilities $36,000 $36,000 $36,000
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 $1,114,663 $1,210,094 $1,377,173
Expenditures 2002 2003 2004
Expenditures from Operations
Cash Spending $456,000 $490,000 $526,000
Bill Payments $460,111 $578,610 $641,410
Subtotal Spent on Operations $916,111 $1,068,610 $1,167,410
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $19,992 $19,992 $19,992
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $18,000 $18,300 $3,700
Purchase Other Current Assets $24,000 $30,000 $40,000
Purchase Long-term Assets $24,000 $30,000 $30,000
Dividends $0 $0 $0
Subtotal Cash Spent $1,002,103 $1,166,902 $1,261,102
Net Cash Flow $112,560 $43,192 $116,071
Cash Balance $152,560 $195,751 $311,823

7.3 Projected Profit and Loss

The following table and charts are the projected profit and loss for three years.

Pro Forma Profit and Loss
2002 2003 2004
Sales $1,010,000 $1,160,000 $1,330,000
Direct Cost of Sales $230,900 $265,000 $296,000
Other Production Expenses $0 $0 $0
Total Cost of Sales $230,900 $265,000 $296,000
Gross Margin $779,100 $895,000 $1,034,000
Gross Margin % 77.14% 77.16% 77.74%
Expenses
Payroll $456,000 $490,000 $526,000
Sales and Marketing and Other Expenses $72,000 $132,000 $132,000
Depreciation $9,600 $9,600 $9,600
Leased Equipment $0 $0 $0
Utilities $12,000 $12,000 $12,000
Insurance $9,600 $9,600 $9,600
Rent $36,000 $36,000 $36,000
Payroll Taxes $68,400 $73,500 $78,900
Other $0 $0 $0
Total Operating Expenses $663,600 $762,700 $804,100
Profit Before Interest and Taxes $115,500 $132,300 $229,900
EBITDA $125,100 $141,900 $239,500
Interest Expense $9,310 $13,703 $14,203
Taxes Incurred $31,857 $35,579 $64,709
Net Profit $74,333 $83,018 $150,988
Net Profit/Sales 7.36% 7.16% 11.35%

7.4 Projected Balance Sheet

The following table is the projected balance sheet for three years.

Pro Forma Balance Sheet
2002 2003 2004
Assets
Current Assets
Cash $152,560 $195,751 $311,823
Accounts Receivable $147,500 $169,406 $194,233
Inventory $25,300 $29,036 $32,433
Other Current Assets $29,000 $59,000 $99,000
Total Current Assets $354,360 $453,193 $637,488
Long-term Assets
Long-term Assets $74,000 $104,000 $134,000
Accumulated Depreciation $21,600 $31,200 $40,800
Total Long-term Assets $52,400 $72,800 $93,200
Total Assets $406,760 $525,993 $730,688
Liabilities and Capital 2002 2003 2004
Current Liabilities
Accounts Payable $45,255 $47,763 $53,162
Current Borrowing $80,171 $60,179 $40,187
Other Current Liabilities $36,000 $72,000 $108,000
Subtotal Current Liabilities $161,426 $179,942 $201,349
Long-term Liabilities $58,000 $75,700 $108,000
Total Liabilities $219,426 $255,642 $309,349
Paid-in Capital $80,000 $80,000 $80,000
Retained Earnings $33,000 $107,333 $190,351
Earnings $74,333 $83,018 $150,988
Total Capital $187,333 $270,351 $421,339
Total Liabilities and Capital $406,760 $525,993 $730,688
Net Worth $187,333 $270,351 $421,339

7.5 Business Ratios

Business ratios for the years of this plan are shown below.  Industry profile ratios based on the Standard Industrial Classification (SIC) code 5149, Groceries and related products, are shown for comparison.

Ratio Analysis
2002 2003 2004 Industry Profile
Sales Growth 74.14% 14.85% 14.66% 4.60%
Percent of Total Assets
Accounts Receivable 36.26% 32.21% 26.58% 33.30%
Inventory 6.22% 5.52% 4.44% 26.00%
Other Current Assets 7.13% 11.22% 13.55% 20.90%
Total Current Assets 87.12% 86.16% 87.24% 80.20%
Long-term Assets 12.88% 13.84% 12.76% 19.80%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 39.69% 34.21% 27.56% 45.20%
Long-term Liabilities 14.26% 14.39% 14.78% 10.00%
Total Liabilities 53.95% 48.60% 42.34% 55.20%
Net Worth 46.05% 51.40% 57.66% 44.80%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 77.14% 77.16% 77.74% 44.10%
Selling, General & Administrative Expenses 69.78% 70.00% 66.39% 26.70%
Advertising Expenses 5.94% 10.34% 9.02% 0.70%
Profit Before Interest and Taxes 11.44% 11.41% 17.29% 0.80%
Main Ratios
Current 2.20 2.52 3.17 1.69
Quick 2.04 2.36 3.01 1.01
Total Debt to Total Assets 53.95% 48.60% 42.34% 55.20%
Pre-tax Return on Net Worth 56.69% 43.87% 51.19% 3.60%
Pre-tax Return on Assets 26.11% 22.55% 29.52% 8.00%
Additional Ratios 2002 2003 2004
Net Profit Margin 7.36% 7.16% 11.35% n.a
Return on Equity 39.68% 30.71% 35.84% n.a
Activity Ratios
Accounts Receivable Turnover 5.14 5.14 5.14 n.a
Collection Days 59 66 67 n.a
Inventory Turnover 10.91 9.75 9.63 n.a
Accounts Payable Turnover 10.73 12.17 12.17 n.a
Payment Days 28 29 28 n.a
Total Asset Turnover 2.48 2.21 1.82 n.a
Debt Ratios
Debt to Net Worth 1.17 0.95 0.73 n.a
Current Liab. to Liab. 0.74 0.70 0.65 n.a
Liquidity Ratios
Net Working Capital $192,933 $273,251 $436,139 n.a
Interest Coverage 12.41 9.66 16.19 n.a
Additional Ratios
Assets to Sales 0.40 0.45 0.55 n.a
Current Debt/Total Assets 40% 34% 28% n.a
Acid Test 1.12 1.42 2.04 n.a
Sales/Net Worth 5.39 4.29 3.16 n.a
Dividend Payout 0.00 0.00 0.00 n.a
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Break-even Analysis
Monthly Revenue Break-even $71,689
Assumptions:
Average Percent Variable Cost 23%
Estimated Monthly Fixed Cost $55,300
Pro Forma Cash Flow
2002 2003 2004
Cash Received
Cash from Operations
Cash Sales $252,500 $290,000 $332,500
Cash from Receivables $690,000 $848,094 $972,673
Subtotal Cash from Operations $942,500 $1,138,094 $1,305,173
Additional Cash Received
Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $100,163 $0 $0
New Other Liabilities (interest-free) $36,000 $36,000 $36,000
New Long-term Liabilities $36,000 $36,000 $36,000
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 $1,114,663 $1,210,094 $1,377,173
Expenditures 2002 2003 2004
Expenditures from Operations
Cash Spending $456,000 $490,000 $526,000
Bill Payments $460,111 $578,610 $641,410
Subtotal Spent on Operations $916,111 $1,068,610 $1,167,410
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $19,992 $19,992 $19,992
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $18,000 $18,300 $3,700
Purchase Other Current Assets $24,000 $30,000 $40,000
Purchase Long-term Assets $24,000 $30,000 $30,000
Dividends $0 $0 $0
Subtotal Cash Spent $1,002,103 $1,166,902 $1,261,102
Net Cash Flow $112,560 $43,192 $116,071
Cash Balance $152,560 $195,751 $311,823
Pro Forma Profit and Loss
2002 2003 2004
Sales $1,010,000 $1,160,000 $1,330,000
Direct Cost of Sales $230,900 $265,000 $296,000
Other Production Expenses $0 $0 $0
Total Cost of Sales $230,900 $265,000 $296,000
Gross Margin $779,100 $895,000 $1,034,000
Gross Margin % 77.14% 77.16% 77.74%
Expenses
Payroll $456,000 $490,000 $526,000
Sales and Marketing and Other Expenses $72,000 $132,000 $132,000
Depreciation $9,600 $9,600 $9,600
Leased Equipment $0 $0 $0
Utilities $12,000 $12,000 $12,000
Insurance $9,600 $9,600 $9,600
Rent $36,000 $36,000 $36,000
Payroll Taxes $68,400 $73,500 $78,900
Other $0 $0 $0
Total Operating Expenses $663,600 $762,700 $804,100
Profit Before Interest and Taxes $115,500 $132,300 $229,900
EBITDA $125,100 $141,900 $239,500
Interest Expense $9,310 $13,703 $14,203
Taxes Incurred $31,857 $35,579 $64,709
Net Profit $74,333 $83,018 $150,988
Net Profit/Sales 7.36% 7.16% 11.35%
Pro Forma Balance Sheet
2002 2003 2004
Assets
Current Assets
Cash $152,560 $195,751 $311,823
Accounts Receivable $147,500 $169,406 $194,233
Inventory $25,300 $29,036 $32,433
Other Current Assets $29,000 $59,000 $99,000
Total Current Assets $354,360 $453,193 $637,488
Long-term Assets
Long-term Assets $74,000 $104,000 $134,000
Accumulated Depreciation $21,600 $31,200 $40,800
Total Long-term Assets $52,400 $72,800 $93,200
Total Assets $406,760 $525,993 $730,688
Liabilities and Capital 2002 2003 2004
Current Liabilities
Accounts Payable $45,255 $47,763 $53,162
Current Borrowing $80,171 $60,179 $40,187
Other Current Liabilities $36,000 $72,000 $108,000
Subtotal Current Liabilities $161,426 $179,942 $201,349
Long-term Liabilities $58,000 $75,700 $108,000
Total Liabilities $219,426 $255,642 $309,349
Paid-in Capital $80,000 $80,000 $80,000
Retained Earnings $33,000 $107,333 $190,351
Earnings $74,333 $83,018 $150,988
Total Capital $187,333 $270,351 $421,339
Total Liabilities and Capital $406,760 $525,993 $730,688
Net Worth $187,333 $270,351 $421,339
Ratio Analysis
2002 2003 2004 Industry Profile
Sales Growth 74.14% 14.85% 14.66% 4.60%
Percent of Total Assets
Accounts Receivable 36.26% 32.21% 26.58% 33.30%
Inventory 6.22% 5.52% 4.44% 26.00%
Other Current Assets 7.13% 11.22% 13.55% 20.90%
Total Current Assets 87.12% 86.16% 87.24% 80.20%
Long-term Assets 12.88% 13.84% 12.76% 19.80%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 39.69% 34.21% 27.56% 45.20%
Long-term Liabilities 14.26% 14.39% 14.78% 10.00%
Total Liabilities 53.95% 48.60% 42.34% 55.20%
Net Worth 46.05% 51.40% 57.66% 44.80%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 77.14% 77.16% 77.74% 44.10%
Selling, General & Administrative Expenses 69.78% 70.00% 66.39% 26.70%
Advertising Expenses 5.94% 10.34% 9.02% 0.70%
Profit Before Interest and Taxes 11.44% 11.41% 17.29% 0.80%
Main Ratios
Current 2.20 2.52 3.17 1.69
Quick 2.04 2.36 3.01 1.01
Total Debt to Total Assets 53.95% 48.60% 42.34% 55.20%
Pre-tax Return on Net Worth 56.69% 43.87% 51.19% 3.60%
Pre-tax Return on Assets 26.11% 22.55% 29.52% 8.00%
Additional Ratios 2002 2003 2004
Net Profit Margin 7.36% 7.16% 11.35% n.a
Return on Equity 39.68% 30.71% 35.84% n.a
Activity Ratios
Accounts Receivable Turnover 5.14 5.14 5.14 n.a
Collection Days 59 66 67 n.a
Inventory Turnover 10.91 9.75 9.63 n.a
Accounts Payable Turnover 10.73 12.17 12.17 n.a
Payment Days 28 29 28 n.a
Total Asset Turnover 2.48 2.21 1.82 n.a
Debt Ratios
Debt to Net Worth 1.17 0.95 0.73 n.a
Current Liab. to Liab. 0.74 0.70 0.65 n.a
Liquidity Ratios
Net Working Capital $192,933 $273,251 $436,139 n.a
Interest Coverage 12.41 9.66 16.19 n.a
Additional Ratios
Assets to Sales 0.40 0.45 0.55 n.a
Current Debt/Total Assets 40% 34% 28% n.a
Acid Test 1.12 1.42 2.04 n.a
Sales/Net Worth 5.39 4.29 3.16 n.a
Dividend Payout 0.00 0.00 0.00 n.a