Glen Mar Forest Products

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Wholesale Landscape Products Business Plan

Financial Plan

The following is the financial plan for Glen Mar Forest Products.

7.1 Break-even Analysis

The monthly break-even point is calculated and displayed in the following table and chart.

Break-even Analysis
Monthly Revenue Break-even $25,743
Assumptions:
Average Percent Variable Cost 31%
Estimated Monthly Fixed Cost $17,700

7.2 Projected Profit and Loss

The following table and chart will highlight projected profit and loss for the next three years.

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $333,500 $420,000 $510,000
Direct Cost of Sales $104,200 $133,000 $154,000
Other Production Expenses $0 $0 $0
Total Cost of Sales $104,200 $133,000 $154,000
Gross Margin $229,300 $287,000 $356,000
Gross Margin % 68.76% 68.33% 69.80%
Expenses
Payroll $124,800 $140,000 $166,000
Sales and Marketing and Other Expenses $18,000 $36,000 $46,000
Depreciation $2,880 $2,880 $2,880
Leased Equipment $0 $0 $0
Utilities $6,000 $6,000 $6,000
Insurance $6,000 $6,000 $6,000
Rent $36,000 $36,000 $36,000
Payroll Taxes $18,720 $21,000 $24,900
Other $0 $0 $0
Total Operating Expenses $212,400 $247,880 $287,780
Profit Before Interest and Taxes $16,900 $39,120 $68,220
EBITDA $19,780 $42,000 $71,100
Interest Expense $9,480 $8,760 $7,940
Taxes Incurred $2,226 $9,108 $18,084
Net Profit $5,194 $21,252 $42,196
Net Profit/Sales 1.56% 5.06% 8.27%

7.3 Projected Cash Flow

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

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $100,050 $126,000 $153,000
Cash from Receivables $181,790 $280,601 $343,059
Subtotal Cash from Operations $281,840 $406,601 $496,059
Additional Cash Received
Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $0 $4,000 $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 $10,000 $0 $0
Subtotal Cash Received $291,840 $410,601 $496,059
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $124,800 $140,000 $166,000
Bill Payments $170,595 $264,865 $298,698
Subtotal Spent on Operations $295,395 $404,865 $464,698
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $1,200
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $9,600 $9,600 $9,600
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $304,995 $414,465 $475,498
Net Cash Flow ($13,155) ($3,864) $20,561
Cash Balance $9,045 $5,181 $25,742

7.4 Projected Balance Sheet

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

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $9,045 $5,181 $25,742
Accounts Receivable $51,660 $65,059 $79,000
Inventory $15,950 $20,358 $23,573
Other Current Assets $0 $0 $0
Total Current Assets $76,655 $90,599 $128,315
Long-term Assets
Long-term Assets $50,000 $50,000 $50,000
Accumulated Depreciation $2,880 $5,760 $8,640
Total Long-term Assets $47,120 $44,240 $41,360
Total Assets $123,775 $134,839 $169,675
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $25,981 $21,393 $24,833
Current Borrowing $0 $4,000 $2,800
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $25,981 $25,393 $27,633
Long-term Liabilities $90,400 $80,800 $71,200
Total Liabilities $116,381 $106,193 $98,833
Paid-in Capital $110,000 $110,000 $110,000
Retained Earnings ($107,800) ($102,606) ($81,354)
Earnings $5,194 $21,252 $42,196
Total Capital $7,394 $28,646 $70,842
Total Liabilities and Capital $123,775 $134,839 $169,675
Net Worth $7,394 $28,646 $70,842

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 2493, Reconstituted Wood Products, are shown for comparison.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 25.94% 21.43% 8.10%
Percent of Total Assets
Accounts Receivable 41.74% 48.25% 46.56% 22.10%
Inventory 12.89% 15.10% 13.89% 16.70%
Other Current Assets 0.00% 0.00% 0.00% 27.00%
Total Current Assets 61.93% 67.19% 75.62% 65.80%
Long-term Assets 38.07% 32.81% 24.38% 34.20%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 20.99% 18.83% 16.29% 36.60%
Long-term Liabilities 73.04% 59.92% 41.96% 15.70%
Total Liabilities 94.03% 78.76% 58.25% 52.30%
Net Worth 5.97% 21.24% 41.75% 47.70%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 68.76% 68.33% 69.80% 31.60%
Selling, General & Administrative Expenses 67.15% 63.13% 61.33% 18.10%
Advertising Expenses 3.60% 7.14% 7.84% 0.50%
Profit Before Interest and Taxes 5.07% 9.31% 13.38% 2.00%
Main Ratios
Current 2.95 3.57 4.64 1.61
Quick 2.34 2.77 3.79 0.98
Total Debt to Total Assets 94.03% 78.76% 58.25% 52.30%
Pre-tax Return on Net Worth 100.35% 105.98% 85.09% 4.20%
Pre-tax Return on Assets 5.99% 22.52% 35.53% 8.90%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 1.56% 5.06% 8.27% n.a
Return on Equity 70.25% 74.19% 59.56% n.a
Activity Ratios
Accounts Receivable Turnover 4.52 4.52 4.52 n.a
Collection Days 56 72 74 n.a
Inventory Turnover 9.68 7.33 7.01 n.a
Accounts Payable Turnover 7.57 12.17 12.17 n.a
Payment Days 27 33 28 n.a
Total Asset Turnover 2.69 3.11 3.01 n.a
Debt Ratios
Debt to Net Worth 15.74 3.71 1.40 n.a
Current Liab. to Liab. 0.22 0.24 0.28 n.a
Liquidity Ratios
Net Working Capital $50,674 $65,206 $100,682 n.a
Interest Coverage 1.78 4.47 8.59 n.a
Additional Ratios
Assets to Sales 0.37 0.32 0.33 n.a
Current Debt/Total Assets 21% 19% 16% n.a
Acid Test 0.35 0.20 0.93 n.a
Sales/Net Worth 45.10 14.66 7.20 n.a
Dividend Payout 0.00 0.00 0.00 n.a