Wasatch Family Fun Center
Financial Plan
It is anticipated that the multi-million dollar loan that the company will seek to secure will cover the business start-up costs and provide funds for operating expenses for the first year. Management projects that it will need to obtain additional investment capital to fund the loan and long-term assets.
The Highlights chart that accompanies the Executive Summary sets forth the company’s anticipated profitability analysis. Management believes that even minimal revenues should be sufficient to offer investors an acceptable return on investment.
7.1 Important Assumptions
NOTES FOR PROJECTIONS
All sales projections/assumptions are based on operating at 35% +/- of capacity. Refer to the Sales Forecast topic for demographic break down and average cost per person.
- The figure of $890,000 shown in the Start-up Funding table under Current Borrowing, is the start-up investment, amortized with a 19% interest rate and paid off in five years.
- Our long-term commercial loan is amortized at 10% interest over 20 years.
- All pricing has been set by industry standards and the local market.
- Revenues are strictly a projection based on gross possible players per venue and then using 35% +/- of that capacity for our base calculation.
- Contract services include: payroll, pest control, trash removal, cable TV.
- Employees needed and wages have been projected for full time and eight hour shifts. All payroll will be done through a payroll company, therefore giving a flatter rate and making it easier to project.
- Weber County tax rates are:
- Real Estate tax $10.00 per $1,000 of assessed value.
- Personal Property tax base is .009% of cost of equipment.
- Business License is $50.00 for first 10,000 sq ft & $5.00 per every additional 1,000 sq. ft. of building space.
- The income tax rate is estimated before deductions and overhead assumptions are included.
General Assumptions | |||||
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
Plan Month | 1 | 2 | 3 | 4 | 5 |
Current Interest Rate | 19.00% | 19.00% | 19.00% | 19.00% | 19.00% |
Long-term Interest Rate | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% |
Tax Rate | 32.75% | 33.00% | 32.75% | 33.00% | 32.75% |
Other | 0 | 0 | 0 | 0 | 0 |
7.2 Valuation
In the following Investment Analysis Table, one should note that the entire (gross loan + points) amount of our long-term liabilities ($4,542,500) is the figure we used to determine the Net Present Value (NPV) and the Internal Rate of Return (IRR) of our company’s projected values.
Investment Analysis | ||||||
Start | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
Initial Investment | ||||||
Investment | $4,542,500 | $0 | $0 | $774,000 | $0 | $0 |
Dividends | $0 | $0 | $774,000 | $0 | $0 | $0 |
Ending Valuation | $0 | $7,370,000 | $8,110,000 | $11,400,000 | $11,050,000 | $12,475,000 |
Combination as Income Stream | ($4,542,500) | $7,370,000 | $8,884,000 | $10,626,000 | $11,050,000 | $12,475,000 |
Percent Equity Acquired | 0% | |||||
Net Present Value (NPV) | $15,893,745 | |||||
Internal Rate of Return (IRR) | 178% | |||||
Assumptions | ||||||
Discount Rate | 10.00% | |||||
Valuation Earnings Multiple | 10 | 10 | 10 | 10 | 10 | |
Valuation Sales Multiple | 2 | 2 | 2 | 2 | 2 | |
Investment (calculated) | $965,000 | $0 | $0 | $774,000 | $0 | $0 |
Dividends | $0 | $774,000 | $0 | $0 | $0 | |
Calculated Earnings-based Valuation | $7,380,000 | $8,110,000 | $11,440,000 | $11,050,000 | $12,220,000 | |
Calculated Sales-based Valuation | $7,120,000 | $7,480,000 | $11,590,000 | $12,170,000 | $12,780,000 | |
Calculated Average Valuation | $7,250,000 | $7,795,000 | $11,515,000 | $11,610,000 | $12,500,000 |
7.3 Key Financial Indicators
These benchmark indicators give I&B Investments a sense of relative comparison for five years of projections.

7.4 Break-even Analysis
Important notice concerning Break-even Analysis
The figures represented in this analysis are connected to the costs presented in the Start-up, Start-up Funding, and Use of Funds tables.
The following chart shows what we need to produce from sales per month to break-even (according to the assumptions). That is less than 1/2 of our planned 2003 sales level and less than 1/3 +/- for the years beyond. We strongly believe we can succeed and provide handsome returns for our owners/investors.
For the Break-even Analysis, we assume our per month fixed costs include most of management’s payroll, loan payments, investor repayments and an estimation of other basic expenses.
Margins are harder to assume. Our overall average of $8.50 (goods/services sold to each person) is based on the local market average number of sales and with an average cost of 20% ($8.50 – $1.70 = $6.80 gross profit per each good/services sold).
We believe that not only will we entertain a much higher number of customers monthly than required by this break-even chart, we believe that we are going to possibly double the amount projected in our cash flow charts in this business plan, because we are going to be the only facilities of its kind within a 50 mile radius.

Break-even Analysis | |
Monthly Revenue Break-even | $51,010 |
Assumptions: | |
Average Percent Variable Cost | 32% |
Estimated Monthly Fixed Cost | $34,725 |
7.5 Projected Profit and Loss
Important notes regarding Depreciation & Payroll Burden
- The depreciation of assets was calculated separately from this Profit and Loss statement. Due to the fact of some accounting issues pertaining to our industry and this program. It appeared to be deducting our depreciation as hard cash expenses and not soft money (tax deduction). Therefore the cash tables did not appear to be reflecting a true statement of cash flow as per our industry (see further explanation below).
- Payroll Burden (overhead/taxes) has been excluded from the Profit and Loss table based on the fact that payroll cost and taxes were pre-calculated and included in the personnel plan table. The basic reason for us doing this is, we plan on using a payroll company. Thus all employee payroll fees, taxes, insurances and other payroll burdens are charged as a flat fee (our industry average fee is: wages + 15% +/- .5%).
As per depreciation figures, our preliminary assessment using a standard 200% declining balance on equipment and assets gives us a first year figure of $190,000 +/-. This figure is considered our income tax deductible base and will adjust each year depending on taxable items, gross income, actual values and depreciation of assets.
Upon reviewing the next table (Profit & Loss), one should note that the company is making a profit in the first month of operation. The yearly analysis is indicated in the table below. The monthly analyses can be found in the appendix.




Pro Forma Profit and Loss | |||||
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
Sales | $3,561,108 | $3,739,163 | $5,795,703 | $6,085,488 | $6,389,763 |
Direct Cost of Sales | $1,136,888 | $1,193,733 | $1,850,286 | $1,942,800 | $2,039,940 |
Operations Payroll | $388,656 | $408,089 | $836,582 | $878,411 | $922,332 |
Known expenses | $0 | $0 | $0 | $0 | $0 |
Total Cost of Sales | $1,525,544 | $1,601,821 | $2,686,868 | $2,821,211 | $2,962,272 |
Gross Margin | $2,035,564 | $2,137,342 | $3,108,836 | $3,264,277 | $3,427,491 |
Gross Margin % | 57.16% | 57.16% | 53.64% | 53.64% | 53.64% |
Operating Expenses | |||||
Sales and Marketing Expenses | |||||
Sales and Marketing Payroll | $55,200 | $57,960 | $60,858 | $63,901 | $67,096 |
Advertising/Promotion | $18,000 | $18,900 | $29,295 | $30,760 | $32,298 |
Travel | $1,800 | $1,890 | $2,930 | $3,076 | $3,230 |
Miscellaneous | $6,000 | $6,300 | $9,765 | $10,253 | $10,766 |
Total Sales and Marketing Expenses | $81,000 | $85,050 | $102,848 | $107,990 | $113,389 |
Sales and Marketing % | 2.27% | 2.27% | 1.77% | 1.77% | 1.77% |
General and Administrative Expenses | |||||
General and Administrative Payroll | $171,120 | $179,676 | $326,605 | $342,935 | $360,082 |
Sales and Marketing and Other Expenses | $0 | $0 | $0 | $0 | $0 |
Depreciation | $0 | $0 | $0 | $0 | $0 |
Utilities | $14,400 | $15,120 | $23,436 | $24,608 | $25,838 |
Insurance | $14,760 | $15,498 | $24,022 | $25,223 | $26,484 |
Telephone | $9,600 | $10,080 | $15,624 | $16,405 | $17,225 |
Payroll Taxes | $0 | $0 | $0 | $0 | $0 |
Other General and Administrative Expenses | $0 | $0 | $0 | $0 | $0 |
Total General and Administrative Expenses | $209,880 | $220,374 | $389,687 | $409,171 | $429,629 |
General and Administrative % | 5.89% | 5.89% | 6.72% | 6.72% | 6.72% |
Other Expenses: | |||||
Other Payroll | $77,280 | $81,144 | $166,345 | $174,662 | $183,396 |
Consultants | $0 | $0 | $0 | $0 | $0 |
Office Supplies | $2,400 | $2,520 | $3,906 | $4,101 | $4,306 |
Postal Fees | $1,800 | $1,890 | $2,930 | $3,076 | $3,230 |
Professional Fees | $3,600 | $3,780 | $5,859 | $6,152 | $6,460 |
Housekeeping Supplies | $12,720 | $13,356 | $20,702 | $21,737 | $22,824 |
Unknown | $3,000 | $3,150 | $4,883 | $5,127 | $5,383 |
Bad Checks | $600 | $630 | $977 | $1,025 | $1,077 |
Bank Card Fees | $600 | $630 | $977 | $1,025 | $1,077 |
Business License | $420 | $441 | $684 | $718 | $754 |
Facility Maintenance | $18,000 | $18,900 | $29,295 | $30,760 | $32,298 |
Contract/Consultants | $5,400 | $5,670 | $8,789 | $9,228 | $9,689 |
Total Other Expenses | $125,820 | $132,111 | $245,344 | $257,611 | $270,492 |
Other % | 3.53% | 3.53% | 4.23% | 4.23% | 4.23% |
Total Operating Expenses | $416,700 | $437,535 | $737,878 | $774,772 | $813,511 |
Profit Before Interest and Taxes | $1,618,864 | $1,699,807 | $2,370,958 | $2,489,505 | $2,613,981 |
EBITDA | $1,618,864 | $1,699,807 | $2,370,958 | $2,489,505 | $2,613,981 |
Interest Expense | $519,346 | $489,761 | $670,033 | $839,570 | $797,376 |
Taxes Incurred | $361,116 | $399,315 | $557,053 | $544,479 | $594,938 |
Net Profit | $738,401 | $810,731 | $1,143,872 | $1,105,457 | $1,221,667 |
Net Profit/Sales | 20.74% | 21.68% | 19.74% | 18.17% | 19.12% |
7.6 Projected Cash Flow
The company’s estimated cash flow analysis is outlined in the following table, including the cost and increase in sales and profits made from Phase 2. I&B Investments low overhead will ensure positive cash balance.

Pro Forma Cash Flow | |||||
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
Cash Received | |||||
Cash from Operations | |||||
Cash Sales | $3,561,108 | $3,739,163 | $5,795,703 | $6,085,488 | $6,389,763 |
Subtotal Cash from Operations | $3,561,108 | $3,739,163 | $5,795,703 | $6,085,488 | $6,389,763 |
Additional Cash Received | |||||
Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 | $0 | $0 |
New Current Borrowing | $0 | $0 | $0 | $0 | $0 |
New Other Liabilities (interest-free) | $0 | $0 | $0 | $0 | $0 |
New Long-term Liabilities | $0 | $0 | $4,386,000 | $0 | $0 |
Sales of Other Current Assets | $0 | $0 | $0 | $0 | $0 |
Sales of Long-term Assets | $0 | $0 | $0 | $0 | $0 |
New Investment Received | $0 | $0 | $774,000 | $0 | $0 |
Subtotal Cash Received | $3,561,108 | $3,739,163 | $10,955,703 | $6,085,488 | $6,389,763 |
Expenditures | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
Expenditures from Operations | |||||
Cash Spending | $692,256 | $726,869 | $1,390,390 | $1,459,909 | $1,532,905 |
Bill Payments | $2,054,748 | $2,096,316 | $3,174,328 | $3,498,861 | $3,625,734 |
Subtotal Spent on Operations | $2,747,004 | $2,823,185 | $4,564,718 | $4,958,770 | $5,158,639 |
Additional Cash Spent | |||||
Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 | $0 | $0 |
Principal Repayment of Current Borrowing | $117,854 | $135,758 | $163,922 | $197,927 | $67,125 |
Other Liabilities Principal Repayment | $0 | $0 | $0 | $0 | $0 |
Long-term Liabilities Principal Repayment | $60,434 | $65,126 | $146,052 | $161,678 | $178,607 |
Purchase Other Current Assets | $0 | $0 | $0 | $0 | $0 |
Purchase Long-term Assets | $0 | $0 | $0 | $0 | $0 |
Dividends | $0 | $774,000 | $0 | $0 | $0 |
Subtotal Cash Spent | $2,925,292 | $3,798,069 | $4,874,692 | $5,318,375 | $5,404,371 |
Net Cash Flow | $635,816 | ($58,905) | $6,081,011 | $767,113 | $985,392 |
Cash Balance | $835,816 | $776,910 | $6,857,922 | $7,625,035 | $8,610,427 |
7.7 Projected Balance Sheet
Estimated balance sheets for the years 2003-2008 including Phase 2 in the year 2006 are provided below.
Pro Forma Balance Sheet | |||||
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
Assets | |||||
Current Assets | |||||
Cash | $835,816 | $776,910 | $6,857,922 | $7,625,035 | $8,610,427 |
Other Current Assets | $0 | $0 | $0 | $0 | $0 |
Total Current Assets | $835,816 | $776,910 | $6,857,922 | $7,625,035 | $8,610,427 |
Long-term Assets | |||||
Long-term Assets | $5,077,925 | $5,077,925 | $5,077,925 | $5,077,925 | $5,077,925 |
Accumulated Depreciation | $0 | $0 | $0 | $0 | $0 |
Total Long-term Assets | $5,077,925 | $5,077,925 | $5,077,925 | $5,077,925 | $5,077,925 |
Total Assets | $5,913,741 | $5,854,835 | $11,935,847 | $12,702,960 | $13,688,352 |
Liabilities and Capital | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
Current Liabilities | |||||
Accounts Payable | $75,702 | $180,950 | $268,064 | $289,325 | $298,783 |
Current Borrowing | $772,146 | $636,388 | $472,466 | $274,539 | $207,414 |
Other Current Liabilities | $0 | $0 | $0 | $0 | $0 |
Subtotal Current Liabilities | $847,848 | $817,338 | $740,530 | $563,864 | $506,197 |
Long-term Liabilities | $3,592,066 | $3,526,940 | $7,766,888 | $7,605,210 | $7,426,603 |
Total Liabilities | $4,439,914 | $4,344,278 | $8,507,418 | $8,169,074 | $7,932,800 |
Paid-in Capital | $965,000 | $965,000 | $1,739,000 | $1,739,000 | $1,739,000 |
Retained Earnings | ($229,575) | ($265,174) | $545,557 | $1,689,429 | $2,794,886 |
Earnings | $738,401 | $810,731 | $1,143,872 | $1,105,457 | $1,221,667 |
Total Capital | $1,473,826 | $1,510,557 | $3,428,429 | $4,533,886 | $5,755,552 |
Total Liabilities and Capital | $5,913,741 | $5,854,835 | $11,935,847 | $12,702,960 | $13,688,352 |
Net Worth | $1,473,826 | $1,510,557 | $3,428,429 | $4,533,886 | $5,755,552 |
7.8 Business Ratios
The company’s projected business ratios are provided in the table below. The final column, Industry Profile, shows significant ratios for the Amusement and Entertainment Industry, as determined by the Standard Industry Classification (SIC) Index code 7999.
Ratio Analysis | ||||||
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Industry Profile | |
Sales Growth | 0.00% | 5.00% | 55.00% | 5.00% | 5.00% | 15.20% |
Percent of Total Assets | ||||||
Other Current Assets | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 34.40% |
Total Current Assets | 14.13% | 13.27% | 57.46% | 60.03% | 62.90% | 42.90% |
Long-term Assets | 85.87% | 86.73% | 42.54% | 39.97% | 37.10% | 57.10% |
Total Assets | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% |
Current Liabilities | 14.34% | 13.96% | 6.20% | 4.44% | 3.70% | 36.40% |
Long-term Liabilities | 60.74% | 60.24% | 65.07% | 59.87% | 54.25% | 23.30% |
Total Liabilities | 75.08% | 74.20% | 71.28% | 64.31% | 57.95% | 59.70% |
Net Worth | 24.92% | 25.80% | 28.72% | 35.69% | 42.05% | 40.30% |
Percent of Sales | ||||||
Sales | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% |
Gross Margin | 57.16% | 57.16% | 53.64% | 53.64% | 53.64% | 55.05% |
Selling, General & Administrative Expenses | 36.47% | 35.48% | 33.98% | 35.47% | 34.59% | 76.60% |
Advertising Expenses | 0.51% | 0.51% | 0.51% | 0.51% | 0.51% | 2.60% |
Profit Before Interest and Taxes | 45.46% | 45.46% | 40.91% | 40.91% | 40.91% | 2.00% |
Main Ratios | ||||||
Current | 0.99 | 0.95 | 9.26 | 13.52 | 17.01 | 1.17 |
Quick | 0.99 | 0.95 | 9.26 | 13.52 | 17.01 | 0.75 |
Total Debt to Total Assets | 75.08% | 74.20% | 71.28% | 64.31% | 57.95% | 59.70% |
Pre-tax Return on Net Worth | 74.60% | 80.11% | 49.61% | 36.39% | 31.56% | 102.42% |
Pre-tax Return on Assets | 18.59% | 20.67% | 14.25% | 12.99% | 13.27% | 30.73% |
Additional Ratios | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
Net Profit Margin | 20.74% | 21.68% | 19.74% | 18.17% | 19.12% | 19.85% |
Return on Equity | 50.10% | 53.67% | 33.36% | 24.38% | 21.23% | 36.53% |
Activity Ratios | ||||||
Accounts Payable Turnover | 28.14 | 12.17 | 12.17 | 12.17 | 12.17 | 0.00% |
Payment Days | 27 | 21 | 25 | 29 | 30 | n.a |
Total Asset Turnover | 0.60 | 0.64 | 0.49 | 0.48 | 0.47 | 54.69% |
Debt Ratios | ||||||
Debt to Net Worth | 3.01 | 2.88 | 2.48 | 1.80 | 1.38 | 224.01% |
Current Liab. to Liab. | 0.19 | 0.19 | 0.09 | 0.07 | 0.06 | 8.98% |
Liquidity Ratios | ||||||
Net Working Capital | ($12,033) | ($40,428) | $6,117,392 | $7,061,171 | $8,104,230 | 424088221.24% |
Interest Coverage | 3.12 | 3.47 | 3.54 | 2.97 | 3.28 | 327.40% |
Additional Ratios | ||||||
Assets to Sales | 1.66 | 1.57 | 2.06 | 2.09 | 2.14 | 186.01% |
Current Debt/Total Assets | 14% | 14% | 6% | 4% | 4% | 6.45% |
Acid Test | 0.99 | 0.95 | 9.26 | 13.52 | 17.01 | 1651.43% |
Sales/Net Worth | 2.42 | 2.48 | 1.69 | 1.34 | 1.11 | 180.94% |
Dividend Payout | 0.00 | 0.95 | 0.00 | 0.00 | 0.00 | 19.09% |