The Art Sentry
Financial Plan
The following sections will outline important financial information.
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 that approximately $3,400 will be needed in monthly revenue to reach the break-even point.

Break-even Analysis | |
Monthly Revenue Break-even | $2,936 |
Assumptions: | |
Average Percent Variable Cost | 5% |
Estimated Monthly Fixed Cost | $2,789 |
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 | $31,092 | $56,700 | $63,950 |
Direct Cost of Sales | $1,555 | $2,835 | $3,198 |
Other Production Expenses | $0 | $0 | $0 |
Total Cost of Sales | $1,555 | $2,835 | $3,198 |
Gross Margin | $29,538 | $53,865 | $60,753 |
Gross Margin % | 95.00% | 95.00% | 95.00% |
Expenses | |||
Payroll | $30,000 | $35,000 | $40,000 |
Sales and Marketing and Other Expenses | $1,200 | $1,200 | $1,200 |
Depreciation | $468 | $468 | $468 |
Leased Equipment | $0 | $0 | $0 |
Licenses and Bonding | $600 | $600 | $600 |
Insurance | $1,200 | $1,200 | $1,200 |
Rent | $0 | $0 | $0 |
Payroll Taxes | $0 | $0 | $0 |
Other | $0 | $0 | $0 |
Total Operating Expenses | $33,468 | $38,468 | $43,468 |
Profit Before Interest and Taxes | ($3,930) | $15,397 | $17,285 |
EBITDA | ($3,462) | $15,865 | $17,753 |
Interest Expense | $0 | $0 | $0 |
Taxes Incurred | $0 | $4,619 | $5,185 |
Net Profit | ($3,930) | $10,778 | $12,099 |
Net Profit/Sales | -12.64% | 19.01% | 18.92% |
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 | $31,092 | $56,700 | $63,950 |
Subtotal Cash from Operations | $31,092 | $56,700 | $63,950 |
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 | $31,092 | $56,700 | $63,950 |
Expenditures | Year 1 | Year 2 | Year 3 |
Expenditures from Operations | |||
Cash Spending | $30,000 | $35,000 | $40,000 |
Bill Payments | $4,085 | $10,065 | $11,307 |
Subtotal Spent on Operations | $34,085 | $45,065 | $51,307 |
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 | $34,085 | $45,065 | $51,307 |
Net Cash Flow | ($2,992) | $11,635 | $12,644 |
Cash Balance | $9,058 | $20,693 | $33,336 |
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 | $9,058 | $20,693 | $33,336 |
Other Current Assets | $0 | $0 | $0 |
Total Current Assets | $9,058 | $20,693 | $33,336 |
Long-term Assets | |||
Long-term Assets | $0 | $0 | $0 |
Accumulated Depreciation | $468 | $936 | $1,404 |
Total Long-term Assets | ($468) | ($936) | ($1,404) |
Total Assets | $8,590 | $19,757 | $31,932 |
Liabilities and Capital | Year 1 | Year 2 | Year 3 |
Current Liabilities | |||
Accounts Payable | $470 | $859 | $936 |
Current Borrowing | $0 | $0 | $0 |
Other Current Liabilities | $0 | $0 | $0 |
Subtotal Current Liabilities | $470 | $859 | $936 |
Long-term Liabilities | $0 | $0 | $0 |
Total Liabilities | $470 | $859 | $936 |
Paid-in Capital | $15,000 | $15,000 | $15,000 |
Retained Earnings | ($2,950) | ($6,880) | $3,898 |
Earnings | ($3,930) | $10,778 | $12,099 |
Total Capital | $8,120 | $18,898 | $30,997 |
Total Liabilities and Capital | $8,590 | $19,757 | $31,932 |
Net Worth | $8,120 | $18,898 | $30,997 |
7.6 Business Ratios
The following Ratios table compares our planned estimates with Standard Industry Code #7299
Ratio Analysis | ||||
Year 1 | Year 2 | Year 3 | Industry Profile | |
Sales Growth | 0.00% | 82.36% | 12.79% | 7.99% |
Percent of Total Assets | ||||
Other Current Assets | 0.00% | 0.00% | 0.00% | 44.22% |
Total Current Assets | 105.45% | 104.74% | 104.40% | 72.16% |
Long-term Assets | -5.45% | -4.74% | -4.40% | 27.84% |
Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
Current Liabilities | 5.47% | 4.35% | 2.93% | 31.22% |
Long-term Liabilities | 0.00% | 0.00% | 0.00% | 11.80% |
Total Liabilities | 5.47% | 4.35% | 2.93% | 43.02% |
Net Worth | 94.53% | 95.65% | 97.07% | 56.98% |
Percent of Sales | ||||
Sales | 100.00% | 100.00% | 100.00% | 100.00% |
Gross Margin | 95.00% | 95.00% | 95.00% | 14.44% |
Selling, General & Administrative Expenses | 110.86% | 79.70% | 76.08% | 7.72% |
Advertising Expenses | 0.00% | 0.00% | 0.00% | 0.37% |
Profit Before Interest and Taxes | -12.64% | 27.16% | 27.03% | 1.12% |
Main Ratios | ||||
Current | 19.27 | 24.08 | 35.63 | 1.68 |
Quick | 19.27 | 24.08 | 35.63 | 1.40 |
Total Debt to Total Assets | 5.47% | 4.35% | 2.93% | 57.54% |
Pre-tax Return on Net Worth | -48.41% | 81.48% | 55.76% | 3.81% |
Pre-tax Return on Assets | -45.76% | 77.93% | 54.13% | 8.97% |
Additional Ratios | Year 1 | Year 2 | Year 3 | |
Net Profit Margin | -12.64% | 19.01% | 18.92% | n.a |
Return on Equity | -48.41% | 57.03% | 39.03% | n.a |
Activity Ratios | ||||
Accounts Payable Turnover | 9.69 | 12.17 | 12.17 | n.a |
Payment Days | 27 | 23 | 29 | n.a |
Total Asset Turnover | 3.62 | 2.87 | 2.00 | n.a |
Debt Ratios | ||||
Debt to Net Worth | 0.06 | 0.05 | 0.03 | n.a |
Current Liab. to Liab. | 1.00 | 1.00 | 1.00 | n.a |
Liquidity Ratios | ||||
Net Working Capital | $8,588 | $19,834 | $32,401 | n.a |
Interest Coverage | 0.00 | 0.00 | 0.00 | n.a |
Additional Ratios | ||||
Assets to Sales | 0.28 | 0.35 | 0.50 | n.a |
Current Debt/Total Assets | 5% | 4% | 3% | n.a |
Acid Test | 19.27 | 24.08 | 35.63 | n.a |
Sales/Net Worth | 3.83 | 3.00 | 2.06 | n.a |
Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |