ArtSphere
Financial Plan
The following subtopics present our financial plan.
7.1 Break-even Analysis
The following table and chart summarize our break-even analysis.
| Break-even Analysis | |
| Monthly Revenue Break-even | $6,673 |
| Assumptions: | |
| Average Percent Variable Cost | 11% |
| Estimated Monthly Fixed Cost | $5,942 |
7.2 Projected Profit and Loss
Our projected profit and loss is shown in the following table and charts.
| Pro Forma Profit and Loss | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | $129,920 | $232,048 | $250,848 |
| Direct Cost of Sales | $14,230 | $27,666 | $29,766 |
| Other | $0 | $0 | $0 |
| Total Cost of Sales | $14,230 | $27,666 | $29,766 |
| Gross Margin | $115,690 | $204,382 | $221,082 |
| Gross Margin % | 89.05% | 88.08% | 88.13% |
| Expenses | |||
| Payroll | $36,000 | $52,800 | $52,030 |
| Sales and Marketing and Other Expenses | $11,129 | $21,626 | $23,876 |
| Depreciation | $1,892 | $2,067 | $2,067 |
| Leased Equipment | $0 | $0 | $0 |
| Utilities (Gas & Elec.) | $1,642 | $1,642 | $1,642 |
| Insurance | $540 | $540 | $540 |
| Rent | $14,700 | $14,700 | $14,700 |
| Payroll Taxes | $5,400 | $7,920 | $7,805 |
| Other | $0 | $0 | $0 |
| Total Operating Expenses | $71,303 | $101,295 | $102,660 |
| Profit Before Interest and Taxes | $44,387 | $103,087 | $118,423 |
| EBITDA | $46,279 | $105,154 | $120,490 |
| Interest Expense | $0 | $0 | $0 |
| Taxes Incurred | $15,508 | $36,080 | $40,954 |
| Net Profit | $28,879 | $67,007 | $77,468 |
| Net Profit/Sales | 22.23% | 28.88% | 30.88% |
7.3 Projected Cash Flow
The following chart and table show our projected cash flow.
| Pro Forma Cash Flow | |||
| Year 1 | Year 2 | Year 3 | |
| Cash Received | |||
| Cash from Operations | |||
| Cash Sales | $129,920 | $232,048 | $250,848 |
| Subtotal Cash from Operations | $129,920 | $232,048 | $250,848 |
| 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 | $129,920 | $232,048 | $250,848 |
| Expenditures | Year 1 | Year 2 | Year 3 |
| Expenditures from Operations | |||
| Cash Spending | $36,000 | $52,800 | $52,030 |
| Bill Payments | $57,136 | $111,363 | $119,017 |
| Subtotal Spent on Operations | $93,136 | $164,163 | $171,047 |
| 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 | $93,136 | $164,163 | $171,047 |
| Net Cash Flow | $36,784 | $67,885 | $79,801 |
| Cash Balance | $36,784 | $104,669 | $184,470 |
7.4 Projected Balance Sheet
The following table outlines our projected balance sheet.
| Pro Forma Balance Sheet | |||
| Year 1 | Year 2 | Year 3 | |
| Assets | |||
| Current Assets | |||
| Cash | $36,784 | $104,669 | $184,470 |
| Inventory | $2,267 | $4,407 | $4,741 |
| Other Current Assets | $0 | $0 | $0 |
| Total Current Assets | $39,050 | $109,076 | $189,211 |
| Long-term Assets | |||
| Long-term Assets | $6,200 | $6,200 | $6,200 |
| Accumulated Depreciation | $1,892 | $3,959 | $6,026 |
| Total Long-term Assets | $4,308 | $2,241 | $174 |
| Total Assets | $43,358 | $111,317 | $189,385 |
| Liabilities and Capital | Year 1 | Year 2 | Year 3 |
| Current Liabilities | |||
| Accounts Payable | $8,280 | $9,231 | $9,832 |
| Current Borrowing | $0 | $0 | $0 |
| Other Current Liabilities | $0 | $0 | $0 |
| Subtotal Current Liabilities | $8,280 | $9,231 | $9,832 |
| Long-term Liabilities | $0 | $0 | $0 |
| Total Liabilities | $8,280 | $9,231 | $9,832 |
| Paid-in Capital | $8,265 | $8,265 | $8,265 |
| Retained Earnings | ($2,065) | $26,814 | $93,820 |
| Earnings | $28,879 | $67,007 | $77,468 |
| Total Capital | $35,079 | $102,085 | $179,553 |
| Total Liabilities and Capital | $43,358 | $111,317 | $189,385 |
| Net Worth | $35,079 | $102,085 | $179,553 |
7.5 Business Ratios
The following table compares computed standard business rations for this plan against averaged ratios for the Fine Arts Schools industry, NAICS code 611610.
| Ratio Analysis | ||||
| Year 1 | Year 2 | Year 3 | Industry Profile | |
| Sales Growth | 0.00% | 78.61% | 8.10% | 4.59% |
| Percent of Total Assets | ||||
| Inventory | 5.23% | 3.96% | 2.50% | 2.25% |
| Other Current Assets | 0.00% | 0.00% | 0.00% | 36.99% |
| Total Current Assets | 90.06% | 97.99% | 99.91% | 44.98% |
| Long-term Assets | 9.94% | 2.01% | 0.09% | 55.02% |
| Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
| Current Liabilities | 19.10% | 8.29% | 5.19% | 23.64% |
| Long-term Liabilities | 0.00% | 0.00% | 0.00% | 33.36% |
| Total Liabilities | 19.10% | 8.29% | 5.19% | 57.00% |
| Net Worth | 80.90% | 91.71% | 94.81% | 43.00% |
| Percent of Sales | ||||
| Sales | 100.00% | 100.00% | 100.00% | 100.00% |
| Gross Margin | 89.05% | 88.08% | 88.13% | 100.00% |
| Selling, General & Administrative Expenses | 66.84% | 59.20% | 57.45% | 63.44% |
| Advertising Expenses | 2.10% | 1.24% | 1.15% | 4.51% |
| Profit Before Interest and Taxes | 34.16% | 44.42% | 47.21% | 3.46% |
| Main Ratios | ||||
| Current | 4.72 | 11.82 | 19.25 | 1.20 |
| Quick | 4.44 | 11.34 | 18.76 | 0.82 |
| Total Debt to Total Assets | 19.10% | 8.29% | 5.19% | 59.16% |
| Pre-tax Return on Net Worth | 126.54% | 100.98% | 65.95% | 4.27% |
| Pre-tax Return on Assets | 102.37% | 92.61% | 62.53% | 10.46% |
| Additional Ratios | Year 1 | Year 2 | Year 3 | |
| Net Profit Margin | 22.23% | 28.88% | 30.88% | n.a |
| Return on Equity | 82.33% | 65.64% | 43.14% | n.a |
| Activity Ratios | ||||
| Inventory Turnover | 9.47 | 8.29 | 6.51 | n.a |
| Accounts Payable Turnover | 7.90 | 12.17 | 12.17 | n.a |
| Payment Days | 27 | 28 | 29 | n.a |
| Total Asset Turnover | 3.00 | 2.08 | 1.32 | n.a |
| Debt Ratios | ||||
| Debt to Net Worth | 0.24 | 0.09 | 0.05 | n.a |
| Current Liab. to Liab. | 1.00 | 1.00 | 1.00 | n.a |
| Liquidity Ratios | ||||
| Net Working Capital | $30,771 | $99,844 | $179,379 | n.a |
| Interest Coverage | 0.00 | 0.00 | 0.00 | n.a |
| Additional Ratios | ||||
| Assets to Sales | 0.33 | 0.48 | 0.75 | n.a |
| Current Debt/Total Assets | 19% | 8% | 5% | n.a |
| Acid Test | 4.44 | 11.34 | 18.76 | n.a |
| Sales/Net Worth | 3.70 | 2.27 | 1.40 | n.a |
| Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |
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