Legal Associates Temp Agency
Financial Plan
The following sections will outline financial assumption/projections.
7.1 Important Assumptions
The following table highlights some of the important financial assumptions for LATA.
| 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 | 25.42% | 25.00% | 25.42% |
| Other | 0 | 0 | 0 |
7.2 Break-even Analysis
The Break-even Analysis table and chart below show the monthly break-even sales figure.
| Break-even Analysis | |
| Monthly Revenue Break-even | $13,525 |
| Assumptions: | |
| Average Percent Variable Cost | 0% |
| Estimated Monthly Fixed Cost | $13,525 |
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 | $106,223 | $219,461 | $235,955 |
| Direct Cost of Sales | $0 | $0 | $0 |
| Other | $0 | $0 | $0 |
| Total Cost of Sales | $0 | $0 | $0 |
| Gross Margin | $106,223 | $219,461 | $235,955 |
| Gross Margin % | 100.00% | 100.00% | 100.00% |
| Expenses | |||
| Payroll | $115,680 | $130,906 | $141,500 |
| Sales and Marketing and Other Expenses | $3,000 | $16,600 | $16,600 |
| Depreciation | $1,668 | $1,666 | $1,666 |
| Utilities | $600 | $600 | $600 |
| Insurance | $6,000 | $6,100 | $6,200 |
| Rent | $18,000 | $19,000 | $19,500 |
| Payroll Taxes | $17,352 | $19,636 | $21,225 |
| Other | $0 | $0 | $0 |
| Total Operating Expenses | $162,300 | $194,508 | $207,291 |
| Profit Before Interest and Taxes | ($56,077) | $24,953 | $28,664 |
| EBITDA | ($54,409) | $26,619 | $30,330 |
| Interest Expense | $650 | $975 | $325 |
| Taxes Incurred | $0 | $5,995 | $7,203 |
| Net Profit | ($56,727) | $17,984 | $21,136 |
| Net Profit/Sales | -53.40% | 8.19% | 8.96% |
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 | $0 | $0 | $0 |
| Cash from Receivables | $69,063 | $179,847 | $230,185 |
| Subtotal Cash from Operations | $69,063 | $179,847 | $230,185 |
| Additional Cash Received | |||
| Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 |
| New Current Borrowing | $13,000 | $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 | $46,000 | $0 | $0 |
| Subtotal Cash Received | $128,063 | $179,847 | $230,185 |
| Expenditures | Year 1 | Year 2 | Year 3 |
| Expenditures from Operations | |||
| Cash Spending | $115,680 | $130,906 | $141,500 |
| Bill Payments | $41,696 | $67,148 | $71,427 |
| Subtotal Spent on Operations | $157,376 | $198,054 | $212,927 |
| Additional Cash Spent | |||
| Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 |
| Principal Repayment of Current Borrowing | $0 | $6,500 | $6,500 |
| 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 | $157,376 | $204,554 | $219,427 |
| Net Cash Flow | ($29,313) | ($24,707) | $10,758 |
| Cash Balance | $29,487 | $4,780 | $15,538 |
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 | $29,487 | $4,780 | $15,538 |
| Accounts Receivable | $37,160 | $76,774 | $82,544 |
| Other Current Assets | $0 | $0 | $0 |
| Total Current Assets | $66,647 | $81,554 | $98,082 |
| Long-term Assets | |||
| Long-term Assets | $5,000 | $5,000 | $5,000 |
| Accumulated Depreciation | $1,668 | $3,334 | $5,000 |
| Total Long-term Assets | $3,332 | $1,666 | $0 |
| Total Assets | $69,979 | $83,220 | $98,082 |
| Liabilities and Capital | Year 1 | Year 2 | Year 3 |
| Current Liabilities | |||
| Accounts Payable | $3,906 | $5,663 | $5,889 |
| Current Borrowing | $13,000 | $6,500 | $0 |
| Other Current Liabilities | $0 | $0 | $0 |
| Subtotal Current Liabilities | $16,906 | $12,163 | $5,889 |
| Long-term Liabilities | $0 | $0 | $0 |
| Total Liabilities | $16,906 | $12,163 | $5,889 |
| Paid-in Capital | $111,000 | $111,000 | $111,000 |
| Retained Earnings | ($1,200) | ($57,927) | ($39,943) |
| Earnings | ($56,727) | $17,984 | $21,136 |
| Total Capital | $53,073 | $71,057 | $92,193 |
| Total Liabilities and Capital | $69,979 | $83,220 | $98,082 |
| Net Worth | $53,073 | $71,057 | $92,193 |
7.6 Business Ratios
Business ratios for the years of this plan are shown below. Industry profile ratios based on the NAICS code 561310, Employment Placement Agencies, are shown for comparison.
| Ratio Analysis | ||||
| Year 1 | Year 2 | Year 3 | Industry Profile | |
| Sales Growth | 0.00% | 106.60% | 7.52% | 11.37% |
| Percent of Total Assets | ||||
| Accounts Receivable | 53.10% | 92.25% | 84.16% | 10.25% |
| Other Current Assets | 0.00% | 0.00% | 0.00% | 50.16% |
| Total Current Assets | 95.24% | 98.00% | 100.00% | 64.49% |
| Long-term Assets | 4.76% | 2.00% | 0.00% | 35.51% |
| Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
| Current Liabilities | 24.16% | 14.62% | 6.00% | 27.96% |
| Long-term Liabilities | 0.00% | 0.00% | 0.00% | 26.35% |
| Total Liabilities | 24.16% | 14.62% | 6.00% | 54.31% |
| Net Worth | 75.84% | 85.38% | 94.00% | 45.69% |
| Percent of Sales | ||||
| Sales | 100.00% | 100.00% | 100.00% | 100.00% |
| Gross Margin | 100.00% | 100.00% | 100.00% | 100.00% |
| Selling, General & Administrative Expenses | 153.40% | 91.81% | 90.99% | 67.20% |
| Advertising Expenses | 1.69% | 0.18% | 0.17% | 1.87% |
| Profit Before Interest and Taxes | -52.79% | 11.37% | 12.15% | 3.25% |
| Main Ratios | ||||
| Current | 3.94 | 6.70 | 16.65 | 1.57 |
| Quick | 3.94 | 6.70 | 16.65 | 1.10 |
| Total Debt to Total Assets | 24.16% | 14.62% | 6.00% | 63.70% |
| Pre-tax Return on Net Worth | -106.88% | 33.75% | 30.74% | 6.19% |
| Pre-tax Return on Assets | -81.06% | 28.81% | 28.89% | 17.06% |
| Additional Ratios | Year 1 | Year 2 | Year 3 | |
| Net Profit Margin | -53.40% | 8.19% | 8.96% | n.a |
| Return on Equity | -106.88% | 25.31% | 22.93% | n.a |
| Activity Ratios | ||||
| Accounts Receivable Turnover | 2.86 | 2.86 | 2.86 | n.a |
| Collection Days | 54 | 95 | 123 | n.a |
| Accounts Payable Turnover | 11.68 | 12.17 | 12.17 | n.a |
| Payment Days | 27 | 25 | 29 | n.a |
| Total Asset Turnover | 1.52 | 2.64 | 2.41 | n.a |
| Debt Ratios | ||||
| Debt to Net Worth | 0.32 | 0.17 | 0.06 | n.a |
| Current Liab. to Liab. | 1.00 | 1.00 | 1.00 | n.a |
| Liquidity Ratios | ||||
| Net Working Capital | $49,741 | $69,391 | $92,193 | n.a |
| Interest Coverage | -86.27 | 25.59 | 88.20 | n.a |
| Additional Ratios | ||||
| Assets to Sales | 0.66 | 0.38 | 0.42 | n.a |
| Current Debt/Total Assets | 24% | 15% | 6% | n.a |
| Acid Test | 1.74 | 0.39 | 2.64 | n.a |
| Sales/Net Worth | 2.00 | 3.09 | 2.56 | n.a |
| Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |
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