CollisionSyzygy, Inc.
Financial Plan
The information contained in the Financial Plan section assumes that an equity investment is made into CollisionSyzygy, during June, 2000, and that the following capital investments are made:
File Server |
$50,000 |
ISP Lines |
$12,000 |
New Phone System |
$25,000 |
15 New Computers |
$22,500 |
Office Furniture |
$10,000 |
Misc. Computer Supplies |
$15,000 |
Total |
$134,500 |
Furthermore, the equity investment allows for the addition of key personnel as mentioned earlier in this business plan. Key promotional programs and travel expenses, including the attendance at the annual NACE Exposition, will require capital and operating expenses totaling approximately $444,500.
With these capital and personnel investments, CollisionSyzygy expects to achieve significant sales growth. For the period ending May 31, 2001, sales are expected to be (whopping), growing to (knock me over with a feather) by June 30, 2003. Cost of Sales should be (wow)%. Net profits after taxes and miscellaneous expenses should range from (alright!)%, for the period ending May 31, 2001, to (sound the fanfare)% for the period ending May 31, 2003.
7.1 Important Assumptions
Calculations throughout this business plan have been based upon key assumptions which are summarized in the following table. The following brief glossary will explain the terms used:
Payment Days is the average number of days (30) which takes CollisionSyzygy to pay its bills.
Collection Days is the average number of days (60) needed to collect an invoice issued by CollisionSyzygy.
Tax Rate refers to the corporate tax rate used in the calculations.
Sales on Credit % (98%) is an important assumption that helps to determine the Accounts Receivable balance. This becomes part of the formula used in the Balance Sheet for the Accounts Receivable row.
Personnel burden (10%) is the sum of employer taxes and benefits paid over and above salaries on behalf of employees. This estimate is multiplied against salaries in the Personnel table. It is also factored into the Profit and Loss table.
General Assumptions | |||
FY 2001 | FY 2002 | FY 2003 | |
Plan Month | 1 | 2 | 3 |
Current Interest Rate | 12.00% | 12.00% | 12.00% |
Long-term Interest Rate | 10.00% | 10.00% | 10.00% |
Tax Rate | 35.00% | 35.00% | 35.00% |
Other | 0 | 0 | 0 |
7.2 Break-even Analysis
Estimated average monthly fixed expenses, average per-unit revenue, and average variable costs were used, as shown below, by the company to determine the sales level needed per month to break even. As mentioned before, claims processing business is profitable only when high volumes are reached. The company management believes CollisionSyzygy will reach its break-even sales volume by the fourth month of operations.

Break-even Analysis | |
Monthly Units Break-even | 7,335 |
Monthly Revenue Break-even | $204,148 |
Assumptions: | |
Average Per-Unit Revenue | $27.83 |
Average Per-Unit Variable Cost | $4.04 |
Estimated Monthly Fixed Cost | $174,526 |
7.3 Projected Profit and Loss
June and July, 2000 are expected to result in slight losses as CollisionSyzygy uses the venture equity to virtually retool its operation for significantly higher sales generation. A net after-tax loss for June, 2000 is estimated, with monthly after-tax profits by May 31, 2001. A jump in personnel costs, expected in January, 2001 as the new CFO and COO additions are made, reduces profits from the prior month, December, 2000.
By May 31, 2002, after-tax profits for the year should climb to nearly (yippie) on gross margin (sales after Cost of Sales) of (whoa Nellie!). After-tax profit margin should be approximately (green w/envy)%.
By May 31, 2003, after-tax profits for the year should reach (yowzah!) on gross margin of (huzzah-huzzah). An after-tax profit margin of (O-M-G)% is expected.




Pro Forma Profit and Loss | |||
FY 2001 | FY 2002 | FY 2003 | |
Sales | $3,471,781 | $6,931,840 | $8,318,208 |
Direct Cost of Sales | $503,757 | $1,056,105 | $1,330,692 |
Other | $0 | $0 | $0 |
Total Cost of Sales | $503,757 | $1,056,105 | $1,330,692 |
Gross Margin | $2,968,024 | $5,875,735 | $6,987,516 |
Gross Margin % | 85.49% | 84.76% | 84.00% |
Expenses | |||
Payroll | $1,393,555 | $2,433,950 | $2,806,243 |
Sales and Marketing and Other Expenses | $444,500 | $466,725 | $490,061 |
Depreciation | $26,904 | $26,904 | $26,904 |
Leased Equipment | $0 | $0 | $0 |
Utilities | $12,000 | $12,600 | $13,230 |
Insurance | $24,000 | $25,200 | $26,460 |
Rent | $54,000 | $56,700 | $59,535 |
Payroll Taxes | $139,356 | $243,395 | $280,624 |
Other | $0 | $0 | $0 |
Total Operating Expenses | $2,094,315 | $3,265,474 | $3,703,058 |
Profit Before Interest and Taxes | $873,709 | $2,610,261 | $3,284,459 |
EBITDA | $900,613 | $2,637,165 | $3,311,363 |
Interest Expense | $0 | $0 | $0 |
Taxes Incurred | $305,798 | $913,591 | $1,149,561 |
Net Profit | $567,911 | $1,696,670 | $2,134,898 |
Net Profit/Sales | 16.36% | 24.48% | 25.67% |
7.4 Projected Cash Flow
After July, 2000, cash flow from operations continues an upward trend and results in a positive cash balance for the period ending May 31, 2001. The following chart illustrates monthly cash flows for June, 2000 through May 31, 2001. As the Pro Forma Cash Flow table shows, it is possible for CollisionSyzygy to have a cash balance twice the size of the net capital injection.

Pro Forma Cash Flow | |||
FY 2001 | FY 2002 | FY 2003 | |
Cash Received | |||
Cash from Operations | |||
Cash Sales | $69,436 | $138,637 | $166,364 |
Cash from Receivables | $2,671,342 | $5,934,512 | $7,807,786 |
Subtotal Cash from Operations | $2,740,778 | $6,073,149 | $7,974,150 |
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 | $2,000,000 | $0 | $0 |
Subtotal Cash Received | $4,740,778 | $6,073,149 | $7,974,150 |
Expenditures | FY 2001 | FY 2002 | FY 2003 |
Expenditures from Operations | |||
Cash Spending | $1,393,555 | $2,433,950 | $2,806,243 |
Bill Payments | $1,362,952 | $2,738,301 | $3,302,833 |
Subtotal Spent on Operations | $2,756,507 | $5,172,251 | $6,109,076 |
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 | $134,500 | $0 | $0 |
Dividends | $0 | $0 | $0 |
Subtotal Cash Spent | $2,891,007 | $5,172,251 | $6,109,076 |
Net Cash Flow | $1,849,771 | $900,898 | $1,865,074 |
Cash Balance | $3,811,099 | $4,711,998 | $6,577,071 |
7.5 Projected Balance Sheet
The following Balance sheet shows the year-end values for 2001 through 2003. It reflects the capital contribution. The contribution is reduced by a shareholder loan, from Mr. Smith.
Pro Forma Balance Sheet | |||
FY 2001 | FY 2002 | FY 2003 | |
Assets | |||
Current Assets | |||
Cash | $3,811,099 | $4,711,998 | $6,577,071 |
Accounts Receivable | $861,600 | $1,720,291 | $2,064,349 |
Other Current Assets | $0 | $0 | $0 |
Total Current Assets | $4,672,699 | $6,432,289 | $8,641,421 |
Long-term Assets | |||
Long-term Assets | $326,791 | $326,791 | $326,791 |
Accumulated Depreciation | $67,568 | $94,472 | $121,376 |
Total Long-term Assets | $259,223 | $232,319 | $205,415 |
Total Assets | $4,931,922 | $6,664,608 | $8,846,836 |
Liabilities and Capital | FY 2001 | FY 2002 | FY 2003 |
Current Liabilities | |||
Accounts Payable | $192,010 | $228,026 | $275,356 |
Current Borrowing | $0 | $0 | $0 |
Other Current Liabilities | $0 | $0 | $0 |
Subtotal Current Liabilities | $192,010 | $228,026 | $275,356 |
Long-term Liabilities | $0 | $0 | $0 |
Total Liabilities | $192,010 | $228,026 | $275,356 |
Paid-in Capital | $3,907,335 | $3,907,335 | $3,907,335 |
Retained Earnings | $264,666 | $832,577 | $2,529,247 |
Earnings | $567,911 | $1,696,670 | $2,134,898 |
Total Capital | $4,739,912 | $6,436,582 | $8,571,480 |
Total Liabilities and Capital | $4,931,922 | $6,664,608 | $8,846,836 |
Net Worth | $4,739,912 | $6,436,582 | $8,571,480 |
7.6 Business Ratios
CollisionSyzygy is virtually debt-free, making it more resistant to economic downturn.
Profitability ratios indicate strong, after-tax profit margins for the period ending May 31, 2001 to the period ending May 31, 2003. Return on equity (ROE) is also very strong for the same period range.
Activity Ratios indicate that asset turnover (sales divided by assets) should be 1.27 for the first year. Sales on credit should average approximately 16 times the average accounts receivable balance.
Liquidity of the firm’s cash position is excellent. The current ratio (short-term assets divided by short-term debt) indicate that CollisionSyzygy has short-term assets to cover each dollar of short-term debt. Furthermore, subtracting out any expected accounts receivable, the firm still has about (beaucoup bucks) for each dollar of short-term debt.
Net working capital does reflect the cash investment.
The following table summarizes the financial health of CollisionSyzygy. Industry profile ratios based on the Standard Industrial Classification (SIC) code 6411, Insurance Agents Brokers and Service, are shown for comparison.
Ratio Analysis | ||||
FY 2001 | FY 2002 | FY 2003 | Industry Profile | |
Sales Growth | 106.02% | 99.66% | 20.00% | 2.40% |
Percent of Total Assets | ||||
Accounts Receivable | 17.47% | 25.81% | 23.33% | 26.30% |
Other Current Assets | 0.00% | 0.00% | 0.00% | 64.30% |
Total Current Assets | 94.74% | 96.51% | 97.68% | 90.60% |
Long-term Assets | 5.26% | 3.49% | 2.32% | 9.40% |
Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
Current Liabilities | 3.89% | 3.42% | 3.11% | 48.20% |
Long-term Liabilities | 0.00% | 0.00% | 0.00% | 9.50% |
Total Liabilities | 3.89% | 3.42% | 3.11% | 57.70% |
Net Worth | 96.11% | 96.58% | 96.89% | 42.30% |
Percent of Sales | ||||
Sales | 100.00% | 100.00% | 100.00% | 100.00% |
Gross Margin | 85.49% | 84.76% | 84.00% | 100.00% |
Selling, General & Administrative Expenses | 69.13% | 60.29% | 58.34% | 60.10% |
Advertising Expenses | 10.73% | 5.64% | 4.94% | 1.70% |
Profit Before Interest and Taxes | 25.17% | 37.66% | 39.49% | 5.20% |
Main Ratios | ||||
Current | 24.34 | 28.21 | 31.38 | 1.66 |
Quick | 24.34 | 28.21 | 31.38 | 1.45 |
Total Debt to Total Assets | 3.89% | 3.42% | 3.11% | 57.70% |
Pre-tax Return on Net Worth | 18.43% | 40.55% | 38.32% | 5.80% |
Pre-tax Return on Assets | 17.72% | 39.17% | 37.13% | 13.70% |
Additional Ratios | FY 2001 | FY 2002 | FY 2003 | |
Net Profit Margin | 16.36% | 24.48% | 25.67% | n.a |
Return on Equity | 11.98% | 26.36% | 24.91% | n.a |
Activity Ratios | ||||
Accounts Receivable Turnover | 3.95 | 3.95 | 3.95 | n.a |
Collection Days | 56 | 69 | 85 | n.a |
Accounts Payable Turnover | 7.73 | 12.17 | 12.17 | n.a |
Payment Days | 28 | 28 | 27 | n.a |
Total Asset Turnover | 0.70 | 1.04 | 0.94 | n.a |
Debt Ratios | ||||
Debt to Net Worth | 0.04 | 0.04 | 0.03 | n.a |
Current Liab. to Liab. | 1.00 | 1.00 | 1.00 | n.a |
Liquidity Ratios | ||||
Net Working Capital | $4,480,689 | $6,204,263 | $8,366,065 | n.a |
Interest Coverage | 0.00 | 0.00 | 0.00 | n.a |
Additional Ratios | ||||
Assets to Sales | 1.42 | 0.96 | 1.06 | n.a |
Current Debt/Total Assets | 4% | 3% | 3% | n.a |
Acid Test | 19.85 | 20.66 | 23.89 | n.a |
Sales/Net Worth | 0.73 | 1.08 | 0.97 | n.a |
Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |