Business Cashflow Solutions, Inc.
Financial Plan
Business Cashflow Solutions, Inc. is seeking a $23,634 financial package, based on assumptions of a loan financed at 9.5% interest for a 3-year term. The following projections reflect this loan amount.
7.1 Important Assumptions
General assumptions for this plan are on the following table.
| General Assumptions | |||
| Year 1 | Year 2 | Year 3 | |
| Plan Month | 1 | 2 | 3 |
| Current Interest Rate | 9.50% | 9.50% | 9.50% |
| Long-term Interest Rate | 9.50% | 9.50% | 9.50% |
| Tax Rate | 25.42% | 25.00% | 25.42% |
| Other | 0 | 0 | 0 |
7.2 Break-even Analysis
Our Break-even Analysis is shown below.
| Break-even Analysis | |
| Monthly Revenue Break-even | $1,198 |
| Assumptions: | |
| Average Percent Variable Cost | 0% |
| Estimated Monthly Fixed Cost | $1,198 |
7.3 Key Financial Indicators
The following benchmark chart indicates our key financial indicators for the first three years. We foresee major growth in sales, with only the normal inflation rates affecting our day to day operating expenses. There is a significant increase in operating costs for the Fiscal Years 2001 and 2002, attributed to the start of payroll for the principals.
7.4 Projected Profit and Loss
The financial plan depends on carefully researched operating expenses. Actual cost was used in calculating these expenses.
It is important to note that the Projected Profit and loss does not reflect any cost of sales. These costs are included in our actual operating expenses. The main reason this is so is that many of the services we provide have virtually no direct cost, as they are paid to our company as commissions.
| Pro Forma Profit and Loss | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | $38,000 | $109,700 | $120,000 |
| Direct Cost of Sales | $0 | $0 | $0 |
| Other | $0 | $0 | $0 |
| Total Cost of Sales | $0 | $0 | $0 |
| Gross Margin | $38,000 | $109,700 | $120,000 |
| Gross Margin % | 100.00% | 100.00% | 100.00% |
| Expenses | |||
| Payroll | $4,800 | $57,600 | $81,600 |
| Sales and Marketing and Other Expenses | $9,312 | $10,350 | $13,950 |
| Depreciation | $0 | $0 | $0 |
| Leased Equipment | $0 | $0 | $0 |
| Utilities | $0 | $0 | $0 |
| Insurance | $207 | $228 | $261 |
| Rent | $0 | $0 | $0 |
| Payroll Taxes | $60 | $720 | $1,020 |
| Other | $0 | $0 | $0 |
| Total Operating Expenses | $14,379 | $68,898 | $96,831 |
| Profit Before Interest and Taxes | $23,621 | $40,802 | $23,169 |
| EBITDA | $23,621 | $40,802 | $23,169 |
| Interest Expense | $1,778 | $951 | $260 |
| Taxes Incurred | $5,403 | $9,963 | $5,823 |
| Net Profit | $16,441 | $29,888 | $17,087 |
| Net Profit/Sales | 43.26% | 27.25% | 14.24% |
7.5 Projected Cash Flow
The following table shows cash flow for the first three years, and the chart illustrates monthly cash flow in the first year. Monthly cash flow projections are included in the appendix.
| Pro Forma Cash Flow | |||
| Year 1 | Year 2 | Year 3 | |
| Cash Received | |||
| Cash from Operations | |||
| Cash Sales | $38,000 | $109,700 | $120,000 |
| Cash from Receivables | $0 | $0 | $0 |
| Subtotal Cash from Operations | $38,000 | $109,700 | $120,000 |
| 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 | $38,000 | $109,700 | $120,000 |
| Expenditures | Year 1 | Year 2 | Year 3 |
| Expenditures from Operations | |||
| Cash Spending | $4,800 | $57,600 | $81,600 |
| Bill Payments | $15,780 | $21,366 | $21,387 |
| Subtotal Spent on Operations | $20,580 | $78,966 | $102,987 |
| Additional Cash Spent | |||
| Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 |
| Principal Repayment of Current Borrowing | $9,084 | $9,084 | $5,466 |
| 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 | $29,664 | $88,050 | $108,453 |
| Net Cash Flow | $8,336 | $21,650 | $11,547 |
| Cash Balance | $13,836 | $35,487 | $47,033 |
7.6 Projected Balance Sheet
The balance sheet in the following table shows a healthy increase in total capital and net worth. The monthly estimates are included in the appendix.
| Pro Forma Balance Sheet | |||
| Year 1 | Year 2 | Year 3 | |
| Assets | |||
| Current Assets | |||
| Cash | $13,836 | $35,487 | $47,033 |
| Accounts Receivable | $0 | $0 | $0 |
| Other Current Assets | $5,885 | $5,885 | $5,885 |
| Total Current Assets | $19,721 | $41,372 | $52,918 |
| Long-term Assets | |||
| Long-term Assets | $0 | $0 | $0 |
| Accumulated Depreciation | $0 | $0 | $0 |
| Total Long-term Assets | $0 | $0 | $0 |
| Total Assets | $19,721 | $41,372 | $52,918 |
| Liabilities and Capital | Year 1 | Year 2 | Year 3 |
| Current Liabilities | |||
| Accounts Payable | $980 | $1,826 | $1,752 |
| Current Borrowing | $14,550 | $5,466 | $0 |
| Other Current Liabilities | $0 | $0 | $0 |
| Subtotal Current Liabilities | $15,530 | $7,292 | $1,752 |
| Long-term Liabilities | $0 | $0 | $0 |
| Total Liabilities | $15,530 | $7,292 | $1,752 |
| Paid-in Capital | $10,000 | $10,000 | $10,000 |
| Retained Earnings | ($22,249) | ($5,808) | $24,080 |
| Earnings | $16,441 | $29,888 | $17,087 |
| Total Capital | $4,192 | $34,080 | $51,167 |
| Total Liabilities and Capital | $19,721 | $41,372 | $52,918 |
| Net Worth | $4,192 | $34,080 | $51,167 |
7.7 Business Ratios
The following table shows the projected businesses ratios. We expect to maintain healthy ratios for profitability, risk, and return. These ratios have been determined by the 7389 industry, as found in the Standard Industry Code (SIC) Index.
| Ratio Analysis | ||||
| Year 1 | Year 2 | Year 3 | Industry Profile | |
| Sales Growth | 0.00% | 188.68% | 9.39% | 8.20% |
| Percent of Total Assets | ||||
| Accounts Receivable | 0.00% | 0.00% | 0.00% | 26.30% |
| Other Current Assets | 29.84% | 14.22% | 11.12% | 44.20% |
| Total Current Assets | 100.00% | 100.00% | 100.00% | 74.30% |
| Long-term Assets | 0.00% | 0.00% | 0.00% | 25.70% |
| Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
| Current Liabilities | 78.75% | 17.62% | 3.31% | 49.00% |
| Long-term Liabilities | 0.00% | 0.00% | 0.00% | 13.80% |
| Total Liabilities | 78.75% | 17.62% | 3.31% | 62.80% |
| Net Worth | 21.25% | 82.38% | 96.69% | 37.20% |
| Percent of Sales | ||||
| Sales | 100.00% | 100.00% | 100.00% | 100.00% |
| Gross Margin | 100.00% | 100.00% | 100.00% | 0.00% |
| Selling, General & Administrative Expenses | 56.89% | 78.17% | 92.59% | 81.40% |
| Advertising Expenses | 11.21% | 4.56% | 6.67% | 1.70% |
| Profit Before Interest and Taxes | 62.16% | 37.19% | 19.31% | 2.10% |
| Main Ratios | ||||
| Current | 1.27 | 5.67 | 30.21 | 1.49 |
| Quick | 1.27 | 5.67 | 30.21 | 1.17 |
| Total Debt to Total Assets | 78.75% | 17.62% | 3.31% | 62.80% |
| Pre-tax Return on Net Worth | 521.11% | 116.93% | 44.77% | 4.20% |
| Pre-tax Return on Assets | 110.76% | 96.32% | 43.29% | 11.30% |
| Additional Ratios | Year 1 | Year 2 | Year 3 | |
| Net Profit Margin | 43.26% | 27.25% | 14.24% | n.a |
| Return on Equity | 392.22% | 87.70% | 33.39% | n.a |
| Activity Ratios | ||||
| Accounts Receivable Turnover | 0.00 | 0.00 | 0.00 | n.a |
| Collection Days | 0 | 0 | 0 | n.a |
| Accounts Payable Turnover | 17.11 | 12.17 | 12.17 | n.a |
| Payment Days | 27 | 23 | 31 | n.a |
| Total Asset Turnover | 1.93 | 2.65 | 2.27 | n.a |
| Debt Ratios | ||||
| Debt to Net Worth | 3.70 | 0.21 | 0.03 | n.a |
| Current Liab. to Liab. | 1.00 | 1.00 | 1.00 | n.a |
| Liquidity Ratios | ||||
| Net Working Capital | $4,192 | $34,080 | $51,167 | n.a |
| Interest Coverage | 13.29 | 42.92 | 89.24 | n.a |
| Additional Ratios | ||||
| Assets to Sales | 0.52 | 0.38 | 0.44 | n.a |
| Current Debt/Total Assets | 79% | 18% | 3% | n.a |
| Acid Test | 1.27 | 5.67 | 30.21 | n.a |
| Sales/Net Worth | 9.07 | 3.22 | 2.35 | n.a |
| Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |
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