Bowl Weevil
Financial Plan
Bowl Weevil’s financial plan is conservative. With sufficient start-up funding, we will be able to not only complete renovations on time for opening, but hire enough staff to provide a full-service, fun, safe, and clean environment for our bowlers. Although we are asking for a very large loan, we should be easily able to repay it within seven years, even after hiring an additional manager in year two.
The first two years will be the slimmest, as we establish our reputation among our target groups and build market share. However, our sales forecasts are based on sound research, and are conservative. We will focus on aggressive marketing and limiting expenses during these early years to achieve our long-term goals.
7.1 Important Assumptions
The financial plan depends on important assumptions, most of which are shown in the following table as annual assumptions. The monthly assumptions are included in the appendix. Bowling league participation rates are based on conservative assumptions.
Two of the more important underlying assumptions are:
- We assume youths, seniors, and adult bowlers will congregate together at Bowl Weevil Bowling Lanes given separate environments to listen to their own preferences in music.
- We assume that there are no unforeseen changes in the local bowling community to increase competition in Anytown.
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 following chart and table summarize our break-even analysis.

Break-even Analysis | |
Monthly Revenue Break-even | $37,928 |
Assumptions: | |
Average Percent Variable Cost | 29% |
Estimated Monthly Fixed Cost | $26,896 |
7.3 Projected Profit and Loss
The following table indicates the projected profit and loss. We plan to take a hit in net profit in the second year in order to hire an assistant manager, and to increase personnel payments for our employees. This additional hiring and the raises are subject to cash flow meeting projections.




Pro Forma Profit and Loss | |||
Year 1 | Year 2 | Year 3 | |
Sales | $523,075 | $568,300 | $608,953 |
Direct Cost of Sales | $152,148 | $165,624 | $180,828 |
Other | $0 | $0 | $0 |
Total Cost of Sales | $152,148 | $165,624 | $180,828 |
Gross Margin | $370,927 | $402,676 | $428,126 |
Gross Margin % | 70.91% | 70.86% | 70.31% |
Expenses | |||
Payroll | $181,800 | $212,620 | $216,620 |
Marketing/Promotion | $3,000 | $3,000 | $3,000 |
Depreciation | $7,788 | $7,788 | $7,788 |
Rent | $110,000 | $112,000 | $112,000 |
Utilities | $3,360 | $3,600 | $3,900 |
Insurance | $2,400 | $2,500 | $2,600 |
Payroll Taxes | $0 | $0 | $0 |
Shoe Repair and maintenance | $2,400 | $2,500 | $2,500 |
Pull Tabs | $6,000 | $6,000 | $6,000 |
Video Game Rentals | $6,000 | $6,000 | $6,000 |
Total Operating Expenses | $322,748 | $356,008 | $360,408 |
Profit Before Interest and Taxes | $48,179 | $46,668 | $67,718 |
EBITDA | $55,967 | $54,456 | $75,506 |
Interest Expense | $15,123 | $12,850 | $10,450 |
Taxes Incurred | $9,917 | $10,145 | $17,180 |
Net Profit | $23,140 | $23,673 | $40,087 |
Net Profit/Sales | 4.42% | 4.17% | 6.58% |
7.4 Projections
7.5 Projected Cash Flow
Our business is a retail-oriented business with clients who will pay primarily with cash and credit cards. Our cash flow is shown below, including repayment of the requested loan. Hiring a second manager will make an impact on cash flow in the second year, but we anticipate greater sales and efficiency to make up this difference by year three.

Pro Forma Cash Flow | |||
Year 1 | Year 2 | Year 3 | |
Cash Received | |||
Cash from Operations | |||
Cash Sales | $523,075 | $568,300 | $608,953 |
Subtotal Cash from Operations | $523,075 | $568,300 | $608,953 |
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 | $523,075 | $568,300 | $608,953 |
Expenditures | Year 1 | Year 2 | Year 3 |
Expenditures from Operations | |||
Cash Spending | $181,800 | $212,620 | $216,620 |
Bill Payments | $292,004 | $325,965 | $344,355 |
Subtotal Spent on Operations | $473,804 | $538,585 | $560,975 |
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 | $23,400 | $24,000 | $24,000 |
Purchase Other Current Assets | $0 | $0 | $0 |
Purchase Long-term Assets | $0 | $0 | $0 |
Dividends | $0 | $0 | $0 |
Subtotal Cash Spent | $497,204 | $562,585 | $584,975 |
Net Cash Flow | $25,872 | $5,715 | $23,978 |
Cash Balance | $65,872 | $71,587 | $95,565 |
7.6 Projected Balance Sheet
The balance sheet in the following table shows managed but sufficient growth of net worth, and a sufficiently healthy financial position. The monthly estimates are included in the appendix.
Pro Forma Balance Sheet | |||
Year 1 | Year 2 | Year 3 | |
Assets | |||
Current Assets | |||
Cash | $65,872 | $71,587 | $95,565 |
Inventory | $15,768 | $17,165 | $18,740 |
Other Current Assets | $35,000 | $35,000 | $35,000 |
Total Current Assets | $116,640 | $123,751 | $149,305 |
Long-term Assets | |||
Long-term Assets | $77,900 | $77,900 | $77,900 |
Accumulated Depreciation | $7,788 | $15,576 | $23,364 |
Total Long-term Assets | $70,112 | $62,324 | $54,536 |
Total Assets | $186,752 | $186,075 | $203,841 |
Liabilities and Capital | Year 1 | Year 2 | Year 3 |
Current Liabilities | |||
Accounts Payable | $27,112 | $26,763 | $28,441 |
Current Borrowing | $0 | $0 | $0 |
Other Current Liabilities | $0 | $0 | $0 |
Subtotal Current Liabilities | $27,112 | $26,763 | $28,441 |
Long-term Liabilities | $140,500 | $116,500 | $92,500 |
Total Liabilities | $167,612 | $143,263 | $120,941 |
Paid-in Capital | $60,000 | $60,000 | $60,000 |
Retained Earnings | ($64,000) | ($40,860) | ($17,188) |
Earnings | $23,140 | $23,673 | $40,087 |
Total Capital | $19,140 | $42,812 | $82,900 |
Total Liabilities and Capital | $186,752 | $186,075 | $203,841 |
Net Worth | $19,140 | $42,812 | $82,900 |
7.7 Business Ratios
The following table shows the projected businesses ratios, and standard comparison ratios for our industry, Bowling Centers (SIC Code 7933). We expect to maintain healthy ratios for profitability, risk, and return.
Ratio Analysis | ||||
Year 1 | Year 2 | Year 3 | Industry Profile | |
Sales Growth | 0.00% | 8.65% | 7.15% | 0.22% |
Percent of Total Assets | ||||
Inventory | 8.44% | 9.22% | 9.19% | 4.61% |
Other Current Assets | 18.74% | 18.81% | 17.17% | 35.98% |
Total Current Assets | 62.46% | 66.51% | 73.25% | 45.58% |
Long-term Assets | 37.54% | 33.49% | 26.75% | 54.42% |
Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
Current Liabilities | 14.52% | 14.38% | 13.95% | 13.21% |
Long-term Liabilities | 75.23% | 62.61% | 45.38% | 24.12% |
Total Liabilities | 89.75% | 76.99% | 59.33% | 37.33% |
Net Worth | 10.25% | 23.01% | 40.67% | 62.67% |
Percent of Sales | ||||
Sales | 100.00% | 100.00% | 100.00% | 100.00% |
Gross Margin | 70.91% | 70.86% | 70.31% | 100.00% |
Selling, General & Administrative Expenses | 46.09% | 47.32% | 36.86% | 72.94% |
Advertising Expenses | 1.49% | 1.37% | 1.28% | 3.33% |
Profit Before Interest and Taxes | 9.21% | 8.21% | 11.12% | 2.79% |
Main Ratios | ||||
Current | 4.30 | 4.62 | 5.25 | 2.20 |
Quick | 3.72 | 3.98 | 4.59 | 1.43 |
Total Debt to Total Assets | 89.75% | 76.99% | 59.33% | 56.31% |
Pre-tax Return on Net Worth | 172.71% | 78.99% | 69.08% | 2.83% |
Pre-tax Return on Assets | 17.70% | 18.17% | 28.09% | 6.48% |
Additional Ratios | Year 1 | Year 2 | Year 3 | |
Net Profit Margin | 4.42% | 4.17% | 6.58% | n.a |
Return on Equity | 120.90% | 55.29% | 48.36% | n.a |
Activity Ratios | ||||
Inventory Turnover | 10.91 | 10.06 | 10.07 | n.a |
Accounts Payable Turnover | 11.77 | 12.17 | 12.17 | n.a |
Payment Days | 27 | 30 | 29 | n.a |
Total Asset Turnover | 2.80 | 3.05 | 2.99 | n.a |
Debt Ratios | ||||
Debt to Net Worth | 8.76 | 3.35 | 1.46 | n.a |
Current Liab. to Liab. | 0.16 | 0.19 | 0.24 | n.a |
Liquidity Ratios | ||||
Net Working Capital | $89,528 | $96,988 | $120,864 | n.a |
Interest Coverage | 3.19 | 3.63 | 6.48 | n.a |
Additional Ratios | ||||
Assets to Sales | 0.36 | 0.33 | 0.33 | n.a |
Current Debt/Total Assets | 15% | 14% | 14% | n.a |
Acid Test | 3.72 | 3.98 | 4.59 | n.a |
Sales/Net Worth | 27.33 | 13.27 | 7.35 | n.a |
Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |