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Kiln Creek Bowling Center
Financial Plan
The commercial loan that the company expects to secure shortly will cover the start-up expenses and provide operating cash. The company needs to attract additional investor capital to cover the remaining long-term assets. The following sections show in detail that Kiln Creek Bowling Center will be profitable from the beginning. Its healthy profits will be sufficient to pay back the loan and provide return to the owners.
7.1 Important Assumptions
NOTES FOR PROJECTIONS
- League Bowler Revenue (see table below)
- Fall/Winter Long Season–35 Weeks
- Fall/Winter Short Season–16 Weeks
- Summer Season–13 Weeks
- Food and Beverage Revenue will be 50% of total bowling revenue.
- There will be 600 lockers rented at $3.00 each per month.
- Shoes will rent for $2.50 per pair.
- Food and Beverage Cost will be 27% of Food and Beverage Sales.
- Apparel and Pro Shop items cost will be 25% of sales.
- Open Bowling is 50% of League Bowling.
- Sales / Food tax is not included in revenue.
- Contract Services include pest control, trash removal, cable TV, uniform rental
- for maintenance and bar towel rental.
- York County tax rates are:
- Real Estate tax $8.60 per $1,000.00 of assessed value.
- Personal Property tax base is 25% of cost of equipment at 4% per thousand.
- Business License is $.20 per $100 for Food & Beverage Revenue and $.36 per $100 for Bowling and Billiards.
Fall and Winter Seasons – Total: $493,800
- Adult Night: 35 Weeks, 1,200 people, $8.00/person, League Revenue: $336,000
- Adult Day: 35 Weeks, 400 people, $7.50/person, League Revenue: $105,000
- Youth: 35 Weeks, 160 people, $6.00/person, League Revenue: $33,600
- Adult Night: 16 Weeks, 150 people, $8.00/person, League Revenue: $19,200
Summer Season – Total: $101,400
- Adult Night: 13 Weeks, 600 people, $8.00/person, League Revenue: $62,400
- Adult Day: 13 Weeks, 200 people, $7.50/person, League Revenue: $19,500
- Youth and Day Care: 13 Weeks, 250 people, $6.00/person, League Revenue: $19,500
Total League Revenue: $595,200
| 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 | 9.50% | 9.50% | 9.50% |
| Tax Rate | 25.42% | 25.00% | 25.42% |
| Other | 0 | 0 | 0 |
7.2 Key Financial Indicators
These benchmark indicators give Kiln Creek Bowling Center a sense of relative comparison for three years of projections.
7.3 Break-even Analysis
With the average monthly fixed costs and projected profit margin, Kiln Creek Bowling Center will break even with the monthly sales revenue shown in the table and chart following.
| Break-even Analysis | |
| Monthly Units Break-even | 24,564 |
| Monthly Revenue Break-even | $78,432 |
| Assumptions: | |
| Average Per-Unit Revenue | $3.19 |
| Average Per-Unit Variable Cost | $0.08 |
| Estimated Monthly Fixed Cost | $76,485 |
7.4 Projected Profit and Loss
One should note that the company is making a profit in the first month of operation. The yearly analysis is indicated in the table below, monthly analyses can be found in the appendix.
| Pro Forma Profit and Loss | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | $1,824,831 | $1,915,900 | $2,011,665 |
| Direct Cost of Sales | $45,304 | $45,923 | $48,219 |
| Food and Beverage | $153,076 | $153,076 | $153,076 |
| Total Cost of Sales | $198,380 | $198,999 | $201,295 |
| Gross Margin | $1,626,451 | $1,716,901 | $1,810,370 |
| Gross Margin % | 89.13% | 89.61% | 89.99% |
| Expenses | |||
| Payroll | $422,000 | $443,100 | $465,255 |
| Sales and Marketing and Other Expenses | $150,840 | $175,328 | $184,102 |
| Depreciation | $204,996 | $204,996 | $204,996 |
| Leased Equipment | $0 | $0 | $0 |
| Utilities | $52,680 | $55,314 | $58,079 |
| Insurance | $24,000 | $0 | $0 |
| Rent | $0 | $0 | $0 |
| Payroll Taxes | $63,300 | $66,465 | $69,788 |
| Other | $0 | $0 | $0 |
| Total Operating Expenses | $917,816 | $945,203 | $982,220 |
| Profit Before Interest and Taxes | $708,635 | $771,698 | $828,150 |
| EBITDA | $913,631 | $976,694 | $1,033,146 |
| Interest Expense | $285,000 | $282,242 | $276,451 |
| Taxes Incurred | $108,624 | $122,364 | $140,223 |
| Net Profit | $315,012 | $367,092 | $411,475 |
| Net Profit/Sales | 17.26% | 19.16% | 20.45% |
7.5 Projected Cash Flow
The company’s estimated cash flow analysis is outlined in the following table. Kiln Creek Bowling’s profitability will ensure positive cash balance.
| Pro Forma Cash Flow | |||
| Year 1 | Year 2 | Year 3 | |
| Cash Received | |||
| Cash from Operations | |||
| Cash Sales | $1,824,831 | $1,915,900 | $2,011,665 |
| Subtotal Cash from Operations | $1,824,831 | $1,915,900 | $2,011,665 |
| 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 | $1,824,831 | $1,915,900 | $2,011,665 |
| Expenditures | Year 1 | Year 2 | Year 3 |
| Expenditures from Operations | |||
| Cash Spending | $422,000 | $443,100 | $465,255 |
| Bill Payments | $815,752 | $903,301 | $928,904 |
| Subtotal Spent on Operations | $1,237,752 | $1,346,401 | $1,394,159 |
| 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 | $58,071 | $63,835 |
| Purchase Other Current Assets | $0 | $0 | $0 |
| Purchase Long-term Assets | $0 | $0 | $0 |
| Dividends | $0 | $0 | $0 |
| Subtotal Cash Spent | $1,237,752 | $1,404,472 | $1,457,994 |
| Net Cash Flow | $587,079 | $511,428 | $553,671 |
| Cash Balance | $852,079 | $1,363,507 | $1,917,178 |
7.6 Projected Balance Sheet
Estimated balance sheets for the years 2001-2003 are provided below.
| Pro Forma Balance Sheet | |||
| Year 1 | Year 2 | Year 3 | |
| Assets | |||
| Current Assets | |||
| Cash | $852,079 | $1,363,507 | $1,917,178 |
| Inventory | $3,354 | $10,104 | $10,989 |
| Other Current Assets | $970,000 | $970,000 | $970,000 |
| Total Current Assets | $1,825,433 | $2,343,610 | $2,898,167 |
| Long-term Assets | |||
| Long-term Assets | $3,000,000 | $3,000,000 | $3,000,000 |
| Accumulated Depreciation | $204,996 | $409,992 | $614,988 |
| Total Long-term Assets | $2,795,004 | $2,590,008 | $2,385,012 |
| Total Assets | $4,620,437 | $4,933,618 | $5,283,179 |
| Liabilities and Capital | Year 1 | Year 2 | Year 3 |
| Current Liabilities | |||
| Accounts Payable | $70,425 | $74,586 | $76,506 |
| Current Borrowing | $0 | $0 | $0 |
| Other Current Liabilities | $0 | $0 | $0 |
| Subtotal Current Liabilities | $70,425 | $74,586 | $76,506 |
| Long-term Liabilities | $3,000,000 | $2,941,929 | $2,878,094 |
| Total Liabilities | $3,070,425 | $3,016,515 | $2,954,600 |
| Paid-in Capital | $1,500,000 | $1,500,000 | $1,500,000 |
| Retained Earnings | ($265,000) | $50,012 | $417,104 |
| Earnings | $315,012 | $367,092 | $411,475 |
| Total Capital | $1,550,012 | $1,917,104 | $2,328,579 |
| Total Liabilities and Capital | $4,620,437 | $4,933,618 | $5,283,179 |
| Net Worth | $1,550,012 | $1,917,104 | $2,328,579 |
7.7 Business Ratios
The company’s projected business ratios are provided in the table below. The final column, Industry Profile, shows significant ratios for the Bowling Center industry, as determined by the Standard Industry Classification (SIC) Index code 7933.
| Ratio Analysis | ||||
| Year 1 | Year 2 | Year 3 | Industry Profile | |
| Sales Growth | n.a. | 4.99% | 5.00% | 0.30% |
| Percent of Total Assets | ||||
| Inventory | 0.07% | 0.20% | 0.21% | 4.10% |
| Other Current Assets | 20.99% | 19.66% | 18.36% | 34.80% |
| Total Current Assets | 39.51% | 47.50% | 54.86% | 44.30% |
| Long-term Assets | 60.49% | 52.50% | 45.14% | 55.70% |
| Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
| Current Liabilities | 1.52% | 1.51% | 1.45% | 30.10% |
| Long-term Liabilities | 64.93% | 59.63% | 54.48% | 23.30% |
| Total Liabilities | 66.45% | 61.14% | 55.92% | 53.40% |
| Net Worth | 33.55% | 38.86% | 44.08% | 46.60% |
| Percent of Sales | ||||
| Sales | 100.00% | 100.00% | 100.00% | 100.00% |
| Gross Margin | 89.13% | 89.61% | 89.99% | 0.00% |
| Selling, General & Administrative Expenses | 71.72% | 70.45% | 69.42% | 73.90% |
| Advertising Expenses | 3.70% | 3.70% | 3.70% | 3.40% |
| Profit Before Interest and Taxes | 38.83% | 40.28% | 41.17% | 2.30% |
| Main Ratios | ||||
| Current | 25.92 | 31.42 | 37.88 | 1.59 |
| Quick | 25.87 | 31.29 | 37.74 | 1.08 |
| Total Debt to Total Assets | 66.45% | 61.14% | 55.92% | 53.40% |
| Pre-tax Return on Net Worth | 27.33% | 25.53% | 23.69% | 2.50% |
| Pre-tax Return on Assets | 9.17% | 9.92% | 10.44% | 5.30% |
| Additional Ratios | Year 1 | Year 2 | Year 3 | |
| Net Profit Margin | 17.26% | 19.16% | 20.45% | n.a |
| Return on Equity | 20.32% | 19.15% | 17.67% | n.a |
| Activity Ratios | ||||
| Inventory Turnover | 4.61 | 6.82 | 4.57 | n.a |
| Accounts Payable Turnover | 12.58 | 12.17 | 12.17 | n.a |
| Payment Days | 27 | 29 | 30 | n.a |
| Total Asset Turnover | 0.39 | 0.39 | 0.38 | n.a |
| Debt Ratios | ||||
| Debt to Net Worth | 1.98 | 1.57 | 1.27 | n.a |
| Current Liab. to Liab. | 0.02 | 0.02 | 0.03 | n.a |
| Liquidity Ratios | ||||
| Net Working Capital | $1,755,008 | $2,269,025 | $2,821,661 | n.a |
| Interest Coverage | 2.49 | 2.73 | 3.00 | n.a |
| Additional Ratios | ||||
| Assets to Sales | 2.53 | 2.58 | 2.63 | n.a |
| Current Debt/Total Assets | 2% | 2% | 1% | n.a |
| Acid Test | 25.87 | 31.29 | 37.74 | n.a |
| Sales/Net Worth | 1.18 | 1.00 | 0.86 | n.a |
| Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |