Building Construction Business Plan

Concrete Installation

Financial Plan

The following sections describe the financials for Concrete Installation.

7.1 Projected Cash Flow

Projected cash flow statements for FY2000-2002 are provided below.

Building construction business plan, financial plan chart image

Pro Forma Cash Flow
	Year 1	Year 2	Year 3
Cash Received

Cash from Operations
Cash Sales	$175,000	$262,500	$393,750
Cash from Receivables	$436,500	$743,250	$1,114,875
Subtotal Cash from Operations	$611,500	$1,005,750	$1,508,625

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	$611,500	$1,005,750	$1,508,625

Expenditures	Year 1	Year 2	Year 3

Expenditures from Operations
Cash Spending	$43,478	$43,478	$52,174
Bill Payments	$575,604	$783,028	$1,046,580
Subtotal Spent on Operations	$619,082	$826,506	$1,098,754

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	$105,000	$100,000	$100,000
Dividends	$0	$0	$0
Subtotal Cash Spent	$724,082	$926,506	$1,198,754

Net Cash Flow	($112,582)	$79,244	$309,871
Cash Balance	$19,418	$98,662	$408,533

7.2 Break-even Analysis

During the first year of operations, the break-even sales volume is estimated as shown below.

Break-even Analysis


Monthly Revenue Break-even	$24,706

Assumptions:
Average Percent Variable Cost	64%
Estimated Monthly Fixed Cost	$8,894

7.3 Projected Profit and Loss

Concrete Installation is in the early stage of development, thus initial projections have only been made on accounts that are believed to most drive the income statement.

Pro Forma Profit and Loss
	Year 1	Year 2	Year 3
Sales	$700,000	$1,050,000	$1,575,000
Direct Cost of Sales	$448,000	$558,750	$698,437
Other	$50,000	$50,000	$50,000
Total Cost of Sales	$498,000	$608,750	$748,437

Gross Margin	$202,000	$441,250	$826,563
Gross Margin %	28.86%	42.02%	52.48%


Expenses
Payroll	$43,478	$43,478	$52,174
Sales and Marketing and Other Expenses	$28,600	$77,000	$112,000
Depreciation	$3,600	$5,000	$6,000
Gasoline and oil	$2,030	$4,000	$5,000
Telephone	$1,500	$2,400	$2,400
Utilities	$6,000	$6,000	$6,500
Insurance	$9,000	$9,000	$9,000
Rent	$6,000	$6,500	$7,000
Payroll Taxes	$6,522	$6,522	$7,826
Other	$0	$0	$0

Total Operating Expenses	$106,730	$159,900	$207,900

Profit Before Interest and Taxes	$95,270	$281,350	$618,663
EBITDA	$98,870	$286,350	$624,663
Interest Expense	$0	$0	$0
Taxes Incurred	$23,621	$70,338	$157,243

Net Profit	$71,650	$211,013	$461,419
Net Profit/Sales	10.24%	20.10%	29.30%

7.4 Projected Balance Sheet

The table below provides Concrete Installation’s projected balance sheets for 2000-2002.

Pro Forma Balance Sheet
	Year 1	Year 2	Year 3
Assets

Current Assets
Cash	$19,418	$98,662	$408,533
Accounts Receivable	$88,500	$132,750	$199,125
Inventory	$42,240	$52,682	$65,853
Other Current Assets	$30,000	$30,000	$30,000
Total Current Assets	$180,158	$314,094	$703,510

Long-term Assets
Long-term Assets	$125,000	$225,000	$325,000
Accumulated Depreciation	$3,600	$8,600	$14,600
Total Long-term Assets	$121,400	$216,400	$310,400
Total Assets	$301,558	$530,494	$1,013,910

Liabilities and Capital	Year 1	Year 2	Year 3

Current Liabilities
Accounts Payable	$47,908	$65,832	$87,828
Current Borrowing	$0	$0	$0
Other Current Liabilities	$0	$0	$0
Subtotal Current Liabilities	$47,908	$65,832	$87,828

Long-term Liabilities	$0	$0	$0
Total Liabilities	$47,908	$65,832	$87,828

Paid-in Capital	$215,000	$215,000	$215,000
Retained Earnings	($33,000)	$38,650	$249,663
Earnings	$71,650	$211,013	$461,419
Total Capital	$253,650	$464,663	$926,082
Total Liabilities and Capital	$301,558	$530,494	$1,013,910

Net Worth	$253,650	$464,663	$926,082

7.5 Business Ratios

The following table presents important ratios from the concrete work industry, as determined by the Standard Industry Classification (SIC) Index code 1771.

Ratio Analysis
	Year 1	Year 2	Year 3	Industry Profile
Sales Growth	0.00%	50.00%	50.00%	7.50%

Percent of Total Assets
Accounts Receivable	29.35%	25.02%	19.64%	30.90%
Inventory	14.01%	9.93%	6.49%	6.30%
Other Current Assets	9.95%	5.66%	2.96%	29.80%
Total Current Assets	59.74%	59.21%	69.39%	67.00%
Long-term Assets	40.26%	40.79%	30.61%	33.00%
Total Assets	100.00%	100.00%	100.00%	100.00%

Current Liabilities	15.89%	12.41%	8.66%	43.50%
Long-term Liabilities	0.00%	0.00%	0.00%	14.10%
Total Liabilities	15.89%	12.41%	8.66%	57.60%
Net Worth	84.11%	87.59%	91.34%	42.40%

Percent of Sales
Sales	100.00%	100.00%	100.00%	100.00%
Gross Margin	28.86%	42.02%	52.48%	29.40%
Selling, General & Administrative Expenses	18.65%	21.93%	23.02%	15.50%
Advertising Expenses	3.29%	6.67%	6.35%	0.30%
Profit Before Interest and Taxes	13.61%	26.80%	39.28%	2.40%

Main Ratios
Current	3.76	4.77	8.01	1.55
Quick	2.88	3.97	7.26	1.17
Total Debt to Total Assets	15.89%	12.41%	8.66%	57.60%
Pre-tax Return on Net Worth	37.56%	60.55%	66.80%	6.50%
Pre-tax Return on Assets	31.59%	53.04%	61.02%	15.40%

Additional Ratios	Year 1	Year 2	Year 3
Net Profit Margin	10.24%	20.10%	29.30%	n.a
Return on Equity	28.25%	45.41%	49.82%	n.a

Activity Ratios
Accounts Receivable Turnover	5.93	5.93	5.93	n.a
Collection Days	57	51	51	n.a
Inventory Turnover	10.91	11.77	11.78	n.a
Accounts Payable Turnover	13.01	12.17	12.17	n.a
Payment Days	27	26	26	n.a
Total Asset Turnover	2.32	1.98	1.55	n.a

Debt Ratios
Debt to Net Worth	0.19	0.14	0.09	n.a
Current Liab. to Liab.	1.00	1.00	1.00	n.a

Liquidity Ratios
Net Working Capital	$132,250	$248,263	$615,682	n.a
Interest Coverage	0.00	0.00	0.00	n.a

Additional Ratios
Assets to Sales	0.43	0.51	0.64	n.a
Current Debt/Total Assets	16%	12%	9%	n.a
Acid Test	1.03	1.95	4.99	n.a
Sales/Net Worth	2.76	2.26	1.70	n.a
Dividend Payout	0.00	0.00	0.00	n.a