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.

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 |