Auto Paradise
Financial Plan
Our business is an “all cash” business that will pay for all variable and fixed expenses monthly. Thus, we will rapidly build cash flow to finance future growth. During the first nine months (six months of operation), two key issues will assist Auto Paradise in rapidly building capital:
- Nine months (three months construction, six months of operation) of deferred long-term loan repayment ($7,081 savings/month)
- CEO/manager will not receive a salary for at least six months ($3,000 savings/month).
7.1 Important Assumptions
The financial plan depends on important assumptions, most of which are shown in the following table as annual assumptions. From the beginning, we recognize that variable expenses are critical. Cost of water, sewer and electricity are our largest expenses. Water is our major concern in West Texas. We are planning for this possibility by installing all of the required storage, electrical and plumbing for a total water reclamation system.
Two of the more important underlying assumptions are:
- We assume our long term financing includes nine months of interim interest for repayment.
- We assume a sound economy, without major recession despite our modest pricing.
- We assume, of course, that there are no unforeseen changes in local regulations that will interrupt our service.
General Assumptions | |||
Year 1 | Year 2 | Year 3 | |
Plan Month | 1 | 2 | 3 |
Current Interest Rate | 7.50% | 7.50% | 7.50% |
Long-term Interest Rate | 8.00% | 8.00% | 8.00% |
Tax Rate | 20.83% | 20.00% | 20.83% |
Other | 0 | 0 | 0 |
7.2 Break-even Analysis
The break-even analysis table below the following revenue sources:
1. Laser Car Wash Sales
2. Vacuum/vending sales
3. ATM revenue
4. Reverse Osmosis water revenue.

Break-even Analysis | |
Monthly Revenue Break-even | $16,059 |
Assumptions: | |
Average Percent Variable Cost | 19% |
Estimated Monthly Fixed Cost | $12,964 |
7.3 Projected Profit and Loss
Projected Revenue. See “Sales Forecast” for a detailed breakdown of projected revenue.
Projected Operating Expenses.
- Direct Cost of Automatic Sales.
- Chemicals. Average 8.6% of gross revenue. Chemicals include soap, wax and salt.
- Utilities. Average 13.9% of gross revenue. Utilities include water, electricity, gas and sewer.
- Direct Cost of Self-Serve Sales. Total cost averages 11.1% of self-serve revenue.
- Direct Cost of Vacuum/Vending Sales. Average 1% of aggregate automatic and self-serve revenue.
- Variable/Fixed Expenses
- Labor. Labor is estimated to be $2,000/month with an additional 15% burden to cover related payroll taxes and workman’s compensation insurance. Based on two part time employees, 70 total hours/week @ $6.50/hr.
- Repair and Maintenance includes $750/month for monthly service provided by WET and $100/month to clean each wash bay pit.
- Real Estate Taxes are estimated at 3% of value of land and construction costs ($500,000).
- General Liability Insurance is estimated at $1800/year.
Depreciation. Depreciation was calculated as follows:
- Equipment. $295,000 ¸ 6 years ¸ 12 months = $4,097/month
- Construction: $390,000 ¸ 15 years ¸ 12 months = $2,167/month


Pro Forma Profit and Loss | |||
Year 1 | Year 2 | Year 3 | |
Sales | $312,838 | $651,382 | $675,960 |
Direct Cost of Sales | $60,297 | $125,307 | $130,018 |
Other Production Expenses | $0 | $0 | $0 |
Total Cost of Sales | $60,297 | $125,307 | $130,018 |
Gross Margin | $252,541 | $526,075 | $545,942 |
Gross Margin % | 80.73% | 80.76% | 80.77% |
Expenses | |||
Payroll | $42,000 | $102,000 | $120,000 |
Sales and Marketing and Other Expenses | $17,400 | $34,800 | $34,800 |
Depreciation | $75,168 | $150,336 | $150,336 |
Accounting / Legal | $1,200 | $2,400 | $2,400 |
Dumpster / Telephone / Pager | $1,500 | $3,000 | $3,000 |
Insurance | $1,800 | $3,600 | $3,600 |
Repairs / Maintenance | $10,200 | $20,400 | $20,400 |
Payroll Taxes | $6,300 | $15,300 | $18,000 |
Other | $0 | $0 | $0 |
Total Operating Expenses | $155,568 | $331,836 | $352,536 |
Profit Before Interest and Taxes | $96,973 | $194,239 | $193,406 |
EBITDA | $172,141 | $344,575 | $343,742 |
Interest Expense | $55,603 | $84,490 | $111,401 |
Taxes Incurred | $7,963 | $21,950 | $17,084 |
Net Profit | $33,407 | $87,800 | $64,920 |
Net Profit/Sales | 10.68% | 13.48% | 9.60% |
7.4 Projected Cash Flow
The following table outlines are estimated cash flow.

Pro Forma Cash Flow | |||
Year 1 | Year 2 | Year 3 | |
Cash Received | |||
Cash from Operations | |||
Cash Sales | $312,838 | $651,382 | $675,960 |
Subtotal Cash from Operations | $312,838 | $651,382 | $675,960 |
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 | $771,390 | $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 | $312,838 | $1,422,772 | $675,960 |
Expenditures | Year 1 | Year 2 | Year 3 |
Expenditures from Operations | |||
Cash Spending | $42,000 | $102,000 | $120,000 |
Bill Payments | $148,606 | $299,321 | $338,283 |
Subtotal Spent on Operations | $190,606 | $401,321 | $458,283 |
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 | $9,168 | $40,808 | $57,792 |
Purchase Other Current Assets | $0 | $0 | $0 |
Purchase Long-term Assets | $0 | $857,100 | $0 |
Dividends | $65,000 | $65,000 | $65,000 |
Subtotal Cash Spent | $264,774 | $1,364,229 | $581,075 |
Net Cash Flow | $48,064 | $58,543 | $94,885 |
Cash Balance | $142,564 | $201,107 | $295,992 |
7.5 Projected Balance Sheet
The following table indicates our estimated balance sheet totals.
Pro Forma Balance Sheet | |||
Year 1 | Year 2 | Year 3 | |
Assets | |||
Current Assets | |||
Cash | $142,564 | $201,107 | $295,992 |
Other Current Assets | $0 | $0 | $0 |
Total Current Assets | $142,564 | $201,107 | $295,992 |
Long-term Assets | |||
Long-term Assets | $799,000 | $1,656,100 | $1,656,100 |
Accumulated Depreciation | $75,168 | $225,504 | $375,840 |
Total Long-term Assets | $723,832 | $1,430,596 | $1,280,260 |
Total Assets | $866,396 | $1,631,703 | $1,576,252 |
Liabilities and Capital | Year 1 | Year 2 | Year 3 |
Current Liabilities | |||
Accounts Payable | $13,656 | $25,582 | $28,003 |
Current Borrowing | $0 | $0 | $0 |
Other Current Liabilities | $0 | $0 | $0 |
Subtotal Current Liabilities | $13,656 | $25,582 | $28,003 |
Long-term Liabilities | $690,832 | $1,421,414 | $1,363,622 |
Total Liabilities | $704,488 | $1,446,996 | $1,391,625 |
Paid-in Capital | $234,000 | $234,000 | $234,000 |
Retained Earnings | ($105,500) | ($137,093) | ($114,293) |
Earnings | $33,407 | $87,800 | $64,920 |
Total Capital | $161,907 | $184,707 | $184,627 |
Total Liabilities and Capital | $866,396 | $1,631,703 | $1,576,252 |
Net Worth | $161,907 | $184,707 | $184,627 |
7.6 Business Ratios
Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 7542, Car washes, are shown for comparison.
Ratio Analysis | ||||
Year 1 | Year 2 | Year 3 | Industry Profile | |
Sales Growth | 0.00% | 108.22% | 3.77% | 3.00% |
Percent of Total Assets | ||||
Other Current Assets | 0.00% | 0.00% | 0.00% | 26.40% |
Total Current Assets | 16.45% | 12.32% | 18.78% | 44.60% |
Long-term Assets | 83.55% | 87.68% | 81.22% | 55.40% |
Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
Current Liabilities | 1.58% | 1.57% | 1.78% | 29.30% |
Long-term Liabilities | 79.74% | 87.11% | 86.51% | 27.80% |
Total Liabilities | 81.31% | 88.68% | 88.29% | 57.10% |
Net Worth | 18.69% | 11.32% | 11.71% | 42.90% |
Percent of Sales | ||||
Sales | 100.00% | 100.00% | 100.00% | 100.00% |
Gross Margin | 80.73% | 80.76% | 80.77% | 0.00% |
Selling, General & Administrative Expenses | 70.15% | 67.28% | 71.06% | 68.20% |
Advertising Expenses | 0.38% | 0.37% | 0.36% | 1.50% |
Profit Before Interest and Taxes | 31.00% | 29.82% | 28.61% | 2.70% |
Main Ratios | ||||
Current | 10.44 | 7.86 | 10.57 | 1.53 |
Quick | 10.44 | 7.86 | 10.57 | 0.88 |
Total Debt to Total Assets | 81.31% | 88.68% | 88.29% | 57.10% |
Pre-tax Return on Net Worth | 25.55% | 59.42% | 44.42% | 3.40% |
Pre-tax Return on Assets | 4.77% | 6.73% | 5.20% | 8.00% |
Additional Ratios | Year 1 | Year 2 | Year 3 | |
Net Profit Margin | 10.68% | 13.48% | 9.60% | n.a |
Return on Equity | 20.63% | 47.53% | 35.16% | n.a |
Activity Ratios | ||||
Accounts Payable Turnover | 11.88 | 12.17 | 12.17 | n.a |
Payment Days | 27 | 23 | 29 | n.a |
Total Asset Turnover | 0.36 | 0.40 | 0.43 | n.a |
Debt Ratios | ||||
Debt to Net Worth | 4.35 | 7.83 | 7.54 | n.a |
Current Liab. to Liab. | 0.02 | 0.02 | 0.02 | n.a |
Liquidity Ratios | ||||
Net Working Capital | $128,907 | $175,525 | $267,989 | n.a |
Interest Coverage | 1.74 | 2.30 | 1.74 | n.a |
Additional Ratios | ||||
Assets to Sales | 2.77 | 2.50 | 2.33 | n.a |
Current Debt/Total Assets | 2% | 2% | 2% | n.a |
Acid Test | 10.44 | 7.86 | 10.57 | n.a |
Sales/Net Worth | 1.93 | 3.53 | 3.66 | n.a |
Dividend Payout | 1.95 | 0.74 | 1.00 | n.a |