Computers Reseller Business Plan

Crest Systems

Financial Plan

The following is the financial plan for Crest Systems.

7.1 Break-even Analysis

The monthly break-even point is shown below.

Computers reseller business plan, financial plan chart image

Break-even Analysis


Monthly Revenue Break-even	$143,373

Assumptions:
Average Percent Variable Cost	67%
Estimated Monthly Fixed Cost	$47,311

7.2 Projected Profit and Loss

The following table and charts will highlight projected profit and loss for the next three years.

Pro Forma Profit and Loss
	Year 1	Year 2	Year 3
Sales	$2,488,000	$3,080,000	$3,720,000
Direct Cost of Sales	$1,667,000	$1,970,000	$2,330,000
Other Production Expenses	$0	$0	$0
Total Cost of Sales	$1,667,000	$1,970,000	$2,330,000

Gross Margin	$821,000	$1,110,000	$1,390,000
Gross Margin %	33.00%	36.04%	37.37%


Expenses
Payroll	$367,000	$414,000	$460,000
Sales and Marketing and Other Expenses	$120,000	$160,000	$200,000
Depreciation	$0	$0	$0
Leased Equipment	$0	$0	$0
Utilities	$1,680	$1,680	$1,680
Insurance	$0	$0	$0
Rent	$24,000	$24,000	$24,000
Payroll Taxes	$55,050	$62,100	$69,000
Other	$0	$0	$0

Total Operating Expenses	$567,730	$661,780	$754,680

Profit Before Interest and Taxes	$253,270	$448,220	$635,320
EBITDA	$253,270	$448,220	$635,320
Interest Expense	$8,903	$6,962	$4,936
Taxes Incurred	$73,310	$132,378	$189,115

Net Profit	$171,057	$308,881	$441,269
Net Profit/Sales	6.88%	10.03%	11.86%

7.3 Projected Cash Flow

The following table and chart highlight the projected cash flow for three years.

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

Cash from Operations
Cash Sales	$622,000	$770,000	$930,000
Cash from Receivables	$1,330,125	$2,182,493	$2,652,154
Subtotal Cash from Operations	$1,952,125	$2,952,493	$3,582,154

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	$66,000	$0	$0
Subtotal Cash Received	$2,018,125	$2,952,493	$3,582,154

Expenditures	Year 1	Year 2	Year 3

Expenditures from Operations
Cash Spending	$367,000	$414,000	$460,000
Bill Payments	$1,632,460	$2,480,866	$2,780,790
Subtotal Spent on Operations	$1,999,460	$2,894,866	$3,240,790

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	$20,256	$20,256	$20,256
Purchase Other Current Assets	$0	$0	$0
Purchase Long-term Assets	$0	$0	$0
Dividends	$0	$0	$0
Subtotal Cash Spent	$2,019,716	$2,915,122	$3,261,046

Net Cash Flow	($1,591)	$37,370	$321,108
Cash Balance	$132,109	$169,480	$490,587

7.4 Projected Balance Sheet

The following table highlights the projected balance sheet for three years.

Pro Forma Balance Sheet
	Year 1	Year 2	Year 3
Assets

Current Assets
Cash	$132,109	$169,480	$490,587
Accounts Receivable	$535,875	$663,382	$801,228
Other Current Assets	$0	$0	$0
Total Current Assets	$667,984	$832,862	$1,291,815

Long-term Assets
Long-term Assets	$0	$0	$0
Accumulated Depreciation	$0	$0	$0
Total Long-term Assets	$0	$0	$0
Total Assets	$667,984	$832,862	$1,291,815

Liabilities and Capital	Year 1	Year 2	Year 3

Current Liabilities
Accounts Payable	$317,483	$193,736	$231,677
Current Borrowing	$0	$0	$0
Other Current Liabilities	$0	$0	$0
Subtotal Current Liabilities	$317,483	$193,736	$231,677

Long-term Liabilities	$79,744	$59,488	$39,232
Total Liabilities	$397,227	$253,224	$270,909

Paid-in Capital	$116,000	$116,000	$116,000
Retained Earnings	($16,300)	$154,757	$463,638
Earnings	$171,057	$308,881	$441,269
Total Capital	$270,757	$579,638	$1,020,907
Total Liabilities and Capital	$667,984	$832,862	$1,291,815

Net Worth	$270,757	$579,638	$1,020,907

7.5 Business Ratios

Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 5045, Computers, peripherals and software, are shown for comparison.

Ratio Analysis
	Year 1	Year 2	Year 3	Industry Profile
Sales Growth	0.00%	23.79%	20.78%	5.80%

Percent of Total Assets
Accounts Receivable	80.22%	79.65%	62.02%	29.30%
Other Current Assets	0.00%	0.00%	0.00%	21.50%
Total Current Assets	100.00%	100.00%	100.00%	86.80%
Long-term Assets	0.00%	0.00%	0.00%	13.20%
Total Assets	100.00%	100.00%	100.00%	100.00%

Current Liabilities	47.53%	23.26%	17.93%	43.70%
Long-term Liabilities	11.94%	7.14%	3.04%	11.20%
Total Liabilities	59.47%	30.40%	20.97%	54.90%
Net Worth	40.53%	69.60%	79.03%	45.10%

Percent of Sales
Sales	100.00%	100.00%	100.00%	100.00%
Gross Margin	33.00%	36.04%	37.37%	24.80%
Selling, General & Administrative Expenses	26.12%	26.01%	25.50%	15.60%
Advertising Expenses	2.41%	2.60%	2.69%	0.50%
Profit Before Interest and Taxes	10.18%	14.55%	17.08%	2.70%

Main Ratios
Current	2.10	4.30	5.58	1.93
Quick	2.10	4.30	5.58	0.92
Total Debt to Total Assets	59.47%	30.40%	20.97%	54.90%
Pre-tax Return on Net Worth	90.25%	76.13%	61.75%	5.50%
Pre-tax Return on Assets	36.58%	52.98%	48.80%	12.20%

Additional Ratios	Year 1	Year 2	Year 3
Net Profit Margin	6.88%	10.03%	11.86%	n.a
Return on Equity	63.18%	53.29%	43.22%	n.a

Activity Ratios
Accounts Receivable Turnover	3.48	3.48	3.48	n.a
Collection Days	55	95	96	n.a
Accounts Payable Turnover	6.14	12.17	12.17	n.a
Payment Days	27	40	28	n.a
Total Asset Turnover	3.72	3.70	2.88	n.a

Debt Ratios
Debt to Net Worth	1.47	0.44	0.27	n.a
Current Liab. to Liab.	0.80	0.77	0.86	n.a

Liquidity Ratios
Net Working Capital	$350,501	$639,126	$1,060,139	n.a
Interest Coverage	28.45	64.38	128.71	n.a

Additional Ratios
Assets to Sales	0.27	0.27	0.35	n.a
Current Debt/Total Assets	48%	23%	18%	n.a
Acid Test	0.42	0.87	2.12	n.a
Sales/Net Worth	9.19	5.31	3.64	n.a
Dividend Payout	0.00	0.00	0.00	n.a