Construction Carpenter Business Plan

Miles Garden Carpentry

Financial Plan

The following is the financial plan for Miles Garden Carpentry.

7.1 Break-even Analysis

The monthly break-even point is calculated in the table and chart below.

Construction carpenter business plan, financial plan chart image

Break-even Analysis


Monthly Revenue Break-even	$20,211

Assumptions:
Average Percent Variable Cost	28%
Estimated Monthly Fixed Cost	$14,557

7.2 Projected Profit and Loss

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

Pro Forma Profit and Loss
	Year 1	Year 2	Year 3
Sales	$311,000	$370,000	$428,000
Direct Cost of Sales	$87,000	$110,000	$125,000
Other Production Expenses	$0	$0	$0
Total Cost of Sales	$87,000	$110,000	$125,000

Gross Margin	$224,000	$260,000	$303,000
Gross Margin %	72.03%	70.27%	70.79%


Expenses
Payroll	$120,000	$136,000	$166,000
Sales and Marketing and Other Expenses	$18,000	$23,000	$28,000
Depreciation	$4,284	$4,284	$4,284
Leased Equipment	$0	$0	$0
Utilities	$2,400	$2,400	$2,400
Insurance	$0	$0	$0
Rent	$12,000	$12,000	$12,000
Payroll Taxes	$18,000	$20,400	$24,900
Other	$0	$0	$0

Total Operating Expenses	$174,684	$198,084	$237,584

Profit Before Interest and Taxes	$49,316	$61,916	$65,416
EBITDA	$53,600	$66,200	$69,700
Interest Expense	$4,459	$3,501	$2,501
Taxes Incurred	$13,457	$17,525	$18,875

Net Profit	$31,400	$40,891	$44,041
Net Profit/Sales	10.10%	11.05%	10.29%

7.3 Projected Cash Flow

The following is the projected cash flow for three years.

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

Cash from Operations
Cash Sales	$311,000	$370,000	$428,000
Subtotal Cash from Operations	$311,000	$370,000	$428,000

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	$311,000	$370,000	$428,000

Expenditures	Year 1	Year 2	Year 3

Expenditures from Operations
Cash Spending	$120,000	$136,000	$166,000
Bill Payments	$145,527	$183,094	$211,633
Subtotal Spent on Operations	$265,527	$319,094	$377,633

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	$9,996	$9,996	$9,996
Purchase Other Current Assets	$0	$0	$0
Purchase Long-term Assets	$0	$0	$0
Dividends	$0	$0	$0
Subtotal Cash Spent	$275,523	$329,090	$387,629

Net Cash Flow	$35,477	$40,910	$40,371
Cash Balance	$48,177	$89,087	$129,458

7.4 Projected Balance Sheet

The following is the projected balance sheet for three years.

Pro Forma Balance Sheet
	Year 1	Year 2	Year 3
Assets

Current Assets
Cash	$48,177	$89,087	$129,458
Other Current Assets	$0	$0	$0
Total Current Assets	$48,177	$89,087	$129,458

Long-term Assets
Long-term Assets	$35,000	$35,000	$35,000
Accumulated Depreciation	$4,284	$8,568	$12,852
Total Long-term Assets	$30,716	$26,432	$22,148
Total Assets	$78,893	$115,519	$151,606

Liabilities and Capital	Year 1	Year 2	Year 3

Current Liabilities
Accounts Payable	$9,789	$15,520	$17,562
Current Borrowing	$0	$0	$0
Other Current Liabilities	$0	$0	$0
Subtotal Current Liabilities	$9,789	$15,520	$17,562

Long-term Liabilities	$40,004	$30,008	$20,012
Total Liabilities	$49,793	$45,528	$37,574

Paid-in Capital	$60,000	$60,000	$60,000
Retained Earnings	($62,300)	($30,900)	$9,991
Earnings	$31,400	$40,891	$44,041
Total Capital	$29,100	$69,991	$114,031
Total Liabilities and Capital	$78,893	$115,519	$151,606

Net Worth	$29,100	$69,991	$114,031

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 1751, Carpentry Work, are shown for comparison.

Ratio Analysis
	Year 1	Year 2	Year 3	Industry Profile
Sales Growth	0.00%	18.97%	15.68%	7.90%

Percent of Total Assets
Other Current Assets	0.00%	0.00%	0.00%	30.30%
Total Current Assets	61.07%	77.12%	85.39%	71.50%
Long-term Assets	38.93%	22.88%	14.61%	28.50%
Total Assets	100.00%	100.00%	100.00%	100.00%

Current Liabilities	12.41%	13.43%	11.58%	42.70%
Long-term Liabilities	50.71%	25.98%	13.20%	14.30%
Total Liabilities	63.11%	39.41%	24.78%	57.00%
Net Worth	36.89%	60.59%	75.22%	43.00%

Percent of Sales
Sales	100.00%	100.00%	100.00%	100.00%
Gross Margin	72.03%	70.27%	70.79%	31.60%
Selling, General & Administrative Expenses	61.93%	59.22%	60.50%	16.70%
Advertising Expenses	3.86%	4.05%	4.21%	0.50%
Profit Before Interest and Taxes	15.86%	16.73%	15.28%	3.40%

Main Ratios
Current	4.92	5.74	7.37	1.64
Quick	4.92	5.74	7.37	1.28
Total Debt to Total Assets	63.11%	39.41%	24.78%	57.00%
Pre-tax Return on Net Worth	154.15%	83.46%	55.17%	7.50%
Pre-tax Return on Assets	56.86%	50.57%	41.50%	17.40%

Additional Ratios	Year 1	Year 2	Year 3
Net Profit Margin	10.10%	11.05%	10.29%	n.a
Return on Equity	107.90%	58.42%	38.62%	n.a

Activity Ratios
Accounts Payable Turnover	15.87	12.17	12.17	n.a
Payment Days	27	24	28	n.a
Total Asset Turnover	3.94	3.20	2.82	n.a

Debt Ratios
Debt to Net Worth	1.71	0.65	0.33	n.a
Current Liab. to Liab.	0.20	0.34	0.47	n.a

Liquidity Ratios
Net Working Capital	$38,388	$73,567	$111,895	n.a
Interest Coverage	11.06	17.69	26.16	n.a

Additional Ratios
Assets to Sales	0.25	0.31	0.35	n.a
Current Debt/Total Assets	12%	13%	12%	n.a
Acid Test	4.92	5.74	7.37	n.a
Sales/Net Worth	10.69	5.29	3.75	n.a
Dividend Payout	0.00	0.00	0.00	n.a