The Shipping Centre
Financial Plan
The following sections will outline important financial information.
7.1 Important Assumptions
The following table highlights important assumptions.
| General Assumptions | |||
| Year 1 | Year 2 | Year 3 | |
| Plan Month | 1 | 2 | 3 |
| Current Interest Rate | 10.00% | 10.00% | 10.00% |
| Long-term Interest Rate | 10.00% | 10.00% | 10.00% |
| Tax Rate | 25.42% | 25.00% | 25.42% |
| Other | 0 | 0 | 0 |
7.2 Break-even Analysis
The Break-even Analysis indicates what The Shipping Centre must achieve in monthly sales to break even.
| Break-even Analysis | |
| Monthly Revenue Break-even | $16,314 |
| Assumptions: | |
| Average Percent Variable Cost | 42% |
| Estimated Monthly Fixed Cost | $9,418 |
7.3 Projected Profit and Loss
The following table will indicate projected profit and loss.
| Pro Forma Profit and Loss | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | $239,854 | $424,470 | $458,091 |
| Direct Cost of Sales | $101,383 | $185,217 | $200,821 |
| Other | $0 | $0 | $0 |
| Total Cost of Sales | $101,383 | $185,217 | $200,821 |
| Gross Margin | $138,471 | $239,253 | $257,270 |
| Gross Margin % | 57.73% | 56.37% | 56.16% |
| Expenses | |||
| Payroll | $66,720 | $77,400 | $80,700 |
| Sales and Marketing and Other Expenses | $3,900 | $3,900 | $3,900 |
| Depreciation | $350 | $4,200 | $4,200 |
| Leased Equipment | $0 | $0 | $0 |
| Utilities | $1,500 | $1,500 | $1,500 |
| DSL | $540 | $540 | $540 |
| Rent | $30,000 | $30,000 | $30,000 |
| Payroll Taxes | $10,008 | $11,610 | $12,105 |
| Other | $0 | $0 | $0 |
| Total Operating Expenses | $113,018 | $129,150 | $132,945 |
| Profit Before Interest and Taxes | $25,453 | $110,103 | $124,325 |
| EBITDA | $25,803 | $114,303 | $128,525 |
| Interest Expense | $0 | $0 | $0 |
| Taxes Incurred | $6,052 | $27,526 | $31,599 |
| Net Profit | $19,401 | $82,577 | $92,726 |
| Net Profit/Sales | 8.09% | 19.45% | 20.24% |
7.4 Projected Cash Flow
The following chart and table will indicate projected cash flow.
| Pro Forma Cash Flow | |||
| Year 1 | Year 2 | Year 3 | |
| Cash Received | |||
| Cash from Operations | |||
| Cash Sales | $239,854 | $424,470 | $458,091 |
| Subtotal Cash from Operations | $239,854 | $424,470 | $458,091 |
| 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 | $239,854 | $424,470 | $458,091 |
| Expenditures | Year 1 | Year 2 | Year 3 |
| Expenditures from Operations | |||
| Cash Spending | $66,720 | $77,400 | $80,700 |
| Bill Payments | $132,722 | $259,560 | $278,807 |
| Subtotal Spent on Operations | $199,442 | $336,960 | $359,507 |
| 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 | $0 | $0 | $0 |
| Dividends | $0 | $0 | $0 |
| Subtotal Cash Spent | $199,442 | $336,960 | $359,507 |
| Net Cash Flow | $40,412 | $87,510 | $98,584 |
| Cash Balance | $54,412 | $141,922 | $240,506 |
7.5 Projected Balance Sheet
The following table will indicate the projected balance sheet.
| Pro Forma Balance Sheet | |||
| Year 1 | Year 2 | Year 3 | |
| Assets | |||
| Current Assets | |||
| Cash | $54,412 | $141,922 | $240,506 |
| Other Current Assets | $0 | $0 | $0 |
| Total Current Assets | $54,412 | $141,922 | $240,506 |
| Long-term Assets | |||
| Long-term Assets | $14,200 | $14,200 | $14,200 |
| Accumulated Depreciation | $350 | $4,550 | $8,750 |
| Total Long-term Assets | $13,850 | $9,650 | $5,450 |
| Total Assets | $68,262 | $151,572 | $245,956 |
| Liabilities and Capital | Year 1 | Year 2 | Year 3 |
| Current Liabilities | |||
| Accounts Payable | $20,661 | $21,394 | $23,052 |
| Current Borrowing | $0 | $0 | $0 |
| Other Current Liabilities | $0 | $0 | $0 |
| Subtotal Current Liabilities | $20,661 | $21,394 | $23,052 |
| Long-term Liabilities | $0 | $0 | $0 |
| Total Liabilities | $20,661 | $21,394 | $23,052 |
| Paid-in Capital | $30,000 | $30,000 | $30,000 |
| Retained Earnings | ($1,800) | $17,601 | $100,178 |
| Earnings | $19,401 | $82,577 | $92,726 |
| Total Capital | $47,601 | $130,178 | $222,904 |
| Total Liabilities and Capital | $68,262 | $151,572 | $245,956 |
| Net Worth | $47,601 | $130,178 | $222,904 |
7.6 Business Ratios
The following table compares the standard business ratios for the Private Mail Centers industry, NAICS code 561431 against the ratios calculated for the financial forecasts of this plan.
| Ratio Analysis | ||||
| Year 1 | Year 2 | Year 3 | Industry Profile | |
| Sales Growth | 0.00% | 76.97% | 7.92% | 10.93% |
| Percent of Total Assets | ||||
| Other Current Assets | 0.00% | 0.00% | 0.00% | 46.15% |
| Total Current Assets | 79.71% | 93.63% | 97.78% | 76.67% |
| Long-term Assets | 20.29% | 6.37% | 2.22% | 23.33% |
| Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
| Current Liabilities | 30.27% | 14.11% | 9.37% | 40.41% |
| Long-term Liabilities | 0.00% | 0.00% | 0.00% | 17.31% |
| Total Liabilities | 30.27% | 14.11% | 9.37% | 57.72% |
| Net Worth | 69.73% | 85.89% | 90.63% | 42.28% |
| Percent of Sales | ||||
| Sales | 100.00% | 100.00% | 100.00% | 100.00% |
| Gross Margin | 57.73% | 56.37% | 56.16% | 100.00% |
| Selling, General & Administrative Expenses | 59.50% | 41.48% | 40.04% | 76.26% |
| Advertising Expenses | 0.50% | 0.28% | 0.26% | 2.58% |
| Profit Before Interest and Taxes | 10.61% | 25.94% | 27.14% | 1.39% |
| Main Ratios | ||||
| Current | 2.63 | 6.63 | 10.43 | 1.42 |
| Quick | 2.63 | 6.63 | 10.43 | 1.14 |
| Total Debt to Total Assets | 30.27% | 14.11% | 9.37% | 67.09% |
| Pre-tax Return on Net Worth | 53.47% | 84.58% | 55.78% | 3.47% |
| Pre-tax Return on Assets | 37.29% | 72.64% | 50.55% | 10.56% |
| Additional Ratios | Year 1 | Year 2 | Year 3 | |
| Net Profit Margin | 8.09% | 19.45% | 20.24% | n.a |
| Return on Equity | 40.76% | 63.43% | 41.60% | n.a |
| Activity Ratios | ||||
| Accounts Payable Turnover | 7.42 | 12.17 | 12.17 | n.a |
| Payment Days | 27 | 29 | 29 | n.a |
| Total Asset Turnover | 3.51 | 2.80 | 1.86 | n.a |
| Debt Ratios | ||||
| Debt to Net Worth | 0.43 | 0.16 | 0.10 | n.a |
| Current Liab. to Liab. | 1.00 | 1.00 | 1.00 | n.a |
| Liquidity Ratios | ||||
| Net Working Capital | $33,751 | $120,528 | $217,454 | n.a |
| Interest Coverage | 0.00 | 0.00 | 0.00 | n.a |
| Additional Ratios | ||||
| Assets to Sales | 0.28 | 0.36 | 0.54 | n.a |
| Current Debt/Total Assets | 30% | 14% | 9% | n.a |
| Acid Test | 2.63 | 6.63 | 10.43 | n.a |
| Sales/Net Worth | 5.04 | 3.26 | 2.06 | n.a |
| Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |
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