The following subsections outline the financial plan for Markam Driving School.
The company's Break-even Analysis is based on the company's running costs, including payroll, and its present fixed costs, not including the expenses associated with the firm's planned expansion.
Break-even Analysis | |
Monthly Revenue Break-even | $74,087 |
Assumptions: | |
Average Percent Variable Cost | 40% |
Estimated Monthly Fixed Cost | $44,452 |
The following table is the projected Profit and Loss statement for Markam.
Pro Forma Profit and Loss | |||
2002 | 2003 | 2004 | |
Sales | $1,004,038 | $1,108,401 | $1,242,325 |
Direct Cost of Sales | $401,615 | $387,940 | $422,390 |
Other Production Expenses | $0 | $0 | $0 |
Total Cost of Sales | $401,615 | $387,940 | $422,390 |
Gross Margin | $602,423 | $720,460 | $819,934 |
Gross Margin % | 60.00% | 65.00% | 66.00% |
Expenses | |||
Payroll | $335,500 | $458,000 | $528,000 |
Sales and Marketing and Other Expenses | $52,000 | $58,000 | $66,000 |
Depreciation | $3,200 | $5,000 | $5,000 |
Leased Equipment | $22,000 | $16,000 | $10,000 |
Utilities | $4,600 | $8,000 | $8,000 |
Insurance | $13,800 | $14,400 | $14,400 |
Rent | $52,000 | $72,000 | $72,000 |
Payroll Taxes | $50,325 | $68,700 | $79,200 |
Other | $0 | $0 | $0 |
Total Operating Expenses | $533,425 | $700,100 | $782,600 |
Profit Before Interest and Taxes | $68,998 | $20,360 | $37,334 |
EBITDA | $72,198 | $25,360 | $42,334 |
Interest Expense | $1,975 | $1,400 | $800 |
Taxes Incurred | $20,107 | $5,688 | $10,960 |
Net Profit | $46,916 | $13,272 | $25,574 |
Net Profit/Sales | 4.67% | 1.20% | 2.06% |
The following table and chart show the projected cash flow and cash balance figures for Markam Driving School.
Pro Forma Cash Flow | |||
2002 | 2003 | 2004 | |
Cash Received | |||
Cash from Operations | |||
Cash Sales | $1,004,038 | $1,108,401 | $1,242,325 |
Subtotal Cash from Operations | $1,004,038 | $1,108,401 | $1,242,325 |
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 | $1,004,038 | $1,108,401 | $1,242,325 |
Expenditures | 2002 | 2003 | 2004 |
Expenditures from Operations | |||
Cash Spending | $335,500 | $458,000 | $528,000 |
Bill Payments | $554,858 | $647,453 | $679,508 |
Subtotal Spent on Operations | $890,358 | $1,105,453 | $1,207,508 |
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 | $6,000 | $6,000 | $6,000 |
Purchase Other Current Assets | $0 | $0 | $0 |
Purchase Long-term Assets | $0 | $0 | $0 |
Dividends | $0 | $40,000 | $40,000 |
Subtotal Cash Spent | $896,358 | $1,151,453 | $1,253,508 |
Net Cash Flow | $107,680 | ($43,052) | ($11,183) |
Cash Balance | $120,618 | $77,566 | $66,383 |
The following table contains the projected balance sheet.
Pro Forma Balance Sheet | |||
2002 | 2003 | 2004 | |
Assets | |||
Current Assets | |||
Cash | $120,618 | $77,566 | $66,383 |
Other Current Assets | $2,000 | $2,000 | $2,000 |
Total Current Assets | $122,618 | $79,566 | $68,383 |
Long-term Assets | |||
Long-term Assets | $74,000 | $74,000 | $74,000 |
Accumulated Depreciation | $15,200 | $20,200 | $25,200 |
Total Long-term Assets | $58,800 | $53,800 | $48,800 |
Total Assets | $181,418 | $133,366 | $117,183 |
Liabilities and Capital | 2002 | 2003 | 2004 |
Current Liabilities | |||
Accounts Payable | $67,280 | $51,956 | $56,199 |
Current Borrowing | $0 | $0 | $0 |
Other Current Liabilities | $0 | $0 | $0 |
Subtotal Current Liabilities | $67,280 | $51,956 | $56,199 |
Long-term Liabilities | $17,000 | $11,000 | $5,000 |
Total Liabilities | $84,280 | $62,956 | $61,199 |
Paid-in Capital | $30,000 | $30,000 | $30,000 |
Retained Earnings | $20,222 | $27,138 | $410 |
Earnings | $46,916 | $13,272 | $25,574 |
Total Capital | $97,138 | $70,410 | $55,984 |
Total Liabilities and Capital | $181,418 | $133,366 | $117,183 |
Net Worth | $97,138 | $70,410 | $55,984 |
The industry business ratios given in the table are those for vocational schools based on the Standard Industrial Classification (SIC) code 8299. Most of the ratios are similar to our own. The only major difference between our company and others is our reliance on long-term assets. This is due to having the majority of our investment in a fleet of cars. Overall the ratios reflect a healthy and growing company with few danger signs.
Ratio Analysis | ||||
2002 | 2003 | 2004 | Industry Profile | |
Sales Growth | 34.59% | 10.39% | 12.08% | 9.50% |
Percent of Total Assets | ||||
Other Current Assets | 1.10% | 1.50% | 1.71% | 44.20% |
Total Current Assets | 67.59% | 59.66% | 58.36% | 70.80% |
Long-term Assets | 32.41% | 40.34% | 41.64% | 29.20% |
Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
Current Liabilities | 37.09% | 38.96% | 47.96% | 52.10% |
Long-term Liabilities | 9.37% | 8.25% | 4.27% | 12.40% |
Total Liabilities | 46.46% | 47.21% | 52.22% | 64.50% |
Net Worth | 53.54% | 52.79% | 47.78% | 35.50% |
Percent of Sales | ||||
Sales | 100.00% | 100.00% | 100.00% | 100.00% |
Gross Margin | 60.00% | 65.00% | 66.00% | n.a |
Selling, General & Administrative Expenses | 55.33% | 63.80% | 63.94% | 74.00% |
Advertising Expenses | 1.54% | 2.26% | 2.82% | 4.60% |
Profit Before Interest and Taxes | 6.87% | 1.84% | 3.01% | 2.40% |
Main Ratios | ||||
Current | 1.82 | 1.53 | 1.22 | 1.30 |
Quick | 1.82 | 1.53 | 1.22 | 1.08 |
Total Debt to Total Assets | 46.46% | 47.21% | 52.22% | 64.50% |
Pre-tax Return on Net Worth | 69.00% | 26.93% | 65.26% | 4.60% |
Pre-tax Return on Assets | 36.94% | 14.22% | 31.18% | 13.00% |
Additional Ratios | 2002 | 2003 | 2004 | |
Net Profit Margin | 4.67% | 1.20% | 2.06% | n.a |
Return on Equity | 48.30% | 18.85% | 45.68% | n.a |
Activity Ratios | ||||
Accounts Payable Turnover | 9.19 | 12.17 | 12.17 | n.a |
Payment Days | 27 | 34 | 29 | n.a |
Total Asset Turnover | 5.53 | 8.31 | 10.60 | n.a |
Debt Ratios | ||||
Debt to Net Worth | 0.87 | 0.89 | 1.09 | n.a |
Current Liab. to Liab. | 0.80 | 0.83 | 0.92 | n.a |
Liquidity Ratios | ||||
Net Working Capital | $55,338 | $27,610 | $12,184 | n.a |
Interest Coverage | 34.94 | 14.54 | 46.67 | n.a |
Additional Ratios | ||||
Assets to Sales | 0.18 | 0.12 | 0.09 | n.a |
Current Debt/Total Assets | 37% | 39% | 48% | n.a |
Acid Test | 1.82 | 1.53 | 1.22 | n.a |
Sales/Net Worth | 10.34 | 15.74 | 22.19 | n.a |
Dividend Payout | 0.00 | 3.01 | 1.56 | n.a |
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Break-even Analysis | |
Monthly Revenue Break-even | $74,087 |
Assumptions: | |
Average Percent Variable Cost | 40% |
Estimated Monthly Fixed Cost | $44,452 |
Pro Forma Profit and Loss | |||
2002 | 2003 | 2004 | |
Sales | $1,004,038 | $1,108,401 | $1,242,325 |
Direct Cost of Sales | $401,615 | $387,940 | $422,390 |
Other Production Expenses | $0 | $0 | $0 |
Total Cost of Sales | $401,615 | $387,940 | $422,390 |
Gross Margin | $602,423 | $720,460 | $819,934 |
Gross Margin % | 60.00% | 65.00% | 66.00% |
Expenses | |||
Payroll | $335,500 | $458,000 | $528,000 |
Sales and Marketing and Other Expenses | $52,000 | $58,000 | $66,000 |
Depreciation | $3,200 | $5,000 | $5,000 |
Leased Equipment | $22,000 | $16,000 | $10,000 |
Utilities | $4,600 | $8,000 | $8,000 |
Insurance | $13,800 | $14,400 | $14,400 |
Rent | $52,000 | $72,000 | $72,000 |
Payroll Taxes | $50,325 | $68,700 | $79,200 |
Other | $0 | $0 | $0 |
Total Operating Expenses | $533,425 | $700,100 | $782,600 |
Profit Before Interest and Taxes | $68,998 | $20,360 | $37,334 |
EBITDA | $72,198 | $25,360 | $42,334 |
Interest Expense | $1,975 | $1,400 | $800 |
Taxes Incurred | $20,107 | $5,688 | $10,960 |
Net Profit | $46,916 | $13,272 | $25,574 |
Net Profit/Sales | 4.67% | 1.20% | 2.06% |
Pro Forma Cash Flow | |||
2002 | 2003 | 2004 | |
Cash Received | |||
Cash from Operations | |||
Cash Sales | $1,004,038 | $1,108,401 | $1,242,325 |
Subtotal Cash from Operations | $1,004,038 | $1,108,401 | $1,242,325 |
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 | $1,004,038 | $1,108,401 | $1,242,325 |
Expenditures | 2002 | 2003 | 2004 |
Expenditures from Operations | |||
Cash Spending | $335,500 | $458,000 | $528,000 |
Bill Payments | $554,858 | $647,453 | $679,508 |
Subtotal Spent on Operations | $890,358 | $1,105,453 | $1,207,508 |
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 | $6,000 | $6,000 | $6,000 |
Purchase Other Current Assets | $0 | $0 | $0 |
Purchase Long-term Assets | $0 | $0 | $0 |
Dividends | $0 | $40,000 | $40,000 |
Subtotal Cash Spent | $896,358 | $1,151,453 | $1,253,508 |
Net Cash Flow | $107,680 | ($43,052) | ($11,183) |
Cash Balance | $120,618 | $77,566 | $66,383 |
Pro Forma Balance Sheet | |||
2002 | 2003 | 2004 | |
Assets | |||
Current Assets | |||
Cash | $120,618 | $77,566 | $66,383 |
Other Current Assets | $2,000 | $2,000 | $2,000 |
Total Current Assets | $122,618 | $79,566 | $68,383 |
Long-term Assets | |||
Long-term Assets | $74,000 | $74,000 | $74,000 |
Accumulated Depreciation | $15,200 | $20,200 | $25,200 |
Total Long-term Assets | $58,800 | $53,800 | $48,800 |
Total Assets | $181,418 | $133,366 | $117,183 |
Liabilities and Capital | 2002 | 2003 | 2004 |
Current Liabilities | |||
Accounts Payable | $67,280 | $51,956 | $56,199 |
Current Borrowing | $0 | $0 | $0 |
Other Current Liabilities | $0 | $0 | $0 |
Subtotal Current Liabilities | $67,280 | $51,956 | $56,199 |
Long-term Liabilities | $17,000 | $11,000 | $5,000 |
Total Liabilities | $84,280 | $62,956 | $61,199 |
Paid-in Capital | $30,000 | $30,000 | $30,000 |
Retained Earnings | $20,222 | $27,138 | $410 |
Earnings | $46,916 | $13,272 | $25,574 |
Total Capital | $97,138 | $70,410 | $55,984 |
Total Liabilities and Capital | $181,418 | $133,366 | $117,183 |
Net Worth | $97,138 | $70,410 | $55,984 |
Ratio Analysis | ||||
2002 | 2003 | 2004 | Industry Profile | |
Sales Growth | 34.59% | 10.39% | 12.08% | 9.50% |
Percent of Total Assets | ||||
Other Current Assets | 1.10% | 1.50% | 1.71% | 44.20% |
Total Current Assets | 67.59% | 59.66% | 58.36% | 70.80% |
Long-term Assets | 32.41% | 40.34% | 41.64% | 29.20% |
Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
Current Liabilities | 37.09% | 38.96% | 47.96% | 52.10% |
Long-term Liabilities | 9.37% | 8.25% | 4.27% | 12.40% |
Total Liabilities | 46.46% | 47.21% | 52.22% | 64.50% |
Net Worth | 53.54% | 52.79% | 47.78% | 35.50% |
Percent of Sales | ||||
Sales | 100.00% | 100.00% | 100.00% | 100.00% |
Gross Margin | 60.00% | 65.00% | 66.00% | n.a |
Selling, General & Administrative Expenses | 55.33% | 63.80% | 63.94% | 74.00% |
Advertising Expenses | 1.54% | 2.26% | 2.82% | 4.60% |
Profit Before Interest and Taxes | 6.87% | 1.84% | 3.01% | 2.40% |
Main Ratios | ||||
Current | 1.82 | 1.53 | 1.22 | 1.30 |
Quick | 1.82 | 1.53 | 1.22 | 1.08 |
Total Debt to Total Assets | 46.46% | 47.21% | 52.22% | 64.50% |
Pre-tax Return on Net Worth | 69.00% | 26.93% | 65.26% | 4.60% |
Pre-tax Return on Assets | 36.94% | 14.22% | 31.18% | 13.00% |
Additional Ratios | 2002 | 2003 | 2004 | |
Net Profit Margin | 4.67% | 1.20% | 2.06% | n.a |
Return on Equity | 48.30% | 18.85% | 45.68% | n.a |
Activity Ratios | ||||
Accounts Payable Turnover | 9.19 | 12.17 | 12.17 | n.a |
Payment Days | 27 | 34 | 29 | n.a |
Total Asset Turnover | 5.53 | 8.31 | 10.60 | n.a |
Debt Ratios | ||||
Debt to Net Worth | 0.87 | 0.89 | 1.09 | n.a |
Current Liab. to Liab. | 0.80 | 0.83 | 0.92 | n.a |
Liquidity Ratios | ||||
Net Working Capital | $55,338 | $27,610 | $12,184 | n.a |
Interest Coverage | 34.94 | 14.54 | 46.67 | n.a |
Additional Ratios | ||||
Assets to Sales | 0.18 | 0.12 | 0.09 | n.a |
Current Debt/Total Assets | 37% | 39% | 48% | n.a |
Acid Test | 1.82 | 1.53 | 1.22 | n.a |
Sales/Net Worth | 10.34 | 15.74 | 22.19 | n.a |
Dividend Payout | 0.00 | 3.01 | 1.56 | n.a |
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