Curriculum Companion Suites
Financial Plan
CCS expects to raise its own capital, and to acquire a guaranteed the SBA 10-year loan. This provides the bulk of the current financing required.
7.1 Break-even Analysis
CCS’s Break-even Analysis is based on the average of the first-year figures for total sales by units, and by operating expenses. These are presented as per-unit revenue, per-unit cost, and fixed costs. These conservative assumptions make for a more accurate estimate of real risk.
| Break-even Analysis | |
| Monthly Units Break-even | 27 |
| Monthly Revenue Break-even | $466,023 |
| Assumptions: | |
| Average Per-Unit Revenue | $17,000.00 |
| Average Per-Unit Variable Cost | $5,200.00 |
| Estimated Monthly Fixed Cost | $323,475 |
7.2 Projected Profit and Loss
The projected Profit and Loss for CCS is presented in the accompanying table. The three yearly totals are shown here, with year one monthlies in the appendix.
| Pro Forma Profit and Loss | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | $10,200,000 | $11,730,000 | $13,489,500 |
| Direct Cost of Sales | $3,120,000 | $3,588,000 | $4,126,200 |
| Other | $0 | $0 | $0 |
| Total Cost of Sales | $3,120,000 | $3,588,000 | $4,126,200 |
| Gross Margin | $7,080,000 | $8,142,000 | $9,363,300 |
| Gross Margin % | 69.41% | 69.41% | 69.41% |
| Expenses | |||
| Payroll | $3,270,000 | $3,433,500 | $3,605,175 |
| Sales and Marketing and Other Expenses | $96,000 | $150,000 | $265,000 |
| Depreciation | $24,000 | $27,600 | $31,740 |
| Utilities | $1,200 | $1,500 | $1,700 |
| Payroll Taxes | $490,500 | $515,025 | $540,776 |
| Other | $0 | $0 | $0 |
| Total Operating Expenses | $3,881,700 | $4,127,625 | $4,444,391 |
| Profit Before Interest and Taxes | $3,198,300 | $4,014,375 | $4,918,909 |
| EBITDA | $3,222,300 | $4,041,975 | $4,950,649 |
| Interest Expense | $18,700 | $16,400 | $14,000 |
| Taxes Incurred | $808,144 | $999,494 | $1,246,664 |
| Net Profit | $2,371,456 | $2,998,481 | $3,658,244 |
| Net Profit/Sales | 23.25% | 25.56% | 27.12% |
7.3 Projected Cash Flow
The cash flow projection shows that provisions for ongoing expenses are adequate to meet CCS’s needs as the business generates cash flow sufficient to support operations.
| Pro Forma Cash Flow | |||
| Year 1 | Year 2 | Year 3 | |
| Cash Received | |||
| Cash from Operations | |||
| Cash Sales | $3,468,000 | $3,988,200 | $4,586,430 |
| Cash from Receivables | $5,628,700 | $7,576,305 | $8,712,751 |
| Subtotal Cash from Operations | $9,096,700 | $11,564,505 | $13,299,181 |
| 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 | $190,000 | $0 | $0 |
| Subtotal Cash Received | $9,286,700 | $11,564,505 | $13,299,181 |
| Expenditures | Year 1 | Year 2 | Year 3 |
| Expenditures from Operations | |||
| Cash Spending | $3,270,000 | $3,433,500 | $3,605,175 |
| Bill Payments | $4,171,394 | $5,201,383 | $6,118,402 |
| Subtotal Spent on Operations | $7,441,394 | $8,634,883 | $9,723,577 |
| Additional Cash Spent | |||
| Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 |
| Principal Repayment of Current Borrowing | $12,000 | $12,000 | $12,000 |
| Other Liabilities Principal Repayment | $0 | $0 | $0 |
| Long-term Liabilities Principal Repayment | $12,000 | $12,000 | $12,000 |
| Purchase Other Current Assets | $0 | $0 | $0 |
| Purchase Long-term Assets | $135,000 | $225,000 | $295,000 |
| Dividends | $0 | $0 | $0 |
| Subtotal Cash Spent | $7,600,394 | $8,883,883 | $10,042,577 |
| Net Cash Flow | $1,686,306 | $2,680,622 | $3,256,604 |
| Cash Balance | $1,866,306 | $4,546,928 | $7,803,532 |
7.4 Projected Balance Sheet
Following is the projected Balance Sheet for CCS. Again, three years of annuals are shown below, with first year monthlies in the appendix.
| Pro Forma Balance Sheet | |||
| Year 1 | Year 2 | Year 3 | |
| Assets | |||
| Current Assets | |||
| Cash | $1,866,306 | $4,546,928 | $7,803,532 |
| Accounts Receivable | $1,103,300 | $1,268,795 | $1,459,114 |
| Other Current Assets | $75,000 | $75,000 | $75,000 |
| Total Current Assets | $3,044,606 | $5,890,723 | $9,337,646 |
| Long-term Assets | |||
| Long-term Assets | $235,000 | $460,000 | $755,000 |
| Accumulated Depreciation | $24,000 | $51,600 | $83,340 |
| Total Long-term Assets | $211,000 | $408,400 | $671,660 |
| Total Assets | $3,255,606 | $6,299,123 | $10,009,306 |
| Liabilities and Capital | Year 1 | Year 2 | Year 3 |
| Current Liabilities | |||
| Accounts Payable | $364,149 | $433,185 | $509,124 |
| Current Borrowing | $38,000 | $26,000 | $14,000 |
| Other Current Liabilities | $0 | $0 | $0 |
| Subtotal Current Liabilities | $402,149 | $459,185 | $523,124 |
| Long-term Liabilities | $138,000 | $126,000 | $114,000 |
| Total Liabilities | $540,149 | $585,185 | $637,124 |
| Paid-in Capital | $368,000 | $368,000 | $368,000 |
| Retained Earnings | ($24,000) | $2,347,456 | $5,345,938 |
| Earnings | $2,371,456 | $2,998,481 | $3,658,244 |
| Total Capital | $2,715,456 | $5,713,938 | $9,372,182 |
| Total Liabilities and Capital | $3,255,606 | $6,299,123 | $10,009,306 |
| Net Worth | $2,715,456 | $5,713,938 | $9,372,182 |
7.5 Business Ratios
The following table represents business ratios for the educational support software industry. These numbers are determined by the Standard Industry Classification (SIC) Index code 7372, Software Publishing Prepackaged.
| Ratio Analysis | ||||
| Year 1 | Year 2 | Year 3 | Industry Profile | |
| Sales Growth | 0.00% | 15.00% | 15.00% | 9.70% |
| Percent of Total Assets | ||||
| Accounts Receivable | 33.89% | 20.14% | 14.58% | 21.50% |
| Other Current Assets | 2.30% | 1.19% | 0.75% | 45.70% |
| Total Current Assets | 93.52% | 93.52% | 93.29% | 70.20% |
| Long-term Assets | 6.48% | 6.48% | 6.71% | 29.80% |
| Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
| Current Liabilities | 12.35% | 7.29% | 5.23% | 42.40% |
| Long-term Liabilities | 4.24% | 2.00% | 1.14% | 19.20% |
| Total Liabilities | 16.59% | 9.29% | 6.37% | 61.60% |
| Net Worth | 83.41% | 90.71% | 93.63% | 38.40% |
| Percent of Sales | ||||
| Sales | 100.00% | 100.00% | 100.00% | 100.00% |
| Gross Margin | 69.41% | 69.41% | 69.41% | 100.00% |
| Selling, General & Administrative Expenses | 46.04% | 43.87% | 42.17% | 79.40% |
| Advertising Expenses | 0.59% | 0.85% | 1.48% | 1.30% |
| Profit Before Interest and Taxes | 31.36% | 34.22% | 36.46% | 2.20% |
| Main Ratios | ||||
| Current | 7.57 | 12.83 | 17.85 | 1.51 |
| Quick | 7.57 | 12.83 | 17.85 | 1.16 |
| Total Debt to Total Assets | 16.59% | 9.29% | 6.37% | 61.60% |
| Pre-tax Return on Net Worth | 117.09% | 69.97% | 52.33% | 3.50% |
| Pre-tax Return on Assets | 97.67% | 63.47% | 49.00% | 9.20% |
| Additional Ratios | Year 1 | Year 2 | Year 3 | |
| Net Profit Margin | 23.25% | 25.56% | 27.12% | n.a |
| Return on Equity | 87.33% | 52.48% | 39.03% | n.a |
| Activity Ratios | ||||
| Accounts Receivable Turnover | 6.10 | 6.10 | 6.10 | n.a |
| Collection Days | 57 | 56 | 56 | n.a |
| Accounts Payable Turnover | 12.45 | 12.17 | 12.17 | n.a |
| Payment Days | 27 | 28 | 28 | n.a |
| Total Asset Turnover | 3.13 | 1.86 | 1.35 | n.a |
| Debt Ratios | ||||
| Debt to Net Worth | 0.20 | 0.10 | 0.07 | n.a |
| Current Liab. to Liab. | 0.74 | 0.78 | 0.82 | n.a |
| Liquidity Ratios | ||||
| Net Working Capital | $2,642,456 | $5,431,538 | $8,814,522 | n.a |
| Interest Coverage | 171.03 | 244.78 | 351.35 | n.a |
| Additional Ratios | ||||
| Assets to Sales | 0.32 | 0.54 | 0.74 | n.a |
| Current Debt/Total Assets | 12% | 7% | 5% | n.a |
| Acid Test | 4.83 | 10.07 | 15.06 | n.a |
| Sales/Net Worth | 3.76 | 2.05 | 1.44 | n.a |
| Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |
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