Electronics Repair Business Plan

Abbey Electronic Services

Financial Plan

The following is the financial plan for Abbey Electronic Services.

7.1 Break-even Analysis

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

Electronics repair business plan, financial plan chart image

Break-even Analysis


Monthly Revenue Break-even	$17,777

Assumptions:
Average Percent Variable Cost	4%
Estimated Monthly Fixed Cost	$17,002

7.2 Projected Profit and Loss

The following table and chart show projected profit and loss for three years.

Pro Forma Profit and Loss
	Year 1	Year 2	Year 3
Sales	$235,000	$252,000	$275,000
Direct Cost of Sales	$10,250	$11,700	$12,800
Other Production Expenses	$0	$0	$0
Total Cost of Sales	$10,250	$11,700	$12,800

Gross Margin	$224,750	$240,300	$262,200
Gross Margin %	95.64%	95.36%	95.35%


Expenses
Payroll	$144,000	$156,000	$174,000
Sales and Marketing and Other Expenses	$7,400	$5,400	$5,400
Depreciation	$2,220	$2,220	$2,220
Leased Equipment	$14,400	$14,400	$14,400
Utilities	$2,400	$2,400	$2,400
Insurance	$0	$0	$0
Rent	$12,000	$12,000	$12,000
Payroll Taxes	$21,600	$23,400	$26,100
Other	$0	$0	$0

Total Operating Expenses	$204,020	$215,820	$236,520

Profit Before Interest and Taxes	$20,730	$24,480	$25,680
EBITDA	$22,950	$26,700	$27,900
Interest Expense	$10,000	$10,000	$10,000
Taxes Incurred	$3,219	$4,344	$4,704

Net Profit	$7,511	$10,136	$10,976
Net Profit/Sales	3.20%	4.02%	3.99%

7.3 Projected Cash Flow

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

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

Cash from Operations
Cash Sales	$235,000	$252,000	$275,000
Subtotal Cash from Operations	$235,000	$252,000	$275,000

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	$235,000	$252,000	$275,000

Expenditures	Year 1	Year 2	Year 3

Expenditures from Operations
Cash Spending	$144,000	$156,000	$174,000
Bill Payments	$74,582	$83,456	$87,462
Subtotal Spent on Operations	$218,582	$239,456	$261,462

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	$218,582	$239,456	$261,462

Net Cash Flow	$16,418	$12,544	$13,538
Cash Balance	$25,618	$38,162	$51,700

7.4 Projected Balance Sheet

The table shows the projected balance sheet for three years.

Pro Forma Balance Sheet
	Year 1	Year 2	Year 3
Assets

Current Assets
Cash	$25,618	$38,162	$51,700
Other Current Assets	$0	$0	$0
Total Current Assets	$25,618	$38,162	$51,700

Long-term Assets
Long-term Assets	$100,000	$100,000	$100,000
Accumulated Depreciation	$2,220	$4,440	$6,660
Total Long-term Assets	$97,780	$95,560	$93,340
Total Assets	$123,398	$133,722	$145,040

Liabilities and Capital	Year 1	Year 2	Year 3

Current Liabilities
Accounts Payable	$6,687	$6,875	$7,217
Current Borrowing	$0	$0	$0
Other Current Liabilities	$0	$0	$0
Subtotal Current Liabilities	$6,687	$6,875	$7,217

Long-term Liabilities	$100,000	$100,000	$100,000
Total Liabilities	$106,687	$106,875	$107,217

Paid-in Capital	$50,000	$50,000	$50,000
Retained Earnings	($40,800)	($33,289)	($23,153)
Earnings	$7,511	$10,136	$10,976
Total Capital	$16,711	$26,847	$37,823
Total Liabilities and Capital	$123,398	$133,722	$145,040

Net Worth	$16,711	$26,847	$37,823

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 7622, Radio and Television Repair, are shown for comparison.

Ratio Analysis
	Year 1	Year 2	Year 3	Industry Profile
Sales Growth	0.00%	7.23%	9.13%	6.10%

Percent of Total Assets
Other Current Assets	0.00%	0.00%	0.00%	27.50%
Total Current Assets	20.76%	28.54%	35.65%	76.90%
Long-term Assets	79.24%	71.46%	64.35%	23.10%
Total Assets	100.00%	100.00%	100.00%	100.00%

Current Liabilities	5.42%	5.14%	4.98%	36.90%
Long-term Liabilities	81.04%	74.78%	68.95%	15.80%
Total Liabilities	86.46%	79.92%	73.92%	52.70%
Net Worth	13.54%	20.08%	26.08%	47.30%

Percent of Sales
Sales	100.00%	100.00%	100.00%	100.00%
Gross Margin	95.64%	95.36%	95.35%	0.00%
Selling, General & Administrative Expenses	92.44%	91.33%	92.26%	83.50%
Advertising Expenses	0.85%	0.00%	0.00%	0.50%
Profit Before Interest and Taxes	8.82%	9.71%	9.34%	3.10%

Main Ratios
Current	3.83	5.55	7.16	2.26
Quick	3.83	5.55	7.16	1.47
Total Debt to Total Assets	86.46%	79.92%	73.92%	52.70%
Pre-tax Return on Net Worth	64.21%	53.94%	41.46%	7.00%
Pre-tax Return on Assets	8.70%	10.83%	10.81%	14.70%

Additional Ratios	Year 1	Year 2	Year 3
Net Profit Margin	3.20%	4.02%	3.99%	n.a
Return on Equity	44.95%	37.75%	29.02%	n.a

Activity Ratios
Accounts Payable Turnover	12.15	12.17	12.17	n.a
Payment Days	27	30	29	n.a
Total Asset Turnover	1.90	1.88	1.90	n.a

Debt Ratios
Debt to Net Worth	6.38	3.98	2.83	n.a
Current Liab. to Liab.	0.06	0.06	0.07	n.a

Liquidity Ratios
Net Working Capital	$18,931	$31,287	$44,483	n.a
Interest Coverage	2.07	2.45	2.57	n.a

Additional Ratios
Assets to Sales	0.53	0.53	0.53	n.a
Current Debt/Total Assets	5%	5%	5%	n.a
Acid Test	3.83	5.55	7.16	n.a
Sales/Net Worth	14.06	9.39	7.27	n.a
Dividend Payout	0.00	0.00	0.00	n.a