McKenzie Tackle and Bait Shop
Financial Plan
The following sections will outline the important financial assumptions, break-even analysis, profit and loss, cash flow, and the balance sheet.
7.1 Break-even Analysis
The break-even analysis indicates what is needed in monthly revenue to break even.
| Break-even Analysis | |
| Monthly Revenue Break-even | $4,595 |
| Assumptions: | |
| Average Percent Variable Cost | 15% |
| Estimated Monthly Fixed Cost | $3,898 |
7.2 Projected Profit and Loss
The following table and charts will highlight projected profit and loss. The appendices include first year monthly P & L estimates.
| Pro Forma Profit and Loss | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | $56,000 | $68,000 | $79,000 |
| Direct Cost of Sales | $8,500 | $10,750 | $12,000 |
| Other Production Expenses | $0 | $0 | $0 |
| Total Cost of Sales | $8,500 | $10,750 | $12,000 |
| Gross Margin | $47,500 | $57,250 | $67,000 |
| Gross Margin % | 84.82% | 84.19% | 84.81% |
| Expenses | |||
| Payroll | $24,000 | $28,000 | $35,000 |
| Sales and Marketing and Other Expenses | $8,000 | $10,000 | $11,000 |
| Depreciation | $0 | $0 | $0 |
| Leased Equipment | $0 | $0 | $0 |
| Utilities | $1,470 | $1,800 | $1,800 |
| Insurance | $0 | $0 | $0 |
| Rent | $9,700 | $9,700 | $9,700 |
| Payroll Taxes | $3,600 | $4,200 | $5,250 |
| Other | $0 | $0 | $0 |
| Total Operating Expenses | $46,770 | $53,700 | $62,750 |
| Profit Before Interest and Taxes | $730 | $3,550 | $4,250 |
| EBITDA | $730 | $3,550 | $4,250 |
| Interest Expense | $0 | $0 | $0 |
| Taxes Incurred | $219 | $1,065 | $1,275 |
| Net Profit | $511 | $2,485 | $2,975 |
| Net Profit/Sales | 0.91% | 3.65% | 3.77% |
7.3 Projected Cash Flow
The following is the projected cash flow for three years. First year monthlies are in the appendix.
| Pro Forma Cash Flow | |||
| Year 1 | Year 2 | Year 3 | |
| Cash Received | |||
| Cash from Operations | |||
| Cash Sales | $56,000 | $68,000 | $79,000 |
| Subtotal Cash from Operations | $56,000 | $68,000 | $79,000 |
| 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 | $56,000 | $68,000 | $79,000 |
| Expenditures | Year 1 | Year 2 | Year 3 |
| Expenditures from Operations | |||
| Cash Spending | $24,000 | $28,000 | $35,000 |
| Bill Payments | $32,132 | $35,243 | $40,920 |
| Subtotal Spent on Operations | $56,132 | $63,243 | $75,920 |
| 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 | $56,132 | $63,243 | $75,920 |
| Net Cash Flow | ($132) | $4,757 | $3,080 |
| Cash Balance | $12,568 | $17,325 | $20,405 |
7.4 Projected Balance Sheet
The following is the projected balance sheet for three years. The first year monthly projections can be seen in the appendix.
| Pro Forma Balance Sheet | |||
| Year 1 | Year 2 | Year 3 | |
| Assets | |||
| Current Assets | |||
| Cash | $12,568 | $17,325 | $20,405 |
| Inventory | $1,170 | $1,480 | $1,652 |
| Other Current Assets | $0 | $0 | $0 |
| Total Current Assets | $13,738 | $18,805 | $22,057 |
| Long-term Assets | |||
| Long-term Assets | $0 | $0 | $0 |
| Accumulated Depreciation | $0 | $0 | $0 |
| Total Long-term Assets | $0 | $0 | $0 |
| Total Assets | $13,738 | $18,805 | $22,057 |
| Liabilities and Capital | Year 1 | Year 2 | Year 3 |
| Current Liabilities | |||
| Accounts Payable | $527 | $3,109 | $3,386 |
| Current Borrowing | $0 | $0 | $0 |
| Other Current Liabilities | $0 | $0 | $0 |
| Subtotal Current Liabilities | $527 | $3,109 | $3,386 |
| Long-term Liabilities | $0 | $0 | $0 |
| Total Liabilities | $527 | $3,109 | $3,386 |
| Paid-in Capital | $25,000 | $25,000 | $25,000 |
| Retained Earnings | ($12,300) | ($11,789) | ($9,304) |
| Earnings | $511 | $2,485 | $2,975 |
| Total Capital | $13,211 | $15,696 | $18,671 |
| Total Liabilities and Capital | $13,738 | $18,805 | $22,057 |
| Net Worth | $13,211 | $15,696 | $18,671 |
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 5091, Sporting & Recreational Goods, are shown for comparison.
| Ratio Analysis | ||||
| Year 1 | Year 2 | Year 3 | Industry Profile | |
| Sales Growth | 0.00% | 21.43% | 16.18% | 11.50% |
| Percent of Total Assets | ||||
| Inventory | 8.52% | 7.87% | 7.49% | 28.00% |
| Other Current Assets | 0.00% | 0.00% | 0.00% | 29.00% |
| Total Current Assets | 100.00% | 100.00% | 100.00% | 88.70% |
| Long-term Assets | 0.00% | 0.00% | 0.00% | 11.30% |
| Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
| Current Liabilities | 3.83% | 16.53% | 15.35% | 38.00% |
| Long-term Liabilities | 0.00% | 0.00% | 0.00% | 9.00% |
| Total Liabilities | 3.83% | 16.53% | 15.35% | 47.00% |
| Net Worth | 96.17% | 83.47% | 84.65% | 53.00% |
| Percent of Sales | ||||
| Sales | 100.00% | 100.00% | 100.00% | 100.00% |
| Gross Margin | 84.82% | 84.19% | 84.81% | 23.00% |
| Selling, General & Administrative Expenses | 83.91% | 80.54% | 81.04% | 14.80% |
| Advertising Expenses | 14.29% | 14.71% | 13.92% | 0.70% |
| Profit Before Interest and Taxes | 1.30% | 5.22% | 5.38% | 2.00% |
| Main Ratios | ||||
| Current | 26.08 | 6.05 | 6.51 | 2.19 |
| Quick | 23.86 | 5.57 | 6.03 | 1.22 |
| Total Debt to Total Assets | 3.83% | 16.53% | 15.35% | 47.00% |
| Pre-tax Return on Net Worth | 5.53% | 22.62% | 22.76% | 5.30% |
| Pre-tax Return on Assets | 5.31% | 18.88% | 19.27% | 10.10% |
| Additional Ratios | Year 1 | Year 2 | Year 3 | |
| Net Profit Margin | 0.91% | 3.65% | 3.77% | n.a |
| Return on Equity | 3.87% | 15.83% | 15.93% | n.a |
| Activity Ratios | ||||
| Inventory Turnover | 9.23 | 8.11 | 7.66 | n.a |
| Accounts Payable Turnover | 61.99 | 12.17 | 12.17 | n.a |
| Payment Days | 27 | 18 | 29 | n.a |
| Total Asset Turnover | 4.08 | 3.62 | 3.58 | n.a |
| Debt Ratios | ||||
| Debt to Net Worth | 0.04 | 0.20 | 0.18 | n.a |
| Current Liab. to Liab. | 1.00 | 1.00 | 1.00 | n.a |
| Liquidity Ratios | ||||
| Net Working Capital | $13,211 | $15,696 | $18,671 | n.a |
| Interest Coverage | 0.00 | 0.00 | 0.00 | n.a |
| Additional Ratios | ||||
| Assets to Sales | 0.25 | 0.28 | 0.28 | n.a |
| Current Debt/Total Assets | 4% | 17% | 15% | n.a |
| Acid Test | 23.86 | 5.57 | 6.03 | n.a |
| Sales/Net Worth | 4.24 | 4.33 | 4.23 | n.a |
| Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |
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