Poppi Designs
Financial Plan
It is assumed that the owner’s private resources will be sufficient to finance any monthly cash-flow shortage. However, it would be advisable to establish a bank relationship as soon as possible. Sales could very well increase at a much sharper rate than assumed in these conservative projections. Sharper sales will result in a greater need for funds in support of inventory and receivables. An over-draft line of credit of $15,000-20,000 would be an excellent cushion to fall back on.
7.1 Important Assumptions
Payroll burden is calculated at 12.65% made up of 7.65% social security, 2% unemployment, and 3% worker’s compensation. Payables are assumed to reach levels equal to one month’s operating expenses. Accounts receivable are assumed to be 45 days, although sales terms are net 30 and some sales require some payment in advance.
Inventory turnover reflects the fact that containers carrying 200 chairs (400 if a 40 ft. container) cause peaks and valleys in inventory. Inventory levels have been calculated monthly by deducting that month’s projected sales and adding inventory of new stocks when sales projections indicate a new container filled with chairs should arrive to prevent a stock-out.
General Assumptions | |||
FY 1999 | FY 2000 | FY 2001 | |
Plan Month | 1 | 2 | 3 |
Current Interest Rate | 0.00% | 0.00% | 0.00% |
Long-term Interest Rate | 0.00% | 0.00% | 0.00% |
Tax Rate | 25.42% | 25.00% | 25.42% |
Other | 0 | 0 | 0 |
7.2 Key Financial Indicators
The following chart outlines our key financial indicators for fiscal years 1996-2001.

7.3 Break-even Analysis
Our break-even analysis is summarized by the following chart and table.

Break-even Analysis | |
Monthly Revenue Break-even | $9,979 |
Assumptions: | |
Average Percent Variable Cost | 40% |
Estimated Monthly Fixed Cost | $5,987 |
7.4 Projected Profit and Loss
There are many factors to include when determining a projected profit and loss statement, these are included in the following table.




Pro Forma Profit and Loss | |||
FY 1999 | FY 2000 | FY 2001 | |
Sales | $139,320 | $185,760 | $232,200 |
Direct Cost of Sales | $55,728 | $74,304 | $92,880 |
Other | $0 | $0 | $0 |
Total Cost of Sales | $55,728 | $74,304 | $92,880 |
Gross Margin | $83,592 | $111,456 | $139,320 |
Gross Margin % | 60.00% | 60.00% | 60.00% |
Expenses | |||
Payroll | $43,992 | $54,000 | $59,000 |
Sales and Marketing and Other Expenses | $17,320 | $17,320 | $17,320 |
Depreciation | $0 | $0 | $0 |
Leased Equipment | $0 | $0 | $0 |
Utilities (Telephone) | $6,000 | $6,000 | $6,000 |
Insurance (Liability/Fire) | $1,500 | $1,500 | $1,500 |
Rent (Warehouse) | $0 | $4,800 | $4,800 |
Payroll Taxes | $3,036 | $6,199 | $7,464 |
Agent Commission | $0 | $0 | $0 |
Other | $0 | $0 | $0 |
Total Operating Expenses | $71,848 | $89,819 | $96,084 |
Profit Before Interest and Taxes | $11,744 | $21,638 | $43,237 |
EBITDA | $11,744 | $21,638 | $43,237 |
Interest Expense | $0 | $0 | $0 |
Taxes Incurred | $2,786 | $5,409 | $10,989 |
Net Profit | $8,958 | $16,228 | $32,247 |
Net Profit/Sales | 6.43% | 8.74% | 13.89% |
7.5 Projected Cash Flow
Our projected cash flow is outlined in the following chart and table.

Pro Forma Cash Flow | |||
FY 1999 | FY 2000 | FY 2001 | |
Cash Received | |||
Cash from Operations | |||
Cash Sales | $0 | $0 | $0 |
Cash from Receivables | $128,486 | $178,949 | $225,389 |
Subtotal Cash from Operations | $128,486 | $178,949 | $225,389 |
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 | $5,000 | $0 | $0 |
Sales of Other Current Assets | $21,000 | $0 | $0 |
Sales of Long-term Assets | $0 | $0 | $0 |
New Investment Received | $0 | $0 | $0 |
Subtotal Cash Received | $154,486 | $178,949 | $225,389 |
Expenditures | FY 1999 | FY 2000 | FY 2001 |
Expenditures from Operations | |||
Cash Spending | $43,992 | $54,000 | $59,000 |
Bill Payments | $76,502 | $116,146 | $140,907 |
Subtotal Spent on Operations | $120,494 | $170,146 | $199,907 |
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 | $12,000 | $12,000 | $12,000 |
Purchase Other Current Assets | $0 | $0 | $0 |
Purchase Long-term Assets | $0 | $0 | $0 |
Dividends | $0 | $0 | $0 |
Subtotal Cash Spent | $132,494 | $182,146 | $211,907 |
Net Cash Flow | $21,992 | ($3,197) | $13,482 |
Cash Balance | $34,992 | $31,795 | $45,277 |
7.6 Projected Balance Sheet
The table below outlines the projected balance sheet.
Pro Forma Balance Sheet | |||
FY 1999 | FY 2000 | FY 2001 | |
Assets | |||
Current Assets | |||
Cash | $34,992 | $31,795 | $45,277 |
Accounts Receivable | $20,434 | $27,245 | $34,056 |
Inventory | $6,130 | $8,173 | $10,217 |
Other Current Assets | $0 | $0 | $0 |
Total Current Assets | $61,556 | $67,213 | $89,550 |
Long-term Assets | |||
Long-term Assets | $3,000 | $3,000 | $3,000 |
Accumulated Depreciation | $3,000 | $3,000 | $3,000 |
Total Long-term Assets | $0 | $0 | $0 |
Total Assets | $61,556 | $67,213 | $89,550 |
Liabilities and Capital | FY 1999 | FY 2000 | FY 2001 |
Current Liabilities | |||
Accounts Payable | $8,234 | $9,664 | $11,753 |
Current Borrowing | $0 | $0 | $0 |
Other Current Liabilities | $15,000 | $15,000 | $15,000 |
Subtotal Current Liabilities | $23,234 | $24,664 | $26,753 |
Long-term Liabilities | $173,000 | $161,000 | $149,000 |
Total Liabilities | $196,234 | $185,664 | $175,753 |
Paid-in Capital | $10,000 | $10,000 | $10,000 |
Retained Earnings | ($153,636) | ($144,678) | ($128,450) |
Earnings | $8,958 | $16,228 | $32,247 |
Total Capital | ($134,678) | ($118,450) | ($86,203) |
Total Liabilities and Capital | $61,556 | $67,213 | $89,550 |
Net Worth | ($134,678) | ($118,450) | ($86,203) |
7.7 Business Ratios
Poppi’s ratios can be seen in the table below. NAICS code 423210, Furniture Merchant Wholesalers, was used for Industry Profile comparisons.
Ratio Analysis | ||||
FY 1999 | FY 2000 | FY 2001 | Industry Profile | |
Sales Growth | 16.10% | 33.33% | 25.00% | 6.12% |
Percent of Total Assets | ||||
Accounts Receivable | 33.20% | 40.53% | 38.03% | 26.55% |
Inventory | 9.96% | 12.16% | 11.41% | 40.47% |
Other Current Assets | 0.00% | 0.00% | 0.00% | 20.71% |
Total Current Assets | 100.00% | 100.00% | 100.00% | 87.73% |
Long-term Assets | 0.00% | 0.00% | 0.00% | 12.27% |
Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
Current Liabilities | 37.75% | 36.69% | 29.88% | 35.88% |
Long-term Liabilities | 281.04% | 239.54% | 166.39% | 10.04% |
Total Liabilities | 318.79% | 276.23% | 196.26% | 45.92% |
Net Worth | -218.79% | -176.23% | -96.26% | 54.08% |
Percent of Sales | ||||
Sales | 100.00% | 100.00% | 100.00% | 100.00% |
Gross Margin | 60.00% | 60.00% | 60.00% | 13.68% |
Selling, General & Administrative Expenses | 40.25% | 46.58% | 43.37% | 5.84% |
Advertising Expenses | 4.31% | 3.23% | 2.58% | 0.69% |
Profit Before Interest and Taxes | 8.43% | 11.65% | 18.62% | 1.61% |
Main Ratios | ||||
Current | 2.65 | 2.73 | 3.35 | 2.22 |
Quick | 2.39 | 2.39 | 2.97 | 0.98 |
Total Debt to Total Assets | 318.79% | 276.23% | 196.26% | 50.20% |
Pre-tax Return on Net Worth | -8.72% | -18.27% | -50.16% | 5.00% |
Pre-tax Return on Assets | 19.08% | 32.19% | 48.28% | 10.03% |
Additional Ratios | FY 1999 | FY 2000 | FY 2001 | |
Net Profit Margin | 6.43% | 8.74% | 13.89% | n.a |
Return on Equity | 0.00% | 0.00% | 0.00% | n.a |
Activity Ratios | ||||
Accounts Receivable Turnover | 6.82 | 6.82 | 6.82 | n.a |
Collection Days | 44 | 47 | 48 | n.a |
Inventory Turnover | 10.30 | 10.39 | 10.10 | n.a |
Accounts Payable Turnover | 9.80 | 12.17 | 12.17 | n.a |
Payment Days | 29 | 28 | 27 | n.a |
Total Asset Turnover | 2.26 | 2.76 | 2.59 | n.a |
Debt Ratios | ||||
Debt to Net Worth | 0.00 | 0.00 | 0.00 | n.a |
Current Liab. to Liab. | 0.12 | 0.13 | 0.15 | n.a |
Liquidity Ratios | ||||
Net Working Capital | $38,322 | $42,550 | $62,797 | n.a |
Interest Coverage | 0.00 | 0.00 | 0.00 | n.a |
Additional Ratios | ||||
Assets to Sales | 0.44 | 0.36 | 0.39 | n.a |
Current Debt/Total Assets | 38% | 37% | 30% | n.a |
Acid Test | 1.51 | 1.29 | 1.69 | n.a |
Sales/Net Worth | 0.00 | 0.00 | 0.00 | n.a |
Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |