Funding Requirements and Uses
The company is raising $125,000 for the purpose of financing equipment purchases to meet a growing demand for its services. The company management has reason to believe that an increased truck fleet will assist the company in its effort to widen its market offering and increase sales.
The following table highlights the important general assumptions of Mike's Trucking. Interest rates, tax rates, and personnel burden are based on conservative assumptions.
The break-even chart and table below indicate our break-even point.
The table below summarizes our projected income statement for the first three years of plan implementation, fiscal years 2000, 2001, and 2002. As with the other tables, the Profit and Loss table is projected to be quite conservative. The detailed monthly projection can be found in the appendix.
The projected cash flow is presented in the chart and table below. The long-term loan in the amount of $125,000 is expected to be received in May, 2000, which is reflected in the increase of the long-term borrowing row for that month. The company is planning to purchase two trucks (one in June and one in July) in the first year of plan implementation, 2000; corresponding transactions are reflected in the capital expenditure rows. Monthly repayments on the $125,000 loan will be made in the amount of $1,500.
The monthly cash flow is presented in the illustration, with one bar representing cash flow per month, and the other the monthly balance. The annual cash flow can be found in the table below, and are in monthly detail in the appendix.
The table below shows Mike's Trucking balance sheets for 2000-2002.
The following table includes Industry Profile statistics for the trucking industry, as determined by the Standard Industry Classification (SIC) Index. The SIC Code for this plan is 4213, and the SIC Description is Trucking except local. These statistics show a comparison of industry standards and key ratios for this plan.