Regali Luxuri
Financial Plan
The following topics present the financials for Regali Luxuri.
7.1 Start-up Funding
Kaethe Villanova and Bensai Halstadt will each invest in Regali Luxuri. Additional start-up funding includes existing computer and printing equipment, some short-term debt in the form of credit card purchases, and a small amount of Accounts Payables owed to suppliers for inventory purchased while this operation was a hobby.
| Start-up Funding | |
| Start-up Expenses to Fund | $17,080 |
| Start-up Assets to Fund | $9,800 |
| Total Funding Required | $26,880 |
| Assets | |
| Non-cash Assets from Start-up | $9,000 |
| Cash Requirements from Start-up | $800 |
| Additional Cash Raised | $0 |
| Cash Balance on Starting Date | $800 |
| Total Assets | $9,800 |
| Liabilities and Capital | |
| Liabilities | |
| Current Borrowing | $2,160 |
| Long-term Liabilities | $0 |
| Accounts Payable (Outstanding Bills) | $720 |
| Other Current Liabilities (interest-free) | $0 |
| Total Liabilities | $2,880 |
| Capital | |
| Planned Investment | |
| Bensai Halstadt | $12,000 |
| Kaethe Villanova | $12,000 |
| Other | $0 |
| Additional Investment Requirement | $0 |
| Total Planned Investment | $24,000 |
| Loss at Start-up (Start-up Expenses) | ($17,080) |
| Total Capital | $6,920 |
| Total Capital and Liabilities | $9,800 |
| Total Funding | $26,880 |
7.2 Break-even Analysis
Current projections of average monthly expenses, and an admittedly high estimated cost of goods, Regali Luxuri will need to sell mechandise and services each month, as shown below, to break even.
| Break-even Analysis | |
| Monthly Revenue Break-even | $5,048 |
| Assumptions: | |
| Average Percent Variable Cost | 42% |
| Estimated Monthly Fixed Cost | $2,928 |
7.3 Projected Profit and Loss
The profit and loss figures show Regali Luxuri balances on the knife edge of profitability. The owners are aware that they may forego salaries in any given month to insure profitablity and positive cash balance.
| Pro Forma Profit and Loss | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | $65,355 | $81,694 | $98,033 |
| Direct Cost of Sales | $27,449 | $27,449 | $28,821 |
| Other Costs of Goods | $0 | $0 | $0 |
| Total Cost of Sales | $27,449 | $27,449 | $28,821 |
| Gross Margin | $37,906 | $54,245 | $69,211 |
| Gross Margin % | 58.00% | 66.40% | 70.60% |
| Expenses | |||
| Payroll | $18,000 | $30,000 | $36,000 |
| Marketing/Promotion | $1,200 | $1,600 | $2,000 |
| Depreciation | $396 | $400 | $400 |
| Delivery & Shipping Cost | $1,200 | $1,200 | $1,200 |
| Legal Expenses | $720 | $720 | $720 |
| Payroll Taxes | $0 | $0 | $0 |
| Rent | $9,600 | $9,600 | $9,600 |
| Utilities & Internet | $1,500 | $1,500 | $1,500 |
| Business Insurance | $1,020 | $1,020 | $1,020 |
| Telephones-Landline/Cell | $1,500 | $1,500 | $1,500 |
| Total Operating Expenses | $35,136 | $47,540 | $53,940 |
| Profit Before Interest and Taxes | $2,770 | $6,705 | $15,271 |
| EBITDA | $3,166 | $7,105 | $15,671 |
| Interest Expense | $40 | $0 | $0 |
| Taxes Incurred | $819 | $2,011 | $4,581 |
| Net Profit | $1,911 | $4,693 | $10,690 |
| Net Profit/Sales | 2.92% | 5.75% | 10.90% |
7.4 Projected Cash Flow
The following includes Regali Luxuri Projected Cash Flow through 2007.
| Pro Forma Cash Flow | |||
| Year 1 | Year 2 | Year 3 | |
| Cash Received | |||
| Cash from Operations | |||
| Cash Sales | $65,355 | $81,694 | $98,033 |
| Subtotal Cash from Operations | $65,355 | $81,694 | $98,033 |
| Additional Cash Received | |||
| Sales Tax, VAT, HST/GST Received | $4,575 | $5,159 | $5,828 |
| 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 | $69,930 | $86,853 | $103,861 |
| Expenditures | Year 1 | Year 2 | Year 3 |
| Expenditures from Operations | |||
| Cash Spending | $18,000 | $30,000 | $36,000 |
| Bill Payments | $42,017 | $44,813 | $50,691 |
| Subtotal Spent on Operations | $60,017 | $74,813 | $86,691 |
| Additional Cash Spent | |||
| Sales Tax, VAT, HST/GST Paid Out | $4,575 | $5,159 | $5,828 |
| Principal Repayment of Current Borrowing | $2,160 | $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 | $66,752 | $79,972 | $92,519 |
| Net Cash Flow | $3,178 | $6,881 | $11,341 |
| Cash Balance | $3,978 | $10,859 | $22,201 |
7.5 Projected Balance Sheet
The balance sheet for Regali Luxuri is somewhat typical of a shoe-string start up company, relying upon the passion and dedication of this founding owners. The company displays steady growth, based on conservative forecasting. Earnings and Net Worth grow and show improvement each year of the plan.
| Pro Forma Balance Sheet | |||
| Year 1 | Year 2 | Year 3 | |
| Assets | |||
| Current Assets | |||
| Cash | $3,978 | $10,859 | $22,201 |
| Inventory | $2,291 | $2,291 | $2,406 |
| Other Current Assets | $3,000 | $3,000 | $3,000 |
| Total Current Assets | $9,270 | $16,150 | $27,607 |
| Long-term Assets | |||
| Long-term Assets | $2,000 | $2,000 | $2,000 |
| Accumulated Depreciation | $396 | $796 | $1,196 |
| Total Long-term Assets | $1,604 | $1,204 | $804 |
| Total Assets | $10,874 | $17,354 | $28,411 |
| Liabilities and Capital | Year 1 | Year 2 | Year 3 |
| Current Liabilities | |||
| Accounts Payable | $2,043 | $3,830 | $4,196 |
| Current Borrowing | $0 | $0 | $0 |
| Other Current Liabilities | $0 | $0 | $0 |
| Subtotal Current Liabilities | $2,043 | $3,830 | $4,196 |
| Long-term Liabilities | $0 | $0 | $0 |
| Total Liabilities | $2,043 | $3,830 | $4,196 |
| Paid-in Capital | $24,000 | $24,000 | $24,000 |
| Retained Earnings | ($17,080) | ($15,169) | ($10,476) |
| Earnings | $1,911 | $4,693 | $10,690 |
| Total Capital | $8,831 | $13,524 | $24,214 |
| Total Liabilities and Capital | $10,874 | $17,354 | $28,411 |
| Net Worth | $8,831 | $13,524 | $24,214 |
7.6 Business Ratios
The Standard Industrial Classification (SIC) Code for our industy is Gift Shops (5947.0104). We used the report for broader category Gift, Novelty, and Souvenir shop (5947) to generate the industry profile ratios shown in the following table.
| Ratio Analysis | ||||
| Year 1 | Year 2 | Year 3 | Industry Profile | |
| Sales Growth | 0.00% | 25.00% | 20.00% | 0.44% |
| Percent of Total Assets | ||||
| Inventory | 21.07% | 13.20% | 8.47% | 34.88% |
| Other Current Assets | 27.59% | 17.29% | 10.56% | 23.80% |
| Total Current Assets | 85.25% | 93.06% | 97.17% | 76.55% |
| Long-term Assets | 14.75% | 6.94% | 2.83% | 23.45% |
| Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
| Current Liabilities | 18.79% | 22.07% | 14.77% | 34.24% |
| Long-term Liabilities | 0.00% | 0.00% | 0.00% | 15.29% |
| Total Liabilities | 18.79% | 22.07% | 14.77% | 49.53% |
| Net Worth | 81.21% | 77.93% | 85.23% | 50.47% |
| Percent of Sales | ||||
| Sales | 100.00% | 100.00% | 100.00% | 100.00% |
| Gross Margin | 58.00% | 66.40% | 70.60% | 39.04% |
| Selling, General & Administrative Expenses | 134.30% | 118.94% | 105.29% | 24.17% |
| Advertising Expenses | 0.00% | 0.00% | 0.00% | 1.96% |
| Profit Before Interest and Taxes | 4.24% | 8.21% | 15.58% | 1.36% |
| Main Ratios | ||||
| Current | 4.54 | 4.22 | 6.58 | 1.99 |
| Quick | 3.42 | 3.62 | 6.01 | 0.81 |
| Total Debt to Total Assets | 18.79% | 22.07% | 14.77% | 51.50% |
| Pre-tax Return on Net Worth | 30.91% | 49.58% | 63.07% | 2.37% |
| Pre-tax Return on Assets | 25.11% | 38.63% | 53.75% | 4.90% |
| Additional Ratios | Year 1 | Year 2 | Year 3 | |
| Net Profit Margin | 2.92% | 5.75% | 10.90% | n.a |
| Return on Equity | 21.64% | 34.70% | 44.15% | n.a |
| Activity Ratios | ||||
| Inventory Turnover | 10.09 | 11.98 | 12.27 | n.a |
| Accounts Payable Turnover | 21.22 | 12.17 | 12.17 | n.a |
| Payment Days | 28 | 23 | 29 | n.a |
| Total Asset Turnover | 6.01 | 4.71 | 3.45 | n.a |
| Debt Ratios | ||||
| Debt to Net Worth | 0.23 | 0.28 | 0.17 | n.a |
| Current Liab. to Liab. | 1.00 | 1.00 | 1.00 | n.a |
| Liquidity Ratios | ||||
| Net Working Capital | $7,227 | $12,320 | $23,410 | n.a |
| Interest Coverage | 69.25 | 0.00 | 0.00 | n.a |
| Additional Ratios | ||||
| Assets to Sales | 0.17 | 0.21 | 0.29 | n.a |
| Current Debt/Total Assets | 19% | 22% | 15% | n.a |
| Acid Test | 3.42 | 3.62 | 6.01 | n.a |
| Sales/Net Worth | 7.40 | 6.04 | 4.05 | n.a |
| Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |
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