By 
Our biggest savings of the year
Classique Gifts Etc.
Financial Plan
- Growth will be moderate.
- Costs will be managed and forecasts for future needs will be performed on a regular basis.
- Finding the right product, at the right price will enable the business to meet planned margins and maintain inventory at an acceptable level.
7.1 Important Assumptions
Key assumptions are:
- We do not sell anything on credit.
- We assume the continued popularity of collectibles.
- We assume access to financing sufficient to maintain our financial plan as shown in the tables.
| General Assumptions | |||
| Year 1 | Year 2 | Year 3 | |
| Plan Month | 1 | 2 | 3 |
| Current Interest Rate | 6.00% | 6.00% | 6.00% |
| Long-term Interest Rate | 7.00% | 7.00% | 7.00% |
| Tax Rate | 30.00% | 30.00% | 30.00% |
| Other | 0 | 0 | 0 |
7.2 Projected Profit and Loss
The following table shows our planned three-year profit and loss estimates. We expect to have a gross margin percent above 40% our first year, which will continue to grow in years two and three.
The associated charts show that we will have a negative profit/sales percentage for the first two years with a positive net profit by year three.
| Pro Forma Profit and Loss | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | $143,510 | $160,731 | $180,019 |
| Direct Cost of Sales | $81,756 | $85,844 | $90,136 |
| Other Costs of Goods | $0 | $0 | $0 |
| Total Cost of Sales | $81,756 | $85,844 | $90,136 |
| Gross Margin | $61,754 | $74,887 | $89,883 |
| Gross Margin % | 43.03% | 46.59% | 49.93% |
| Expenses | |||
| Payroll | $26,720 | $34,120 | $35,120 |
| Sales and Marketing and Other Expenses | $600 | $1,200 | $2,400 |
| Depreciation | $0 | $0 | $0 |
| Rent and CAM Expense | $18,150 | $18,150 | $18,150 |
| Utilities | $3,600 | $3,600 | $3,600 |
| Liability Insurance:Store | $0 | $2,400 | $2,400 |
| Insurance (medical Brenda & Charles) | $7,800 | $7,150 | $7,150 |
| Payroll Taxes | $0 | $0 | $0 |
| Other | $0 | $0 | $0 |
| Total Operating Expenses | $56,870 | $66,620 | $68,820 |
| Profit Before Interest and Taxes | $4,884 | $8,267 | $21,063 |
| EBITDA | $4,884 | $8,267 | $21,063 |
| Interest Expense | $3,156 | $2,549 | $1,915 |
| Taxes Incurred | $518 | $1,716 | $5,745 |
| Net Profit | $1,209 | $4,003 | $13,404 |
| Net Profit/Sales | 0.84% | 2.49% | 7.45% |
7.3 Break-even Analysis
The following table and chart show our estimated monthly revenue break-even point.
| Break-even Analysis | |
| Monthly Revenue Break-even | $11,013 |
| Assumptions: | |
| Average Percent Variable Cost | 57% |
| Estimated Monthly Fixed Cost | $4,739 |
7.4 Projected Cash Flow
The following table and chart represents the projected cash flow.
| Pro Forma Cash Flow | |||
| Year 1 | Year 2 | Year 3 | |
| Cash Received | |||
| Cash from Operations | |||
| Cash Sales | $143,510 | $160,731 | $180,019 |
| Subtotal Cash from Operations | $143,510 | $160,731 | $180,019 |
| 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 | $143,510 | $160,731 | $180,019 |
| Expenditures | Year 1 | Year 2 | Year 3 |
| Expenditures from Operations | |||
| Cash Spending | $26,720 | $34,120 | $35,120 |
| Bill Payments | $67,291 | $124,798 | $131,213 |
| Subtotal Spent on Operations | $94,011 | $158,918 | $166,333 |
| 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 | $9,060 | $9,060 | $9,060 |
| Purchase Other Current Assets | $0 | $0 | $0 |
| Purchase Long-term Assets | $0 | $0 | $0 |
| Dividends | $0 | $0 | $0 |
| Subtotal Cash Spent | $103,071 | $167,978 | $175,393 |
| Net Cash Flow | $40,439 | ($7,247) | $4,625 |
| Cash Balance | $52,624 | $45,378 | $50,003 |
7.5 Projected Balance Sheet
The following table shows our projected Balance Sheet.
| Pro Forma Balance Sheet | |||
| Year 1 | Year 2 | Year 3 | |
| Assets | |||
| Current Assets | |||
| Cash | $52,624 | $45,378 | $50,003 |
| Inventory | $8,583 | $9,012 | $9,463 |
| Other Current Assets | $12,757 | $12,757 | $12,757 |
| Total Current Assets | $73,964 | $67,147 | $72,223 |
| Long-term Assets | |||
| Long-term Assets | $0 | $0 | $0 |
| Accumulated Depreciation | $0 | $0 | $0 |
| Total Long-term Assets | $0 | $0 | $0 |
| Total Assets | $73,964 | $67,147 | $72,223 |
| Liabilities and Capital | Year 1 | Year 2 | Year 3 |
| Current Liabilities | |||
| Accounts Payable | $11,873 | $10,113 | $10,845 |
| Current Borrowing | $0 | $0 | $0 |
| Other Current Liabilities | $0 | $0 | $0 |
| Subtotal Current Liabilities | $11,873 | $10,113 | $10,845 |
| Long-term Liabilities | $40,940 | $31,880 | $22,820 |
| Total Liabilities | $52,813 | $41,993 | $33,665 |
| Paid-in Capital | $40,000 | $40,000 | $40,000 |
| Retained Earnings | ($20,058) | ($18,849) | ($14,846) |
| Earnings | $1,209 | $4,003 | $13,404 |
| Total Capital | $21,151 | $25,154 | $38,558 |
| Total Liabilities and Capital | $73,964 | $67,147 | $72,223 |
| Net Worth | $21,151 | $25,154 | $38,558 |
7.6 Business Ratios
The following table outlines some of the more important ratios from the Gift Shop industry. The final column, Industry Profile, details specific ratios based on the industry as it is classified by the Standard Industry Classification (SIC) code 5947.
| Ratio Analysis | ||||
| Year 1 | Year 2 | Year 3 | Industry Profile | |
| Sales Growth | 0.00% | 12.00% | 12.00% | 3.34% |
| Percent of Total Assets | ||||
| Inventory | 11.60% | 13.42% | 13.10% | 40.42% |
| Other Current Assets | 17.25% | 19.00% | 17.66% | 23.99% |
| Total Current Assets | 100.00% | 100.00% | 100.00% | 80.29% |
| Long-term Assets | 0.00% | 0.00% | 0.00% | 19.71% |
| Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
| Current Liabilities | 16.05% | 15.06% | 15.02% | 36.19% |
| Long-term Liabilities | 55.35% | 47.48% | 31.60% | 15.42% |
| Total Liabilities | 71.40% | 62.54% | 46.61% | 51.61% |
| Net Worth | 28.60% | 37.46% | 53.39% | 48.39% |
| Percent of Sales | ||||
| Sales | 100.00% | 100.00% | 100.00% | 100.00% |
| Gross Margin | 43.03% | 46.59% | 49.93% | 37.74% |
| Selling, General & Administrative Expenses | 44.22% | 47.15% | 45.12% | 23.72% |
| Advertising Expenses | 0.00% | 0.00% | 0.00% | 2.14% |
| Profit Before Interest and Taxes | 3.40% | 5.14% | 11.70% | 1.65% |
| Main Ratios | ||||
| Current | 6.23 | 6.64 | 6.66 | 1.98 |
| Quick | 5.51 | 5.75 | 5.79 | 0.74 |
| Total Debt to Total Assets | 71.40% | 62.54% | 46.61% | 3.65% |
| Pre-tax Return on Net Worth | 8.17% | 22.73% | 49.66% | 58.19% |
| Pre-tax Return on Assets | 2.34% | 8.52% | 26.51% | 8.72% |
| Additional Ratios | Year 1 | Year 2 | Year 3 | |
| Net Profit Margin | 0.84% | 2.49% | 7.45% | n.a |
| Return on Equity | 5.72% | 15.91% | 34.76% | n.a |
| Activity Ratios | ||||
| Inventory Turnover | 5.75 | 9.76 | 9.76 | n.a |
| Accounts Payable Turnover | 6.67 | 12.17 | 12.17 | n.a |
| Payment Days | 27 | 33 | 29 | n.a |
| Total Asset Turnover | 1.94 | 2.39 | 2.49 | n.a |
| Debt Ratios | ||||
| Debt to Net Worth | 2.50 | 1.67 | 0.87 | n.a |
| Current Liab. to Liab. | 0.22 | 0.24 | 0.32 | n.a |
| Liquidity Ratios | ||||
| Net Working Capital | $62,091 | $57,034 | $61,378 | n.a |
| Interest Coverage | 1.55 | 3.24 | 11.00 | n.a |
| Additional Ratios | ||||
| Assets to Sales | 0.52 | 0.42 | 0.40 | n.a |
| Current Debt/Total Assets | 16% | 15% | 15% | n.a |
| Acid Test | 5.51 | 5.75 | 5.79 | n.a |
| Sales/Net Worth | 6.78 | 6.39 | 4.67 | n.a |
| Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |