Our biggest savings of the year
Sarrica's Market
Financial Plan
As our Sales Forecast made clear, profits will initially be seasonal. We expect to sustain small losses in the winter months for the first year, until our local clientele is fully established. Summer sales increases are based on the much larger number of potential customers in Moab then, and the trend for visitors to spend more per purchase than the locals.
We have planned for this seasonal variance, and the funding we are requesting will help to maintain a positive cash balance throughout the first three years, until we become fully profitable. The owners are receiving no dividends, and have some margin to reduce their own salaries from what is projected to cushion any unexpected short-term shortfalls.
Our partnership agreement includes an exit plan (see topic 9.0, below), with clear agreements on what constitutes “success” or “failure” in each timeframe. If the businesses sustains larger than acceptable losses, our chief priority will be repaying our creditors, with recouping of owner investments as the last item on the payback list.
8.1 Break-even Analysis
Our estimated monthly revenue break-even point includes payroll, rent, utilities, cost of goods, and other operating costs. We expect summer sales to make up for the slow winter months.
Being a family-run business will be an asset, because we will have the flexibility to adjust our expenses each month in order to maintain a positive cash flow.

Break-even Analysis | |
Monthly Revenue Break-even | $32,425 |
Assumptions: | |
Average Percent Variable Cost | 60% |
Estimated Monthly Fixed Cost | $12,970 |
8.2 Projected Profit and Loss
Projected profit and loss illustrated in the following table and charts. Sarrica’s Market will be profitable early in the first year, with net profit rising over the next two years.




Pro Forma Profit and Loss | |||
Year 1 | Year 2 | Year 3 | |
Sales | $461,900 | $484,735 | $508,712 |
Direct Cost of Sales | $277,140 | $282,620 | $288,210 |
Hidden Row | $0 | $0 | $0 |
Total Cost of Sales | $277,140 | $282,620 | $288,210 |
Gross Margin | $184,760 | $202,115 | $220,501 |
Gross Margin % | 40.00% | 41.70% | 43.35% |
Expenses | |||
Payroll | $86,240 | $88,840 | $92,840 |
Marketing/Postage/Other | $6,000 | $6,000 | $6,000 |
Depreciation | $2,500 | $2,500 | $2,500 |
Legal | $1,200 | $1,200 | $1,200 |
Books/Accounting | $1,200 | $2,400 | $2,400 |
Licenses/Permits/Memberships | $900 | $900 | $900 |
Delivery/Transportation | $4,800 | $4,800 | $4,800 |
Insurance | $3,600 | $3,600 | $3,600 |
Rent | $30,000 | $30,000 | $30,000 |
Utilities | $12,000 | $12,000 | $12,000 |
Equipment/Supplies | $4,800 | $4,800 | $4,800 |
Building/Equipment Maintenence | $1,200 | $1,200 | $1,200 |
Payroll Taxes | $0 | $0 | $0 |
Other | $1,200 | $1,200 | $1,200 |
Total Operating Expenses | $155,640 | $159,440 | $163,440 |
Profit Before Interest and Taxes | $29,120 | $42,675 | $57,061 |
EBITDA | $31,620 | $45,175 | $59,561 |
Interest Expense | $5,997 | $5,107 | $4,179 |
Taxes Incurred | $6,937 | $11,270 | $15,865 |
Net Profit | $16,186 | $26,297 | $37,018 |
Net Profit/Sales | 3.50% | 5.43% | 7.28% |
8.3 Projected Cash Flow
Below is our projected cash flow. Sarrica’s will maintain a positive cash balance while covering expenses and repaying our loan.

Pro Forma Cash Flow | |||
Year 1 | Year 2 | Year 3 | |
Cash Received | |||
Cash from Operations | |||
Cash Sales | $461,900 | $484,735 | $508,712 |
Subtotal Cash from Operations | $461,900 | $484,735 | $508,712 |
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 | $461,900 | $484,735 | $508,712 |
Expenditures | Year 1 | Year 2 | Year 3 |
Expenditures from Operations | |||
Cash Spending | $86,240 | $88,840 | $92,840 |
Bill Payments | $334,497 | $356,068 | $375,923 |
Subtotal Spent on Operations | $420,737 | $444,908 | $468,763 |
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 | $14,286 | $14,285 | $14,285 |
Purchase Other Current Assets | $0 | $0 | $0 |
Purchase Long-term Assets | $0 | $0 | $0 |
Dividends | $0 | $0 | $0 |
Subtotal Cash Spent | $435,023 | $459,193 | $483,048 |
Net Cash Flow | $26,877 | $25,542 | $25,664 |
Cash Balance | $42,577 | $68,120 | $93,784 |
8.4 Projected Balance Sheet
Our projected Balance Sheet, based on well-researched sales and expense forecasts, shows a steadily increasing net worth.
Pro Forma Balance Sheet | |||
Year 1 | Year 2 | Year 3 | |
Assets | |||
Current Assets | |||
Cash | $42,577 | $68,120 | $93,784 |
Inventory | $16,368 | $16,692 | $17,022 |
Other Current Assets | $5,000 | $5,000 | $5,000 |
Total Current Assets | $63,945 | $89,811 | $115,806 |
Long-term Assets | |||
Long-term Assets | $20,000 | $20,000 | $20,000 |
Accumulated Depreciation | $2,500 | $5,000 | $7,500 |
Total Long-term Assets | $17,500 | $15,000 | $12,500 |
Total Assets | $81,445 | $104,811 | $128,306 |
Liabilities and Capital | Year 1 | Year 2 | Year 3 |
Current Liabilities | |||
Accounts Payable | $18,845 | $30,199 | $30,960 |
Current Borrowing | $0 | $0 | $0 |
Other Current Liabilities | $0 | $0 | $0 |
Subtotal Current Liabilities | $18,845 | $30,199 | $30,960 |
Long-term Liabilities | $85,714 | $71,429 | $57,144 |
Total Liabilities | $104,559 | $101,628 | $88,104 |
Paid-in Capital | $24,000 | $24,000 | $24,000 |
Retained Earnings | ($63,300) | ($47,114) | ($20,817) |
Earnings | $16,186 | $26,297 | $37,018 |
Total Capital | ($23,114) | $3,183 | $40,201 |
Total Liabilities and Capital | $81,445 | $104,811 | $128,306 |
Net Worth | ($23,114) | $3,183 | $40,201 |
8.5 Business Ratios
The following table outlines some of the more important ratios from the Gourmet Food Stores industry. The final column, Industry Profile, details specific ratios based on the industry as it is classified by the Standard Industry Classification (SIC) code, 5499.
Ratio Analysis | ||||
Year 1 | Year 2 | Year 3 | Industry Profile | |
Sales Growth | 0.00% | 4.94% | 4.95% | 3.96% |
Percent of Total Assets | ||||
Inventory | 20.10% | 15.93% | 13.27% | 19.65% |
Other Current Assets | 6.14% | 4.77% | 3.90% | 37.17% |
Total Current Assets | 78.51% | 85.69% | 90.26% | 65.22% |
Long-term Assets | 21.49% | 14.31% | 9.74% | 34.78% |
Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
Current Liabilities | 23.14% | 28.81% | 24.13% | 24.57% |
Long-term Liabilities | 105.24% | 68.15% | 44.54% | 25.08% |
Total Liabilities | 128.38% | 96.96% | 68.67% | 49.65% |
Net Worth | -28.38% | 3.04% | 31.33% | 50.35% |
Percent of Sales | ||||
Sales | 100.00% | 100.00% | 100.00% | 100.00% |
Gross Margin | 40.00% | 41.70% | 43.35% | 32.20% |
Selling, General & Administrative Expenses | 40.11% | 38.22% | 35.79% | 17.91% |
Advertising Expenses | 0.00% | 0.00% | 0.00% | 1.57% |
Profit Before Interest and Taxes | 6.30% | 8.80% | 11.22% | 0.87% |
Main Ratios | ||||
Current | 3.39 | 2.97 | 3.74 | 1.96 |
Quick | 2.52 | 2.42 | 3.19 | 0.98 |
Total Debt to Total Assets | 128.38% | 96.96% | 68.67% | 61.35% |
Pre-tax Return on Net Worth | -100.04% | 1180.13% | 131.54% | 3.41% |
Pre-tax Return on Assets | 28.39% | 35.84% | 41.22% | 8.82% |
Additional Ratios | Year 1 | Year 2 | Year 3 | |
Net Profit Margin | 3.50% | 5.43% | 7.28% | n.a |
Return on Equity | 0.00% | 826.09% | 92.08% | n.a |
Activity Ratios | ||||
Inventory Turnover | 10.82 | 17.10 | 17.10 | n.a |
Accounts Payable Turnover | 18.75 | 12.17 | 12.17 | n.a |
Payment Days | 27 | 24 | 30 | n.a |
Total Asset Turnover | 5.67 | 4.62 | 3.96 | n.a |
Debt Ratios | ||||
Debt to Net Worth | 0.00 | 31.93 | 2.19 | n.a |
Current Liab. to Liab. | 0.18 | 0.30 | 0.35 | n.a |
Liquidity Ratios | ||||
Net Working Capital | $45,100 | $59,612 | $84,845 | n.a |
Interest Coverage | 4.86 | 8.36 | 13.66 | n.a |
Additional Ratios | ||||
Assets to Sales | 0.18 | 0.22 | 0.25 | n.a |
Current Debt/Total Assets | 23% | 29% | 24% | n.a |
Acid Test | 2.52 | 2.42 | 3.19 | n.a |
Sales/Net Worth | 0.00 | 152.27 | 12.65 | n.a |
Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |