Gymnastics Jump-Start
Financial Plan
The following sections will outline the Financial Plan of Gymnastics Jump-Start.
7.1 Start-up Funding
Total start-up expenses and assets required will be funded as shown in the Start-up Funding table, below. Wanda Bounce will invest $25,000. Bea Flip will invest $25,000. In addition, gym will secure a $36,600 long-term loan (7 years at 10% interest).
Start-up Funding | |
Start-up Expenses to Fund | $36,600 |
Start-up Assets to Fund | $50,000 |
Total Funding Required | $86,600 |
Assets | |
Non-cash Assets from Start-up | $40,000 |
Cash Requirements from Start-up | $10,000 |
Additional Cash Raised | $0 |
Cash Balance on Starting Date | $10,000 |
Total Assets | $50,000 |
Liabilities and Capital | |
Liabilities | |
Current Borrowing | $0 |
Long-term Liabilities | $36,600 |
Accounts Payable (Outstanding Bills) | $0 |
Other Current Liabilities (interest-free) | $0 |
Total Liabilities | $36,600 |
Capital | |
Planned Investment | |
Owner 1 | $25,000 |
Owner 2 | $25,000 |
Additional Investment Requirement | $0 |
Total Planned Investment | $50,000 |
Loss at Start-up (Start-up Expenses) | ($36,600) |
Total Capital | $13,400 |
Total Capital and Liabilities | $50,000 |
Total Funding | $86,600 |
7.2 Important Assumptions
- We are assuming steady growth from the 3 counties we service.
- We are assuming adequate funding to sustain us during start-up.
- We are assuming that the popularity of gymnastics does not decrease.
- We are assuming that there will be no other private gyms starting up in close proximity to us.
7.3 Break-even Analysis
Table 7.3 summarizes the break-even analysis. The Break-even Analysis is based on the average of the first-year figures for total sales, and by operating expenses. Our variable costs are relatively low and our main operating costs are salaries for teachers.

Break-even Analysis | |
Monthly Revenue Break-even | $11,973 |
Assumptions: | |
Average Percent Variable Cost | 31% |
Estimated Monthly Fixed Cost | $8,306 |
7.4 Projected Profit and Loss
As the Profit and Loss table shows, the company expects to continue its steady growth in profitability over the next three years of operations. Aside from payroll, Rent and Insurance are our largest expenses. The rent for the studio we have chosen is reasonable for the square footage, which will allow us to conduct multiple classes (or classes and birthday parties) at the same time. Insurance demands when dealing with young children and physical activity are high, but the owners’ prior experience will keep these costs affordable.
Payroll taxes are based on wages and salaries for all employees, including hourly teachers (shown here as direct cost of sales).




Pro Forma Profit and Loss | |||
Year 1 | Year 2 | Year 3 | |
Sales | $211,603 | $300,344 | $389,080 |
Direct Cost of Sales | $64,809 | $92,755 | $133,244 |
Other Costs of Sales | $3,360 | $3,840 | $4,320 |
Total Cost of Sales | $68,169 | $96,595 | $137,564 |
Gross Margin | $143,434 | $203,749 | $251,516 |
Gross Margin % | 67.78% | 67.84% | 64.64% |
Expenses | |||
Payroll | $41,280 | $68,000 | $81,120 |
Marketing/Promotion | $5,000 | $5,000 | $5,000 |
Depreciation | $4,000 | $4,000 | $4,000 |
Rent | $24,000 | $24,000 | $24,000 |
Utilities | $3,600 | $3,700 | $3,800 |
Insurance | $19,992 | $21,992 | $22,992 |
Payroll Taxes | $0 | $0 | $0 |
Other | $1,800 | $2,100 | $2,500 |
Total Operating Expenses | $99,672 | $128,792 | $143,412 |
Profit Before Interest and Taxes | $43,762 | $74,957 | $108,104 |
EBITDA | $47,762 | $78,957 | $112,104 |
Interest Expense | $3,377 | $2,876 | $2,353 |
Taxes Incurred | $12,116 | $21,624 | $31,725 |
Net Profit | $28,270 | $50,457 | $74,026 |
Net Profit/Sales | 13.36% | 16.80% | 19.03% |
7.5 Projected Cash Flow
The cash flow projection shows that provisions for ongoing expenses are adequate to meet the needs of the company as the business generates sufficient cash flow to support operations. The table shows the planned repayment of our long-term loan over seven years.

Pro Forma Cash Flow | |||
Year 1 | Year 2 | Year 3 | |
Cash Received | |||
Cash from Operations | |||
Cash Sales | $158,702 | $225,258 | $291,810 |
Cash from Receivables | $42,899 | $70,891 | $93,076 |
Subtotal Cash from Operations | $201,601 | $296,149 | $384,886 |
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 | $201,601 | $296,149 | $384,886 |
Expenditures | Year 1 | Year 2 | Year 3 |
Expenditures from Operations | |||
Cash Spending | $41,280 | $68,000 | $81,120 |
Bill Payments | $125,633 | $175,686 | $225,656 |
Subtotal Spent on Operations | $166,913 | $243,686 | $306,776 |
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 | $5,230 | $5,230 | $5,230 |
Purchase Other Current Assets | $2,000 | $0 | $0 |
Purchase Long-term Assets | $0 | $0 | $0 |
Dividends | $0 | $0 | $0 |
Subtotal Cash Spent | $174,143 | $248,916 | $312,006 |
Net Cash Flow | $27,458 | $47,233 | $72,879 |
Cash Balance | $37,458 | $84,691 | $157,570 |
7.6 Projected Balance Sheet
The following table presents the Balance Sheet for Gymnastics Jump-Start. Our cash, retained earnings, and net worth will increase steadily as we establish a stable, returning customer base.
Pro Forma Balance Sheet | |||
Year 1 | Year 2 | Year 3 | |
Assets | |||
Current Assets | |||
Cash | $37,458 | $84,691 | $157,570 |
Accounts Receivable | $10,002 | $14,197 | $18,391 |
Other Current Assets | $2,000 | $2,000 | $2,000 |
Total Current Assets | $49,460 | $100,888 | $177,962 |
Long-term Assets | |||
Long-term Assets | $40,000 | $40,000 | $40,000 |
Accumulated Depreciation | $4,000 | $8,000 | $12,000 |
Total Long-term Assets | $36,000 | $32,000 | $28,000 |
Total Assets | $85,460 | $132,888 | $205,962 |
Liabilities and Capital | Year 1 | Year 2 | Year 3 |
Current Liabilities | |||
Accounts Payable | $12,420 | $14,621 | $18,899 |
Current Borrowing | $0 | $0 | $0 |
Other Current Liabilities | $0 | $0 | $0 |
Subtotal Current Liabilities | $12,420 | $14,621 | $18,899 |
Long-term Liabilities | $31,370 | $26,140 | $20,910 |
Total Liabilities | $43,791 | $40,761 | $39,809 |
Paid-in Capital | $50,000 | $50,000 | $50,000 |
Retained Earnings | ($36,600) | ($8,330) | $42,127 |
Earnings | $28,270 | $50,457 | $74,026 |
Total Capital | $41,670 | $92,127 | $166,153 |
Total Liabilities and Capital | $85,460 | $132,888 | $205,962 |
Net Worth | $41,670 | $92,127 | $166,153 |
7.7 Business Ratios
The following table outlines some of the more important ratios from the Gymnastic instruction industry. The final column, Industry Profile, details specific ratios based on the industry as it is classified by the Standard Industry Classification (SIC) code, 7999.1109.
Ratio Analysis | ||||
Year 1 | Year 2 | Year 3 | Industry Profile | |
Sales Growth | 0.00% | 41.94% | 29.54% | 4.94% |
Percent of Total Assets | ||||
Accounts Receivable | 11.70% | 10.68% | 8.93% | 5.13% |
Other Current Assets | 2.34% | 1.51% | 0.97% | 36.35% |
Total Current Assets | 57.88% | 75.92% | 86.41% | 43.63% |
Long-term Assets | 42.12% | 24.08% | 13.59% | 56.37% |
Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
Current Liabilities | 14.53% | 11.00% | 9.18% | 21.68% |
Long-term Liabilities | 36.71% | 19.67% | 10.15% | 31.17% |
Total Liabilities | 51.24% | 30.67% | 19.33% | 52.85% |
Net Worth | 48.76% | 69.33% | 80.67% | 47.15% |
Percent of Sales | ||||
Sales | 100.00% | 100.00% | 100.00% | 100.00% |
Gross Margin | 67.78% | 67.84% | 64.64% | 100.00% |
Selling, General & Administrative Expenses | 54.42% | 51.04% | 45.62% | 76.74% |
Advertising Expenses | 0.00% | 0.00% | 0.00% | 2.84% |
Profit Before Interest and Taxes | 20.68% | 24.96% | 27.78% | 2.11% |
Main Ratios | ||||
Current | 3.98 | 6.90 | 9.42 | 1.05 |
Quick | 3.98 | 6.90 | 9.42 | 0.69 |
Total Debt to Total Assets | 51.24% | 30.67% | 19.33% | 62.49% |
Pre-tax Return on Net Worth | 96.92% | 78.24% | 63.65% | 2.98% |
Pre-tax Return on Assets | 47.26% | 54.24% | 51.35% | 7.95% |
Additional Ratios | Year 1 | Year 2 | Year 3 | |
Net Profit Margin | 13.36% | 16.80% | 19.03% | n.a |
Return on Equity | 67.84% | 54.77% | 44.55% | n.a |
Activity Ratios | ||||
Accounts Receivable Turnover | 5.29 | 5.29 | 5.29 | n.a |
Collection Days | 57 | 59 | 61 | n.a |
Accounts Payable Turnover | 11.12 | 12.17 | 12.17 | n.a |
Payment Days | 27 | 28 | 27 | n.a |
Total Asset Turnover | 2.48 | 2.26 | 1.89 | n.a |
Debt Ratios | ||||
Debt to Net Worth | 1.05 | 0.44 | 0.24 | n.a |
Current Liab. to Liab. | 0.28 | 0.36 | 0.47 | n.a |
Liquidity Ratios | ||||
Net Working Capital | $37,040 | $86,267 | $159,063 | n.a |
Interest Coverage | 12.96 | 26.07 | 45.95 | n.a |
Additional Ratios | ||||
Assets to Sales | 0.40 | 0.44 | 0.53 | n.a |
Current Debt/Total Assets | 15% | 11% | 9% | n.a |
Acid Test | 3.18 | 5.93 | 8.44 | n.a |
Sales/Net Worth | 5.08 | 3.26 | 2.34 | n.a |
Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |