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Human Capital Maximizers

Financial Plan

The following sections will outline important financial information. Please note that the stock options granted in lieu of compensation are not entered into the financial plan as they are not yet of value.  Upon exercising the options there will be tax consequences (because one of the realizing events has occurred) as well as assets to be accounted for.

8.1 Important Assumptions

The following table details important financial assumptions.

General Assumptions
Year 1 Year 2 Year 3
Plan Month 1 2 3
Current Interest Rate 10.00% 10.00% 10.00%
Long-term Interest Rate 10.00% 10.00% 10.00%
Tax Rate 30.00% 30.00% 30.00%
Other 0 0 0

8.2 Break-even Analysis

The Break-even Analysis is shown below.

Human resources consulting business plan, financial plan chart image

Break-even Analysis
Monthly Revenue Break-even $5,766
Assumptions:
Average Percent Variable Cost 5%
Estimated Monthly Fixed Cost $5,478

8.3 Projected Profit and Loss

The following table will indicate projected profit and loss.

Human resources consulting business plan, financial plan chart image

Human resources consulting business plan, financial plan chart image

Human resources consulting business plan, financial plan chart image

Human resources consulting business plan, financial plan chart image

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $58,100 $109,837 $129,557
Direct Cost of Sales $2,905 $5,492 $6,478
Other Production Expenses $0 $0 $0
Total Cost of Sales $2,905 $5,492 $6,478
Gross Margin $55,195 $104,345 $123,080
Gross Margin % 95.00% 95.00% 95.00%
Expenses
Payroll $48,500 $66,000 $66,000
Sales and Marketing and Other Expenses $0 $0 $0
Depreciation $960 $960 $960
Leased Equipment $0 $0 $0
Utilities $1,200 $1,200 $1,200
Insurance $1,800 $1,800 $1,800
Rent $6,000 $6,000 $6,000
Payroll Taxes $7,275 $9,900 $9,900
Other $0 $0 $0
Total Operating Expenses $65,735 $85,860 $85,860
Profit Before Interest and Taxes ($10,540) $18,485 $37,220
EBITDA ($9,580) $19,445 $38,180
Interest Expense $0 $0 $0
Taxes Incurred $0 $5,546 $11,166
Net Profit ($10,540) $12,940 $26,054
Net Profit/Sales -18.14% 11.78% 20.11%

8.4 Projected Cash Flow

The following chart and table will indicate projected cash flow.

Human resources consulting business plan, financial plan chart image

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $58,100 $109,837 $129,557
Subtotal Cash from Operations $58,100 $109,837 $129,557
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 $58,100 $109,837 $129,557
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $48,500 $66,000 $66,000
Bill Payments $17,265 $29,392 $36,001
Subtotal Spent on Operations $65,765 $95,392 $102,001
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 $0 $0 $0
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $65,765 $95,392 $102,001
Net Cash Flow ($7,665) $14,445 $27,557
Cash Balance $2,385 $16,830 $44,387

8.5 Projected Balance Sheet

The following table will indicate the projected balance sheet.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $2,385 $16,830 $44,387
Other Current Assets $0 $0 $0
Total Current Assets $2,385 $16,830 $44,387
Long-term Assets
Long-term Assets $4,800 $4,800 $4,800
Accumulated Depreciation $960 $1,920 $2,880
Total Long-term Assets $3,840 $2,880 $1,920
Total Assets $6,225 $19,710 $46,307
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $1,915 $2,461 $3,004
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $1,915 $2,461 $3,004
Long-term Liabilities $0 $0 $0
Total Liabilities $1,915 $2,461 $3,004
Paid-in Capital $16,000 $16,000 $16,000
Retained Earnings ($1,150) ($11,690) $1,250
Earnings ($10,540) $12,940 $26,054
Total Capital $4,310 $17,250 $43,303
Total Liabilities and Capital $6,225 $19,710 $46,307
Net Worth $4,310 $17,250 $43,303

8.6 Business Ratios

The following table outlines some of the more important ratios from the Management Consulting Resources industry. The final column, Industry Profile, details specific ratios based on the industry as it is classified by the Standard Industry Classification (SIC) code, 8742.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 89.05% 17.95% 8.60%
Percent of Total Assets
Other Current Assets 0.00% 0.00% 0.00% 46.70%
Total Current Assets 38.31% 85.39% 95.85% 74.90%
Long-term Assets 61.69% 14.61% 4.15% 25.10%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 30.76% 12.48% 6.49% 42.80%
Long-term Liabilities 0.00% 0.00% 0.00% 17.20%
Total Liabilities 30.76% 12.48% 6.49% 60.00%
Net Worth 69.24% 87.52% 93.51% 40.00%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 95.00% 95.00% 95.00% 0.00%
Selling, General & Administrative Expenses 113.14% 83.22% 74.89% 83.50%
Advertising Expenses 0.00% 0.00% 0.00% 1.20%
Profit Before Interest and Taxes -18.14% 16.83% 28.73% 2.60%
Main Ratios
Current 1.25 6.84 14.78 1.59
Quick 1.25 6.84 14.78 1.26
Total Debt to Total Assets 30.76% 12.48% 6.49% 60.00%
Pre-tax Return on Net Worth -244.55% 107.16% 85.95% 4.40%
Pre-tax Return on Assets -169.32% 93.78% 80.38% 10.90%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -18.14% 11.78% 20.11% n.a
Return on Equity -244.55% 75.01% 60.17% n.a
Activity Ratios
Accounts Payable Turnover 10.02 12.17 12.17 n.a
Payment Days 27 27 27 n.a
Total Asset Turnover 9.33 5.57 2.80 n.a
Debt Ratios
Debt to Net Worth 0.44 0.14 0.07 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $470 $14,370 $41,383 n.a
Interest Coverage 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 0.11 0.18 0.36 n.a
Current Debt/Total Assets 31% 12% 6% n.a
Acid Test 1.25 6.84 14.78 n.a
Sales/Net Worth 13.48 6.37 2.99 n.a
Dividend Payout 0.00 0.00 0.00 n.a