Inline Hockey Service Business Plan

The Skate Zone

Financial Plan

The following sections describe the financial information of The Skate Zone.

Important Assumptions

The detailed assumptions to the company’s financial projections can be found in the table below.

General Assumptions
	Year 1	Year 2	Year 3
Plan Month	1	2	3
Current Interest Rate	8.50%	8.50%	8.50%
Long-term Interest Rate	8.50%	8.50%	8.50%
Tax Rate	2.50%	0.00%	2.50%
Other	0	0	0

Projected Profit and Loss

The following table contains the profit and loss information for The Skate Zone.

Inline hockey service business plan, financial plan chart image

Pro Forma Profit and Loss
	Year 1	Year 2	Year 3
Sales	$181,500	$271,500	$410,000
Direct Cost of Sales	$38,500	$57,500	$87,500
Other	$0	$0	$0
Total Cost of Sales	$38,500	$57,500	$87,500

Gross Margin	$143,000	$214,000	$322,500
Gross Margin %	78.79%	78.82%	78.66%


Expenses
Payroll	$83,750	$101,600	$127,500
Sales and Marketing and Other Expenses	$32,000	$42,700	$75,000
Depreciation	$12,000	$20,000	$25,000
Telephone	$1,800	$1,800	$2,000
Cleaning Supplies	$3,000	$4,000	$7,500
Contract Referees	$3,000	$3,000	$6,000
Payroll Taxes	$12,563	$15,240	$19,125
Other	$0	$0	$0

Total Operating Expenses	$148,113	$188,340	$262,125

Profit Before Interest and Taxes	($5,113)	$25,660	$60,375
EBITDA	$6,888	$45,660	$85,375
Interest Expense	$28,535	$27,379	$25,551
Taxes Incurred	$0	$0	$871

Net Profit	($33,647)	($1,719)	$33,953
Net Profit/Sales	-18.54%	-0.63%	8.28%

Projected Cash Flow

A summary of The Skate Zone’s cash flow projections for the next three years is found in the table below.

Pro Forma Cash Flow
	Year 1	Year 2	Year 3
Cash Received

Cash from Operations
Cash Sales	$181,500	$271,500	$410,000
Subtotal Cash from Operations	$181,500	$271,500	$410,000

Additional Cash Received
Sales Tax, VAT, HST/GST Received	$0	$0	$0
New Current Borrowing	$0	$22,000	$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	$2,000	$0	$0
Subtotal Cash Received	$183,500	$293,500	$410,000

Expenditures	Year 1	Year 2	Year 3

Expenditures from Operations
Cash Spending	$83,750	$101,600	$127,500
Bill Payments	$112,137	$153,311	$221,968
Subtotal Spent on Operations	$195,887	$254,911	$349,468

Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out	$0	$0	$0
Principal Repayment of Current Borrowing	$0	$0	$15,000
Other Liabilities Principal Repayment	$0	$0	$0
Long-term Liabilities Principal Repayment	$26,400	$25,000	$25,000
Purchase Other Current Assets	$0	$0	$0
Purchase Long-term Assets	$0	$20,000	$20,000
Dividends	$0	$0	$0
Subtotal Cash Spent	$222,287	$299,911	$409,468

Net Cash Flow	($38,787)	($6,411)	$532
Cash Balance	$9,213	$2,802	$3,334

Projected Balance Sheet

The Skate Zone’s projected Balance Sheet follows.

Pro Forma Balance Sheet
	Year 1	Year 2	Year 3
Assets

Current Assets
Cash	$9,213	$2,802	$3,334
Inventory	$6,050	$8,223	$12,750
Other Current Assets	$0	$0	$0
Total Current Assets	$15,263	$11,025	$16,084

Long-term Assets
Long-term Assets	$405,000	$425,000	$445,000
Accumulated Depreciation	$12,000	$32,000	$57,000
Total Long-term Assets	$393,000	$393,000	$388,000
Total Assets	$408,263	$404,025	$404,084

Liabilities and Capital	Year 1	Year 2	Year 3

Current Liabilities
Accounts Payable	$12,160	$12,640	$18,746
Current Borrowing	$0	$22,000	$7,000
Other Current Liabilities	$0	$0	$0
Subtotal Current Liabilities	$12,160	$34,640	$25,746

Long-term Liabilities	$323,600	$298,600	$273,600
Total Liabilities	$335,760	$333,240	$299,346

Paid-in Capital	$119,000	$119,000	$119,000
Retained Earnings	($12,850)	($46,497)	($48,216)
Earnings	($33,647)	($1,719)	$33,953
Total Capital	$72,503	$70,785	$104,738
Total Liabilities and Capital	$408,263	$404,025	$404,084

Net Worth	$72,503	$70,785	$104,738

Business Ratios

Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 7941, Sporting and Recreation Goods industry, are shown for comparison.

Ratio Analysis
	Year 1	Year 2	Year 3	Industry Profile
Sales Growth	n.a.	49.59%	51.01%	15.90%

Percent of Total Assets
Inventory	1.48%	2.04%	3.16%	2.80%
Other Current Assets	0.00%	0.00%	0.00%	34.10%
Total Current Assets	3.74%	2.73%	3.98%	45.20%
Long-term Assets	96.26%	97.27%	96.02%	54.80%
Total Assets	100.00%	100.00%	100.00%	100.00%

Current Liabilities	2.98%	8.57%	6.37%	39.60%
Long-term Liabilities	79.26%	73.91%	67.71%	24.80%
Total Liabilities	82.24%	82.48%	74.08%	64.40%
Net Worth	17.76%	17.52%	25.92%	35.60%

Percent of Sales
Sales	100.00%	100.00%	100.00%	100.00%
Gross Margin	78.79%	78.82%	78.66%	0.00%
Selling, General & Administrative Expenses	83.16%	70.54%	64.27%	79.30%
Advertising Expenses	7.05%	4.79%	3.66%	2.10%
Profit Before Interest and Taxes	-2.82%	9.45%	14.73%	2.10%

Main Ratios
Current	1.26	0.32	0.62	1.18
Quick	0.76	0.08	0.13	0.85
Total Debt to Total Assets	82.24%	82.48%	74.08%	64.40%
Pre-tax Return on Net Worth	-46.41%	-2.43%	33.25%	2.10%
Pre-tax Return on Assets	-8.24%	-0.43%	8.62%	5.90%

Additional Ratios	Year 1	Year 2	Year 3
Net Profit Margin	-18.54%	-0.63%	8.28%	n.a
Return on Equity	-46.41%	-2.43%	32.42%	n.a

Activity Ratios
Inventory Turnover	10.44	8.06	8.34	n.a
Accounts Payable Turnover	9.90	12.17	12.17	n.a
Payment Days	28	29	25	n.a
Total Asset Turnover	0.44	0.67	1.01	n.a

Debt Ratios
Debt to Net Worth	4.63	4.71	2.86	n.a
Current Liab. to Liab.	0.04	0.10	0.09	n.a

Liquidity Ratios
Net Working Capital	$3,103	($23,615)	($9,662)	n.a
Interest Coverage	-0.18	0.94	2.36	n.a

Additional Ratios
Assets to Sales	2.25	1.49	0.99	n.a
Current Debt/Total Assets	3%	9%	6%	n.a
Acid Test	0.76	0.08	0.13	n.a
Sales/Net Worth	2.50	3.84	3.91	n.a
Dividend Payout	0.00	0.00	0.00	n.a