Quaestor Services
Financial Plan
Quaestor Services’ financial plan is based on obtaining a loan by January of 2005 of $15,000 to cover the start-up expenses. In July of 2005 an additional $10,000 in financing will be required to ensure business operations, marketing and stability during the first year of operation. For financial forecasting the loan is a seven year loan at an interest rate of 9.09%. Quaestor will achieve profitability in the second year.
The fiscal year is a calendar year, January through December.
7.1 Start-up Funding
Start-up costs come to $30,000 of which $15,000 is being financed by a direct owner investment. Before the first six months of operation, $15,000 financing is being sought for the start-up costs. In July of 2005 an additional $10,000 in financing will be required to ensure business operations, marketing and stability during the first year of operation.
Start-up Funding | |
Start-up Expenses to Fund | $15,000 |
Start-up Assets to Fund | $13,000 |
Total Funding Required | $28,000 |
Assets | |
Non-cash Assets from Start-up | $3,000 |
Cash Requirements from Start-up | $10,000 |
Additional Cash Raised | $2,000 |
Cash Balance on Starting Date | $12,000 |
Total Assets | $15,000 |
Liabilities and Capital | |
Liabilities | |
Current Borrowing | $0 |
Long-term Liabilities | $15,000 |
Accounts Payable (Outstanding Bills) | $0 |
Other Current Liabilities (interest-free) | $0 |
Total Liabilities | $15,000 |
Capital | |
Planned Investment | |
Owner | $15,000 |
Other | $0 |
Additional Investment Requirement | $0 |
Total Planned Investment | $15,000 |
Loss at Start-up (Start-up Expenses) | ($15,000) |
Total Capital | $0 |
Total Capital and Liabilities | $15,000 |
Total Funding | $30,000 |
7.2 Important Assumptions
The key underlying assumptions of Quaestor financial plan shown in the following general assumption table are:
- We assume access to financing of $30,000 to support our financial plan.
- We assume our financial progress is based on a very conservative sales forecast supported by data received and reviewed by Whelnoan Insurance.
- We assume that all sales milestones have been achieved.
General Assumptions | |||
Year 1 | Year 2 | Year 3 | |
Plan Month | 1 | 2 | 3 |
Current Interest Rate | 9.09% | 9.09% | 9.09% |
Long-term Interest Rate | 9.09% | 9.09% | 9.09% |
Tax Rate | 20.00% | 20.00% | 20.00% |
Other | 0 | 0 | 0 |
7.3 Break-even Analysis
The following table and chart show our Break-even Analysis. The first year due to start-up costs and expenses will not be included in the break-even analysis.

Break-even Analysis | |
Monthly Revenue Break-even | $4,997 |
Assumptions: | |
Average Percent Variable Cost | 71% |
Estimated Monthly Fixed Cost | $1,468 |
7.4 Projected Profit and Loss
Based on the realistic sales projections and efficient cost control measures in place, Quaestor will achieve profitability in the second year of operation. Monthly profitability is first achieved in November 2005, but due to developing a customer base, the first months of operations reflect a loss.
In the second year of operation, sales increased $68,810 or 174%, resulting in a net profit. Significant changes in the second year are the hiring of an agent in January 2006, resulting in additional costs to the direct cost of sales of $34,500 and the set-up of an office outside of the owner’s home and Whelnoan Insurance District 15 office, resulting in additional operating costs of $7,120.
In the third year of operation, sales increased $13,800 or 13%. This yields an increase on the bottom line. In the third year of operations, Whelnoan Insurance subsidies are no longer available, resulting in a decrease in Miscellaneous revenue of $36,800 over the prior year. There are no significant changes in the third year of operations.




Pro Forma Profit and Loss | |||
Year 1 | Year 2 | Year 3 | |
Sales | $39,500 | $108,310 | $122,110 |
Direct Cost of Sales | $27,900 | $63,000 | $70,900 |
Other Costs of Sales | $0 | $0 | $0 |
Total Cost of Sales | $27,900 | $63,000 | $70,900 |
Gross Margin | $11,600 | $45,310 | $51,210 |
Gross Margin % | 29.37% | 41.83% | 41.94% |
Expenses | |||
Payroll | $0 | $0 | $0 |
Marketing/Promotion | $4,200 | $6,600 | $7,200 |
Depreciation | $1,020 | $2,520 | $3,180 |
Employee Benefits | $2,250 | $3,000 | $3,000 |
Rent | $3,000 | $6,000 | $6,000 |
Utilities | $600 | $1,500 | $1,500 |
Telephone/DSL/Cell | $3,000 | $4,050 | $4,200 |
Office Supplies | $900 | $1,650 | $2,150 |
Professional Services | $250 | $500 | $500 |
Training/Licensing | $290 | $250 | $0 |
Insurance | $900 | $1,200 | $1,200 |
Payroll Taxes | $0 | $0 | $0 |
Miscellaneous | $1,200 | $1,200 | $1,200 |
Total Operating Expenses | $17,610 | $28,470 | $30,130 |
Profit Before Interest and Taxes | ($6,010) | $16,840 | $21,080 |
EBITDA | ($4,990) | $19,360 | $24,260 |
Interest Expense | $1,719 | $1,899 | $1,572 |
Taxes Incurred | $0 | $2,988 | $3,902 |
Net Profit | ($7,729) | $11,953 | $15,607 |
Net Profit/Sales | -19.57% | 11.04% | 12.78% |
7.5 Projected Cash Flow
Due the fact that Quaestor is a new start-up company, the cash flow for FY2005 is somewhat exaggerated by the instant influx of new capital. Subsequent years however show a healthy growth in cash flow, mainly due to the 84-month repayment of the start-up loan and increased sales.

Pro Forma Cash Flow | |||
Year 1 | Year 2 | Year 3 | |
Cash Received | |||
Cash from Operations | |||
Cash Sales | $33,575 | $92,064 | $103,794 |
Subtotal Cash from Operations | $38,846 | $107,171 | $121,882 |
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 | $10,000 | $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 | $48,846 | $107,171 | $121,882 |
Expenditures | Year 1 | Year 2 | Year 3 |
Expenditures from Operations | |||
Cash Spending | $0 | $0 | $0 |
Bill Payments | $42,322 | $90,012 | $102,544 |
Subtotal Spent on Operations | $42,322 | $90,012 | $102,544 |
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 | $2,387 | $3,440 | $3,766 |
Purchase Other Current Assets | $0 | $0 | $0 |
Purchase Long-term Assets | $0 | $7,500 | $2,000 |
Dividends | $0 | $0 | $0 |
Subtotal Cash Spent | $44,709 | $100,952 | $108,310 |
Net Cash Flow | $4,137 | $6,219 | $13,572 |
Cash Balance | $16,137 | $22,356 | $35,928 |
7.6 Projected Balance Sheet
The table below presents the balance sheet for Quaestor Services. This table reflects a positive cash position throughout the period of this financial plan. The negative net worth is created in the first year due to the start-up costs showing as a negative retained earnings. As the balance sheet shows, Quaestor will not have any difficulty meeting their debt obligations as long as the conservative revenue projections are met.
Pro Forma Balance Sheet | |||
Year 1 | Year 2 | Year 3 | |
Assets | |||
Current Assets | |||
Cash | $16,137 | $22,356 | $35,928 |
Accounts Receivable | $654 | $1,793 | $2,022 |
Other Current Assets | $0 | $0 | $0 |
Total Current Assets | $16,791 | $24,149 | $37,950 |
Long-term Assets | |||
Long-term Assets | $3,000 | $10,500 | $12,500 |
Accumulated Depreciation | $1,020 | $3,540 | $6,720 |
Total Long-term Assets | $1,980 | $6,960 | $5,780 |
Total Assets | $18,771 | $31,109 | $43,730 |
Liabilities and Capital | Year 1 | Year 2 | Year 3 |
Current Liabilities | |||
Accounts Payable | $3,887 | $7,713 | $8,492 |
Current Borrowing | $0 | $0 | $0 |
Other Current Liabilities | $0 | $0 | $0 |
Subtotal Current Liabilities | $3,887 | $7,713 | $8,492 |
Long-term Liabilities | $22,613 | $19,173 | $15,407 |
Total Liabilities | $26,500 | $26,886 | $23,899 |
Paid-in Capital | $15,000 | $15,000 | $15,000 |
Retained Earnings | ($15,000) | ($22,729) | ($10,776) |
Earnings | ($7,729) | $11,953 | $15,607 |
Total Capital | ($7,729) | $4,224 | $19,830 |
Total Liabilities and Capital | $18,771 | $31,109 | $43,730 |
Net Worth | ($7,729) | $4,224 | $19,830 |
7.7 Business Ratios
The table below presents common business ratios as a reference. Industry Profile comparisons are for Standard Industrial Classification code 6411.0000, Insurance Agents, Brokers and Service as the majority of our revenue comes from insurance sales. However, since the combined business of accounting/bookkeeping services and insurance sales does not fall underneath any predefined Industry dataset, the Industry ratios are not wholly accurate nor representative for Quaestor Services.
Ratio Analysis | ||||
Year 1 | Year 2 | Year 3 | Industry Profile | |
Sales Growth | 0.00% | 174.20% | 12.74% | 8.23% |
Percent of Total Assets | ||||
Accounts Receivable | 3.48% | 5.76% | 4.62% | 24.10% |
Other Current Assets | 0.00% | 0.00% | 0.00% | 69.87% |
Total Current Assets | 89.45% | 77.63% | 86.78% | 94.00% |
Long-term Assets | 10.55% | 22.37% | 13.22% | 6.00% |
Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
Current Liabilities | 20.71% | 24.79% | 19.42% | 36.78% |
Long-term Liabilities | 120.47% | 61.63% | 35.23% | 9.58% |
Total Liabilities | 141.17% | 86.42% | 54.65% | 46.36% |
Net Worth | -41.17% | 13.58% | 45.35% | 53.64% |
Percent of Sales | ||||
Sales | 100.00% | 100.00% | 100.00% | 100.00% |
Gross Margin | 29.37% | 41.83% | 41.94% | 100.00% |
Selling, General & Administrative Expenses | 48.93% | 30.80% | 29.16% | 74.71% |
Advertising Expenses | 0.00% | 0.00% | 0.00% | 0.48% |
Profit Before Interest and Taxes | -15.22% | 15.55% | 17.26% | 5.37% |
Main Ratios | ||||
Current | 4.32 | 3.13 | 4.47 | 1.82 |
Quick | 4.32 | 3.13 | 4.47 | 1.62 |
Total Debt to Total Assets | 141.17% | 86.42% | 54.65% | 51.49% |
Pre-tax Return on Net Worth | 100.00% | 353.74% | 98.38% | 7.25% |
Pre-tax Return on Assets | -41.17% | 48.03% | 44.61% | 14.94% |
Additional Ratios | Year 1 | Year 2 | Year 3 | |
Net Profit Margin | -19.57% | 11.04% | 12.78% | n.a |
Return on Equity | 0.00% | 282.99% | 78.70% | n.a |
Activity Ratios | ||||
Accounts Receivable Turnover | 9.06 | 9.06 | 9.06 | n.a |
Collection Days | 29 | 27 | 38 | n.a |
Accounts Payable Turnover | 11.89 | 12.17 | 12.17 | n.a |
Payment Days | 27 | 23 | 29 | n.a |
Total Asset Turnover | 2.10 | 3.48 | 2.79 | n.a |
Debt Ratios | ||||
Debt to Net Worth | 0.00 | 6.37 | 1.21 | n.a |
Current Liab. to Liab. | 0.15 | 0.29 | 0.36 | n.a |
Liquidity Ratios | ||||
Net Working Capital | $12,904 | $16,437 | $29,457 | n.a |
Interest Coverage | -3.50 | 8.87 | 13.41 | n.a |
Additional Ratios | ||||
Assets to Sales | 0.48 | 0.29 | 0.36 | n.a |
Current Debt/Total Assets | 21% | 25% | 19% | n.a |
Acid Test | 4.15 | 2.90 | 4.23 | n.a |
Sales/Net Worth | 0.00 | 25.64 | 6.16 | n.a |
Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |