Grassroots Wireless
Financial Plan
The following sections outline important financial information.
8.1 Break-even Analysis
Average per-unit revenue: based on the $20 monthly access fee.
Average per-unit variable cost: costs based on infrastructure, and administrative costs.
Estimated monthly fixed costs: Internet connections costs.
| Break-even Analysis | |
| Monthly Revenue Break-even | $8,072 |
| Assumptions: | |
| Average Percent Variable Cost | 5% |
| Estimated Monthly Fixed Cost | $7,668 |
8.2 Projected Profit and Loss
The following table and charts show the Projected Profit and Loss.
| Pro Forma Profit and Loss | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | $36,584 | $132,665 | $211,443 |
| Direct Cost of Sales | $1,829 | $6,633 | $10,572 |
| Other Costs of Sales | $0 | $0 | $0 |
| Total Cost of Sales | $1,829 | $6,633 | $10,572 |
| Gross Margin | $34,755 | $126,032 | $200,871 |
| Gross Margin % | 95.00% | 95.00% | 95.00% |
| Expenses | |||
| Payroll | $58,800 | $75,600 | $87,600 |
| Sales and Marketing and Other Expenses | $2,400 | $5,600 | $12,000 |
| Depreciation | $996 | $1,002 | $1,002 |
| Rent | $2,400 | $2,400 | $2,400 |
| Utilities | $9,600 | $13,000 | $15,000 |
| Insurance | $3,000 | $3,000 | $3,000 |
| Payroll Taxes | $8,820 | $11,340 | $13,140 |
| Other | $6,000 | $6,000 | $6,000 |
| Total Operating Expenses | $92,016 | $117,942 | $140,142 |
| Profit Before Interest and Taxes | ($57,261) | $8,090 | $60,729 |
| EBITDA | ($56,265) | $9,092 | $61,731 |
| Interest Expense | $0 | $0 | $0 |
| Taxes Incurred | $0 | $2,427 | $18,219 |
| Net Profit | ($57,261) | $5,663 | $42,510 |
| Net Profit/Sales | -156.52% | 4.27% | 20.10% |
8.3 Projected Cash Flow
The following table and chart display the Projected Cash Flow.
| Pro Forma Cash Flow | |||
| Year 1 | Year 2 | Year 3 | |
| Cash Received | |||
| Cash from Operations | |||
| Cash Sales | $36,584 | $132,665 | $211,443 |
| Subtotal Cash from Operations | $36,584 | $132,665 | $211,443 |
| 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 | $36,584 | $132,665 | $211,443 |
| Expenditures | Year 1 | Year 2 | Year 3 |
| Expenditures from Operations | |||
| Cash Spending | $58,800 | $75,600 | $87,600 |
| Bill Payments | $31,112 | $49,195 | $77,871 |
| Subtotal Spent on Operations | $89,912 | $124,795 | $165,471 |
| 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 | $89,912 | $124,795 | $165,471 |
| Net Cash Flow | ($53,328) | $7,870 | $45,972 |
| Cash Balance | $2,172 | $10,042 | $56,014 |
8.4 Projected Balance Sheet
The following table presents the Projected Balance Sheet.
| Pro Forma Balance Sheet | |||
| Year 1 | Year 2 | Year 3 | |
| Assets | |||
| Current Assets | |||
| Cash | $2,172 | $10,042 | $56,014 |
| Other Current Assets | $0 | $0 | $0 |
| Total Current Assets | $2,172 | $10,042 | $56,014 |
| Long-term Assets | |||
| Long-term Assets | $5,000 | $5,000 | $5,000 |
| Accumulated Depreciation | $996 | $1,998 | $3,000 |
| Total Long-term Assets | $4,004 | $3,002 | $2,000 |
| Total Assets | $6,176 | $13,044 | $58,014 |
| Liabilities and Capital | Year 1 | Year 2 | Year 3 |
| Current Liabilities | |||
| Accounts Payable | $2,938 | $4,142 | $6,603 |
| Current Borrowing | $0 | $0 | $0 |
| Other Current Liabilities | $0 | $0 | $0 |
| Subtotal Current Liabilities | $2,938 | $4,142 | $6,603 |
| Long-term Liabilities | $0 | $0 | $0 |
| Total Liabilities | $2,938 | $4,142 | $6,603 |
| Paid-in Capital | $70,000 | $70,000 | $70,000 |
| Retained Earnings | ($9,500) | ($66,761) | ($61,098) |
| Earnings | ($57,261) | $5,663 | $42,510 |
| Total Capital | $3,239 | $8,902 | $51,412 |
| Total Liabilities and Capital | $6,176 | $13,044 | $58,014 |
| Net Worth | $3,239 | $8,902 | $51,412 |
8.5 Business Ratios
The following table illustrates the different Business Ratios, based on NAICS code 518111, Internet Service Providers.
| Ratio Analysis | ||||
| Year 1 | Year 2 | Year 3 | Industry Profile | |
| Sales Growth | 0.00% | 262.63% | 59.38% | 15.97% |
| Percent of Total Assets | ||||
| Other Current Assets | 0.00% | 0.00% | 0.00% | 56.35% |
| Total Current Assets | 35.17% | 76.99% | 96.55% | 87.48% |
| Long-term Assets | 64.83% | 23.01% | 3.45% | 12.52% |
| Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
| Current Liabilities | 47.56% | 31.76% | 11.38% | 30.66% |
| Long-term Liabilities | 0.00% | 0.00% | 0.00% | 23.07% |
| Total Liabilities | 47.56% | 31.76% | 11.38% | 53.73% |
| Net Worth | 52.44% | 68.24% | 88.62% | 46.27% |
| Percent of Sales | ||||
| Sales | 100.00% | 100.00% | 100.00% | 100.00% |
| Gross Margin | 95.00% | 95.00% | 95.00% | 100.00% |
| Selling, General & Administrative Expenses | 251.52% | 90.73% | 74.90% | 73.80% |
| Advertising Expenses | 0.00% | 0.00% | 0.00% | 1.37% |
| Profit Before Interest and Taxes | -156.52% | 6.10% | 28.72% | 1.03% |
| Main Ratios | ||||
| Current | 0.74 | 2.42 | 8.48 | 1.97 |
| Quick | 0.74 | 2.42 | 8.48 | 1.50 |
| Total Debt to Total Assets | 47.56% | 31.76% | 11.38% | 59.78% |
| Pre-tax Return on Net Worth | -1767.98% | 90.88% | 118.12% | 2.93% |
| Pre-tax Return on Assets | -927.10% | 62.02% | 104.68% | 7.28% |
| Additional Ratios | Year 1 | Year 2 | Year 3 | |
| Net Profit Margin | -156.52% | 4.27% | 20.10% | n.a |
| Return on Equity | -1767.98% | 63.62% | 82.69% | n.a |
| Activity Ratios | ||||
| Accounts Payable Turnover | 11.59 | 12.17 | 12.17 | n.a |
| Payment Days | 27 | 26 | 24 | n.a |
| Total Asset Turnover | 5.92 | 10.17 | 3.64 | n.a |
| Debt Ratios | ||||
| Debt to Net Worth | 0.91 | 0.47 | 0.13 | n.a |
| Current Liab. to Liab. | 1.00 | 1.00 | 1.00 | n.a |
| Liquidity Ratios | ||||
| Net Working Capital | ($765) | $5,900 | $49,412 | n.a |
| Interest Coverage | 0.00 | 0.00 | 0.00 | n.a |
| Additional Ratios | ||||
| Assets to Sales | 0.17 | 0.10 | 0.27 | n.a |
| Current Debt/Total Assets | 48% | 32% | 11% | n.a |
| Acid Test | 0.74 | 2.42 | 8.48 | n.a |
| Sales/Net Worth | 11.30 | 14.90 | 4.11 | n.a |
| Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |
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