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Medical Equipment Manufacturing icon Lift Bed Manufacturer Business Plan

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Load Hog

Financial Plan

Our financial picture is encouraging. If we can secure the levels of financial support we are now seeking, we will be able to improve on forecasted results.

7.1 Important Assumptions

The financial plan depends on important assumptions, most of which are shown in the following table. The key underlying assumptions are as follows:

General Assumptions
2001 2002 2003
Plan Month 1 2 3
Current Interest Rate 12.00% 12.00% 12.00%
Long-term Interest Rate 10.00% 10.00% 10.00%
Tax Rate 25.42% 25.00% 25.42%
Other 0 0 0

7.2 Break-even Analysis

Our Break-even Analysis is based on true observed expenses over the last three years. Including payroll, rent, utilities, insurance, and basic marketing costs, our observation is that $80,000 is a realistic estimate.

Lift bed manufacturer business plan, financial plan chart image

Break-even Analysis
Monthly Units Break-even 1,554
Monthly Revenue Break-even $142,484
Assumptions:
Average Per-Unit Revenue $91.70
Average Per-Unit Variable Cost $39.68
Estimated Monthly Fixed Cost $80,822

7.3 Projected Profit and Loss

The company’s projected Income Statements are presented below.

Pro Forma Profit and Loss
2001 2002 2003
Sales $4,479,283 $10,087,800 $18,048,700
Direct Cost of Sales $1,938,489 $4,845,600 $8,975,300
Production Payroll $99,600 $129,000 $266,000
Comissions $67,577 $166,000 $325,000
Total Cost of Sales $2,105,666 $5,140,600 $9,566,300
Gross Margin $2,373,617 $4,947,200 $8,482,400
Gross Margin % 52.99% 49.04% 47.00%
Operating Expenses
Sales and Marketing Expenses
Sales and Marketing Payroll $116,000 $261,000 $455,000
Advertising/Promotion $323,171 $400,000 $500,000
Travel $84,000 $100,000 $200,000
Miscellaneous $69,000 $100,000 $125,000
Total Sales and Marketing Expenses $592,171 $861,000 $1,280,000
Sales and Marketing % 13.22% 8.54% 7.09%
General and Administrative Expenses
General and Administrative Payroll $66,000 $124,000 $154,000
Sales and Marketing and Other Expenses $0 $0 $0
Depreciation $72,000 $72,000 $72,000
Leased Equipment $18,784 $25,000 $60,000
Utilities/Phone/Postage $28,484 $90,000 $200,000
Insurance $37,440 $75,000 $100,000
Rent $22,500 $30,000 $50,000
Payroll Taxes $84,480 $190,200 $319,500
Other General and Administrative Expenses $0 $0 $0
Total General and Administrative Expenses $329,688 $606,200 $955,500
General and Administrative % 7.36% 6.01% 5.29%
Other Expenses:
Other Payroll $0 $120,000 $190,000
Consultants $0 $0 $0
Contract/Consultants $48,000 $30,000 $50,000
Total Other Expenses $48,000 $150,000 $240,000
Other % 1.07% 1.49% 1.33%
Total Operating Expenses $969,859 $1,617,200 $2,475,500
Profit Before Interest and Taxes $1,403,758 $3,330,000 $6,006,900
EBITDA $1,475,758 $3,402,000 $6,078,900
Interest Expense $137,050 $138,700 $124,900
Taxes Incurred $314,915 $797,825 $1,495,008
Net Profit $951,794 $2,393,475 $4,386,992
Net Profit/Sales 21.25% 23.73% 24.31%

7.4 Projected Cash Flow

The chart and table below outlines the projected annual Cash Flow for the first three years of this plan.

Lift bed manufacturer business plan, financial plan chart image

Pro Forma Cash Flow
2001 2002 2003
Cash Received
Cash from Operations
Cash Sales $0 $0 $0
Cash from Receivables $3,142,915 $8,381,237 $15,626,353
Subtotal Cash from Operations $3,142,915 $8,381,237 $15,626,353
Additional Cash Received
Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $175,000 $0 $0
New Other Liabilities (interest-free) $0 $0 $0
New Long-term Liabilities $500,000 $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 $3,817,915 $8,381,237 $15,626,353
Expenditures 2001 2002 2003
Expenditures from Operations
Cash Spending $281,600 $634,000 $1,065,000
Bill Payments $2,833,305 $7,681,212 $12,979,610
Subtotal Spent on Operations $3,114,905 $8,315,212 $14,044,610
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $75,000 $75,000 $75,000
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $48,000 $48,000 $48,000
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $3,237,905 $8,438,212 $14,167,610
Net Cash Flow $580,010 ($56,975) $1,458,743
Cash Balance $582,816 $525,842 $1,984,585

7.5 Projected Balance Sheet

Load Hog’s projected Balance Sheet is presented below.

Pro Forma Balance Sheet
2001 2002 2003
Assets
Current Assets
Cash $582,816 $525,842 $1,984,585
Accounts Receivable $1,362,959 $3,069,521 $5,491,868
Inventory $437,784 $1,094,318 $2,026,959
Other Current Assets $5,418 $5,418 $5,418
Total Current Assets $2,388,977 $4,695,099 $9,508,830
Long-term Assets
Long-term Assets $362,502 $362,502 $362,502
Accumulated Depreciation $140,330 $212,330 $284,330
Total Long-term Assets $222,172 $150,172 $78,172
Total Assets $2,611,149 $4,845,271 $9,587,002
Liabilities and Capital 2001 2002 2003
Current Liabilities
Accounts Payable $664,697 $628,345 $1,106,083
Current Borrowing $485,239 $410,239 $335,239
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $1,149,936 $1,038,584 $1,441,322
Long-term Liabilities $873,710 $825,710 $777,710
Total Liabilities $2,023,646 $1,864,294 $2,219,032
Paid-in Capital $375,886 $375,886 $375,886
Retained Earnings ($740,177) $211,617 $2,605,092
Earnings $951,794 $2,393,475 $4,386,992
Total Capital $587,503 $2,980,978 $7,367,970
Total Liabilities and Capital $2,611,149 $4,845,271 $9,587,002
Net Worth $587,503 $2,980,978 $7,367,970

7.6 Business Ratios

The company’s business ratios are presented below, the final column, Industry Profile, contains ratios for the motor vehicle parts and accessories industry, as determined by the standard industry classification (SIC) index code 3714, Motor Vehicle Parts and Accessories.

Ratio Analysis
2001 2002 2003 Industry Profile
Sales Growth 2077.61% 125.21% 78.92% 4.40%
Percent of Total Assets
Accounts Receivable 52.20% 63.35% 57.28% 24.50%
Inventory 16.77% 22.59% 21.14% 23.00%
Other Current Assets 0.21% 0.11% 0.06% 21.50%
Total Current Assets 91.49% 96.90% 99.18% 69.00%
Long-term Assets 8.51% 3.10% 0.82% 31.00%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 44.04% 21.43% 15.03% 38.20%
Long-term Liabilities 33.46% 17.04% 8.11% 14.20%
Total Liabilities 77.50% 38.48% 23.15% 52.40%
Net Worth 22.50% 61.52% 76.85% 47.60%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 52.99% 49.04% 47.00% 26.20%
Selling, General & Administrative Expenses 32.64% 25.96% 23.39% 15.10%
Advertising Expenses 7.21% 3.97% 2.77% 0.50%
Profit Before Interest and Taxes 31.34% 33.01% 33.28% 2.40%
Main Ratios
Current 2.08 4.52 6.60 1.86
Quick 1.70 3.47 5.19 1.01
Total Debt to Total Assets 77.50% 38.48% 23.15% 52.40%
Pre-tax Return on Net Worth 215.61% 107.06% 79.83% 5.40%
Pre-tax Return on Assets 48.51% 65.86% 61.35% 11.30%
Additional Ratios 2001 2002 2003
Net Profit Margin 21.25% 23.73% 24.31% n.a
Return on Equity 162.01% 80.29% 59.54% n.a
Activity Ratios
Accounts Receivable Turnover 3.29 3.29 3.29 n.a
Collection Days 55 80 87 n.a
Inventory Turnover 9.10 6.33 5.75 n.a
Accounts Payable Turnover 5.15 12.17 12.17 n.a
Payment Days 28 31 24 n.a
Total Asset Turnover 1.72 2.08 1.88 n.a
Debt Ratios
Debt to Net Worth 3.44 0.63 0.30 n.a
Current Liab. to Liab. 0.57 0.56 0.65 n.a
Liquidity Ratios
Net Working Capital $1,239,041 $3,656,516 $8,067,508 n.a
Interest Coverage 10.24 24.01 48.09 n.a
Additional Ratios
Assets to Sales 0.58 0.48 0.53 n.a
Current Debt/Total Assets 44% 21% 15% n.a
Acid Test 0.51 0.51 1.38 n.a
Sales/Net Worth 7.62 3.38 2.45 n.a
Dividend Payout 0.00 0.00 0.00 n.a