Bra~vo Intimates
Financial Plan
- Being a retail store we will not be selling on credit, nor will we have lay-aways.
- The first year we will keep the part-time help to a minimum.
- Due to the soft economy we plan on a better interest rate than offered in the past five years.
7.1 Important Assumptions
Our sales paid for by credit card will be deposited in our business checking account within 48 hours. Since most of our personnel are part-time, the first year only the Owner/Manager Rebecca Autumn will receive benefits. Our business checking account will be with National City, in Royal Oak. They have reported the approximate current interest rates as those below.
| General Assumptions | |||
| Year 1 | Year 2 | Year 3 | |
| Plan Month | 1 | 2 | 3 |
| Current Interest Rate | 9.00% | 9.00% | 9.00% |
| Long-term Interest Rate | 9.00% | 9.00% | 9.00% |
| Tax Rate | 2.50% | 0.00% | 2.50% |
| Other | 0 | 0 | 0 |
7.2 Key Financial Indicators
The following chart shows the Benchmark figures for Bra~vo.
7.3 Break-even Analysis
The following table and chart show our Break-even Analysis. Fixed costs are based on operating expenses in the first year.
| Break-even Analysis | |
| Monthly Revenue Break-even | $32,367 |
| Assumptions: | |
| Average Percent Variable Cost | 42% |
| Estimated Monthly Fixed Cost | $18,727 |
7.4 Projected Profit and Loss
The following table will indicate projected Profit and Loss.
| Pro Forma Profit and Loss | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | $389,750 | $535,200 | $655,250 |
| Direct Cost of Sales | $164,250 | $219,850 | $257,625 |
| Other | $0 | $0 | $0 |
| Total Cost of Sales | $164,250 | $219,850 | $257,625 |
| Gross Margin | $225,500 | $315,350 | $397,625 |
| Gross Margin % | 57.86% | 58.92% | 60.68% |
| Expenses | |||
| Payroll | $90,248 | $129,300 | $145,075 |
| Sales and Marketing and Other Expenses | $42,025 | $48,354 | $46,460 |
| Depreciation | $0 | $0 | $0 |
| Principle Loan Payment | $21,006 | $5,937 | $7,907 |
| Utilities | $5,475 | $6,325 | $7,085 |
| Telephone | $3,000 | $3,850 | $4,240 |
| Insurance | $8,400 | $8,500 | $8,600 |
| Bankcard Machine | $325 | $200 | $0 |
| Bankcard Processing fees | $9,094 | $12,488 | $15,289 |
| Bank Account fees | $108 | $144 | $150 |
| Business Supplies | $1,955 | $800 | $850 |
| Rent | $32,256 | $30,000 | $30,000 |
| Payroll Taxes | $10,830 | $15,516 | $17,409 |
| Other | $0 | $0 | $0 |
| Total Operating Expenses | $224,722 | $261,414 | $283,065 |
| Profit Before Interest and Taxes | $778 | $53,936 | $114,560 |
| EBITDA | $778 | $53,936 | $114,560 |
| Interest Expense | $14,147 | $12,864 | $10,178 |
| Taxes Incurred | $0 | $0 | $2,610 |
| Net Profit | ($13,369) | $41,072 | $101,773 |
| Net Profit/Sales | -3.43% | 7.67% | 15.53% |
7.5 Projected Cash Flow
The following chart and table will indicate projected cash flow.
| Pro Forma Cash Flow | |||
| Year 1 | Year 2 | Year 3 | |
| Cash Received | |||
| Cash from Operations | |||
| Cash Sales | $389,750 | $535,200 | $655,250 |
| Subtotal Cash from Operations | $389,750 | $535,200 | $655,250 |
| 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 | $389,750 | $535,200 | $655,250 |
| Expenditures | Year 1 | Year 2 | Year 3 |
| Expenditures from Operations | |||
| Cash Spending | $90,248 | $129,300 | $145,075 |
| Bill Payments | $228,814 | $349,774 | $406,803 |
| Subtotal Spent on Operations | $319,062 | $479,074 | $551,878 |
| 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 | $28,512 | $31,187 |
| Purchase Other Current Assets | $0 | $0 | $0 |
| Purchase Long-term Assets | $0 | $0 | $0 |
| Dividends | $0 | $0 | $0 |
| Subtotal Cash Spent | $319,062 | $507,586 | $583,065 |
| Net Cash Flow | $70,688 | $27,614 | $72,185 |
| Cash Balance | $75,688 | $103,301 | $175,486 |
7.6 Projected Balance Sheet
Deborah Summers will keep our financial reports current, Chris Hamill our accountant will make a quarterly visit to review the reports and offer suggestions on business development.
| Pro Forma Balance Sheet | |||
| Year 1 | Year 2 | Year 3 | |
| Assets | |||
| Current Assets | |||
| Cash | $75,688 | $103,301 | $175,486 |
| Inventory | $8,298 | $11,106 | $13,015 |
| Other Current Assets | $0 | $0 | $0 |
| Total Current Assets | $83,985 | $114,408 | $188,501 |
| Long-term Assets | |||
| Long-term Assets | $0 | $0 | $0 |
| Accumulated Depreciation | $0 | $0 | $0 |
| Total Long-term Assets | $0 | $0 | $0 |
| Total Assets | $83,985 | $114,408 | $188,501 |
| Liabilities and Capital | Year 1 | Year 2 | Year 3 |
| Current Liabilities | |||
| Accounts Payable | $12,354 | $30,217 | $33,724 |
| Current Borrowing | $0 | $0 | $0 |
| Other Current Liabilities | $0 | $0 | $0 |
| Subtotal Current Liabilities | $12,354 | $30,217 | $33,724 |
| Long-term Liabilities | $157,190 | $128,678 | $97,491 |
| Total Liabilities | $169,544 | $158,895 | $131,215 |
| Paid-in Capital | $39,000 | $39,000 | $39,000 |
| Retained Earnings | ($111,190) | ($124,559) | ($83,487) |
| Earnings | ($13,369) | $41,072 | $101,773 |
| Total Capital | ($85,559) | ($44,487) | $57,286 |
| Total Liabilities and Capital | $83,985 | $114,408 | $188,501 |
| Net Worth | ($85,559) | ($44,487) | $57,286 |
7.7 Business Ratios
Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 5632, Women’s Accessory and Specialty Stores, are shown for comparison.
| Ratio Analysis | ||||
| Year 1 | Year 2 | Year 3 | Industry Profile | |
| Sales Growth | 0.00% | 37.32% | 22.43% | 8.20% |
| Percent of Total Assets | ||||
| Inventory | 9.88% | 9.71% | 6.90% | 50.10% |
| Other Current Assets | 0.00% | 0.00% | 0.00% | 22.40% |
| Total Current Assets | 100.00% | 100.00% | 100.00% | 81.40% |
| Long-term Assets | 0.00% | 0.00% | 0.00% | 18.60% |
| Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
| Current Liabilities | 14.71% | 26.41% | 17.89% | 42.60% |
| Long-term Liabilities | 187.16% | 112.47% | 51.72% | 14.90% |
| Total Liabilities | 201.87% | 138.88% | 69.61% | 57.50% |
| Net Worth | -101.87% | -38.88% | 30.39% | 42.50% |
| Percent of Sales | ||||
| Sales | 100.00% | 100.00% | 100.00% | 100.00% |
| Gross Margin | 57.86% | 58.92% | 60.68% | 40.50% |
| Selling, General & Administrative Expenses | 61.29% | 51.25% | 44.75% | 22.20% |
| Advertising Expenses | 4.71% | 3.92% | 3.51% | 2.20% |
| Profit Before Interest and Taxes | 0.20% | 10.08% | 17.48% | 1.10% |
| Main Ratios | ||||
| Current | 6.80 | 3.79 | 5.59 | 2.23 |
| Quick | 6.13 | 3.42 | 5.20 | 0.57 |
| Total Debt to Total Assets | 201.87% | 138.88% | 69.61% | 57.50% |
| Pre-tax Return on Net Worth | 15.63% | -92.32% | 182.21% | 2.80% |
| Pre-tax Return on Assets | -15.92% | 35.90% | 55.37% | 6.70% |
| Additional Ratios | Year 1 | Year 2 | Year 3 | |
| Net Profit Margin | -3.43% | 7.67% | 15.53% | n.a |
| Return on Equity | 0.00% | 0.00% | 177.66% | n.a |
| Activity Ratios | ||||
| Inventory Turnover | 5.35 | 22.66 | 21.36 | n.a |
| Accounts Payable Turnover | 19.52 | 12.17 | 12.17 | n.a |
| Payment Days | 27 | 21 | 28 | n.a |
| Total Asset Turnover | 4.64 | 4.68 | 3.48 | n.a |
| Debt Ratios | ||||
| Debt to Net Worth | 0.00 | 0.00 | 2.29 | n.a |
| Current Liab. to Liab. | 0.07 | 0.19 | 0.26 | n.a |
| Liquidity Ratios | ||||
| Net Working Capital | $71,631 | $84,191 | $154,777 | n.a |
| Interest Coverage | 0.05 | 4.19 | 11.26 | n.a |
| Additional Ratios | ||||
| Assets to Sales | 0.22 | 0.21 | 0.29 | n.a |
| Current Debt/Total Assets | 15% | 26% | 18% | n.a |
| Acid Test | 6.13 | 3.42 | 5.20 | n.a |
| Sales/Net Worth | 0.00 | 0.00 | 11.44 | n.a |
| Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |
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