QuickReturns
Financial Plan
Our financial success depends on reaching desired market share and maintaining superb customer retention rate. Additional rounds of investor financing must be secured in years one and two to ensure the company growth until it reaches the self-sustaining level of sales. At the moment, the company seeks seed financing to cover the initial costs.
7.1 Projected Profit and Loss
The following table summarizes the estimated income statement of QuickReturns for three years.
| Pro Forma Profit and Loss | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | $433,246 | $20,665,177 | $77,836,804 |
| Direct Cost of Sales | $0 | $0 | $0 |
| Other | $0 | $0 | $0 |
| Total Cost of Sales | $0 | $0 | $0 |
| Gross Margin | $433,246 | $20,665,177 | $77,836,804 |
| Gross Margin % | 100.00% | 100.00% | 100.00% |
| Expenses | |||
| Payroll | $1,387,992 | $3,127,000 | $4,608,000 |
| Sales and Marketing and Other Expenses | $1,637,496 | $14,240,500 | $15,151,000 |
| Depreciation | $0 | $0 | $0 |
| Telephone | $12,000 | $70,000 | $100,000 |
| Software and Web site development | $777,000 | $600,000 | $800,000 |
| Office supplies and subscriptions | $82,404 | $350,000 | $450,000 |
| Rent | $34,800 | $60,000 | $99,600 |
| Legal & Accounting | $55,956 | $72,000 | $84,000 |
| Equipment Rental | $230,000 | $2,280,000 | $3,000,000 |
| Utilities | $6,960 | $12,000 | $19,920 |
| Payroll Taxes | $208,199 | $469,050 | $691,200 |
| Hardware & Maintenance | $322,500 | $54,000 | $403,500 |
| Other | $240,000 | $600,000 | $700,000 |
| Total Operating Expenses | $4,995,307 | $21,934,550 | $26,107,220 |
| Profit Before Interest and Taxes | ($4,562,061) | ($1,269,373) | $51,729,584 |
| EBITDA | ($4,562,061) | ($1,269,373) | $51,729,584 |
| Interest Expense | $0 | $0 | $0 |
| Taxes Incurred | $0 | $0 | $13,147,936 |
| Net Profit | ($4,562,061) | ($1,269,373) | $38,581,648 |
| Net Profit/Sales | -1053.00% | -6.14% | 49.57% |
7.2 Break-even Analysis
QuickReturns will generate sufficient monthly revenues to cover its average monthly fixed expenses. The company will reach that sales level at the beginning of year two.
| Break-even Analysis | |
| Monthly Units Break-even | 76,309 |
| Monthly Revenue Break-even | $416,276 |
| Assumptions: | |
| Average Per-Unit Revenue | $5.46 |
| Average Per-Unit Variable Cost | $0.00 |
| Estimated Monthly Fixed Cost | $416,276 |
7.3 Projected Cash Flow
QuickReturns’ estimated Cash Flow Analysis for the next three years in shown below. As stated before, the company plans to attract additional rounds of investor financing in years one and two.
| Pro Forma Cash Flow | |||
| Year 1 | Year 2 | Year 3 | |
| Cash Received | |||
| Cash from Operations | |||
| Cash Sales | $0 | $0 | $0 |
| Cash from Receivables | $187,419 | $9,185,433 | $45,397,211 |
| Subtotal Cash from Operations | $187,419 | $9,185,433 | $45,397,211 |
| 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 | $2,000,000 | $11,500,000 | $0 |
| Subtotal Cash Received | $2,187,419 | $20,685,433 | $45,397,211 |
| Expenditures | Year 1 | Year 2 | Year 3 |
| Expenditures from Operations | |||
| Cash Spending | $1,387,992 | $3,127,000 | $4,608,000 |
| Bill Payments | $3,316,887 | $17,552,152 | $33,345,271 |
| Subtotal Spent on Operations | $4,704,879 | $20,679,152 | $37,953,271 |
| 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 | $4,704,879 | $20,679,152 | $37,953,271 |
| Net Cash Flow | ($2,517,460) | $6,281 | $7,443,941 |
| Cash Balance | $1,032,540 | $1,038,822 | $8,482,763 |
7.4 Projected Balance Sheet
Projected Balance Sheets for three years are shown below.
| Pro Forma Balance Sheet | |||
| Year 1 | Year 2 | Year 3 | |
| Assets | |||
| Current Assets | |||
| Cash | $1,032,540 | $1,038,822 | $8,482,763 |
| Accounts Receivable | $245,827 | $11,725,570 | $44,165,163 |
| Other Current Assets | $50,000 | $50,000 | $50,000 |
| Total Current Assets | $1,328,367 | $12,814,392 | $52,697,925 |
| Long-term Assets | |||
| Long-term Assets | $0 | $0 | $0 |
| Accumulated Depreciation | $0 | $0 | $0 |
| Total Long-term Assets | $0 | $0 | $0 |
| Total Assets | $1,328,367 | $12,814,392 | $52,697,925 |
| Liabilities and Capital | Year 1 | Year 2 | Year 3 |
| Current Liabilities | |||
| Accounts Payable | $290,428 | $1,545,826 | $2,847,711 |
| Current Borrowing | $0 | $0 | $0 |
| Other Current Liabilities | $0 | $0 | $0 |
| Subtotal Current Liabilities | $290,428 | $1,545,826 | $2,847,711 |
| Long-term Liabilities | $0 | $0 | $0 |
| Total Liabilities | $290,428 | $1,545,826 | $2,847,711 |
| Paid-in Capital | $5,750,000 | $17,250,000 | $17,250,000 |
| Retained Earnings | ($150,000) | ($4,712,061) | ($5,981,435) |
| Earnings | ($4,562,061) | ($1,269,373) | $38,581,648 |
| Total Capital | $1,037,939 | $11,268,566 | $49,850,214 |
| Total Liabilities and Capital | $1,328,367 | $12,814,392 | $52,697,925 |
| Net Worth | $1,037,939 | $11,268,566 | $49,850,214 |
7.5 Business Ratios
The company’s Business Ratios are shown below, the last column, Industry Profile, contains ratios for the business services industry, as determined by the Standard Industry Classification (SIC) Index code 7389.
| Ratio Analysis | ||||
| Year 1 | Year 2 | Year 3 | Industry Profile | |
| Sales Growth | 0.00% | 4669.85% | 276.66% | 8.20% |
| Percent of Total Assets | ||||
| Accounts Receivable | 18.51% | 91.50% | 83.81% | 26.30% |
| Other Current Assets | 3.76% | 0.39% | 0.09% | 44.20% |
| Total Current Assets | 100.00% | 100.00% | 100.00% | 74.30% |
| Long-term Assets | 0.00% | 0.00% | 0.00% | 25.70% |
| Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
| Current Liabilities | 21.86% | 12.06% | 5.40% | 49.00% |
| Long-term Liabilities | 0.00% | 0.00% | 0.00% | 13.80% |
| Total Liabilities | 21.86% | 12.06% | 5.40% | 62.80% |
| Net Worth | 78.14% | 87.94% | 94.60% | 37.20% |
| Percent of Sales | ||||
| Sales | 100.00% | 100.00% | 100.00% | 100.00% |
| Gross Margin | 100.00% | 100.00% | 100.00% | 0.00% |
| Selling, General & Administrative Expenses | 1153.00% | 106.14% | 50.16% | 81.40% |
| Advertising Expenses | 115.41% | 48.39% | 12.85% | 1.70% |
| Profit Before Interest and Taxes | -1053.00% | -6.14% | 66.46% | 2.10% |
| Main Ratios | ||||
| Current | 4.57 | 8.29 | 18.51 | 1.49 |
| Quick | 4.57 | 8.29 | 18.51 | 1.17 |
| Total Debt to Total Assets | 21.86% | 12.06% | 5.40% | 62.80% |
| Pre-tax Return on Net Worth | -439.53% | -11.26% | 103.77% | 4.20% |
| Pre-tax Return on Assets | -343.43% | -9.91% | 98.16% | 11.30% |
| Additional Ratios | Year 1 | Year 2 | Year 3 | |
| Net Profit Margin | -1053.00% | -6.14% | 49.57% | n.a |
| Return on Equity | -439.53% | -11.26% | 77.40% | n.a |
| Activity Ratios | ||||
| Accounts Receivable Turnover | 1.76 | 1.76 | 1.76 | n.a |
| Collection Days | 51 | 106 | 131 | n.a |
| Accounts Payable Turnover | 12.42 | 12.17 | 12.17 | n.a |
| Payment Days | 27 | 18 | 23 | n.a |
| Total Asset Turnover | 0.33 | 1.61 | 1.48 | n.a |
| Debt Ratios | ||||
| Debt to Net Worth | 0.28 | 0.14 | 0.06 | n.a |
| Current Liab. to Liab. | 1.00 | 1.00 | 1.00 | n.a |
| Liquidity Ratios | ||||
| Net Working Capital | $1,037,939 | $11,268,566 | $49,850,214 | n.a |
| Interest Coverage | 0.00 | 0.00 | 0.00 | n.a |
| Additional Ratios | ||||
| Assets to Sales | 3.07 | 0.62 | 0.68 | n.a |
| Current Debt/Total Assets | 22% | 12% | 5% | n.a |
| Acid Test | 3.73 | 0.70 | 3.00 | n.a |
| Sales/Net Worth | 0.42 | 1.83 | 1.56 | n.a |
| Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |
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