DocBuzz, Inc.
Financial Plan
We are looking to fund a total package of $836,000 to support our growth plan, management style and vision. This total package has been broken into three phases, which is important to note, since at any time the management may decide that further funding is not necessary.
Our three-year sales projection shown below, profit and loss statement, cash flow analysis and balance sheet herein supports this financial plan.
7.1 Important Assumptions
The table below summarizes key financial assumptions.
| General Assumptions | |||
| Year 1 | Year 2 | Year 3 | |
| Plan Month | 1 | 2 | 3 |
| Current Interest Rate | 10.00% | 10.00% | 10.00% |
| Long-term Interest Rate | 10.00% | 10.00% | 10.00% |
| Tax Rate | 30.00% | 30.00% | 30.00% |
| Other | 0 | 0 | 0 |
7.2 Key Financial Indicators
The following benchmark chart indicates our key financial indicators for the first three years. We project major growth in sales and operating expenses during times of expansion.
7.3 Break-even Analysis
The table below summarizes the break-even analysis. The break-even analysis has been calculated on the “burn rate” of the company. The company feels that this gives the investor a more accurate picture of the actual risk of the venture.
| Break-even Analysis | |
| Monthly Revenue Break-even | $55,836 |
| Assumptions: | |
| Average Percent Variable Cost | 2% |
| Estimated Monthly Fixed Cost | $54,976 |
7.4 Projected Profit and Loss
The table and charts below summarize the profit and loss for the first three fiscal years.
| Pro Forma Profit and Loss | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | $4,532,000 | $3,814,800 | $6,982,192 |
| Direct Cost of Sales | $69,765 | $112,000 | $169,000 |
| Other Production Expenses | $0 | $0 | $0 |
| Total Cost of Sales | $69,765 | $112,000 | $169,000 |
| Gross Margin | $4,462,235 | $3,702,800 | $6,813,192 |
| Gross Margin % | 98.46% | 97.06% | 97.58% |
| Expenses | |||
| Payroll | $352,800 | $399,100 | $508,600 |
| Sales and Marketing and Other Expenses | $204,000 | $214,000 | $224,000 |
| Depreciation | $0 | $0 | $0 |
| Leased Equipment | $30,000 | $30,000 | $30,000 |
| Utilities | $0 | $0 | $0 |
| Insurance | $0 | $0 | $0 |
| Rent | $19,992 | $20,000 | $20,000 |
| Payroll Taxes | $52,920 | $59,865 | $76,290 |
| Other | $0 | $0 | $0 |
| Total Operating Expenses | $659,712 | $722,965 | $858,890 |
| Profit Before Interest and Taxes | $3,802,523 | $2,979,835 | $5,954,302 |
| EBITDA | $3,802,523 | $2,979,835 | $5,954,302 |
| Interest Expense | $0 | $0 | $0 |
| Taxes Incurred | $1,140,757 | $893,951 | $1,786,291 |
| Net Profit | $2,661,766 | $2,085,885 | $4,168,011 |
| Net Profit/Sales | 58.73% | 54.68% | 59.69% |
7.5 Projected Cash Flow
Cash flow projections are critical to our success. The monthly cash flow is shown in the illustration, with one bar representing cash flow per month and the other representing the monthly balance. The annual cash flow figures are included here on the following table.
| Pro Forma Cash Flow | |||
| Year 1 | Year 2 | Year 3 | |
| Cash Received | |||
| Cash from Operations | |||
| Cash Sales | $4,532,000 | $3,814,800 | $6,982,192 |
| Subtotal Cash from Operations | $4,532,000 | $3,814,800 | $6,982,192 |
| 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 | $4,532,000 | $3,814,800 | $6,982,192 |
| Expenditures | Year 1 | Year 2 | Year 3 |
| Expenditures from Operations | |||
| Cash Spending | $352,800 | $399,100 | $508,600 |
| Bill Payments | $1,395,906 | $1,342,043 | $2,225,381 |
| Subtotal Spent on Operations | $1,748,706 | $1,741,143 | $2,733,981 |
| 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 | $1,748,706 | $1,741,143 | $2,733,981 |
| Net Cash Flow | $2,783,294 | $2,073,657 | $4,248,211 |
| Cash Balance | $3,087,294 | $5,160,951 | $9,409,162 |
7.6 Projected Balance Sheet
The balance sheet shows healthy growth of net worth and strong financial position. The monthly estimates are included in the appendix.
| Pro Forma Balance Sheet | |||
| Year 1 | Year 2 | Year 3 | |
| Assets | |||
| Current Assets | |||
| Cash | $3,087,294 | $5,160,951 | $9,409,162 |
| Other Current Assets | $5,000 | $5,000 | $5,000 |
| Total Current Assets | $3,092,294 | $5,165,951 | $9,414,162 |
| Long-term Assets | |||
| Long-term Assets | $0 | $0 | $0 |
| Accumulated Depreciation | $0 | $0 | $0 |
| Total Long-term Assets | $0 | $0 | $0 |
| Total Assets | $3,092,294 | $5,165,951 | $9,414,162 |
| Liabilities and Capital | Year 1 | Year 2 | Year 3 |
| Current Liabilities | |||
| Accounts Payable | $121,528 | $109,300 | $189,500 |
| Current Borrowing | $0 | $0 | $0 |
| Other Current Liabilities | $0 | $0 | $0 |
| Subtotal Current Liabilities | $121,528 | $109,300 | $189,500 |
| Long-term Liabilities | $0 | $0 | $0 |
| Total Liabilities | $121,528 | $109,300 | $189,500 |
| Paid-in Capital | $408,000 | $408,000 | $408,000 |
| Retained Earnings | ($99,000) | $2,562,766 | $4,648,651 |
| Earnings | $2,661,766 | $2,085,885 | $4,168,011 |
| Total Capital | $2,970,766 | $5,056,651 | $9,224,662 |
| Total Liabilities and Capital | $3,092,294 | $5,165,951 | $9,414,162 |
| Net Worth | $2,970,766 | $5,056,651 | $9,224,662 |
7.7 Business Ratios
The following table shows the projected business ratios. We expect to maintain healthy ratios for profitability, risk, and return. Industry profile ratios based on the Standard Industrial Classification (SIC) code 8742, Management Consulting Services, are shown for comparison.
| Ratio Analysis | ||||
| Year 1 | Year 2 | Year 3 | Industry Profile | |
| Sales Growth | 0.00% | -15.83% | 83.03% | 8.60% |
| Percent of Total Assets | ||||
| Other Current Assets | 0.16% | 0.10% | 0.05% | 46.70% |
| Total Current Assets | 100.00% | 100.00% | 100.00% | 74.90% |
| Long-term Assets | 0.00% | 0.00% | 0.00% | 25.10% |
| Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
| Current Liabilities | 3.93% | 2.12% | 2.01% | 42.80% |
| Long-term Liabilities | 0.00% | 0.00% | 0.00% | 17.20% |
| Total Liabilities | 3.93% | 2.12% | 2.01% | 60.00% |
| Net Worth | 96.07% | 97.88% | 97.99% | 40.00% |
| Percent of Sales | ||||
| Sales | 100.00% | 100.00% | 100.00% | 100.00% |
| Gross Margin | 98.46% | 97.06% | 97.58% | 0.00% |
| Selling, General & Administrative Expenses | 39.73% | 42.39% | 37.88% | 83.50% |
| Advertising Expenses | 1.32% | 1.83% | 1.15% | 1.20% |
| Profit Before Interest and Taxes | 83.90% | 78.11% | 85.28% | 2.60% |
| Main Ratios | ||||
| Current | 25.45 | 47.26 | 49.68 | 1.59 |
| Quick | 25.45 | 47.26 | 49.68 | 1.26 |
| Total Debt to Total Assets | 3.93% | 2.12% | 2.01% | 60.00% |
| Pre-tax Return on Net Worth | 128.00% | 58.93% | 64.55% | 4.40% |
| Pre-tax Return on Assets | 122.97% | 57.68% | 63.25% | 10.90% |
| Additional Ratios | Year 1 | Year 2 | Year 3 | |
| Net Profit Margin | 58.73% | 54.68% | 59.69% | n.a |
| Return on Equity | 89.60% | 41.25% | 45.18% | n.a |
| Activity Ratios | ||||
| Accounts Payable Turnover | 12.49 | 12.17 | 12.17 | n.a |
| Payment Days | 27 | 32 | 24 | n.a |
| Total Asset Turnover | 1.47 | 0.74 | 0.74 | n.a |
| Debt Ratios | ||||
| Debt to Net Worth | 0.04 | 0.02 | 0.02 | n.a |
| Current Liab. to Liab. | 1.00 | 1.00 | 1.00 | n.a |
| Liquidity Ratios | ||||
| Net Working Capital | $2,970,766 | $5,056,651 | $9,224,662 | n.a |
| Interest Coverage | 0.00 | 0.00 | 0.00 | n.a |
| Additional Ratios | ||||
| Assets to Sales | 0.68 | 1.35 | 1.35 | n.a |
| Current Debt/Total Assets | 4% | 2% | 2% | n.a |
| Acid Test | 25.45 | 47.26 | 49.68 | n.a |
| Sales/Net Worth | 1.53 | 0.75 | 0.76 | n.a |
| Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |
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