Microbrewery Business Plan

Martin Cove Brewing Company

Financial Plan

The following is the financial plan for Martin Cove Brewing Company.

7.1 Break-even Analysis

The monthly break-even point is $67,036.

Microbrewery business plan, financial plan chart image

Break-even Analysis


Monthly Revenue Break-even	$67,036

Assumptions:
Average Percent Variable Cost	30%
Estimated Monthly Fixed Cost	$46,925

7.2 Projected Profit and Loss

The following table and charts highlight the projected profit and loss for the next three years.

Pro Forma Profit and Loss
	FY 2003	FY 2004	FY 2005
Sales	$890,000	$1,068,000	$1,281,600
Direct Cost of Sales	$267,000	$320,400	$384,480
Other Production Expenses	$0	$0	$0
Total Cost of Sales	$267,000	$320,400	$384,480

Gross Margin	$623,000	$747,600	$897,120
Gross Margin %	70.00%	70.00%	70.00%


Expenses
Payroll	$372,000	$387,000	$402,000
Sales and Marketing and Other Expenses	$63,000	$83,000	$105,000
Depreciation	$14,400	$14,400	$14,400
Sales Commission	$26,700	$32,040	$38,448
Utilities	$12,000	$12,000	$12,000
Insurance	$2,400	$2,600	$2,800
Rent	$16,800	$16,800	$16,800
Payroll Taxes	$55,800	$58,050	$60,300
Other	$0	$0	$0

Total Operating Expenses	$563,100	$605,890	$651,748

Profit Before Interest and Taxes	$59,900	$141,710	$245,372
EBITDA	$74,300	$156,110	$259,772
Interest Expense	$3,782	$3,398	$2,998
Taxes Incurred	$16,835	$41,494	$72,712

Net Profit	$39,282	$96,818	$169,662
Net Profit/Sales	4.41%	9.07%	13.24%

7.3 Projected Cash Flow

The following table and chart highlight the projected cash flow for the next three years.

Pro Forma Cash Flow
	FY 2003	FY 2004	FY 2005
Cash Received

Cash from Operations
Cash Sales	$222,500	$267,000	$320,400
Cash from Receivables	$622,500	$776,000	$931,200
Subtotal Cash from Operations	$845,000	$1,043,000	$1,251,600

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	$845,000	$1,043,000	$1,251,600

Expenditures	FY 2003	FY 2004	FY 2005

Expenditures from Operations
Cash Spending	$372,000	$387,000	$402,000
Bill Payments	$461,903	$552,706	$690,670
Subtotal Spent on Operations	$833,903	$939,706	$1,092,670

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	$4,020	$4,000	$4,000
Purchase Other Current Assets	$0	$0	$0
Purchase Long-term Assets	$0	$0	$0
Dividends	$0	$0	$0
Subtotal Cash Spent	$837,923	$943,706	$1,096,670

Net Cash Flow	$7,077	$99,294	$154,930
Cash Balance	$87,077	$186,372	$341,302

7.4 Projected Balance Sheet

The following table highlights the projected balance sheet for the next three years.

Pro Forma Balance Sheet
	FY 2003	FY 2004	FY 2005
Assets

Current Assets
Cash	$87,077	$186,372	$341,302
Accounts Receivable	$125,000	$150,000	$180,000
Inventory	$23,100	$27,720	$33,264
Other Current Assets	$5,000	$5,000	$5,000
Total Current Assets	$240,177	$369,092	$559,566

Long-term Assets
Long-term Assets	$100,000	$100,000	$100,000
Accumulated Depreciation	$26,400	$40,800	$55,200
Total Long-term Assets	$73,600	$59,200	$44,800
Total Assets	$313,777	$428,292	$604,366

Liabilities and Capital	FY 2003	FY 2004	FY 2005

Current Liabilities
Accounts Payable	$25,515	$47,211	$57,623
Current Borrowing	$0	$0	$0
Other Current Liabilities	$0	$0	$0
Subtotal Current Liabilities	$25,515	$47,211	$57,623

Long-term Liabilities	$35,980	$31,980	$27,980
Total Liabilities	$61,495	$79,191	$85,603

Paid-in Capital	$80,000	$80,000	$80,000
Retained Earnings	$133,000	$172,282	$269,101
Earnings	$39,282	$96,818	$169,662
Total Capital	$252,282	$349,101	$518,763
Total Liabilities and Capital	$313,777	$428,292	$604,366

Net Worth	$252,282	$349,101	$518,763

7.5 Business Ratios

Industry profile ratios based on the Standard Industrial Classification(SIC) code 5181, Beer and Ale, are shown for comparison.

Ratio Analysis
	FY 2003	FY 2004	FY 2005	Industry Profile
Sales Growth	71.15%	20.00%	20.00%	6.20%

Percent of Total Assets
Accounts Receivable	39.84%	35.02%	29.78%	19.00%
Inventory	7.36%	6.47%	5.50%	28.70%
Other Current Assets	1.59%	1.17%	0.83%	31.50%
Total Current Assets	76.54%	86.18%	92.59%	79.20%
Long-term Assets	23.46%	13.82%	7.41%	20.80%
Total Assets	100.00%	100.00%	100.00%	100.00%

Current Liabilities	8.13%	11.02%	9.53%	32.00%
Long-term Liabilities	11.47%	7.47%	4.63%	18.40%
Total Liabilities	19.60%	18.49%	14.16%	50.40%
Net Worth	80.40%	81.51%	85.84%	49.60%

Percent of Sales
Sales	100.00%	100.00%	100.00%	100.00%
Gross Margin	70.00%	70.00%	70.00%	24.60%
Selling, General & Administrative Expenses	65.60%	60.97%	56.82%	15.60%
Advertising Expenses	6.74%	7.49%	7.80%	0.60%
Profit Before Interest and Taxes	6.73%	13.27%	19.15%	2.80%

Main Ratios
Current	9.41	7.82	9.71	2.24
Quick	8.51	7.23	9.13	1.07
Total Debt to Total Assets	19.60%	18.49%	14.16%	50.40%
Pre-tax Return on Net Worth	22.24%	39.62%	46.72%	9.10%
Pre-tax Return on Assets	17.88%	32.29%	40.10%	18.40%

Additional Ratios	FY 2003	FY 2004	FY 2005
Net Profit Margin	4.41%	9.07%	13.24%	n.a
Return on Equity	15.57%	27.73%	32.71%	n.a

Activity Ratios
Accounts Receivable Turnover	5.34	5.34	5.34	n.a
Collection Days	59	63	63	n.a
Inventory Turnover	10.91	12.61	12.61	n.a
Accounts Payable Turnover	18.32	12.17	12.17	n.a
Payment Days	28	23	27	n.a
Total Asset Turnover	2.84	2.49	2.12	n.a

Debt Ratios
Debt to Net Worth	0.24	0.23	0.17	n.a
Current Liab. to Liab.	0.41	0.60	0.67	n.a

Liquidity Ratios
Net Working Capital	$214,662	$321,881	$501,943	n.a
Interest Coverage	15.84	41.70	81.85	n.a

Additional Ratios
Assets to Sales	0.35	0.40	0.47	n.a
Current Debt/Total Assets	8%	11%	10%	n.a
Acid Test	3.61	4.05	6.01	n.a
Sales/Net Worth	3.53	3.06	2.47	n.a
Dividend Payout	0.00	0.00	0.00	n.a