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.

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 |