Rekayasa Tambang Indonesia
Financial Plan
The following table shows the projected revenue of RTI over the period of 2001-2005. The most important elements in the financial plan can be listed as follows:
- The company must keep a high gross margin.
- In order to take advantage of the market demand growth to increase the yearly sales as well as the profit margin, the company must increase the frequency of business visits to the prospective clients’ sites by 10%. This will result in steady increases in net profits from sales in 2001 through 2005.
7.1 Important Assumptions
The accompanying table lists the main assumptions of RTI for developing its financial projections. The most sensitive assumption is collection days. RTI would like to improve collection days to take pressure off of its working capital.
| General Assumptions | |||||
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
| Plan Month | 1 | 2 | 3 | 4 | 5 |
| Current Interest Rate | 8.50% | 8.50% | 8.50% | 8.50% | 8.50% |
| Long-term Interest Rate | 9.00% | 9.00% | 9.00% | 9.00% | 9.00% |
| Tax Rate | 25.42% | 25.00% | 25.42% | 25.00% | 25.42% |
| Other | 0 | 0 | 0 | 0 | 0 |
7.2 Business Ratios
The following table contains important business ratios for the prepackaged software industry, as determined by the Standard Industry Classification (SIC) Index, 7372.
| Ratio Analysis | ||||||
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Industry Profile | |
| Sales Growth | 0.00% | 16.89% | 16.89% | 16.89% | 16.89% | 9.70% |
| Percent of Total Assets | ||||||
| Accounts Receivable | 20.92% | 13.57% | 10.29% | 8.41% | 7.20% | 21.50% |
| Other Current Assets | 6.40% | 3.55% | 2.30% | 1.61% | 1.18% | 45.70% |
| Total Current Assets | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 70.20% |
| Long-term Assets | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 29.80% |
| Total Assets | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% |
| Current Liabilities | 11.86% | 7.86% | 5.94% | 4.80% | 4.10% | 42.40% |
| Long-term Liabilities | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 19.20% |
| Total Liabilities | 11.86% | 7.86% | 5.94% | 4.80% | 4.10% | 61.60% |
| Net Worth | 88.14% | 92.14% | 94.06% | 95.20% | 95.90% | 38.40% |
| Percent of Sales | ||||||
| Sales | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% |
| Gross Margin | 66.33% | 66.33% | 66.22% | 66.22% | 66.22% | 100.00% |
| Selling, General & Administrative Expenses | 41.70% | 40.22% | 38.80% | 37.49% | 36.25% | 79.40% |
| Advertising Expenses | 0.48% | 0.45% | 0.42% | 0.40% | 0.37% | 1.30% |
| Profit Before Interest and Taxes | 32.85% | 34.82% | 36.56% | 38.31% | 39.95% | 2.20% |
| Main Ratios | ||||||
| Current | 8.43 | 12.72 | 16.83 | 20.81 | 24.40 | 1.51 |
| Quick | 8.43 | 12.72 | 16.83 | 20.81 | 24.40 | 1.16 |
| Total Debt to Total Assets | 11.86% | 7.86% | 5.94% | 4.80% | 4.10% | 61.60% |
| Pre-tax Return on Net Worth | 95.13% | 62.57% | 48.83% | 41.29% | 36.59% | 3.50% |
| Pre-tax Return on Assets | 83.85% | 57.65% | 45.93% | 39.30% | 35.09% | 9.20% |
| Additional Ratios | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
| Net Profit Margin | 24.48% | 26.11% | 27.27% | 28.73% | 29.80% | n.a |
| Return on Equity | 70.90% | 46.92% | 36.42% | 30.96% | 27.29% | n.a |
| Activity Ratios | ||||||
| Accounts Receivable Turnover | 6.10 | 6.10 | 6.10 | 6.10 | 6.10 | n.a |
| Collection Days | 57 | 55 | 55 | 55 | 55 | n.a |
| Accounts Payable Turnover | 12.57 | 12.17 | 12.17 | 12.17 | 12.17 | n.a |
| Payment Days | 27 | 28 | 28 | 28 | 28 | n.a |
| Total Asset Turnover | 2.55 | 1.66 | 1.26 | 1.03 | 0.88 | n.a |
| Debt Ratios | ||||||
| Debt to Net Worth | 0.13 | 0.09 | 0.06 | 0.05 | 0.04 | n.a |
| Current Liab. to Liab. | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | n.a |
| Liquidity Ratios | ||||||
| Net Working Capital | $435,030 | $819,646 | $1,289,086 | $1,867,265 | $2,568,205 | n.a |
| Interest Coverage | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | n.a |
| Additional Ratios | ||||||
| Assets to Sales | 0.39 | 0.60 | 0.80 | 0.97 | 1.14 | n.a |
| Current Debt/Total Assets | 12% | 8% | 6% | 5% | 4% | n.a |
| Acid Test | 6.67 | 11.00 | 15.10 | 19.06 | 22.65 | n.a |
| Sales/Net Worth | 2.90 | 1.80 | 1.34 | 1.08 | 0.92 | n.a |
| Dividend Payout | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | n.a |
7.3 Break-even Analysis
The following table and chart summarize the Break-even Analysis, including the assumed monthly running costs and sales break-even points.
| Break-even Analysis | |
| Monthly Revenue Break-even | $53,010 |
| Assumptions: | |
| Average Percent Variable Cost | 34% |
| Estimated Monthly Fixed Cost | $35,163 |
7.4 Projected Profit and Loss
The most important and strategic component in the Projected Profit and Loss statement is the net profit, which is planned and targeted to increase. Month-by-month assumptions for profit and loss are included in the appendix.
| Pro Forma Profit and Loss | |||||
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
| Sales | $1,260,000 | $1,472,814 | $1,721,572 | $2,012,346 | $2,352,231 |
| Direct Cost of Sales | $424,192 | $495,837 | $581,584 | $679,812 | $794,632 |
| Other | $0 | $0 | $0 | $0 | $0 |
| Total Cost of Sales | $424,192 | $495,837 | $581,584 | $679,812 | $794,632 |
| Gross Margin | $835,808 | $976,977 | $1,139,988 | $1,332,534 | $1,557,599 |
| Gross Margin % | 66.33% | 66.33% | 66.22% | 66.22% | 66.22% |
| Expenses | |||||
| Payroll | $216,000 | $237,600 | $261,360 | $287,496 | $316,246 |
| Sales and Marketing and Other Expenses | $122,200 | $134,420 | $147,862 | $162,648 | $178,913 |
| Depreciation | $0 | $0 | $0 | $0 | $0 |
| Leased Equipment | $0 | $0 | $0 | $0 | $0 |
| Utilities | $7,200 | $7,920 | $8,712 | $9,583 | $10,541 |
| Insurance | $2,160 | $2,376 | $2,614 | $2,875 | $3,163 |
| Rent | $42,000 | $46,200 | $50,820 | $55,902 | $61,492 |
| Payroll Taxes | $32,400 | $35,640 | $39,204 | $43,124 | $47,437 |
| Other | $0 | $0 | $0 | $0 | $0 |
| Total Operating Expenses | $421,960 | $464,156 | $510,572 | $561,629 | $617,791 |
| Profit Before Interest and Taxes | $413,848 | $512,821 | $629,417 | $770,905 | $939,807 |
| EBITDA | $413,848 | $512,821 | $629,417 | $770,905 | $939,807 |
| Interest Expense | $0 | $0 | $0 | $0 | $0 |
| Taxes Incurred | $105,406 | $128,205 | $159,977 | $192,726 | $238,868 |
| Net Profit | $308,443 | $384,616 | $469,440 | $578,179 | $700,940 |
| Net Profit/Sales | 24.48% | 26.11% | 27.27% | 28.73% | 29.80% |
7.5 Projected Cash Flow
Cash flow projections are critical to RTI’s success. The monthly cash flow is shown in the illustration, with one bar representing the cash flow per month and the other representing the monthly balance. The annual cash flow figures are included here in the following table. Detailed monthly numbers are included in the appendix.
| Pro Forma Cash Flow | |||||
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
| Cash Received | |||||
| Cash from Operations | |||||
| Cash Sales | $630,000 | $736,407 | $860,786 | $1,006,173 | $1,176,116 |
| Cash from Receivables | $526,750 | $718,968 | $840,402 | $982,346 | $1,148,264 |
| Subtotal Cash from Operations | $1,156,750 | $1,455,375 | $1,701,188 | $1,988,519 | $2,324,379 |
| Additional Cash Received | |||||
| Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 | $0 | $0 |
| New Current Borrowing | $0 | $0 | $0 | $0 | $0 |
| New Other Liabilities (interest-free) | $0 | $0 | $0 | $0 | $0 |
| New Long-term Liabilities | $0 | $0 | $0 | $0 | $0 |
| Sales of Other Current Assets | $0 | $0 | $0 | $0 | $0 |
| Sales of Long-term Assets | $0 | $0 | $0 | $0 | $0 |
| New Investment Received | $0 | $0 | $0 | $0 | $0 |
| Subtotal Cash Received | $1,156,750 | $1,455,375 | $1,701,188 | $1,988,519 | $2,324,379 |
| Expenditures | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
| Expenditures from Operations | |||||
| Cash Spending | $216,000 | $237,600 | $261,360 | $287,496 | $316,246 |
| Bill Payments | $682,028 | $839,215 | $979,251 | $1,133,858 | $1,319,563 |
| Subtotal Spent on Operations | $898,028 | $1,076,815 | $1,240,611 | $1,421,354 | $1,635,809 |
| Additional Cash Spent | |||||
| Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 | $0 | $0 |
| Principal Repayment of Current Borrowing | $0 | $0 | $0 | $0 | $0 |
| Other Liabilities Principal Repayment | $0 | $0 | $0 | $0 | $0 |
| Long-term Liabilities Principal Repayment | $0 | $0 | $0 | $0 | $0 |
| Purchase Other Current Assets | $0 | $0 | $0 | $0 | $0 |
| Purchase Long-term Assets | $0 | $0 | $0 | $0 | $0 |
| Dividends | $0 | $0 | $0 | $0 | $0 |
| Subtotal Cash Spent | $898,028 | $1,076,815 | $1,240,611 | $1,421,354 | $1,635,809 |
| Net Cash Flow | $258,722 | $378,560 | $460,577 | $567,165 | $688,571 |
| Cash Balance | $358,722 | $737,282 | $1,197,859 | $1,765,024 | $2,453,595 |
7.6 Projected Balance Sheet
The following Balance Sheet shows healthy growth of Net Worth and a strong financial position. The monthly estimates are included in the appendix.
| Pro Forma Balance Sheet | |||||
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
| Assets | |||||
| Current Assets | |||||
| Cash | $358,722 | $737,282 | $1,197,859 | $1,765,024 | $2,453,595 |
| Accounts Receivable | $103,250 | $120,689 | $141,073 | $164,901 | $192,752 |
| Other Current Assets | $31,588 | $31,588 | $31,588 | $31,588 | $31,588 |
| Total Current Assets | $493,559 | $889,558 | $1,370,519 | $1,961,512 | $2,677,934 |
| Long-term Assets | |||||
| Long-term Assets | $0 | $0 | $0 | $0 | $0 |
| Accumulated Depreciation | $0 | $0 | $0 | $0 | $0 |
| Total Long-term Assets | $0 | $0 | $0 | $0 | $0 |
| Total Assets | $493,559 | $889,558 | $1,370,519 | $1,961,512 | $2,677,934 |
| Liabilities and Capital | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
| Current Liabilities | |||||
| Accounts Payable | $58,529 | $69,912 | $81,433 | $94,247 | $109,730 |
| Current Borrowing | $0 | $0 | $0 | $0 | $0 |
| Other Current Liabilities | $0 | $0 | $0 | $0 | $0 |
| Subtotal Current Liabilities | $58,529 | $69,912 | $81,433 | $94,247 | $109,730 |
| Long-term Liabilities | $0 | $0 | $0 | $0 | $0 |
| Total Liabilities | $58,529 | $69,912 | $81,433 | $94,247 | $109,730 |
| Paid-in Capital | $195,675 | $195,675 | $195,675 | $195,675 | $195,675 |
| Retained Earnings | ($69,088) | $239,355 | $623,971 | $1,093,411 | $1,671,590 |
| Earnings | $308,443 | $384,616 | $469,440 | $578,179 | $700,940 |
| Total Capital | $435,030 | $819,646 | $1,289,086 | $1,867,265 | $2,568,205 |
| Total Liabilities and Capital | $493,559 | $889,558 | $1,370,519 | $1,961,512 | $2,677,934 |
| Net Worth | $435,030 | $819,646 | $1,289,086 | $1,867,265 | $2,568,205 |
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