Water Factory
Financial Plan
The following sections will outline the important financial details.
Important Assumptions
The following table details the important 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 | 25.42% | 25.00% | 25.42% |
| Other | 0 | 0 | 0 |
Break-even Analysis
The Break-even Analysis indicates what is needed in monthly revenue to break even.
| Break-even Analysis | |
| Monthly Revenue Break-even | $7,025 |
| Assumptions: | |
| Average Percent Variable Cost | 47% |
| Estimated Monthly Fixed Cost | $3,699 |
Projected Profit and Loss
The following table indicates projected profit and loss.
| Pro Forma Profit and Loss | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | $41,280 | $93,301 | $102,421 |
| Direct Cost of Sales | $19,546 | $38,927 | $41,274 |
| Other | $0 | $0 | $0 |
| Total Cost of Sales | $19,546 | $38,927 | $41,274 |
| Gross Margin | $21,735 | $54,374 | $61,148 |
| Gross Margin % | 52.65% | 58.28% | 59.70% |
| Expenses | |||
| Payroll | $36,000 | $36,000 | $36,000 |
| Sales and Marketing and Other Expenses | $600 | $600 | $600 |
| Depreciation | $768 | $768 | $764 |
| Leased Equipment | $0 | $0 | $0 |
| Utilities | $900 | $900 | $900 |
| Insurance | $720 | $720 | $720 |
| Rent | $0 | $0 | $0 |
| Payroll Taxes | $5,400 | $5,400 | $5,400 |
| Other | $0 | $0 | $0 |
| Total Operating Expenses | $44,388 | $44,388 | $44,384 |
| Profit Before Interest and Taxes | ($22,654) | $9,986 | $16,764 |
| EBITDA | ($21,886) | $10,754 | $17,528 |
| Interest Expense | $0 | $0 | $0 |
| Taxes Incurred | $0 | $2,497 | $4,261 |
| Net Profit | ($22,654) | $7,490 | $12,503 |
| Net Profit/Sales | -54.88% | 8.03% | 12.21% |
Projected Cash Flow
The following chart and table will indicate projected cash flow.
| Pro Forma Cash Flow | |||
| Year 1 | Year 2 | Year 3 | |
| Cash Received | |||
| Cash from Operations | |||
| Cash Sales | $41,280 | $93,301 | $102,421 |
| Subtotal Cash from Operations | $41,280 | $93,301 | $102,421 |
| Additional Cash Received | |||
| Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 |
| New Current Borrowing | $0 | $0 | $0 |
| New Other Liabilities (interest-free) | $5,000 | $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 | $46,280 | $93,301 | $102,421 |
| Expenditures | Year 1 | Year 2 | Year 3 |
| Expenditures from Operations | |||
| Cash Spending | $36,000 | $36,000 | $36,000 |
| Bill Payments | $23,711 | $48,467 | $52,816 |
| Subtotal Spent on Operations | $59,711 | $84,467 | $88,816 |
| 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 | $2,500 | $2,500 |
| 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 | $59,711 | $86,967 | $91,316 |
| Net Cash Flow | ($13,431) | $6,334 | $11,105 |
| Cash Balance | $1,669 | $8,003 | $19,108 |
Projected Balance Sheet
The following table will indicate the projected balance sheet.
| Pro Forma Balance Sheet | |||
| Year 1 | Year 2 | Year 3 | |
| Assets | |||
| Current Assets | |||
| Cash | $1,669 | $8,003 | $19,108 |
| Other Current Assets | $0 | $0 | $0 |
| Total Current Assets | $1,669 | $8,003 | $19,108 |
| Long-term Assets | |||
| Long-term Assets | $2,300 | $2,300 | $2,300 |
| Accumulated Depreciation | $768 | $1,536 | $2,300 |
| Total Long-term Assets | $1,532 | $764 | $0 |
| Total Assets | $3,201 | $8,767 | $19,108 |
| Liabilities and Capital | Year 1 | Year 2 | Year 3 |
| Current Liabilities | |||
| Accounts Payable | $3,455 | $4,031 | $4,369 |
| Current Borrowing | $0 | $0 | $0 |
| Other Current Liabilities | $5,000 | $2,500 | $0 |
| Subtotal Current Liabilities | $8,455 | $6,531 | $4,369 |
| Long-term Liabilities | $0 | $0 | $0 |
| Total Liabilities | $8,455 | $6,531 | $4,369 |
| Paid-in Capital | $18,000 | $18,000 | $18,000 |
| Retained Earnings | ($600) | ($23,254) | ($15,764) |
| Earnings | ($22,654) | $7,490 | $12,503 |
| Total Capital | ($5,254) | $2,236 | $14,739 |
| Total Liabilities and Capital | $3,201 | $8,767 | $19,108 |
| Net Worth | ($5,253) | $2,236 | $14,739 |
Business Ratios
The following table contains ratios from the home water purification equipment industry, as determined by the Standard Industry Classification (SIC) Index code 3589, Service Industry Machinery, Not Elsewhere Classified.
| Ratio Analysis | ||||
| Year 1 | Year 2 | Year 3 | Industry Profile | |
| Sales Growth | n.a. | 126.02% | 9.77% | 8.10% |
| Percent of Total Assets | ||||
| Other Current Assets | 0.00% | 0.00% | 0.00% | 25.80% |
| Total Current Assets | 52.15% | 91.29% | 100.00% | 72.50% |
| Long-term Assets | 47.85% | 8.71% | 0.00% | 27.50% |
| Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
| Current Liabilities | 264.10% | 74.50% | 22.86% | 35.50% |
| Long-term Liabilities | 0.00% | 0.00% | 0.00% | 21.30% |
| Total Liabilities | 264.10% | 74.50% | 22.86% | 56.80% |
| Net Worth | -164.10% | 25.50% | 77.14% | 43.20% |
| Percent of Sales | ||||
| Sales | 100.00% | 100.00% | 100.00% | 100.00% |
| Gross Margin | 52.65% | 58.28% | 59.70% | 32.10% |
| Selling, General & Administrative Expenses | 94.45% | 45.91% | 43.48% | 17.80% |
| Advertising Expenses | 0.00% | 0.00% | 0.00% | 0.90% |
| Profit Before Interest and Taxes | -54.88% | 10.70% | 16.37% | 3.40% |
| Main Ratios | ||||
| Current | 0.20 | 1.23 | 4.37 | 2.12 |
| Quick | 0.20 | 1.23 | 4.37 | 1.20 |
| Total Debt to Total Assets | 264.10% | 74.50% | 22.86% | 56.80% |
| Pre-tax Return on Net Worth | 431.21% | 446.60% | 113.74% | 4.50% |
| Pre-tax Return on Assets | -707.62% | 113.90% | 87.73% | 10.40% |
| Additional Ratios | Year 1 | Year 2 | Year 3 | |
| Net Profit Margin | -54.88% | 8.03% | 12.21% | n.a |
| Return on Equity | 0.00% | 334.95% | 84.83% | n.a |
| Activity Ratios | ||||
| Accounts Payable Turnover | 7.86 | 12.17 | 12.17 | n.a |
| Payment Days | 27 | 28 | 29 | n.a |
| Total Asset Turnover | 12.89 | 10.64 | 5.36 | n.a |
| Debt Ratios | ||||
| Debt to Net Worth | 0.00 | 2.92 | 0.30 | n.a |
| Current Liab. to Liab. | 1.00 | 1.00 | 1.00 | n.a |
| Liquidity Ratios | ||||
| Net Working Capital | ($6,785) | $1,472 | $14,739 | n.a |
| Interest Coverage | 0.00 | 0.00 | 0.00 | n.a |
| Additional Ratios | ||||
| Assets to Sales | 0.08 | 0.09 | 0.19 | n.a |
| Current Debt/Total Assets | 264% | 74% | 23% | n.a |
| Acid Test | 0.20 | 1.23 | 4.37 | n.a |
| Sales/Net Worth | 0.00 | 41.73 | 6.95 | n.a |
| Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |
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