University Mopeds
Financial Plan
All of the monies necessary for the start-up of this business will come from the owners. It will be entirely self-financed. The owners will not draw a salary, but will receive payments for their investments as University Mopeds generates cash flow.
7.1 Important Assumptions
The following table outlines the general assumptions for University Mopeds.
| 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 | 8.50% | 8.50% | 8.50% |
| Tax Rate | 30.00% | 30.00% | 30.00% |
| Other | 0 | 0 | 0 |
7.2 Key Financial Indicators
The following chart gives the benchmarks planned for University Mopeds.
7.3 Break-even Analysis
The following chart and table outline the Break-even Analysis.
| Break-even Analysis | |
| Monthly Units Break-even | 1,053 |
| Monthly Revenue Break-even | $23,686 |
| Assumptions: | |
| Average Per-Unit Revenue | $22.50 |
| Average Per-Unit Variable Cost | $5.50 |
| Estimated Monthly Fixed Cost | $17,896 |
7.4 Projected Profit and Loss
The following table shows the projected Profit and Loss.
| Pro Forma Profit and Loss | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | $476,955 | $607,500 | $675,000 |
| Direct Cost of Sales | $116,589 | $297,000 | $335,000 |
| Other | $0 | $0 | $0 |
| Total Cost of Sales | $116,589 | $297,000 | $335,000 |
| Gross Margin | $360,366 | $310,500 | $340,000 |
| Gross Margin % | 75.56% | 51.11% | 50.37% |
| Expenses | |||
| Payroll | $75,000 | $82,500 | $90,750 |
| Sales and Marketing and Other Expenses | $900 | $1,100 | $1,300 |
| Depreciation | $100,000 | $100,000 | $100,000 |
| Leased Equipment | $600 | $600 | $600 |
| Utilities | $600 | $650 | $700 |
| Insurance | $2,400 | $2,800 | $3,200 |
| Rent | $24,000 | $28,000 | $30,000 |
| Payroll Taxes | $11,250 | $12,375 | $13,613 |
| Other | $0 | $0 | $0 |
| Total Operating Expenses | $214,750 | $228,025 | $240,163 |
| Profit Before Interest and Taxes | $145,616 | $82,475 | $99,838 |
| EBITDA | $245,616 | $182,475 | $199,838 |
| Interest Expense | $28,596 | $24,876 | $21,011 |
| Taxes Incurred | $35,106 | $17,280 | $23,648 |
| Net Profit | $81,914 | $40,319 | $55,178 |
| Net Profit/Sales | 17.17% | 6.64% | 8.17% |
7.5 Projected Cash Flow
The following chart and table are the projected Cash Flow.
| Pro Forma Cash Flow | |||
| Year 1 | Year 2 | Year 3 | |
| Cash Received | |||
| Cash from Operations | |||
| Cash Sales | $476,955 | $607,500 | $675,000 |
| Subtotal Cash from Operations | $476,955 | $607,500 | $675,000 |
| 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 | $476,955 | $607,500 | $675,000 |
| Expenditures | Year 1 | Year 2 | Year 3 |
| Expenditures from Operations | |||
| Cash Spending | $75,000 | $82,500 | $90,750 |
| Bill Payments | $142,534 | $360,154 | $427,552 |
| Subtotal Spent on Operations | $217,534 | $442,654 | $518,302 |
| Additional Cash Spent | |||
| Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 |
| Principal Repayment of Current Borrowing | $0 | $40,000 | $0 |
| Other Liabilities Principal Repayment | $0 | $0 | $0 |
| Long-term Liabilities Principal Repayment | $19,898 | $21,941 | $21,941 |
| Purchase Other Current Assets | $0 | $0 | $0 |
| Purchase Long-term Assets | $0 | $100,000 | $100,000 |
| Dividends | $0 | $0 | $0 |
| Subtotal Cash Spent | $237,432 | $604,596 | $640,243 |
| Net Cash Flow | $239,523 | $2,904 | $34,757 |
| Cash Balance | $272,623 | $275,527 | $310,285 |
7.6 Projected Balance Sheet
The Balance Sheet table follows.
| Pro Forma Balance Sheet | |||
| Year 1 | Year 2 | Year 3 | |
| Assets | |||
| Current Assets | |||
| Cash | $272,623 | $275,527 | $310,285 |
| Inventory | $4,993 | $12,719 | $14,347 |
| Other Current Assets | $50,000 | $50,000 | $50,000 |
| Total Current Assets | $327,616 | $338,247 | $374,631 |
| Long-term Assets | |||
| Long-term Assets | $300,000 | $400,000 | $500,000 |
| Accumulated Depreciation | $100,000 | $200,000 | $300,000 |
| Total Long-term Assets | $200,000 | $200,000 | $200,000 |
| Total Assets | $527,616 | $538,247 | $574,631 |
| Liabilities and Capital | Year 1 | Year 2 | Year 3 |
| Current Liabilities | |||
| Accounts Payable | $0 | $32,253 | $35,400 |
| Current Borrowing | $40,000 | $0 | $0 |
| Other Current Liabilities | $0 | $0 | $0 |
| Subtotal Current Liabilities | $40,000 | $32,253 | $35,400 |
| Long-term Liabilities | $280,102 | $258,161 | $236,219 |
| Total Liabilities | $320,102 | $290,413 | $271,619 |
| Paid-in Capital | $130,000 | $130,000 | $130,000 |
| Retained Earnings | ($4,400) | $77,514 | $117,833 |
| Earnings | $81,914 | $40,319 | $55,178 |
| Total Capital | $207,514 | $247,833 | $303,012 |
| Total Liabilities and Capital | $527,616 | $538,247 | $574,631 |
| Net Worth | $207,514 | $247,833 | $303,012 |
7.7 Business Ratios
The standard ratios shown are for SIC code 7359, other nonclassified rental businesses.
| Ratio Analysis | ||||
| Year 1 | Year 2 | Year 3 | Industry Profile | |
| Sales Growth | 0.00% | 27.37% | 11.11% | 7.90% |
| Percent of Total Assets | ||||
| Inventory | 0.95% | 2.36% | 2.50% | 3.40% |
| Other Current Assets | 9.48% | 9.29% | 8.70% | 45.10% |
| Total Current Assets | 62.09% | 62.84% | 65.20% | 74.30% |
| Long-term Assets | 37.91% | 37.16% | 34.80% | 25.70% |
| Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
| Current Liabilities | 7.58% | 5.99% | 6.16% | 42.00% |
| Long-term Liabilities | 53.09% | 47.96% | 41.11% | 15.70% |
| Total Liabilities | 60.67% | 53.96% | 47.27% | 57.70% |
| Net Worth | 39.33% | 46.04% | 52.73% | 42.30% |
| Percent of Sales | ||||
| Sales | 100.00% | 100.00% | 100.00% | 100.00% |
| Gross Margin | 75.56% | 51.11% | 50.37% | 0.00% |
| Selling, General & Administrative Expenses | 57.15% | 44.00% | 41.61% | 82.90% |
| Advertising Expenses | 0.19% | 0.18% | 0.19% | 1.00% |
| Profit Before Interest and Taxes | 30.53% | 13.58% | 14.79% | 2.60% |
| Main Ratios | ||||
| Current | 8.19 | 10.49 | 10.58 | 1.68 |
| Quick | 8.07 | 10.09 | 10.18 | 1.33 |
| Total Debt to Total Assets | 60.67% | 53.96% | 47.27% | 57.70% |
| Pre-tax Return on Net Worth | 56.39% | 23.24% | 26.01% | 4.80% |
| Pre-tax Return on Assets | 22.18% | 10.70% | 13.72% | 11.40% |
| Additional Ratios | Year 1 | Year 2 | Year 3 | |
| Net Profit Margin | 17.17% | 6.64% | 8.17% | n.a |
| Return on Equity | 39.47% | 16.27% | 18.21% | n.a |
| Activity Ratios | ||||
| Inventory Turnover | 3.69 | 33.54 | 24.75 | n.a |
| Accounts Payable Turnover | 0.00 | 12.17 | 12.17 | n.a |
| Payment Days | 32 | 15 | 29 | n.a |
| Total Asset Turnover | 0.90 | 1.13 | 1.17 | n.a |
| Debt Ratios | ||||
| Debt to Net Worth | 1.54 | 1.17 | 0.90 | n.a |
| Current Liab. to Liab. | 0.12 | 0.11 | 0.13 | n.a |
| Liquidity Ratios | ||||
| Net Working Capital | $287,616 | $305,994 | $339,231 | n.a |
| Interest Coverage | 5.09 | 3.32 | 4.75 | n.a |
| Additional Ratios | ||||
| Assets to Sales | 1.11 | 0.89 | 0.85 | n.a |
| Current Debt/Total Assets | 8% | 6% | 6% | n.a |
| Acid Test | 8.07 | 10.09 | 10.18 | n.a |
| Sales/Net Worth | 2.30 | 2.45 | 2.23 | n.a |
| Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |
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