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Falls River Theatre

Financial Plan

The following sections outline the financial analysis for Falls River Theatre.

8.1 Important Assumptions

The following shows the important General Assumptions for Falls River Theatre.

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 30.00% 30.00% 30.00%
Other 0 0 0

8.2 Break-even Analysis

The following Break-even Analysis shows the monthly break-even point.

Movie theater business plan, financial plan chart image

Break-even Analysis
Monthly Revenue Break-even $23,758
Assumptions:
Average Percent Variable Cost 49%
Estimated Monthly Fixed Cost $12,176

8.3 Projected Profit and Loss

The following table and charts show the Projected Profit and Loss for Falls River Theatre.

Movie theater business plan, financial plan chart image

Movie theater business plan, financial plan chart image

Movie theater business plan, financial plan chart image

Movie theater business plan, financial plan chart image

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $187,188 $280,782 $421,173
Direct Cost of Sales $91,254 $136,881 $205,322
Other Costs of Sales $0 $0 $0
Total Cost of Sales $91,254 $136,881 $205,322
Gross Margin $95,934 $143,901 $215,851
Gross Margin % 51.25% 51.25% 51.25%
Expenses
Payroll $78,150 $82,058 $86,160
Sales and Marketing and Other Expenses $3,300 $0 $400
Depreciation $1,992 $0 $0
Rent $10,800 $0 $900
Utilities $30,000 $0 $2,750
Insurance $10,150 $0 $1,100
Payroll Taxes $11,723 $0 $1,138
Other $0 $0 $0
Total Operating Expenses $146,115 $82,058 $92,448
Profit Before Interest and Taxes ($50,181) $61,843 $123,403
EBITDA ($48,189) $61,843 $123,403
Interest Expense $0 $0 $0
Taxes Incurred $0 $18,553 $37,021
Net Profit ($50,181) $43,290 $86,382
Net Profit/Sales -26.81% 15.42% 20.51%

8.4 Projected Cash Flow

The two founders will be the sole investors. Samantha Farmer and Steve Brinksman will invest, both in early January.

Movie theater business plan, financial plan chart image

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $187,188 $280,782 $421,173
Subtotal Cash from Operations $187,188 $280,782 $421,173
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 $60,000 $0 $0
Subtotal Cash Received $247,188 $280,782 $421,173
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $78,150 $82,058 $86,160
Bill Payments $152,553 $178,262 $256,786
Subtotal Spent on Operations $230,703 $260,320 $342,946
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 $0 $0 $0
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $230,703 $260,320 $342,946
Net Cash Flow $16,485 $20,462 $78,227
Cash Balance $28,885 $49,347 $127,574

8.5 Projected Balance Sheet

The following table illustrates Falls River Theatre’s Projected Balance Sheet.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $28,885 $49,347 $127,574
Inventory $21,681 $32,521 $48,782
Other Current Assets $0 $0 $0
Total Current Assets $50,565 $81,868 $176,356
Long-term Assets
Long-term Assets $10,000 $10,000 $10,000
Accumulated Depreciation $1,992 $1,992 $1,992
Total Long-term Assets $8,008 $8,008 $8,008
Total Assets $58,573 $89,876 $184,364
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $25,654 $13,666 $21,772
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $25,654 $13,666 $21,772
Long-term Liabilities $0 $0 $0
Total Liabilities $25,654 $13,666 $21,772
Paid-in Capital $105,000 $105,000 $105,000
Retained Earnings ($21,900) ($72,081) ($28,790)
Earnings ($50,181) $43,290 $86,382
Total Capital $32,919 $76,210 $162,592
Total Liabilities and Capital $58,573 $89,876 $184,364
Net Worth $32,919 $76,210 $162,592

8.6 Business Ratios

Business ratios for the years of this plan are shown below. Industry profile ratios are based on the Standard Industrial Classification (SIC) code 7832, [motion picture theatres, except drive-ins].

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 50.00% 50.00% 4.18%
Percent of Total Assets
Inventory 37.01% 36.18% 26.46% 0.54%
Other Current Assets 0.00% 0.00% 0.00% 27.25%
Total Current Assets 86.33% 91.09% 95.66% 32.96%
Long-term Assets 13.67% 8.91% 4.34% 67.04%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 43.80% 15.21% 11.81% 23.77%
Long-term Liabilities 0.00% 0.00% 0.00% 30.06%
Total Liabilities 43.80% 15.21% 11.81% 53.83%
Net Worth 56.20% 84.79% 88.19% 46.17%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 51.25% 51.25% 51.25% 100.00%
Selling, General & Administrative Expenses 76.99% 0.00% 40.59% 76.64%
Advertising Expenses 0.00% 0.00% 0.00% 3.12%
Profit Before Interest and Taxes -26.81% 22.03% 29.30% 2.78%
Main Ratios
Current 1.97 5.99 8.10 0.93
Quick 1.13 3.61 5.86 0.63
Total Debt to Total Assets 43.80% 15.21% 11.81% 2.70%
Pre-tax Return on Net Worth -152.43% 81.15% 75.90% 61.15%
Pre-tax Return on Assets -85.67% 68.81% 66.93% 6.94%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -26.81% 15.42% 20.51% n.a
Return on Equity -152.43% 56.80% 53.13% n.a
Activity Ratios
Inventory Turnover 10.40 5.05 5.05 n.a
Accounts Payable Turnover 6.95 12.17 12.17 n.a
Payment Days 27 43 24 n.a
Total Asset Turnover 3.20 3.12 2.28 n.a
Debt Ratios
Debt to Net Worth 0.78 0.18 0.13 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $24,911 $68,202 $154,584 n.a
Interest Coverage 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 0.31 0.32 0.44 n.a
Current Debt/Total Assets 44% 15% 12% n.a
Acid Test 1.13 3.61 5.86 n.a
Sales/Net Worth 5.69 3.68 2.59 n.a
Dividend Payout 0.00 0.00 0.00 n.a