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.
| 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.
| 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.
| 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 |
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