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Financial Plan

The following sections will outline important financial information.

7.1 Important Assumptions

The following table details 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 0.00% 0.00% 0.00%
Other 0 0 0

7.2 Projected Surplus or Deficit

The following table will indicate surplus or deficit.

Nonprofit law firm business plan, financial plan chart image

Surplus and Deficit
Year 1 Year 2 Year 3
Funding $58,991 $76,409 $80,873
Direct Cost $0 $0 $0
Other Production Expenses $0 $0 $0
Total Direct Cost $0 $0 $0
Gross Surplus $58,991 $76,409 $80,873
Gross Surplus % 100.00% 100.00% 100.00%
Expenses
Payroll $38,500 $53,000 $55,000
Sales and Marketing and Other Expenses $1,200 $1,200 $1,200
Depreciation $936 $936 $936
Web site + DSL $1,620 $1,620 $1,620
Utilities $600 $600 $600
Insurance $2,100 $2,100 $2,100
Rent $6,000 $6,000 $6,000
Payroll Taxes $5,775 $7,950 $8,250
Other $0 $0 $0
Total Operating Expenses $56,731 $73,406 $75,706
Surplus Before Interest and Taxes $2,260 $3,003 $5,167
EBITDA $3,196 $3,939 $6,103
Interest Expense $0 $0 $0
Taxes Incurred $0 $0 $0
Net Surplus $2,260 $3,003 $5,167
Net Surplus/Funding 3.83% 3.93% 6.39%

7.3 Break-even Analysis

The Break-even Analysis is shown below.

Nonprofit law firm business plan, financial plan chart image

Break-even Analysis
Monthly Revenue Break-even $4,728
Assumptions:
Average Percent Variable Cost 0%
Estimated Monthly Fixed Cost $4,728

7.4 Projected Cash Flow

The following chart and table will indicate projected cash flow.

Nonprofit law firm business plan, financial plan chart image

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Funding $58,991 $76,409 $80,873
Subtotal Cash from Operations $58,991 $76,409 $80,873
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 $58,991 $76,409 $80,873
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $38,500 $53,000 $55,000
Bill Payments $15,773 $19,392 $19,745
Subtotal Spent on Operations $54,273 $72,392 $74,745
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 $54,273 $72,392 $74,745
Net Cash Flow $4,719 $4,017 $6,128
Cash Balance $9,819 $13,835 $19,963

7.5 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 $9,819 $13,835 $19,963
Other Current Assets $0 $0 $0
Total Current Assets $9,819 $13,835 $19,963
Long-term Assets
Long-term Assets $4,700 $4,700 $4,700
Accumulated Depreciation $936 $1,872 $2,808
Total Long-term Assets $3,764 $2,828 $1,892
Total Assets $13,583 $16,663 $21,855
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $1,523 $1,600 $1,625
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $1,523 $1,600 $1,625
Long-term Liabilities $0 $0 $0
Total Liabilities $1,523 $1,600 $1,625
Paid-in Capital $10,000 $10,000 $10,000
Accumulated Surplus/Deficit ($200) $2,060 $5,063
Surplus/Deficit $2,260 $3,003 $5,167
Total Capital $12,060 $15,063 $20,230
Total Liabilities and Capital $13,583 $16,663 $21,855
Net Worth $12,060 $15,063 $20,230

7.6 Business Ratios

The following table outlines some of the more important ratios from the Offices of Laywers industry. The final column, Industry Profile, details specific ratios based on the industry as it is classified by the Standard Industry Classification (SIC) code, 8111.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Funding Growth 0.00% 29.53% 5.84% 8.50%
Percent of Total Assets
Other Current Assets 0.00% 0.00% 0.00% 66.90%
Total Current Assets 72.29% 83.03% 91.34% 75.50%
Long-term Assets 27.71% 16.97% 8.66% 24.50%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 11.21% 9.60% 7.44% 50.20%
Long-term Liabilities 0.00% 0.00% 0.00% 12.90%
Total Liabilities 11.21% 9.60% 7.44% 63.10%
Net Worth 88.79% 90.40% 92.56% 36.90%
Percent of Funding
Funding 100.00% 100.00% 100.00% 100.00%
Gross Surplus 100.00% 100.00% 100.00% 0.00%
Selling, General & Administrative Expenses 96.17% 96.07% 93.61% 58.20%
Advertising Expenses 0.00% 0.00% 0.00% 0.50%
Surplus Before Interest and Taxes 3.83% 3.93% 6.39% 3.40%
Main Ratios
Current 6.45 8.65 12.29 1.54
Quick 6.45 8.65 12.29 1.09
Total Debt to Total Assets 11.21% 9.60% 7.44% 63.10%
Pre-tax Return on Net Worth 18.74% 19.94% 25.54% 12.30%
Pre-tax Return on Assets 16.64% 18.02% 23.64% 33.40%
Additional Ratios Year 1 Year 2 Year 3
Net Surplus Margin 3.83% 3.93% 6.39% n.a
Return on Equity 18.74% 19.94% 25.54% n.a
Activity Ratios
Accounts Payable Turnover 11.36 12.17 12.17 n.a
Payment Days 27 29 30 n.a
Total Asset Turnover 4.34 4.59 3.70 n.a
Debt Ratios
Debt to Net Worth 0.13 0.11 0.08 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $8,296 $12,235 $18,338 n.a
Interest Coverage 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Funding 0.23 0.22 0.27 n.a
Current Debt/Total Assets 11% 10% 7% n.a
Acid Test 6.45 8.65 12.29 n.a
Funding/Net Worth 4.89 5.07 4.00 n.a
Dividend Payout 0.00 0.00 0.00 n.a