Green Office
Financial Plan
The following sections will outline important financial information.
8.1 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 | 9.00% | 9.00% | 9.00% |
| Long-term Interest Rate | 8.00% | 8.00% | 8.00% |
| Tax Rate | 30.00% | 30.00% | 30.00% |
| Other | 0 | 0 | 0 |
8.2 Break-even Analysis
The following table and chart show our break-even analysis.
| Break-even Analysis | |
| Monthly Revenue Break-even | $31,303 |
| Assumptions: | |
| Average Percent Variable Cost | 50% |
| Estimated Monthly Fixed Cost | $15,657 |
8.3 Projected Profit and Loss
The following table will indicate Projected Profit and Loss.
| Pro Forma Profit and Loss | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | $259,724 | $818,950 | $1,004,331 |
| Direct Cost of Sales | $129,821 | $532,318 | $652,815 |
| Other Costs of Goods | $0 | $0 | $0 |
| Total Cost of Sales | $129,821 | $532,318 | $652,815 |
| Gross Margin | $129,903 | $286,633 | $351,516 |
| Gross Margin % | 50.02% | 35.00% | 35.00% |
| Expenses | |||
| Payroll | $131,200 | $144,320 | $158,752 |
| Sales and Marketing and Other Expenses | $2,400 | $2,400 | $2,400 |
| Depreciation | $8,700 | $8,700 | $8,700 |
| Rent | $12,000 | $12,000 | $12,000 |
| Utilities | $6,000 | $6,000 | $6,000 |
| Insurance | $2,400 | $2,400 | $2,400 |
| Payroll Taxes | $19,680 | $27,180 | $28,080 |
| Website Maintenance | $5,500 | $6,500 | $7,500 |
| Total Operating Expenses | $187,880 | $209,500 | $225,832 |
| Profit Before Interest and Taxes | ($57,977) | $77,133 | $125,684 |
| EBITDA | ($49,277) | $85,833 | $134,384 |
| Interest Expense | $3,854 | $3,731 | $3,500 |
| Taxes Incurred | $0 | $22,021 | $36,655 |
| Net Profit | ($61,831) | $51,381 | $85,528 |
| Net Profit/Sales | -23.81% | 6.27% | 8.52% |
8.4 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 | $64,931 | $204,738 | $251,083 |
| Cash from Receivables | $151,445 | $520,877 | $722,308 |
| Subtotal Cash from Operations | $216,376 | $725,615 | $973,390 |
| Additional Cash Received | |||
| Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 |
| New Current Borrowing | $0 | $3,000 | $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 | $36,000 | $0 |
| Subtotal Cash Received | $216,376 | $764,615 | $973,390 |
| Expenditures | Year 1 | Year 2 | Year 3 |
| Expenditures from Operations | |||
| Cash Spending | $131,200 | $144,320 | $158,752 |
| Bill Payments | $130,946 | $601,459 | $748,773 |
| Subtotal Spent on Operations | $262,146 | $745,779 | $907,525 |
| Additional Cash Spent | |||
| Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 |
| Principal Repayment of Current Borrowing | $0 | $0 | $2,234 |
| Other Liabilities Principal Repayment | $0 | $0 | $0 |
| Long-term Liabilities Principal Repayment | $3,403 | $3,302 | $3,324 |
| Purchase Other Current Assets | $0 | $0 | $0 |
| Purchase Long-term Assets | $0 | $0 | $0 |
| Dividends | $0 | $0 | $0 |
| Subtotal Cash Spent | $265,548 | $749,080 | $913,083 |
| Net Cash Flow | ($49,173) | $15,534 | $60,308 |
| Cash Balance | $79,527 | $95,062 | $155,369 |
8.5 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 | $79,527 | $95,062 | $155,369 |
| Other Current Assets | $3,500 | $3,500 | $3,500 |
| Total Current Assets | $141,788 | $269,506 | $368,509 |
| Long-term Assets | |||
| Long-term Assets | $43,500 | $43,500 | $43,500 |
| Accumulated Depreciation | $8,700 | $17,400 | $26,100 |
| Total Long-term Assets | $34,800 | $26,100 | $17,400 |
| Total Assets | $176,588 | $295,606 | $385,909 |
| Liabilities and Capital | Year 1 | Year 2 | Year 3 |
| Current Liabilities | |||
| Accounts Payable | $20,122 | $52,060 | $62,392 |
| Current Borrowing | $0 | $3,000 | $766 |
| Other Current Liabilities | $0 | $0 | $0 |
| Subtotal Current Liabilities | $20,122 | $55,060 | $63,158 |
| Long-term Liabilities | $46,597 | $43,296 | $39,972 |
| Total Liabilities | $66,719 | $98,356 | $103,131 |
| Paid-in Capital | $213,000 | $249,000 | $249,000 |
| Retained Earnings | ($41,300) | ($103,131) | ($51,750) |
| Earnings | ($61,831) | $51,381 | $85,528 |
| Total Capital | $109,869 | $197,250 | $282,779 |
| Total Liabilities and Capital | $176,588 | $295,606 | $385,909 |
| Net Worth | $109,869 | $197,250 | $282,779 |
8.6 Business Ratios
The following table shows common Business Ratios, specific to Green Office as well as to the industry as a whole.
| Ratio Analysis | ||||
| Year 1 | Year 2 | Year 3 | Industry Profile | |
| Sales Growth | 0.00% | 215.32% | 22.64% | 1.50% |
| Percent of Total Assets | ||||
| Accounts Receivable | 24.55% | 46.24% | 43.44% | 38.65% |
| Inventory | 8.73% | 11.59% | 10.89% | 28.15% |
| Other Current Assets | 1.98% | 1.18% | 0.91% | 18.82% |
| Total Current Assets | 80.29% | 91.17% | 95.49% | 85.62% |
| Long-term Assets | 19.71% | 8.83% | 4.51% | 14.38% |
| Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
| Current Liabilities | 11.39% | 18.63% | 16.37% | 43.40% |
| Long-term Liabilities | 26.39% | 14.65% | 10.36% | 11.10% |
| Total Liabilities | 37.78% | 33.27% | 26.72% | 54.50% |
| Net Worth | 62.22% | 66.73% | 73.28% | 45.50% |
| Percent of Sales | ||||
| Sales | 100.00% | 100.00% | 100.00% | 100.00% |
| Gross Margin | 50.02% | 35.00% | 35.00% | 22.64% |
| Selling, General & Administrative Expenses | 96.00% | 31.88% | 28.47% | 13.42% |
| Advertising Expenses | 0.00% | 0.00% | 0.00% | 0.26% |
| Profit Before Interest and Taxes | -22.32% | 9.42% | 12.51% | 1.70% |
| Main Ratios | ||||
| Current | 7.05 | 4.89 | 5.83 | 1.77 |
| Quick | 6.28 | 4.27 | 5.17 | 1.07 |
| Total Debt to Total Assets | 37.78% | 33.27% | 26.72% | 5.52% |
| Pre-tax Return on Net Worth | -56.28% | 37.21% | 43.21% | 59.64% |
| Pre-tax Return on Assets | -35.01% | 24.83% | 31.66% | 13.69% |
| Additional Ratios | Year 1 | Year 2 | Year 3 | |
| Net Profit Margin | -23.81% | 6.27% | 8.52% | n.a |
| Return on Equity | -56.28% | 26.05% | 30.25% | n.a |
| Activity Ratios | ||||
| Accounts Receivable Turnover | 4.49 | 4.49 | 4.49 | n.a |
| Collection Days | 56 | 53 | 74 | n.a |
| Inventory Turnover | 5.91 | 21.43 | 17.12 | n.a |
| Accounts Payable Turnover | 7.51 | 12.17 | 12.17 | n.a |
| Payment Days | 27 | 21 | 28 | n.a |
| Total Asset Turnover | 1.47 | 2.77 | 2.60 | n.a |
| Debt Ratios | ||||
| Debt to Net Worth | 0.61 | 0.50 | 0.36 | n.a |
| Current Liab. to Liab. | 0.30 | 0.56 | 0.61 | n.a |
| Liquidity Ratios | ||||
| Net Working Capital | $121,666 | $214,446 | $305,351 | n.a |
| Interest Coverage | -15.04 | 20.67 | 35.91 | n.a |
| Additional Ratios | ||||
| Assets to Sales | 0.68 | 0.36 | 0.38 | n.a |
| Current Debt/Total Assets | 11% | 19% | 16% | n.a |
| Acid Test | 4.13 | 1.79 | 2.52 | n.a |
| Sales/Net Worth | 2.36 | 4.15 | 3.55 | n.a |
| Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |
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