Barnum Painters
Financial Plan
The following sections will outline the Financial Plan of Barnum Painters.
Important Assumptions
The following table shows the General Assumptions for Barnum Painters.
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 |
Key Financial Indicators
The chart below shows the Benchmarks for Barnum Painters.

Break-even Analysis
The Break-even Analysis gives the reader an idea of how many projects Barnum Painters must bid for, prep, paint and complete each month to cover costs. Because Barnum Painters is providing a customized service with many projects having unique requirements, the estimates of revenue and cost are somewhat arbitrary. Furthermore, the company experiences a high degree of seasonality in its contracts which may result in a number of unprofitable months during the late fall, winter and early spring periods.
Fixed costs are based on running costs estimated by the officers of the company and include payroll for all employees. Variable costs are based on a 26% estimate of the average sales per unit. The average revenue estimate is based on the consensus of the principal officers who have had many years of experience in the industry and on the realistic assumption of the types of contracts the company will get in the beginning and the requirements needed to complete such projects.

Break-even Analysis | |
Monthly Revenue Break-even | $17,755 |
Assumptions: | |
Average Percent Variable Cost | 26% |
Estimated Monthly Fixed Cost | $13,126 |
Projected Profit and Loss
The following table and chart shows the projected Profit and Loss for Barnum Painters.




Pro Forma Profit and Loss | |||
Year 1 | Year 2 | Year 3 | |
Sales | $336,500 | $480,505 | $629,048 |
Direct Cost of Sales | $87,730 | $131,703 | $155,755 |
Production Payroll | $84,075 | $111,000 | $172,000 |
Other Production Expenses | $0 | $0 | $0 |
Total Cost of Sales | $171,805 | $242,703 | $327,755 |
Gross Margin | $164,695 | $237,803 | $301,293 |
Gross Margin % | 48.94% | 49.49% | 47.90% |
Operating Expenses | |||
Sales and Marketing Expenses | |||
Sales and Marketing Payroll | $30,000 | $30,000 | $30,000 |
Advertising/Promotion | $3,600 | $5,000 | $10,000 |
Travel | $2,400 | $3,500 | $4,000 |
Miscellaneous | $2,400 | $3,000 | $3,000 |
Total Sales and Marketing Expenses | $38,400 | $41,500 | $47,000 |
Sales and Marketing % | 11.41% | 8.64% | 7.47% |
General and Administrative Expenses | |||
General and Administrative Payroll | $60,000 | $78,000 | $96,000 |
Sales and Marketing and Other Expenses | $0 | $0 | $0 |
Depreciation | $1,200 | $1,200 | $1,200 |
Leased Equipment | $0 | $0 | $0 |
Utilities | $1,800 | $1,800 | $1,800 |
Insurance | $3,600 | $3,600 | $3,600 |
Rent | $24,000 | $24,000 | $24,000 |
Payroll Taxes | $26,111 | $32,850 | $44,700 |
Other General and Administrative Expenses | $0 | $0 | $0 |
Total General and Administrative Expenses | $116,711 | $141,450 | $171,300 |
General and Administrative % | 34.68% | 29.44% | 27.23% |
Other Expenses: | |||
Other Payroll | $0 | $0 | $0 |
Consultants | $0 | $0 | $0 |
Bookkeeper and acountant | $2,400 | $2,500 | $2,750 |
Total Other Expenses | $2,400 | $2,500 | $2,750 |
Other % | 0.71% | 0.52% | 0.44% |
Total Operating Expenses | $157,511 | $185,450 | $221,050 |
Profit Before Interest and Taxes | $7,184 | $52,353 | $80,243 |
EBITDA | $8,384 | $53,553 | $81,443 |
Interest Expense | $574 | $350 | $117 |
Taxes Incurred | $1,983 | $15,601 | $24,038 |
Net Profit | $4,627 | $36,402 | $56,088 |
Net Profit/Sales | 1.38% | 7.58% | 8.92% |
Projected Cash Flow
The following table and chart is the Cash Flow for Barnum Painters.

Pro Forma Cash Flow | |||
Year 1 | Year 2 | Year 3 | |
Cash Received | |||
Cash from Operations | |||
Cash Sales | $168,250 | $240,253 | $314,524 |
Cash from Receivables | $163,833 | $238,362 | $312,574 |
Subtotal Cash from Operations | $332,083 | $478,615 | $627,098 |
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 | $3,000 | $0 | $0 |
Subtotal Cash Received | $335,083 | $478,615 | $627,098 |
Expenditures | Year 1 | Year 2 | Year 3 |
Expenditures from Operations | |||
Cash Spending | $174,075 | $219,000 | $298,000 |
Bill Payments | $164,958 | $217,088 | $269,271 |
Subtotal Spent on Operations | $339,033 | $436,088 | $567,271 |
Additional Cash Spent | |||
Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 |
Principal Repayment of Current Borrowing | $2,334 | $2,333 | $2,333 |
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 | $341,367 | $438,421 | $569,604 |
Net Cash Flow | ($6,283) | $40,194 | $57,494 |
Cash Balance | $33,867 | $74,061 | $131,555 |
Projected Balance Sheet
The following table presents the Balance Sheet for Barnum Painters.
Pro Forma Balance Sheet | |||
Year 1 | Year 2 | Year 3 | |
Assets | |||
Current Assets | |||
Cash | $33,867 | $74,061 | $131,555 |
Accounts Receivable | $4,417 | $6,307 | $8,256 |
Inventory | $9,906 | $21,772 | $20,284 |
Other Current Assets | $0 | $0 | $0 |
Total Current Assets | $48,189 | $102,140 | $160,096 |
Long-term Assets | |||
Long-term Assets | $4,000 | $4,000 | $4,000 |
Accumulated Depreciation | $1,200 | $2,400 | $3,600 |
Total Long-term Assets | $2,800 | $1,600 | $400 |
Total Assets | $50,989 | $103,740 | $160,496 |
Liabilities and Capital | Year 1 | Year 2 | Year 3 |
Current Liabilities | |||
Accounts Payable | $696 | $19,378 | $22,378 |
Current Borrowing | $4,666 | $2,333 | $0 |
Other Current Liabilities | $0 | $0 | $0 |
Subtotal Current Liabilities | $5,362 | $21,711 | $22,378 |
Long-term Liabilities | $0 | $0 | $0 |
Total Liabilities | $5,362 | $21,711 | $22,378 |
Paid-in Capital | $47,550 | $47,550 | $47,550 |
Retained Earnings | ($6,550) | ($1,923) | $34,479 |
Earnings | $4,627 | $36,402 | $56,088 |
Total Capital | $45,627 | $82,029 | $138,117 |
Total Liabilities and Capital | $50,989 | $103,740 | $160,496 |
Net Worth | $45,627 | $82,029 | $138,117 |
Business Ratios
Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 1721, Painting and Paper Hanging, are shown for comparison.
Ratio Analysis | ||||
Year 1 | Year 2 | Year 3 | Industry Profile | |
Sales Growth | n.a. | 42.79% | 30.91% | 5.90% |
Percent of Total Assets | ||||
Accounts Receivable | 8.66% | 6.08% | 5.14% | 34.60% |
Inventory | 19.43% | 20.99% | 12.64% | 5.40% |
Other Current Assets | 0.00% | 0.00% | 0.00% | 29.80% |
Total Current Assets | 94.51% | 98.46% | 99.75% | 69.80% |
Long-term Assets | 5.49% | 1.54% | 0.25% | 30.20% |
Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
Current Liabilities | 10.52% | 20.93% | 13.94% | 43.40% |
Long-term Liabilities | 0.00% | 0.00% | 0.00% | 12.40% |
Total Liabilities | 10.52% | 20.93% | 13.94% | 55.80% |
Net Worth | 89.48% | 79.07% | 86.06% | 44.20% |
Percent of Sales | ||||
Sales | 100.00% | 100.00% | 100.00% | 100.00% |
Gross Margin | 48.94% | 49.49% | 47.90% | 27.20% |
Selling, General & Administrative Expenses | 47.59% | 41.97% | 39.05% | 15.40% |
Advertising Expenses | 1.07% | 1.04% | 1.59% | 0.40% |
Profit Before Interest and Taxes | 2.13% | 10.90% | 12.76% | 2.50% |
Main Ratios | ||||
Current | 8.99 | 4.70 | 7.15 | 1.60 |
Quick | 7.14 | 3.70 | 6.25 | 1.27 |
Total Debt to Total Assets | 10.52% | 20.93% | 13.94% | 55.80% |
Pre-tax Return on Net Worth | 14.49% | 63.40% | 58.01% | 5.60% |
Pre-tax Return on Assets | 12.96% | 50.13% | 49.92% | 12.60% |
Additional Ratios | Year 1 | Year 2 | Year 3 | |
Net Profit Margin | 1.38% | 7.58% | 8.92% | n.a |
Return on Equity | 10.14% | 44.38% | 40.61% | n.a |
Activity Ratios | ||||
Accounts Receivable Turnover | 38.09 | 38.09 | 38.09 | n.a |
Collection Days | 59 | 8 | 8 | n.a |
Inventory Turnover | 9.08 | 8.31 | 7.41 | n.a |
Accounts Payable Turnover | 237.90 | 12.17 | 12.17 | n.a |
Payment Days | 27 | 16 | 28 | n.a |
Total Asset Turnover | 6.60 | 4.63 | 3.92 | n.a |
Debt Ratios | ||||
Debt to Net Worth | 0.12 | 0.26 | 0.16 | n.a |
Current Liab. to Liab. | 1.00 | 1.00 | 1.00 | n.a |
Liquidity Ratios | ||||
Net Working Capital | $42,827 | $80,429 | $137,717 | n.a |
Interest Coverage | 12.52 | 149.60 | 687.89 | n.a |
Additional Ratios | ||||
Assets to Sales | 0.15 | 0.22 | 0.26 | n.a |
Current Debt/Total Assets | 11% | 21% | 14% | n.a |
Acid Test | 6.32 | 3.41 | 5.88 | n.a |
Sales/Net Worth | 7.38 | 5.86 | 4.55 | n.a |
Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |