Pasta Manufacturer Business Plan

The Pasta Tree

Financial Plan

The following is financial plan for The Pasta Tree.

7.1 Break-even Analysis

The monthly break-even point is $24,989.

Pasta manufacturer business plan, financial plan chart image

Break-even Analysis


Monthly Revenue Break-even	$24,989

Assumptions:
Average Percent Variable Cost	10%
Estimated Monthly Fixed Cost	$22,490

7.2 Projected Profit and Loss

The following table and charts are the projected profit and loss for three years.

Pro Forma Profit and Loss
	FY 2003	FY 2004	FY 2005
Sales	$313,000	$346,000	$419,000
Direct Cost of Sales	$31,300	$35,300	$40,300
Other Production Expenses	$0	$0	$0
Total Cost of Sales	$31,300	$35,300	$40,300

Gross Margin	$281,700	$310,700	$378,700
Gross Margin %	90.00%	89.80%	90.38%


Expenses
Payroll	$199,200	$215,136	$247,406
Sales and Marketing and Other Expenses	$6,000	$8,000	$10,000
Depreciation	$9,600	$9,600	$9,600
Leased Equipment	$0	$0	$0
Utilities	$3,600	$12,000	$12,000
Insurance	$9,600	$9,600	$9,600
Rent	$12,000	$12,000	$12,000
Payroll Taxes	$29,880	$32,270	$37,111
Other	$0	$0	$0

Total Operating Expenses	$269,880	$298,606	$337,717

Profit Before Interest and Taxes	$11,820	$12,094	$40,983
EBITDA	$21,420	$21,694	$50,583
Interest Expense	$4,760	$3,405	$1,715
Taxes Incurred	$2,118	$2,607	$11,780

Net Profit	$4,942	$6,082	$27,488
Net Profit/Sales	1.58%	1.76%	6.56%

7.3 Projected Cash Flow

The following table and chart are the projected cash flow for three years.

Pro Forma Cash Flow
	FY 2003	FY 2004	FY 2005
Cash Received

Cash from Operations
Cash Sales	$78,250	$86,500	$104,750
Cash from Receivables	$203,750	$254,756	$303,755
Subtotal Cash from Operations	$282,000	$341,256	$408,505

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	$50,000	$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	$332,000	$341,256	$408,505

Expenditures	FY 2003	FY 2004	FY 2005

Expenditures from Operations
Cash Spending	$199,200	$215,136	$247,406
Bill Payments	$94,829	$115,954	$133,454
Subtotal Spent on Operations	$294,029	$331,090	$380,860

Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out	$0	$0	$0
Principal Repayment of Current Borrowing	$1,200	$1,200	$600
Other Liabilities Principal Repayment	$0	$0	$0
Long-term Liabilities Principal Repayment	$18,000	$18,300	$13,700
Purchase Other Current Assets	$0	$0	$0
Purchase Long-term Assets	$0	$0	$0
Dividends	$0	$0	$0
Subtotal Cash Spent	$313,229	$350,590	$395,160

Net Cash Flow	$18,771	($9,335)	$13,345
Cash Balance	$88,771	$79,437	$92,781

7.4 Projected Balance Sheet

The following table shows the projected balance sheet for three years.

Pro Forma Balance Sheet
	FY 2003	FY 2004	FY 2005
Assets

Current Assets
Cash	$88,771	$79,437	$92,781
Accounts Receivable	$45,000	$49,744	$60,240
Inventory	$3,410	$3,846	$4,391
Other Current Assets	$5,000	$5,000	$5,000
Total Current Assets	$142,181	$138,027	$162,412

Long-term Assets
Long-term Assets	$36,736	$36,736	$36,736
Accumulated Depreciation	$14,848	$24,448	$34,048
Total Long-term Assets	$21,888	$12,288	$2,688
Total Assets	$164,069	$150,315	$165,100

Liabilities and Capital	FY 2003	FY 2004	FY 2005

Current Liabilities
Accounts Payable	$9,839	$9,503	$11,100
Current Borrowing	$1,800	$600	$0
Other Current Liabilities	$0	$0	$0
Subtotal Current Liabilities	$11,639	$10,103	$11,100

Long-term Liabilities	$42,000	$23,700	$10,000
Total Liabilities	$53,639	$33,803	$21,100

Paid-in Capital	$0	$0	$0
Retained Earnings	$105,488	$110,430	$116,512
Earnings	$4,942	$6,082	$27,488
Total Capital	$110,430	$116,512	$144,000
Total Liabilities and Capital	$164,069	$150,315	$165,100

Net Worth	$110,430	$116,512	$144,000

7.5 Business Ratios

Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 5149, Groceries and related products, are shown for comparison.

Ratio Analysis
	FY 2003	FY 2004	FY 2005	Industry Profile
Sales Growth	56.50%	10.54%	21.10%	4.60%

Percent of Total Assets
Accounts Receivable	27.43%	33.09%	36.49%	33.30%
Inventory	2.08%	2.56%	2.66%	26.00%
Other Current Assets	3.05%	3.33%	3.03%	20.90%
Total Current Assets	86.66%	91.83%	98.37%	80.20%
Long-term Assets	13.34%	8.17%	1.63%	19.80%
Total Assets	100.00%	100.00%	100.00%	100.00%

Current Liabilities	7.09%	6.72%	6.72%	45.20%
Long-term Liabilities	25.60%	15.77%	6.06%	10.00%
Total Liabilities	32.69%	22.49%	12.78%	55.20%
Net Worth	67.31%	77.51%	87.22%	44.80%

Percent of Sales
Sales	100.00%	100.00%	100.00%	100.00%
Gross Margin	90.00%	89.80%	90.38%	44.10%
Selling, General & Administrative Expenses	88.44%	88.08%	83.95%	26.70%
Advertising Expenses	1.92%	2.31%	2.39%	0.70%
Profit Before Interest and Taxes	3.78%	3.50%	9.78%	0.80%

Main Ratios
Current	12.22	13.66	14.63	1.69
Quick	11.92	13.28	14.24	1.01
Total Debt to Total Assets	32.69%	22.49%	12.78%	55.20%
Pre-tax Return on Net Worth	6.39%	7.46%	27.27%	3.60%
Pre-tax Return on Assets	4.30%	5.78%	23.78%	8.00%

Additional Ratios	FY 2003	FY 2004	FY 2005
Net Profit Margin	1.58%	1.76%	6.56%	n.a
Return on Equity	4.48%	5.22%	19.09%	n.a

Activity Ratios
Accounts Receivable Turnover	5.22	5.22	5.22	n.a
Collection Days	58	67	64	n.a
Inventory Turnover	9.76	9.73	9.79	n.a
Accounts Payable Turnover	9.62	12.17	12.17	n.a
Payment Days	30	31	28	n.a
Total Asset Turnover	1.91	2.30	2.54	n.a

Debt Ratios
Debt to Net Worth	0.49	0.29	0.15	n.a
Current Liab. to Liab.	0.22	0.30	0.53	n.a

Liquidity Ratios
Net Working Capital	$130,542	$127,924	$151,312	n.a
Interest Coverage	2.48	3.55	23.90	n.a

Additional Ratios
Assets to Sales	0.52	0.43	0.39	n.a
Current Debt/Total Assets	7%	7%	7%	n.a
Acid Test	8.06	8.36	8.81	n.a
Sales/Net Worth	2.83	2.97	2.91	n.a
Dividend Payout	0.00	0.00	0.00	n.a