Wishbone Pet Products
Financial Plan
Product sales generate the primary revenue stream for Wishbone Pet Products. As such, the financial projections are closely tied to the sales forecast. While we believe that the sales forecast presented is conservative and reflects a clear understanding of the market, we have considered scenarios in which sales lag or lead our projections.
Lagging Sales
Rather than purchasing inventory in large lots we will purchase inventory approximately every three months on an as-needed basis. If actual sales volumes are less than projected, we can respond by reducing inventory purchases to reduce variable costs and maintain a positive cash balance. Our operations strategy is also an asset in this scenario as our fixed costs are very low with respect to our variable costs. If necessary we can further reduce our fixed costs by reducing personnel, as payroll constitutes the majority of our fixed costs.
Leading Sales
If actual sales volumes exceed our projections we will respond by increasing inventory purchases. Our suppliers capacity greatly exceeds the estimates in our current sales projections. While we should be able to finance the increased inventory purchases with revenue generated from the increased sales, this scenario may require additional infusions of cash. We may also consider financing accounts receivable with a factor to make cash for inventory purchases readily available.
The following subtopics highlight the financial plan for Wishbone Pet Products.
8.1 Assumptions
The table below presents the assumptions used in the financial calculations of this business plan.
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% | 6.00% | 6.00% |
Tax Rate | 30.00% | 30.00% | 30.00% |
Unit Sales – scoops | 20,300 | 3,000 | 20,300 |
Unit Sales – bags (boxes of 25) | 29,400 | 5,500 | 29,400 |
8.2 Break-even Analysis
Wishbone Pet Products revenues are generated from unit sales of Fetchâ„¢ (a one-time expense) and replacement liner bag sales (a recurring expense). The monthly break-even volume was determined using the sales forecast as a guide, and based on estimates for fixed costs and average revenue for Fetchâ„¢ and the replacement liner bags. We anticipate breaking even within the first year of operation.
Notes:
- One scoop and one box of liners constitute one unit.
- Average Per-Unit Revenue assumes only wholesale sales of one scoop and one box of bags.
- Direct sales to retailers and catalogs will increase average per-unit revenue.

Break-even Analysis | |
Monthly Revenue Break-even | $20,996 |
Assumptions: | |
Average Percent Variable Cost | 42% |
Estimated Monthly Fixed Cost | $12,258 |
8.3 Projected Profit and Loss
Based on the sales projections and our low fixed cost operations strategy, Wishbone Pet Products will achieve profitability within one year. Profits in subsequent years will accelerate with an increase in anticipated sales volume, yielding approximately tripling of net profit in Year 2 and Year 3.




Pro Forma Profit and Loss | |||
Year 1 | Year 2 | Year 3 | |
Sales | $398,650 | $1,282,713 | $2,716,825 |
Direct Cost of Sales | $165,900 | $541,650 | $1,154,700 |
Shipping and Handling – scoops | $8,398 | $25,971 | $35,027 |
Shipping and Handling – bags | $7,970 | $28,781 | $64,279 |
Total Cost of Sales | $182,268 | $596,402 | $1,254,006 |
Gross Margin | $216,382 | $686,311 | $1,462,819 |
Gross Margin % | 54.28% | 53.50% | 53.84% |
Expenses | |||
Payroll | $66,000 | $198,000 | $228,000 |
Sales and Marketing and Other Expenses | $59,798 | $192,407 | $407,524 |
Depreciation | $0 | $0 | $0 |
Rent | $6,000 | $6,500 | $7,000 |
Utilities | $1,200 | $1,500 | $1,750 |
Insurance – liability | $4,200 | $4,200 | $4,200 |
Payroll Taxes | $9,900 | $29,700 | $34,200 |
Other | $0 | $0 | $0 |
Total Operating Expenses | $147,098 | $432,307 | $682,674 |
Profit Before Interest and Taxes | $69,284 | $254,004 | $780,146 |
EBITDA | $69,284 | $254,004 | $780,146 |
Interest Expense | $4,638 | $3,576 | $2,376 |
Taxes Incurred | $19,394 | $75,128 | $233,331 |
Net Profit | $45,252 | $175,299 | $544,439 |
Net Profit/Sales | 11.35% | 13.67% | 20.04% |
8.4 Projected Cash Flow
We expect to manage cash flow with an initial investment and expect be profitable by the end of Year 1, with occasional negative cash flows corresponding to inventory purchases. Owner invests additional $10,000 in Year 2 as a hedge against Accounts Payable/Accounts Receivable flows.

Pro Forma Cash Flow | |||
Year 1 | Year 2 | Year 3 | |
Cash Received | |||
Cash from Operations | |||
Cash Sales | $99,663 | $320,678 | $679,206 |
Cash from Receivables | $208,143 | $760,573 | $1,710,811 |
Subtotal Cash from Operations | $307,805 | $1,081,251 | $2,390,017 |
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 | $10,000 | $0 |
Subtotal Cash Received | $307,805 | $1,091,251 | $2,390,017 |
Expenditures | Year 1 | Year 2 | Year 3 |
Expenditures from Operations | |||
Cash Spending | $66,000 | $198,000 | $228,000 |
Bill Payments | $249,698 | $921,205 | $1,918,396 |
Subtotal Spent on Operations | $315,698 | $1,119,205 | $2,146,396 |
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 | $15,400 | $20,000 | $20,000 |
Purchase Other Current Assets | $0 | $0 | $0 |
Purchase Long-term Assets | $0 | $0 | $0 |
Dividends | $0 | $5,000 | $7,500 |
Subtotal Cash Spent | $331,098 | $1,144,205 | $2,173,896 |
Net Cash Flow | ($23,293) | ($52,954) | $216,121 |
Cash Balance | $76,707 | $23,753 | $239,873 |
8.5 Projected Balance Sheet
As shown on the balance sheet in the following table, we expect a healthy growth in net worth by the end of the plan period. The monthly projections for Year 1 are in the appendix.
Pro Forma Balance Sheet | |||
Year 1 | Year 2 | Year 3 | |
Assets | |||
Current Assets | |||
Cash | $76,707 | $23,753 | $239,873 |
Accounts Receivable | $90,845 | $292,307 | $619,114 |
Inventory | $28,875 | $94,275 | $200,976 |
Other Current Assets | $15,000 | $15,000 | $15,000 |
Total Current Assets | $211,427 | $425,334 | $1,074,964 |
Long-term Assets | |||
Long-term Assets | $0 | $0 | $0 |
Accumulated Depreciation | $0 | $0 | $0 |
Total Long-term Assets | $0 | $0 | $0 |
Total Assets | $211,427 | $425,334 | $1,074,964 |
Liabilities and Capital | Year 1 | Year 2 | Year 3 |
Current Liabilities | |||
Accounts Payable | $66,575 | $120,182 | $252,874 |
Current Borrowing | $0 | $0 | $0 |
Other Current Liabilities | $0 | $0 | $0 |
Subtotal Current Liabilities | $66,575 | $120,182 | $252,874 |
Long-term Liabilities | $69,600 | $49,600 | $29,600 |
Total Liabilities | $136,175 | $169,782 | $282,474 |
Paid-in Capital | $50,000 | $60,000 | $60,000 |
Retained Earnings | ($20,000) | $20,252 | $188,051 |
Earnings | $45,252 | $175,299 | $544,439 |
Total Capital | $75,252 | $255,551 | $792,490 |
Total Liabilities and Capital | $211,427 | $425,334 | $1,074,964 |
Net Worth | $75,252 | $255,551 | $792,490 |
8.6 Business Ratios
The following table presents common business ratios for reference. Wishbone Pet Products NAICS classification is 339999 (SIC, 3999) – Manufacturing Industries, NEC (Not Elsewhere Classified).
Ratio Analysis | ||||
Year 1 | Year 2 | Year 3 | Industry Profile | |
Sales Growth | 0.00% | 221.76% | 111.80% | -3.08% |
Percent of Total Assets | ||||
Accounts Receivable | 42.97% | 68.72% | 57.59% | 23.87% |
Inventory | 13.66% | 22.16% | 18.70% | 22.83% |
Other Current Assets | 7.09% | 3.53% | 1.40% | 27.81% |
Total Current Assets | 100.00% | 100.00% | 100.00% | 74.51% |
Long-term Assets | 0.00% | 0.00% | 0.00% | 25.49% |
Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
Current Liabilities | 31.49% | 28.26% | 23.52% | 24.61% |
Long-term Liabilities | 32.92% | 11.66% | 2.75% | 21.74% |
Total Liabilities | 64.41% | 39.92% | 26.28% | 46.35% |
Net Worth | 35.59% | 60.08% | 73.72% | 53.65% |
Percent of Sales | ||||
Sales | 100.00% | 100.00% | 100.00% | 100.00% |
Gross Margin | 54.28% | 53.50% | 53.84% | 37.64% |
Selling, General & Administrative Expenses | 40.11% | 36.61% | 30.46% | 20.59% |
Advertising Expenses | 0.00% | 0.00% | 0.00% | 1.38% |
Profit Before Interest and Taxes | 17.38% | 19.80% | 28.72% | 4.79% |
Main Ratios | ||||
Current | 3.18 | 3.54 | 4.25 | 2.48 |
Quick | 2.74 | 2.75 | 3.46 | 1.35 |
Total Debt to Total Assets | 64.41% | 39.92% | 26.28% | 6.29% |
Pre-tax Return on Net Worth | 85.91% | 98.00% | 98.14% | 50.32% |
Pre-tax Return on Assets | 30.58% | 58.88% | 72.35% | 12.65% |
Additional Ratios | Year 1 | Year 2 | Year 3 | |
Net Profit Margin | 11.35% | 13.67% | 20.04% | n.a |
Return on Equity | 60.13% | 68.60% | 68.70% | n.a |
Activity Ratios | ||||
Accounts Receivable Turnover | 3.29 | 3.29 | 3.29 | n.a |
Collection Days | 55 | 73 | 82 | n.a |
Inventory Turnover | 10.91 | 8.80 | 7.82 | n.a |
Accounts Payable Turnover | 4.75 | 8.11 | 8.11 | n.a |
Payment Days | 40 | 35 | 33 | n.a |
Total Asset Turnover | 1.89 | 3.02 | 2.53 | n.a |
Debt Ratios | ||||
Debt to Net Worth | 1.81 | 0.66 | 0.36 | n.a |
Current Liab. to Liab. | 0.49 | 0.71 | 0.90 | n.a |
Liquidity Ratios | ||||
Net Working Capital | $144,852 | $305,151 | $822,090 | n.a |
Interest Coverage | 14.94 | 71.03 | 328.34 | n.a |
Additional Ratios | ||||
Assets to Sales | 0.53 | 0.33 | 0.40 | n.a |
Current Debt/Total Assets | 31% | 28% | 24% | n.a |
Acid Test | 1.38 | 0.32 | 1.01 | n.a |
Sales/Net Worth | 5.30 | 5.02 | 3.43 | n.a |
Dividend Payout | 0.00 | 0.03 | 0.01 | n.a |