R & R Printing's financial plan is detailed in following sections. Preliminary estimates suggest that we will experience a steady growth in the first year of operation. Income estimates are based, in part, on anticipated revenues from accounts that were secured by Rob Scott in his prior sales position. R & R Printing also anticipates an increase in gross margin and sales volume. Thus, the overall financial plan presents a conservative but realistic depiction of R & R Printing's financial position.
R & R Printing assumes the following:
The following chart indicates R & R Printing's key financial indicators for the first three years of business. R & R Printing anticipates growth in sales with relatively stable operating expenses. Favorable economic conditions and forecasts of continued growth in the printing market support R & R Printing planned financial success.
The following table details R & R Printing's break-even analysis.
Break-even calculations assume a 25% to 30% gross margin. This is a conservative estimate, and it will be improved as strategic relationships develop and the benefits of R & R Printing offerings are realized by customers.
R & R Printing's profit picture improves as operations progress into the second quarter of operation. R & R Printing anticipates improving its gross margin from 25% in year one to 30% in year two. Annual estimates of profit and loss are detailed in the following table.
Monthly cash flow is shown in the following illustration. Annual cash flow figures are estimated based on collection days included in the table. Annual cash flow for the first year of operation becomes positive in the second quarter of operation.
The Projected Balance Sheet is quite solid. We do not project any trouble meeting our debt obligations -- as long as we can achieve our specific objectives.
The following table details our primary business ratios. Initial analysis indicates that R & R Printing ratios for profitability, risk, and return are financially favorable and will improve greatly in year two of operation. Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 2752, Commercial Printing, Lithographic, are shown for comparison.