Anywhere Remodeling
Financial Plan
The most important element in the financial plan is the critical need for improving several of the key factors that impact cash flow:
- Anywhere Remodeling must do a better job of collecting deposits and asking for (demanding) prompt payment from the customers.
- We must bring the gross margin up to 35%. This is related to improving the marketing program which will generate higher quality leads and jobs.
8.1 Important Assumptions
The financial plan depends on important assumptions, most of which are shown in the General Assumptions table below. The key underlying assumptions are:
- A slow-growth economy, without major recession.
- There are no unforeseen changes in technology to make our services immediately obsolete (very unlikely).
- We assume access to equity capital and financing sufficient to maintain our financial plan as shown in the tables.
| General Assumptions | |||||
| FY 2009 | FY 2010 | FY 2011 | FY 2012 | FY 2013 | |
| Plan Month | 1 | 2 | 3 | 4 | 5 |
| Current Interest Rate | 7.00% | 7.00% | 7.00% | 7.00% | 7.00% |
| Long-term Interest Rate | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% |
| Tax Rate | 25.00% | 25.00% | 25.00% | 25.00% | 25.00% |
| Other | 0 | 0 | 0 | 0 | 0 |
8.2 Break-even Analysis
The break-even analysis can be found below.
| Break-even Analysis | |
| Monthly Revenue Break-even | $113,038 |
| Assumptions: | |
| Average Percent Variable Cost | 54% |
| Estimated Monthly Fixed Cost | $52,121 |
8.3 Projected Profit and Loss
The most important assumption in the Projected Profit and Loss statement is the gross margin, which is supposed to increase, up quite a bit from the last year. The increase in gross margin is based on changing our sales mix due to increased target marketing based on 5% assumptions between years.
Month-by-month assumptions for profit and loss are included in the appendices.
| Pro Forma Profit and Loss | |||||
| FY 2009 | FY 2010 | FY 2011 | FY 2012 | FY 2013 | |
| Sales | $1,328,403 | $1,496,903 | $1,666,998 | $1,822,098 | $1,982,202 |
| Direct Cost of Sales | $715,885 | $805,135 | $895,541 | $978,094 | $1,063,327 |
| Other Costs of Goods | $0 | $0 | $0 | $0 | $0 |
| Total Cost of Sales | $715,885 | $805,135 | $895,541 | $978,094 | $1,063,327 |
| Gross Margin | $612,517 | $691,768 | $771,457 | $844,004 | $918,875 |
| Gross Margin % | 46.11% | 46.21% | 46.28% | 46.32% | 46.36% |
| Expenses | |||||
| Payroll | $366,810 | $421,654 | $443,846 | $467,206 | $491,796 |
| Advertising | $11,890 | $7,023 | $7,393 | $7,782 | $8,191 |
| Depreciation | $8,856 | $9,322 | $9,813 | $10,329 | $10,873 |
| Marketing | $13,757 | $8,122 | $8,550 | $9,000 | $9,473 |
| Bad Debts | $2,244 | $2,362 | $2,486 | $2,617 | $2,755 |
| Donations | $2,364 | $2,488 | $2,619 | $2,757 | $2,902 |
| Entertainment 50% | $2,100 | $2,211 | $2,327 | $2,449 | $2,578 |
| Employee Benefits | $65,729 | $52,152 | $54,897 | $57,786 | $60,828 |
| Equipment Buy/Rental | $3,880 | $3,082 | $3,244 | $3,415 | $3,595 |
| Interest/Bank Charges | ($204) | ($215) | ($226) | ($238) | ($250) |
| Tool Repair/Replacement | $2,760 | $2,905 | $3,058 | $3,219 | $3,389 |
| Computer/Hardware/Software Consultants | $8,602 | $6,836 | $7,196 | $7,574 | $7,973 |
| Dues/Sub/Licenses/Royalties/Trade Assoc | $2,840 | $2,990 | $3,147 | $3,313 | $3,487 |
| Corp & Business Taxes | $2,104 | $2,214 | $2,331 | $2,454 | $2,583 |
| Legal Expenses | $1,309 | $1,378 | $1,451 | $1,527 | $1,608 |
| Accounting Expenses | $2,331 | $2,453 | $2,582 | $2,718 | $2,861 |
| Rent of Office/Warehouse Space | $14,520 | $15,284 | $16,089 | $16,935 | $17,827 |
| Repairs/Maintenance | $1,137 | $1,197 | $1,260 | $1,326 | $1,396 |
| Communications | $9,357 | $9,850 | $10,368 | $10,914 | $11,488 |
| Utilities | $930 | $979 | $1,030 | $1,084 | $1,142 |
| Office Expenses | $8,416 | $8,859 | $9,325 | $9,816 | $10,332 |
| Miscellaneous/Other | $4,589 | $4,831 | $5,085 | $5,353 | $5,634 |
| Liability Insurance | $7,512 | $7,907 | $8,324 | $8,762 | $9,223 |
| Vehicle Expenses & Insurance | $10,392 | $10,939 | $11,515 | $12,121 | $12,759 |
| Liability Insurance for employees | $504 | $531 | $558 | $588 | $619 |
| Vehicle Expenses & Insurance | $4,044 | $4,257 | $4,481 | $4,717 | $4,965 |
| Insurance – General (#43) | $1,020 | $1,074 | $1,130 | $1,190 | $1,252 |
| Payroll Taxes | $65,659 | $75,476 | $79,448 | $83,630 | $88,031 |
| Total Operating Expenses | $625,452 | $668,161 | $703,328 | $740,345 | $779,309 |
| Profit Before Interest and Taxes | ($12,935) | $23,607 | $68,129 | $103,658 | $139,566 |
| EBITDA | ($4,079) | $32,929 | $77,942 | $113,988 | $150,439 |
| Interest Expense | $0 | $0 | $0 | $0 | $0 |
| Taxes Incurred | $0 | $5,902 | $17,032 | $25,915 | $34,892 |
| Net Profit | ($12,935) | $17,705 | $51,097 | $77,744 | $104,675 |
| Net Profit/Sales | -0.97% | 1.18% | 3.07% | 4.27% | 5.28% |
8.4 Projected Cash Flow
The cash flow depends on assumptions for payment days and accounts receivable management. The projected 75-day collection days is critical, and it is also reasonable.
| Pro Forma Cash Flow | |||||
| FY 2009 | FY 2010 | FY 2011 | FY 2012 | FY 2013 | |
| Cash Received | |||||
| Cash from Operations | |||||
| Cash Sales | $332,101 | $374,226 | $416,749 | $455,524 | $495,551 |
| Cash from Receivables | $1,500,397 | $1,093,388 | $1,220,682 | $1,339,614 | $1,458,822 |
| Subtotal Cash from Operations | $1,832,498 | $1,467,614 | $1,637,432 | $1,795,138 | $1,954,373 |
| Additional Cash Received | |||||
| Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 | $0 | $0 |
| New Current Borrowing | $0 | $0 | $0 | $0 | $0 |
| New Other Liabilities (interest-free) | $0 | $0 | $0 | $0 | $0 |
| New Long-term Liabilities | $0 | $0 | $0 | $0 | $0 |
| Sales of Other Current Assets | $0 | $0 | $0 | $0 | $0 |
| Sales of Long-term Assets | $0 | $0 | $0 | $0 | $0 |
| New Investment Received | $0 | $0 | $0 | $0 | $0 |
| Subtotal Cash Received | $1,832,498 | $1,467,614 | $1,637,432 | $1,795,138 | $1,954,373 |
| Expenditures | FY 2009 | FY 2010 | FY 2011 | FY 2012 | FY 2013 |
| Expenditures from Operations | |||||
| Cash Spending | $366,810 | $421,654 | $443,846 | $467,206 | $491,796 |
| Bill Payments | $948,152 | $1,049,306 | $1,152,871 | $1,258,223 | $1,365,979 |
| Subtotal Spent on Operations | $1,314,962 | $1,470,960 | $1,596,716 | $1,725,429 | $1,857,775 |
| Additional Cash Spent | |||||
| Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 | $0 | $0 |
| Principal Repayment of Current Borrowing | $0 | $0 | $0 | $0 | $0 |
| Other Liabilities Principal Repayment | $0 | $0 | $0 | $0 | $0 |
| Long-term Liabilities Principal Repayment | $0 | $0 | $0 | $0 | $0 |
| Purchase Other Current Assets | $0 | $0 | $0 | $0 | $0 |
| Purchase Long-term Assets | $0 | $0 | $0 | $0 | $0 |
| Dividends | $0 | $0 | $0 | $0 | $0 |
| Subtotal Cash Spent | $1,314,962 | $1,470,960 | $1,596,716 | $1,725,429 | $1,857,775 |
| Net Cash Flow | $517,536 | ($3,346) | $40,715 | $69,709 | $96,598 |
| Cash Balance | $700,964 | $697,618 | $738,333 | $808,042 | $904,640 |
8.5 Projected Balance Sheet
The Projected Balance Sheet is quite solid. We do not project any real trouble meeting our debt obligations–as long as we can achieve our specific objectives.
| Pro Forma Balance Sheet | |||||
| FY 2009 | FY 2010 | FY 2011 | FY 2012 | FY 2013 | |
| Assets | |||||
| Current Assets | |||||
| Cash | $700,964 | $697,618 | $738,333 | $808,042 | $904,640 |
| Accounts Receivable | $230,904 | $260,193 | $289,760 | $316,719 | $344,549 |
| Other Current Assets | $31,380 | $31,380 | $31,380 | $31,380 | $31,380 |
| Total Current Assets | $963,249 | $989,191 | $1,059,473 | $1,156,141 | $1,280,569 |
| Long-term Assets | |||||
| Long-term Assets | $145,879 | $145,879 | $145,879 | $145,879 | $145,879 |
| Accumulated Depreciation | $65,735 | $75,057 | $84,870 | $95,199 | $106,072 |
| Total Long-term Assets | $80,144 | $70,822 | $61,009 | $50,680 | $39,807 |
| Total Assets | $1,043,393 | $1,060,013 | $1,120,482 | $1,206,821 | $1,320,376 |
| Liabilities and Capital | FY 2009 | FY 2010 | FY 2011 | FY 2012 | FY 2013 |
| Current Liabilities | |||||
| Accounts Payable | $87,239 | $86,155 | $95,527 | $104,122 | $113,002 |
| Current Borrowing | $0 | $0 | $0 | $0 | $0 |
| Other Current Liabilities | $0 | $0 | $0 | $0 | $0 |
| Subtotal Current Liabilities | $87,239 | $86,155 | $95,527 | $104,122 | $113,002 |
| Long-term Liabilities | $0 | $0 | $0 | $0 | $0 |
| Total Liabilities | $87,239 | $86,155 | $95,527 | $104,122 | $113,002 |
| Paid-in Capital | $20,000 | $20,000 | $20,000 | $20,000 | $20,000 |
| Retained Earnings | $949,088 | $936,153 | $953,858 | $1,004,955 | $1,082,699 |
| Earnings | ($12,935) | $17,705 | $51,097 | $77,744 | $104,675 |
| Total Capital | $956,153 | $973,858 | $1,024,955 | $1,102,699 | $1,207,374 |
| Total Liabilities and Capital | $1,043,393 | $1,060,013 | $1,120,482 | $1,206,821 | $1,320,376 |
| Net Worth | $956,153 | $973,858 | $1,024,955 | $1,102,699 | $1,207,374 |
8.6 Business Ratios
The table follows with our main business ratios. We do intend to improve gross profit and collection days.
| Ratio Analysis | ||||||
| FY 2009 | FY 2010 | FY 2011 | FY 2012 | FY 2013 | Industry Profile | |
| Sales Growth | 77.12% | 12.68% | 11.36% | 9.30% | 8.79% | -2.88% |
| Percent of Total Assets | ||||||
| Accounts Receivable | 22.13% | 24.55% | 25.86% | 26.24% | 26.09% | 11.37% |
| Other Current Assets | 3.01% | 2.96% | 2.80% | 2.60% | 2.38% | 25.23% |
| Total Current Assets | 92.32% | 93.32% | 94.56% | 95.80% | 96.99% | 76.82% |
| Long-term Assets | 7.68% | 6.68% | 5.44% | 4.20% | 3.01% | 23.18% |
| Total Assets | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% |
| Current Liabilities | 8.36% | 8.13% | 8.53% | 8.63% | 8.56% | 44.21% |
| Long-term Liabilities | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 12.47% |
| Total Liabilities | 8.36% | 8.13% | 8.53% | 8.63% | 8.56% | 56.68% |
| Net Worth | 91.64% | 91.87% | 91.47% | 91.37% | 91.44% | 43.32% |
| Percent of Sales | ||||||
| Sales | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% |
| Gross Margin | 46.11% | 46.21% | 46.28% | 46.32% | 46.36% | 16.88% |
| Selling, General & Administrative Expenses | 26.96% | 27.77% | 28.42% | 13.06% | 13.02% | 5.45% |
| Advertising Expenses | 0.87% | 0.87% | 0.86% | 0.00% | 0.00% | 0.23% |
| Profit Before Interest and Taxes | -0.97% | 1.58% | 4.09% | 5.69% | 7.04% | 0.91% |
| Main Ratios | ||||||
| Current | 11.04 | 11.48 | 11.09 | 11.10 | 11.33 | 1.59 |
| Quick | 11.04 | 11.48 | 11.09 | 11.10 | 11.33 | 0.57 |
| Total Debt to Total Assets | 8.36% | 8.13% | 8.53% | 8.63% | 8.56% | 59.20% |
| Pre-tax Return on Net Worth | -1.35% | 2.42% | 6.65% | 9.40% | 11.56% | 1.93% |
| Pre-tax Return on Assets | -1.24% | 2.23% | 6.08% | 8.59% | 10.57% | 4.72% |
| Additional Ratios | FY 2009 | FY 2010 | FY 2011 | FY 2012 | FY 2013 | |
| Net Profit Margin | -0.97% | 1.18% | 3.07% | 4.27% | 5.28% | n.a |
| Return on Equity | -1.35% | 1.82% | 4.99% | 7.05% | 8.67% | n.a |
| Activity Ratios | ||||||
| Accounts Receivable Turnover | 4.31 | 4.31 | 4.31 | 4.31 | 4.31 | n.a |
| Collection Days | 88 | 80 | 80 | 81 | 81 | n.a |
| Accounts Payable Turnover | 11.07 | 12.17 | 12.17 | 12.17 | 12.17 | n.a |
| Payment Days | 29 | 30 | 29 | 29 | 29 | n.a |
| Total Asset Turnover | 1.27 | 1.41 | 1.49 | 1.51 | 1.50 | n.a |
| Debt Ratios | ||||||
| Debt to Net Worth | 0.09 | 0.09 | 0.09 | 0.09 | 0.09 | n.a |
| Current Liab. to Liab. | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | n.a |
| Liquidity Ratios | ||||||
| Net Working Capital | $876,009 | $903,036 | $963,946 | $1,052,019 | $1,167,566 | n.a |
| Interest Coverage | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | n.a |
| Additional Ratios | ||||||
| Assets to Sales | 0.79 | 0.71 | 0.67 | 0.66 | 0.67 | n.a |
| Current Debt/Total Assets | 8% | 8% | 9% | 9% | 9% | n.a |
| Acid Test | 8.39 | 8.46 | 8.06 | 8.06 | 8.28 | n.a |
| Sales/Net Worth | 1.39 | 1.54 | 1.63 | 1.65 | 1.64 | n.a |
| Dividend Payout | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | n.a |
8.7 Long-term Plan
The long-term plan is shown in the Appendix.
By 
