Ice Dreams
Financial Plan
- We want to finance growth mainly through cash flow. We recognized that this means we will have to grow slowly.
- The most important indicator in our case is that minimal inventory will have to be stored for these products.
7.1 Important Assumptions
Monthly sales are the largest indicator for this business. There are some seasonal variations with the months of March through September being the highest sales months.
| 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 |
7.2 Key Financial Indicators
The following Benchmark chart shows our key financial indicators.
7.3 Break-even Analysis
The following table and chart show the current break-even analysis.
| Break-even Analysis | |
| Monthly Revenue Break-even | $1,685 |
| Assumptions: | |
| Average Percent Variable Cost | 23% |
| Estimated Monthly Fixed Cost | $1,294 |
7.4 Projected Profit and Loss
We expect significant profits in all three years.
| Pro Forma Profit and Loss | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | $52,217 | $77,383 | $104,446 |
| Direct Cost of Sales | $12,114 | $17,772 | $24,227 |
| Other Costs of Sales | $0 | $0 | $0 |
| Total Cost of Sales | $12,114 | $17,772 | $24,227 |
| Gross Margin | $40,103 | $59,611 | $80,219 |
| Gross Margin % | 76.80% | 77.03% | 76.80% |
| Expenses | |||
| Payroll | $10,800 | $11,232 | $11,681 |
| Marketing/Promotion | $1,410 | $1,466 | $1,525 |
| Depreciation | $400 | $400 | $400 |
| Utilities | $1,720 | $1,789 | $1,861 |
| Insurance | $1,200 | $1,248 | $1,298 |
| Payroll Taxes | $0 | $0 | $0 |
| Other | $0 | $0 | $0 |
| Total Operating Expenses | $15,530 | $16,135 | $16,765 |
| Profit Before Interest and Taxes | $24,573 | $43,476 | $63,454 |
| EBITDA | $24,973 | $43,876 | $63,854 |
| Interest Expense | $3,632 | $2,626 | $1,576 |
| Taxes Incurred | $6,282 | $12,255 | $18,563 |
| Net Profit | $14,659 | $28,595 | $43,315 |
| Net Profit/Sales | 28.07% | 36.95% | 41.47% |
7.5 Projected Cash Flow
Projected cash flow is estimated for the next three years as shown in the table below.
| Pro Forma Cash Flow | |||
| Year 1 | Year 2 | Year 3 | |
| Cash Received | |||
| Cash from Operations | |||
| Cash Sales | $52,217 | $77,383 | $104,446 |
| Subtotal Cash from Operations | $52,217 | $77,383 | $104,446 |
| 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 | $0 | $0 |
| Subtotal Cash Received | $52,217 | $77,383 | $104,446 |
| Expenditures | Year 1 | Year 2 | Year 3 |
| Expenditures from Operations | |||
| Cash Spending | $10,800 | $11,232 | $11,681 |
| Bill Payments | $25,459 | $34,970 | $48,550 |
| Subtotal Spent on Operations | $36,259 | $46,202 | $60,231 |
| Additional Cash Spent | |||
| Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 |
| Principal Repayment of Current Borrowing | $10,500 | $10,500 | $10,500 |
| 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 | $46,759 | $56,702 | $70,731 |
| Net Cash Flow | $5,458 | $20,681 | $33,715 |
| Cash Balance | $15,458 | $36,139 | $69,854 |
7.6 Projected Balance Sheet
The balance sheet shows a slow but steady upward growth in net worth after initial start-up.
| Pro Forma Balance Sheet | |||
| Year 1 | Year 2 | Year 3 | |
| Assets | |||
| Current Assets | |||
| Cash | $15,458 | $36,139 | $69,854 |
| Inventory | $905 | $1,328 | $1,810 |
| Other Current Assets | $675 | $675 | $675 |
| Total Current Assets | $17,038 | $38,142 | $72,339 |
| Long-term Assets | |||
| Long-term Assets | $4,000 | $4,000 | $4,000 |
| Accumulated Depreciation | $400 | $800 | $1,200 |
| Total Long-term Assets | $3,600 | $3,200 | $2,800 |
| Total Assets | $20,638 | $41,342 | $75,139 |
| Liabilities and Capital | Year 1 | Year 2 | Year 3 |
| Current Liabilities | |||
| Accounts Payable | $480 | $3,089 | $4,071 |
| Current Borrowing | $31,510 | $21,010 | $10,510 |
| Other Current Liabilities | $0 | $0 | $0 |
| Subtotal Current Liabilities | $31,990 | $24,099 | $14,581 |
| Long-term Liabilities | $0 | $0 | $0 |
| Total Liabilities | $31,990 | $24,099 | $14,581 |
| Paid-in Capital | $10,000 | $10,000 | $10,000 |
| Retained Earnings | ($36,010) | ($21,351) | $7,244 |
| Earnings | $14,659 | $28,595 | $43,315 |
| Total Capital | ($11,351) | $17,244 | $60,558 |
| Total Liabilities and Capital | $20,638 | $41,342 | $75,139 |
| Net Worth | ($11,351) | $17,244 | $60,558 |
7.7 Business Ratios
Standard business ratios are included in the table that follows. The ratios show a plan for balanced, healthy growth. The standard industry indicators shown are for SIC 5812, eating places.
| Ratio Analysis | ||||
| Year 1 | Year 2 | Year 3 | Industry Profile | |
| Sales Growth | 0.00% | 48.20% | 34.97% | 7.60% |
| Percent of Total Assets | ||||
| Inventory | 4.39% | 3.21% | 2.41% | 3.60% |
| Other Current Assets | 3.27% | 1.63% | 0.90% | 40.10% |
| Total Current Assets | 82.56% | 92.26% | 96.27% | 43.70% |
| Long-term Assets | 17.44% | 7.74% | 3.73% | 56.30% |
| Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
| Current Liabilities | 155.00% | 58.29% | 19.41% | 32.70% |
| Long-term Liabilities | 0.00% | 0.00% | 0.00% | 28.50% |
| Total Liabilities | 155.00% | 58.29% | 19.41% | 61.20% |
| Net Worth | -55.00% | 41.71% | 80.59% | 38.80% |
| Percent of Sales | ||||
| Sales | 100.00% | 100.00% | 100.00% | 100.00% |
| Gross Margin | 76.80% | 77.03% | 76.80% | 60.50% |
| Selling, General & Administrative Expenses | 48.73% | 40.08% | 35.33% | 39.80% |
| Advertising Expenses | 0.77% | 0.52% | 0.38% | 3.20% |
| Profit Before Interest and Taxes | 47.06% | 56.18% | 60.75% | 0.70% |
| Main Ratios | ||||
| Current | 0.53 | 1.58 | 4.96 | 0.98 |
| Quick | 0.50 | 1.53 | 4.84 | 0.65 |
| Total Debt to Total Assets | 155.00% | 58.29% | 19.41% | 61.20% |
| Pre-tax Return on Net Worth | -184.48% | 236.90% | 102.18% | 1.70% |
| Pre-tax Return on Assets | 101.47% | 98.81% | 82.35% | 4.30% |
| Additional Ratios | Year 1 | Year 2 | Year 3 | |
| Net Profit Margin | 28.07% | 36.95% | 41.47% | n.a |
| Return on Equity | 0.00% | 165.83% | 71.53% | n.a |
| Activity Ratios | ||||
| Inventory Turnover | 9.70 | 15.92 | 15.44 | n.a |
| Accounts Payable Turnover | 54.09 | 12.17 | 12.17 | n.a |
| Payment Days | 27 | 17 | 26 | n.a |
| Total Asset Turnover | 2.53 | 1.87 | 1.39 | n.a |
| Debt Ratios | ||||
| Debt to Net Worth | 0.00 | 1.40 | 0.24 | n.a |
| Current Liab. to Liab. | 1.00 | 1.00 | 1.00 | n.a |
| Liquidity Ratios | ||||
| Net Working Capital | ($14,951) | $14,044 | $57,758 | n.a |
| Interest Coverage | 6.77 | 16.56 | 40.26 | n.a |
| Additional Ratios | ||||
| Assets to Sales | 0.40 | 0.53 | 0.72 | n.a |
| Current Debt/Total Assets | 155% | 58% | 19% | n.a |
| Acid Test | 0.50 | 1.53 | 4.84 | n.a |
| Sales/Net Worth | 0.00 | 4.49 | 1.72 | n.a |
| Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |
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