Double Decker Tours of Washington
Financial Plan
Double Decker Tours of Washington’s financial plan is detailed in the following sections. Preliminary estimates suggest a substantial profit after our first two quarters of operations. Income estimates are based on garnering 2% of the tourist/sightseeing business in Washington with a growth rate of 20% for the next three years and a growth of 10% after that.
All our financial projections present a conservative but realistic depiction of DDTOW’s financial position based on loans and financing of $800,000.
8.1 Important Assumptions
DDTOW, LLC assumes the following:
- Market growth projections for sightseeing will be down because of war fears that permeate the city but with over 4 million residents in the area and over 20 million visitors per year, DDTOW, LLC will be able to experience a 20% growth rate over the next three years.
- Local economic conditions will remain viable and favorable to the tourism industry for the next five years.
- International conditions will change from a war footing to peace thus increasing tourism to the city.
General Assumptions | |||
Year 1 | Year 2 | Year 3 | |
Plan Month | 1 | 2 | 3 |
Current Interest Rate | 5.00% | 5.00% | 5.00% |
Long-term Interest Rate | 10.00% | 10.00% | 10.00% |
Tax Rate | 24.00% | 24.00% | 24.00% |
Other | 0 | 0 | 0 |
8.2 Break-even Analysis
The break-even analysis is based on an average monthly fixed cost of approximately $121,200. By placing our ticket price between Tourmobile’s price and Old town Trolley’s, we needed only4,000 riders per month to break even. On a thirty-day basis that comes to about 134 riders per day or 12 riders per bus per day. During the fall, spring and summer months, we will more than surpass that number of riders.

Break-even Analysis | |
Monthly Revenue Break-even | $111,821 |
Assumptions: | |
Average Percent Variable Cost | 1% |
Estimated Monthly Fixed Cost | $110,741 |
8.3 Projected Profit and Loss
Our projected profit and loss is shown on the following table, with sales increasing from more than $14 million the first year to more than $21 million the third, and profits varying substantially for the start-up phase of this business. We show a profit in the first year on 2% of 22 million visitors to the city or 453,000 customers which equals 1,286 customers per day or making two tours per day for 12 buses.
As with the break-even analysis, we are projecting very conservatively regarding cost of sales and gross margin. Our cost of sales should be much lower, and gross margin higher, than in this projection. We prefer to project conservatively so that we make sure we have enough cash.
The detailed monthly projections are included in the appendices.




Pro Forma Profit and Loss | |||
Year 1 | Year 2 | Year 3 | |
Sales | $14,765,866 | $17,679,253 | $21,171,338 |
Direct Cost of Sales | $142,631 | $163,962 | $191,410 |
Other Cost of Sales | $0 | $0 | $0 |
Total Cost of Sales | $142,631 | $163,962 | $191,410 |
Gross Margin | $14,623,235 | $17,515,291 | $20,979,928 |
Gross Margin % | 99.03% | 99.07% | 99.10% |
Expenses | |||
Payroll | $750,000 | $839,000 | $996,000 |
Sales and Marketing and Other Expenses | $144,000 | $180,000 | $220,000 |
Depreciation | $61,090 | $81,090 | $101,090 |
Rent | $84,000 | $92,400 | $101,640 |
Utilities | $9,600 | $11,520 | $13,824 |
Insurance | $18,000 | $21,600 | $25,920 |
Payroll Taxes | $0 | $0 | $0 |
Local Taxes | $24,000 | $28,800 | $34,560 |
Bus Maintenance | $120,000 | $144,000 | $172,800 |
Bookkeeping/Payroll | $18,000 | $21,600 | $25,920 |
Professional Asst. | $6,000 | $7,200 | $8,640 |
Telephones and Nextels | $7,200 | $8,640 | $10,368 |
Office Supplies | $3,000 | $3,600 | $4,320 |
Brochures | $4,200 | $5,040 | $6,048 |
Licenses/Permits | $1,800 | $2,160 | $2,592 |
Website Maintenance | $18,000 | $18,000 | $18,000 |
Miscellaneous | $48,000 | $57,600 | $69,120 |
Uniforms | $12,000 | $28,800 | $34,560 |
Total Operating Expenses | $1,328,890 | $1,551,050 | $1,845,402 |
Profit Before Interest and Taxes | $12,565,035 | $15,903,677 | $19,088,979 |
EBITDA | $12,626,125 | $15,984,767 | $19,190,069 |
Interest Expense | $73,075 | $59,848 | $44,757 |
Taxes Incurred | $2,998,070 | $3,802,519 | $4,570,613 |
Other Income | |||
Interest Income | $0 | $0 | $0 |
Other Income Account Name | $0 | $0 | $0 |
Total Other Income | $0 | $0 | $0 |
Other Expense | |||
Interest Expense | $74,157 | $60,564 | $45,547 |
Profit tax | $737,335 | $927,140 | $1,107,878 |
Total Other Expense | $729,310 | $60,564 | $45,547 |
Net Other Income | ($729,310) | ($60,564) | ($45,547) |
Net Profit | $9,493,889 | $12,041,310 | $14,473,609 |
Net Profit/Sales | 64.30% | 68.11% | 68.36% |
8.4 Projected Cash Flow
Cash flow projections are critical to our success. Our analysis shows strong cash generation over the projected period. Some of our assumptions for the cash flow table below are as follows:
- We start repaying on the $800,000 five-year long-term loan at the very beginning of our operations. The first few months will be critical to our survival as we need to make sure that our cash balance remains strong.
- We do not plan any additional long-term asset purchases, except for those summarized in the start-up table earlier in this document, for the first year. During the second and third year we budget $100,000 for each year for additional long-term asset, which may include some additional or replacement buses.
- We assume collecting the District of Columbia’s sales tax (5.75%) off the ticket sales. These sales taxes will be paid out quarterly. For all additional purchases (i.e., operational expenses and capital assets) we assume prices inclusive of applicable sales taxes.
The monthly cash is shown in the illustration below, with one bar representing the cash flow per month, and the other the monthly cash balance. The annual cash flow figures are included here and the more important detailed monthly numbers are included in the appendices.

Pro Forma Cash Flow | |||
Year 1 | Year 2 | Year 3 | |
Cash Received | |||
Cash from Operations | |||
Cash Sales | $14,765,866 | $17,679,253 | $21,171,338 |
Subtotal Cash from Operations | $14,765,866 | $17,679,253 | $21,171,338 |
Additional Cash Received | |||
Non Operating (Other) Income | $0 | $0 | $0 |
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 | $14,765,866 | $17,679,253 | $21,171,338 |
Expenditures | Year 1 | Year 2 | Year 3 |
Expenditures from Operations | |||
Cash Spending | $750,000 | $839,000 | $996,000 |
Bill Payments | $3,359,554 | $4,646,520 | $5,481,300 |
Subtotal Spent on Operations | $4,109,554 | $5,485,520 | $6,477,300 |
Additional Cash Spent | |||
Non Operating (Other) Expense | $729,310 | $60,564 | $45,547 |
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 | $129,814 | $143,408 | $158,425 |
Purchase Other Current Assets | $0 | $0 | $0 |
Purchase Long-term Assets | $0 | $100,000 | $100,000 |
Dividends | $0 | $0 | $0 |
Subtotal Cash Spent | $4,968,679 | $5,789,492 | $6,781,272 |
Net Cash Flow | $9,797,187 | $11,889,761 | $14,390,066 |
Cash Balance | $9,911,187 | $21,800,947 | $36,191,013 |
8.5 Projected Balance Sheet
The balance sheet in the following table shows managed but sufficient growth of net worth, and a sufficiently healthy financial position. The monthly estimates are included in the appendices.
Pro Forma Balance Sheet | |||
Year 1 | Year 2 | Year 3 | |
Assets | |||
Current Assets | |||
Cash | $9,911,187 | $21,800,947 | $36,191,013 |
Other Current Assets | $0 | $0 | $0 |
Total Current Assets | $9,911,187 | $21,800,947 | $36,191,013 |
Long-term Assets | |||
Long-term Assets | $305,450 | $405,450 | $505,450 |
Accumulated Depreciation | $61,090 | $142,180 | $243,270 |
Total Long-term Assets | $244,360 | $263,270 | $262,180 |
Total Assets | $10,155,547 | $22,064,217 | $36,453,193 |
Liabilities and Capital | Year 1 | Year 2 | Year 3 |
Current Liabilities | |||
Accounts Payable | $372,022 | $382,791 | $456,583 |
Current Borrowing | $0 | $0 | $0 |
Other Current Liabilities | $0 | $0 | $0 |
Subtotal Current Liabilities | $372,022 | $382,791 | $456,583 |
Long-term Liabilities | $670,186 | $526,778 | $368,353 |
Total Liabilities | $1,042,207 | $909,568 | $824,935 |
Paid-in Capital | $40,000 | $40,000 | $40,000 |
Retained Earnings | ($420,550) | $9,073,339 | $21,114,648 |
Earnings | $9,493,889 | $12,041,310 | $14,473,609 |
Total Capital | $9,113,339 | $21,154,648 | $35,628,257 |
Total Liabilities and Capital | $10,155,546 | $22,064,217 | $36,453,193 |
Net Worth | $9,113,339 | $21,154,649 | $35,628,258 |
8.6 Business Ratios
We expect to maintain healthy ratios for profitability, risk, and return. The following table outlines some of the more important ratios from the Sightseeing tour company industry. The final column, Industry Profile, details specific ratios based on the industry as it is classified by the Standard Industry Classification (SIC) code, 4725.9902.
Ratio Analysis | ||||
Year 1 | Year 2 | Year 3 | Industry Profile | |
Sales Growth | 0.00% | 19.73% | 19.75% | 5.03% |
Percent of Total Assets | ||||
Other Current Assets | 0.00% | 0.00% | 0.00% | 38.77% |
Total Current Assets | 97.59% | 98.81% | 99.28% | 63.07% |
Long-term Assets | 2.41% | 1.19% | 0.72% | 36.93% |
Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
Current Liabilities | 3.66% | 1.73% | 1.25% | 31.32% |
Long-term Liabilities | 6.60% | 2.39% | 1.01% | 17.81% |
Total Liabilities | 10.26% | 4.12% | 2.26% | 49.13% |
Net Worth | 89.74% | 95.88% | 97.74% | 50.87% |
Percent of Sales | ||||
Sales | 100.00% | 100.00% | 100.00% | 100.00% |
Gross Margin | 99.03% | 99.07% | 99.10% | 39.36% |
Selling, General & Administrative Expenses | 9.89% | 9.64% | 9.43% | 28.53% |
Advertising Expenses | 0.00% | 0.00% | 0.00% | 1.21% |
Profit Before Interest and Taxes | 85.10% | 89.96% | 90.16% | 1.07% |
Main Ratios | ||||
Current | 26.64 | 56.95 | 79.26 | 1.51 |
Quick | 26.64 | 56.95 | 79.26 | 1.17 |
Total Debt to Total Assets | 10.26% | 4.12% | 2.26% | 2.79% |
Pre-tax Return on Net Worth | 137.07% | 74.90% | 53.45% | 55.37% |
Pre-tax Return on Assets | 123.01% | 71.81% | 52.24% | 6.25% |
Additional Ratios | Year 1 | Year 2 | Year 3 | |
Net Profit Margin | 64.30% | 68.11% | 68.36% | n.a |
Return on Equity | 104.18% | 56.92% | 40.62% | n.a |
Activity Ratios | ||||
Accounts Payable Turnover | 10.03 | 12.17 | 12.17 | n.a |
Payment Days | 27 | 30 | 28 | n.a |
Total Asset Turnover | 1.45 | 0.80 | 0.58 | n.a |
Debt Ratios | ||||
Debt to Net Worth | 0.11 | 0.04 | 0.02 | n.a |
Current Liab. to Liab. | 0.36 | 0.42 | 0.55 | n.a |
Liquidity Ratios | ||||
Net Working Capital | $9,539,165 | $21,418,156 | $35,734,430 | n.a |
Interest Coverage | 171.95 | 265.73 | 426.51 | n.a |
Additional Ratios | ||||
Assets to Sales | 0.69 | 1.25 | 1.72 | n.a |
Current Debt/Total Assets | 4% | 2% | 1% | n.a |
Acid Test | 26.64 | 56.95 | 79.26 | n.a |
Sales/Net Worth | 1.62 | 0.84 | 0.59 | n.a |
Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |