The following sections will outline important financial information.
7.1 Important Assumptions
The following table details important financial assumptions.
General Assumptions |
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 Break-even Analysis
The Break-even Analysis indicates that approximately $25,000 will be needed in monthly revenue to reach the break-even point.
Break-even Analysis |
|
|
Monthly Revenue Break-even |
$24,867 |
|
|
Average Percent Variable Cost |
32% |
Estimated Monthly Fixed Cost |
$16,969 |
7.3 Projected Profit and Loss
The following table will indicate projected profit and loss.
Pro Forma Profit and Loss |
Direct Cost of Sales |
$55,842 |
$143,005 |
$156,512 |
Other Production Expenses |
$0 |
$0 |
$0 |
Total Cost of Sales |
$55,842 |
$143,005 |
$156,512 |
|
|
|
|
Gross Margin |
$119,987 |
$307,277 |
$336,299 |
Gross Margin % |
68.24% |
68.24% |
68.24% |
|
|
|
|
|
|
|
|
Payroll |
$144,900 |
$162,980 |
$167,980 |
Sales and Marketing and Other Expenses |
$2,400 |
$2,400 |
$2,400 |
Depreciation |
$9,996 |
$9,996 |
$9,996 |
Permits |
$1,200 |
$1,200 |
$1,200 |
Utilities |
$2,400 |
$2,400 |
$2,400 |
Insurance |
$3,000 |
$3,000 |
$3,000 |
Rent |
$18,000 |
$18,000 |
$18,000 |
Payroll Taxes |
$21,735 |
$24,447 |
$25,197 |
Other |
$0 |
$0 |
$0 |
|
|
|
|
|
|
|
|
Profit Before Interest and Taxes |
($83,644) |
$82,854 |
$106,126 |
EBITDA |
($73,648) |
$92,850 |
$116,122 |
Interest Expense |
$0 |
$0 |
$0 |
Taxes Incurred |
$0 |
$24,856 |
$31,838 |
|
|
|
|
Net Profit/Sales |
-47.57% |
12.88% |
15.07% |
7.4 Projected Cash Flow
The following chart and table will indicate projected cash flow.
Pro Forma Cash Flow |
|
|
|
|
Cash from Operations |
|
|
|
Cash Sales |
$175,829 |
$450,282 |
$492,811 |
Subtotal Cash from Operations |
$175,829 |
$450,282 |
$492,811 |
|
|
|
|
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 |
$175,829 |
$450,282 |
$492,811 |
|
|
|
|
|
|
|
|
Expenditures from Operations |
|
|
|
Cash Spending |
$144,900 |
$162,980 |
$167,980 |
Bill Payments |
$92,562 |
$213,297 |
$238,801 |
Subtotal Spent on Operations |
$237,462 |
$376,277 |
$406,781 |
|
|
|
|
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 |
$0 |
$0 |
$0 |
Purchase Other Current Assets |
$0 |
$0 |
$0 |
Purchase Long-term Assets |
$0 |
$0 |
$0 |
Dividends |
$0 |
$0 |
$0 |
Subtotal Cash Spent |
$237,462 |
$376,277 |
$406,781 |
|
|
|
|
Cash Balance |
$7,217 |
$81,221 |
$167,251 |
7.5 Projected Balance Sheet
The following chart and table will indicate projected cash flow.
Pro Forma Balance Sheet |
|
|
|
|
Current Assets |
|
|
|
Cash |
$7,217 |
$81,221 |
$167,251 |
Other Current Assets |
$0 |
$0 |
$0 |
Total Current Assets |
$7,217 |
$81,221 |
$167,251 |
|
|
|
|
Long-term Assets |
|
|
|
Long-term Assets |
$50,000 |
$50,000 |
$50,000 |
Accumulated Depreciation |
$9,996 |
$19,992 |
$29,988 |
Total Long-term Assets |
$40,004 |
$30,008 |
$20,012 |
Total Assets |
$47,221 |
$111,229 |
$187,263 |
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
Accounts Payable |
$12,015 |
$18,025 |
$19,771 |
Current Borrowing |
$0 |
$0 |
$0 |
Other Current Liabilities |
$0 |
$0 |
$0 |
Subtotal Current Liabilities |
$12,015 |
$18,025 |
$19,771 |
|
|
|
|
Long-term Liabilities |
$0 |
$0 |
$0 |
Total Liabilities |
$12,015 |
$18,025 |
$19,771 |
|
|
|
|
Paid-in Capital |
$120,000 |
$120,000 |
$120,000 |
Retained Earnings |
($1,150) |
($84,794) |
($26,796) |
Earnings |
($83,644) |
$57,997 |
$74,288 |
Total Capital |
$35,206 |
$93,204 |
$167,492 |
Total Liabilities and Capital |
$47,221 |
$111,229 |
$187,263 |
|
|
|
|
Net Worth |
$35,206 |
$93,204 |
$167,492 |
7.6 Business Ratios
Ratio Analysis |
Sales Growth |
0.00% |
156.09% |
9.45% |
7.60% |
|
|
|
|
|
Other Current Assets |
0.00% |
0.00% |
0.00% |
35.60% |
Total Current Assets |
15.28% |
73.02% |
89.31% |
43.70% |
Long-term Assets |
84.72% |
26.98% |
10.69% |
56.30% |
Total Assets |
100.00% |
100.00% |
100.00% |
100.00% |
|
|
|
|
|
Current Liabilities |
25.44% |
16.21% |
10.56% |
32.70% |
Long-term Liabilities |
0.00% |
0.00% |
0.00% |
28.50% |
Total Liabilities |
25.44% |
16.21% |
10.56% |
61.20% |
Net Worth |
74.56% |
83.79% |
89.44% |
38.80% |
|
|
|
|
|
Sales |
100.00% |
100.00% |
100.00% |
100.00% |
Gross Margin |
68.24% |
68.24% |
68.24% |
60.50% |
Selling, General & Administrative Expenses |
115.81% |
55.36% |
53.17% |
39.80% |
Advertising Expenses |
0.68% |
0.27% |
0.24% |
3.20% |
Profit Before Interest and Taxes |
-47.57% |
18.40% |
21.53% |
0.70% |
|
|
|
|
|
Current |
0.60 |
4.51 |
8.46 |
0.98 |
Quick |
0.60 |
4.51 |
8.46 |
0.65 |
Total Debt to Total Assets |
25.44% |
16.21% |
10.56% |
61.20% |
Pre-tax Return on Net Worth |
-237.58% |
88.90% |
63.36% |
1.70% |
Pre-tax Return on Assets |
-177.13% |
74.49% |
56.67% |
4.30% |
|
|
|
|
|
Net Profit Margin |
-47.57% |
12.88% |
15.07% |
n.a |
Return on Equity |
-237.58% |
62.23% |
44.35% |
n.a |
|
|
|
|
|
Accounts Payable Turnover |
8.70 |
12.17 |
12.17 |
n.a |
Payment Days |
27 |
25 |
29 |
n.a |
Total Asset Turnover |
3.72 |
4.05 |
2.63 |
n.a |
|
|
|
|
|
Debt to Net Worth |
0.34 |
0.19 |
0.12 |
n.a |
Current Liab. to Liab. |
1.00 |
1.00 |
1.00 |
n.a |
|
|
|
|
|
Net Working Capital |
($4,798) |
$63,196 |
$147,480 |
n.a |
Interest Coverage |
0.00 |
0.00 |
0.00 |
n.a |
|
|
|
|
|
Assets to Sales |
0.27 |
0.25 |
0.38 |
n.a |
Current Debt/Total Assets |
25% |
16% |
11% |
n.a |
Acid Test |
0.60 |
4.51 |
8.46 |
n.a |
Sales/Net Worth |
4.99 |
4.83 |
2.94 |
n.a |
Dividend Payout |
0.00 |
0.00 |
0.00 |
n.a |