Creative Concepts Computer Design
Financial Plan
The following sections include the annual estimates for the standard set of financial tables. Detailed monthly pro-forma tables are included in the appendix.
7.1 Important Assumptions
Creative Concepts customer base would fluctuate if there was a recess in the economy or other extenuating circumstances that pertain directly to consumer or industry behavior.
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 | 25.42% | 25.00% | 25.42% |
Other | 0 | 0 | 0 |
7.2 Break-even Analysis
Fixed costs have been set at a reasonably accurate monthly level. This should allow for equipment maintenance and purchase or replacement of basic tools used in performing our services. Variable costs have been set per unit to allow for additional expenses such as gas or other travel costs specific to each job.

Break-even Analysis | |
Monthly Units Break-even | 28 |
Monthly Revenue Break-even | $834 |
Assumptions: | |
Average Per-Unit Revenue | $29.98 |
Average Per-Unit Variable Cost | $5.70 |
Estimated Monthly Fixed Cost | $675 |
7.3 Projected Profit and Loss
The profit and loss shown for this company is a source of inspiration. For the first year of operation the books show a modest net profit. This should allow for great flexibility and survival in the start-up phase in case of unexpected problems or expenses. The profit margin declines incrementally in the following two years as greater payroll allocations are made. These increased allocations will be contingent upon the continued success of this going concern. Additionally, since this business is operated out of the home, expenses such as rent, utilities, and insurance are sunk costs and not reflective of the business venture.




Pro Forma Profit and Loss | |||
Year 1 | Year 2 | Year 3 | |
Sales | $18,289 | $24,142 | $31,868 |
Direct Cost of Sales | $3,476 | $5,677 | $9,063 |
Other | $0 | $0 | $0 |
Total Cost of Sales | $3,476 | $5,677 | $9,063 |
Gross Margin | $14,814 | $18,465 | $22,804 |
Gross Margin % | 80.99% | 76.48% | 71.56% |
Expenses | |||
Payroll | $8,102 | $12,071 | $15,934 |
Sales and Marketing and Other Expenses | $0 | $0 | $0 |
Depreciation | $0 | $0 | $0 |
Leased Equipment | $0 | $0 | $0 |
Utilities | $0 | $0 | $0 |
Insurance | $0 | $0 | $0 |
Rent | $0 | $0 | $0 |
Payroll Taxes | $0 | $0 | $0 |
Other | $0 | $0 | $0 |
Total Operating Expenses | $8,102 | $12,071 | $15,934 |
Profit Before Interest and Taxes | $6,711 | $6,394 | $6,870 |
EBITDA | $6,711 | $6,394 | $6,870 |
Interest Expense | $0 | $0 | $0 |
Taxes Incurred | $1,702 | $1,598 | $1,746 |
Net Profit | $5,009 | $4,795 | $5,124 |
Net Profit/Sales | 27.39% | 19.86% | 16.08% |
7.4 Projected Cash Flow
This information is presented in the chart and table below.

Pro Forma Cash Flow | |||
Year 1 | Year 2 | Year 3 | |
Cash Received | |||
Cash from Operations | |||
Cash Sales | $0 | $0 | $0 |
Cash from Receivables | $12,657 | $22,340 | $29,488 |
Subtotal Cash from Operations | $12,657 | $22,340 | $29,488 |
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 | $12,657 | $22,340 | $29,488 |
Expenditures | Year 1 | Year 2 | Year 3 |
Expenditures from Operations | |||
Cash Spending | $8,102 | $12,071 | $15,934 |
Bill Payments | $4,391 | $7,464 | $10,519 |
Subtotal Spent on Operations | $12,493 | $19,535 | $26,453 |
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 | $12,493 | $19,535 | $26,453 |
Net Cash Flow | $164 | $2,804 | $3,035 |
Cash Balance | $444 | $3,248 | $6,283 |
7.5 Projected Balance Sheet
This information is presented in the table below.
Pro Forma Balance Sheet | |||
Year 1 | Year 2 | Year 3 | |
Assets | |||
Current Assets | |||
Cash | $444 | $3,248 | $6,283 |
Accounts Receivable | $5,633 | $7,435 | $9,815 |
Other Current Assets | $0 | $0 | $0 |
Total Current Assets | $6,076 | $10,683 | $16,098 |
Long-term Assets | |||
Long-term Assets | $0 | $0 | $0 |
Accumulated Depreciation | $0 | $0 | $0 |
Total Long-term Assets | $0 | $0 | $0 |
Total Assets | $6,076 | $10,683 | $16,098 |
Liabilities and Capital | Year 1 | Year 2 | Year 3 |
Current Liabilities | |||
Accounts Payable | $787 | $598 | $888 |
Current Borrowing | $0 | $0 | $0 |
Other Current Liabilities | $0 | $0 | $0 |
Subtotal Current Liabilities | $787 | $598 | $888 |
Long-term Liabilities | $0 | $0 | $0 |
Total Liabilities | $787 | $598 | $888 |
Paid-in Capital | $1,000 | $1,000 | $1,000 |
Retained Earnings | ($720) | $4,289 | $9,085 |
Earnings | $5,009 | $4,795 | $5,124 |
Total Capital | $5,289 | $10,085 | $15,209 |
Total Liabilities and Capital | $6,076 | $10,683 | $16,098 |
Net Worth | $5,289 | $10,085 | $15,209 |
7.6 Business Ratios
Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 7379, Computer Related Services NEC, are shown for comparison.
Ratio Analysis | ||||
Year 1 | Year 2 | Year 3 | Industry Profile | |
Sales Growth | 0.00% | 32.00% | 32.00% | 7.20% |
Percent of Total Assets | ||||
Accounts Receivable | 92.70% | 69.60% | 60.97% | 21.70% |
Other Current Assets | 0.00% | 0.00% | 0.00% | 46.70% |
Total Current Assets | 100.00% | 100.00% | 100.00% | 71.90% |
Long-term Assets | 0.00% | 0.00% | 0.00% | 28.10% |
Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
Current Liabilities | 12.95% | 5.60% | 5.52% | 51.40% |
Long-term Liabilities | 0.00% | 0.00% | 0.00% | 19.10% |
Total Liabilities | 12.95% | 5.60% | 5.52% | 70.50% |
Net Worth | 87.05% | 94.40% | 94.48% | 29.50% |
Percent of Sales | ||||
Sales | 100.00% | 100.00% | 100.00% | 100.00% |
Gross Margin | 80.99% | 76.48% | 71.56% | 0.00% |
Selling, General & Administrative Expenses | 38.70% | 65.72% | 64.96% | 80.70% |
Advertising Expenses | 0.00% | 0.00% | 0.00% | 1.20% |
Profit Before Interest and Taxes | 36.69% | 26.48% | 21.56% | 1.70% |
Main Ratios | ||||
Current | 7.72 | 17.86 | 18.12 | 1.27 |
Quick | 7.72 | 17.86 | 18.12 | 1.01 |
Total Debt to Total Assets | 12.95% | 5.60% | 5.52% | 70.50% |
Pre-tax Return on Net Worth | 126.88% | 63.40% | 45.17% | 3.50% |
Pre-tax Return on Assets | 110.45% | 59.85% | 42.68% | 11.80% |
Additional Ratios | Year 1 | Year 2 | Year 3 | |
Net Profit Margin | 27.39% | 19.86% | 16.08% | n.a |
Return on Equity | 94.71% | 47.55% | 33.69% | n.a |
Activity Ratios | ||||
Accounts Receivable Turnover | 3.25 | 3.25 | 3.25 | n.a |
Collection Days | 55 | 99 | 99 | n.a |
Accounts Payable Turnover | 6.58 | 12.17 | 12.17 | n.a |
Payment Days | 27 | 35 | 25 | n.a |
Total Asset Turnover | 3.01 | 2.26 | 1.98 | n.a |
Debt Ratios | ||||
Debt to Net Worth | 0.15 | 0.06 | 0.06 | n.a |
Current Liab. to Liab. | 1.00 | 1.00 | 1.00 | n.a |
Liquidity Ratios | ||||
Net Working Capital | $5,289 | $10,085 | $15,209 | n.a |
Interest Coverage | 0.00 | 0.00 | 0.00 | n.a |
Additional Ratios | ||||
Assets to Sales | 0.33 | 0.44 | 0.51 | n.a |
Current Debt/Total Assets | 13% | 6% | 6% | n.a |
Acid Test | 0.56 | 5.43 | 7.07 | n.a |
Sales/Net Worth | 3.46 | 2.39 | 2.10 | n.a |
Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |