Sun Heat
Financial Plan
The following sections will outline important financial information.
8.1 Important Assumptions
The following table details important Financial Assumptions.
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 |
8.2 Break-even Analysis
The Break-even Analysis indicates what will be needed in monthly revenue to reach the break-even point.

Break-even Analysis | |
Monthly Revenue Break-even | $29,872 |
Assumptions: | |
Average Percent Variable Cost | 45% |
Estimated Monthly Fixed Cost | $16,430 |
8.3 Projected Profit and Loss
The following table will indicate Projected Profit and Loss.




Pro Forma Profit and Loss | |||
Year 1 | Year 2 | Year 3 | |
Sales | $240,309 | $403,967 | $523,389 |
Direct Cost of Sales | $108,139 | $181,785 | $235,525 |
Other Costs of Goods | $0 | $0 | $0 |
Total Cost of Sales | $108,139 | $181,785 | $235,525 |
Gross Margin | $132,170 | $222,182 | $287,864 |
Gross Margin % | 55.00% | 55.00% | 55.00% |
Expenses | |||
Payroll | $118,400 | $141,600 | $151,600 |
Sales and Marketing and Other Expenses | $5,400 | $5,400 | $5,400 |
Depreciation | $12,396 | $1,033 | $1,033 |
Rent | $24,000 | $25,000 | $26,000 |
Utilities | $9,000 | $750 | $750 |
Insurance | $7,800 | $7,800 | $7,800 |
Payroll Taxes | $17,760 | $21,240 | $22,740 |
Other | $2,400 | $2,400 | $2,400 |
Total Operating Expenses | $197,156 | $205,223 | $217,723 |
Profit Before Interest and Taxes | ($64,986) | $16,959 | $70,141 |
EBITDA | ($52,590) | $17,992 | $71,174 |
Interest Expense | $0 | $0 | $0 |
Taxes Incurred | $0 | $5,088 | $21,042 |
Net Profit | ($64,986) | $11,871 | $49,099 |
Net Profit/Sales | -27.04% | 2.94% | 9.38% |
8.4 Projected Cash Flow
The following chart and table will indicate Projected Cash Flow.

Pro Forma Cash Flow | |||
Year 1 | Year 2 | Year 3 | |
Cash Received | |||
Cash from Operations | |||
Cash Sales | $60,077 | $100,992 | $130,847 |
Cash from Receivables | $136,262 | $273,031 | $370,691 |
Subtotal Cash from Operations | $196,340 | $374,022 | $501,538 |
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 | $196,340 | $374,022 | $501,538 |
Expenditures | Year 1 | Year 2 | Year 3 |
Expenditures from Operations | |||
Cash Spending | $118,400 | $141,600 | $151,600 |
Bill Payments | $155,929 | $247,529 | $315,723 |
Subtotal Spent on Operations | $274,329 | $389,129 | $467,323 |
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 | $274,329 | $389,129 | $467,323 |
Net Cash Flow | ($77,989) | ($15,107) | $34,215 |
Cash Balance | $16,011 | $904 | $35,119 |
8.5 Projected Balance Sheet
The following table will indicate the Projected Balance Sheet.
Pro Forma Balance Sheet | |||
Year 1 | Year 2 | Year 3 | |
Assets | |||
Current Assets | |||
Cash | $16,011 | $904 | $35,119 |
Accounts Receivable | $43,969 | $73,914 | $95,765 |
Other Current Assets | $0 | $0 | $0 |
Total Current Assets | $59,980 | $74,818 | $130,883 |
Long-term Assets | |||
Long-term Assets | $62,000 | $62,000 | $62,000 |
Accumulated Depreciation | $12,396 | $13,429 | $14,462 |
Total Long-term Assets | $49,604 | $48,571 | $47,538 |
Total Assets | $109,584 | $123,389 | $178,421 |
Liabilities and Capital | Year 1 | Year 2 | Year 3 |
Current Liabilities | |||
Accounts Payable | $18,570 | $20,504 | $26,438 |
Current Borrowing | $0 | $0 | $0 |
Other Current Liabilities | $0 | $0 | $0 |
Subtotal Current Liabilities | $18,570 | $20,504 | $26,438 |
Long-term Liabilities | $0 | $0 | $0 |
Total Liabilities | $18,570 | $20,504 | $26,438 |
Paid-in Capital | $165,000 | $165,000 | $165,000 |
Retained Earnings | ($9,000) | ($73,986) | ($62,115) |
Earnings | ($64,986) | $11,871 | $49,099 |
Total Capital | $91,014 | $102,885 | $151,984 |
Total Liabilities and Capital | $109,584 | $123,389 | $178,421 |
Net Worth | $91,014 | $102,885 | $151,984 |
8.6 Business Ratios
The following table details important Business Ratios specific to Sun Heat as well as industry ratios for the Other Electric Power Generation industry, NAICS code 221119.
Ratio Analysis | ||||
Year 1 | Year 2 | Year 3 | Industry Profile | |
Sales Growth | 0.00% | 68.10% | 29.56% | 10.72% |
Percent of Total Assets | ||||
Accounts Receivable | 40.12% | 59.90% | 53.67% | 10.41% |
Other Current Assets | 0.00% | 0.00% | 0.00% | 40.72% |
Total Current Assets | 54.73% | 60.64% | 73.36% | 51.79% |
Long-term Assets | 45.27% | 39.36% | 26.64% | 48.21% |
Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
Current Liabilities | 16.95% | 16.62% | 14.82% | 12.65% |
Long-term Liabilities | 0.00% | 0.00% | 0.00% | 40.12% |
Total Liabilities | 16.95% | 16.62% | 14.82% | 52.77% |
Net Worth | 83.05% | 83.38% | 85.18% | 47.23% |
Percent of Sales | ||||
Sales | 100.00% | 100.00% | 100.00% | 100.00% |
Gross Margin | 55.00% | 55.00% | 55.00% | 47.48% |
Selling, General & Administrative Expenses | 82.04% | 52.06% | 45.62% | 13.69% |
Advertising Expenses | 0.00% | 0.00% | 0.00% | 0.03% |
Profit Before Interest and Taxes | -27.04% | 4.20% | 13.40% | 9.26% |
Main Ratios | ||||
Current | 3.23 | 3.65 | 4.95 | 2.10 |
Quick | 3.23 | 3.65 | 4.95 | 1.69 |
Total Debt to Total Assets | 16.95% | 16.62% | 14.82% | 60.03% |
Pre-tax Return on Net Worth | -71.40% | 16.48% | 46.15% | 7.72% |
Pre-tax Return on Assets | -59.30% | 13.74% | 39.31% | 19.31% |
Additional Ratios | Year 1 | Year 2 | Year 3 | |
Net Profit Margin | -27.04% | 2.94% | 9.38% | n.a |
Return on Equity | -71.40% | 11.54% | 32.31% | n.a |
Activity Ratios | ||||
Accounts Receivable Turnover | 4.10 | 4.10 | 4.10 | n.a |
Collection Days | 56 | 71 | 79 | n.a |
Accounts Payable Turnover | 9.40 | 12.17 | 12.17 | n.a |
Payment Days | 27 | 29 | 27 | n.a |
Total Asset Turnover | 2.19 | 3.27 | 2.93 | n.a |
Debt Ratios | ||||
Debt to Net Worth | 0.20 | 0.20 | 0.17 | n.a |
Current Liab. to Liab. | 1.00 | 1.00 | 1.00 | n.a |
Liquidity Ratios | ||||
Net Working Capital | $41,410 | $54,314 | $104,446 | n.a |
Interest Coverage | 0.00 | 0.00 | 0.00 | n.a |
Additional Ratios | ||||
Assets to Sales | 0.46 | 0.31 | 0.34 | n.a |
Current Debt/Total Assets | 17% | 17% | 15% | n.a |
Acid Test | 0.86 | 0.04 | 1.33 | n.a |
Sales/Net Worth | 2.64 | 3.93 | 3.44 | n.a |
Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |