Specialty Clothing Retail Business Plan

Chicano Stylez

Financial Plan

The following sections outline the financial plan for Chicano Stylez.

7.1 Important Assumptions

The table below highlights the important assumptions for the company.

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 Projected Profit and Loss

The table below provides the expected profit and loss for the company.

Specialty clothing retail business plan, financial plan chart image

Pro Forma Profit and Loss
	Year 1	Year 2	Year 3
Sales	$90,200	$108,240	$140,712
Direct Cost of Sales	$22,550	$27,060	$35,178
Other	$0	$0	$0
Total Cost of Sales	$22,550	$27,060	$35,178

Gross Margin	$67,650	$81,180	$105,534
Gross Margin %	75.00%	75.00%	75.00%


Expenses
Payroll	$35,600	$37,380	$39,249
Sales and Marketing and Other Expenses	$14,400	$16,500	$16,900
Depreciation	$0	$0	$0
Leased Equipment	$2,400	$2,000	$1,500
Utilities	$3,600	$3,800	$4,000
Insurance	$3,600	$3,600	$3,600
Rent	$12,000	$13,000	$14,000
Payroll Taxes	$0	$0	$0
Other	$0	$0	$0

Total Operating Expenses	$71,600	$76,280	$79,249

Profit Before Interest and Taxes	($3,950)	$4,900	$26,285
EBITDA	($3,950)	$4,900	$26,285
Interest Expense	$1,070	$840	$600
Taxes Incurred	$0	$1,015	$6,528

Net Profit	($5,020)	$3,045	$19,157
Net Profit/Sales	-5.57%	2.81%	13.61%

7.3 Break-even Analysis

The chart and table below indicate the Break-even Analysis for CS.

Break-even Analysis


Monthly Revenue Break-even	$7,956

Assumptions:
Average Percent Variable Cost	25%
Estimated Monthly Fixed Cost	$5,967

7.4 Projected Cash Flow

The cash flow statement can be found in the chart and table below.

Pro Forma Cash Flow
	Year 1	Year 2	Year 3
Cash Received

Cash from Operations
Cash Sales	$90,200	$108,240	$140,712
Subtotal Cash from Operations	$90,200	$108,240	$140,712

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	$90,200	$108,240	$140,712

Expenditures	Year 1	Year 2	Year 3

Expenditures from Operations
Cash Spending	$35,600	$37,380	$39,249
Bill Payments	$55,718	$68,977	$81,568
Subtotal Spent on Operations	$91,318	$106,357	$120,817

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	$2,400	$2,400	$2,400
Purchase Other Current Assets	$0	$0	$0
Purchase Long-term Assets	$0	$0	$0
Dividends	$0	$0	$0
Subtotal Cash Spent	$93,718	$108,757	$123,217

Net Cash Flow	($3,518)	($517)	$17,495
Cash Balance	$16,482	$15,966	$33,461

7.5 Projected Balance Sheet

The Balance Sheet is found in the following table.

Pro Forma Balance Sheet
	Year 1	Year 2	Year 3
Assets

Current Assets
Cash	$16,482	$15,966	$33,461
Inventory	$3,080	$3,696	$4,805
Other Current Assets	$27,000	$27,000	$27,000
Total Current Assets	$46,562	$46,662	$65,266

Long-term Assets
Long-term Assets	$0	$0	$0
Accumulated Depreciation	$0	$0	$0
Total Long-term Assets	$0	$0	$0
Total Assets	$46,562	$46,662	$65,266

Liabilities and Capital	Year 1	Year 2	Year 3

Current Liabilities
Accounts Payable	$8,982	$8,437	$10,284
Current Borrowing	$0	$0	$0
Other Current Liabilities	$0	$0	$0
Subtotal Current Liabilities	$8,982	$8,437	$10,284

Long-term Liabilities	$9,600	$7,200	$4,800
Total Liabilities	$18,582	$15,637	$15,084

Paid-in Capital	$45,300	$45,300	$45,300
Retained Earnings	($12,300)	($17,320)	($14,275)
Earnings	($5,020)	$3,045	$19,157
Total Capital	$27,980	$31,025	$50,182
Total Liabilities and Capital	$46,562	$46,662	$65,266

Net Worth	$27,980	$31,025	$50,182

7.6 Business Ratios

The following table contains important ratios from the retail clothing industry, Code 5999, as determined by the Standard Industry Classification (SIC) Index.

Ratio Analysis
	Year 1	Year 2	Year 3	Industry Profile
Sales Growth	0.00%	20.00%	30.00%	6.30%

Percent of Total Assets
Inventory	6.61%	7.92%	7.36%	39.30%
Other Current Assets	57.99%	57.86%	41.37%	23.90%
Total Current Assets	100.00%	100.00%	100.00%	80.10%
Long-term Assets	0.00%	0.00%	0.00%	19.90%
Total Assets	100.00%	100.00%	100.00%	100.00%

Current Liabilities	19.29%	18.08%	15.76%	46.00%
Long-term Liabilities	20.62%	15.43%	7.35%	14.00%
Total Liabilities	39.91%	33.51%	23.11%	60.00%
Net Worth	60.09%	66.49%	76.89%	40.00%

Percent of Sales
Sales	100.00%	100.00%	100.00%	100.00%
Gross Margin	75.00%	75.00%	75.00%	34.10%
Selling, General & Administrative Expenses	95.57%	56.75%	49.76%	19.80%
Advertising Expenses	7.22%	6.88%	5.45%	2.60%
Profit Before Interest and Taxes	-4.38%	4.53%	18.68%	1.10%

Main Ratios
Current	5.18	5.53	6.35	1.77
Quick	4.84	5.09	5.88	0.67
Total Debt to Total Assets	39.91%	33.51%	23.11%	60.00%
Pre-tax Return on Net Worth	-17.94%	13.09%	51.18%	2.60%
Pre-tax Return on Assets	-10.78%	8.70%	39.35%	6.50%

Additional Ratios	Year 1	Year 2	Year 3
Net Profit Margin	-5.57%	2.81%	13.61%	n.a
Return on Equity	-17.94%	9.81%	38.17%	n.a

Activity Ratios
Inventory Turnover	7.55	7.99	8.28	n.a
Accounts Payable Turnover	6.09	8.11	8.11	n.a
Payment Days	47	46	41	n.a
Total Asset Turnover	1.94	2.32	2.16	n.a

Debt Ratios
Debt to Net Worth	0.66	0.50	0.30	n.a
Current Liab. to Liab.	0.48	0.54	0.68	n.a

Liquidity Ratios
Net Working Capital	$37,580	$38,225	$54,982	n.a
Interest Coverage	-3.69	5.83	43.81	n.a

Additional Ratios
Assets to Sales	0.52	0.43	0.46	n.a
Current Debt/Total Assets	19%	18%	16%	n.a
Acid Test	4.84	5.09	5.88	n.a
Sales/Net Worth	3.22	3.49	2.80	n.a
Dividend Payout	0.00	0.00	0.00	n.a