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.




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 |