City Taxi
Financial Plan
The company is seeking $2.5 million of financing to fund the acquisition of Mighty Cab Association and its initial operations. This funding will cover the purchase of Mighty Cab, marketing, purchase of extra vehicles, software, and hardware.
7.1 Important Assumptions
The table below shows the key assumptions for City Taxi.
| General Assumptions | |||
| 1999 | 2000 | 2001 | |
| 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
City Taxi’s Break-even Analysis indicates that the firm has a strong balance of costs and sales. The company estimates a monthly break-even sales volume of approximately $43,000, which will be reached by Fiscal Year (FY) 2000.
| Break-even Analysis | |
| Monthly Revenue Break-even | $43,333 |
| Assumptions: | |
| Average Percent Variable Cost | 32% |
| Estimated Monthly Fixed Cost | $29,250 |
7.3 Projected Profit and Loss
City Taxi is in the early stage of development, thus initial projections have only been made on accounts that are believed to most drive the income statement.
| Pro Forma Profit and Loss | |||
| 1999 | 2000 | 2001 | |
| Sales | $200,000 | $1,500,000 | $2,200,000 |
| Direct Cost of Sales | $65,000 | $125,000 | $100,000 |
| Other | $5,000 | $10,000 | $15,000 |
| Total Cost of Sales | $70,000 | $135,000 | $115,000 |
| Gross Margin | $130,000 | $1,365,000 | $2,085,000 |
| Gross Margin % | 65.00% | 91.00% | 94.77% |
| Expenses | |||
| Payroll | $217,391 | $521,739 | $565,217 |
| Sales and Marketing and Other Expenses | $64,000 | $164,000 | $214,000 |
| Depreciation | $14,997 | $17,500 | $17,500 |
| Research & Development | $15,000 | $25,000 | $40,000 |
| Utilities | $2,000 | $2,000 | $2,000 |
| Insurance | $5,000 | $5,000 | $5,000 |
| Payroll Taxes | $32,609 | $78,261 | $84,783 |
| Other | $0 | $0 | $0 |
| Total Operating Expenses | $350,997 | $813,500 | $928,500 |
| Profit Before Interest and Taxes | ($220,997) | $551,500 | $1,156,500 |
| EBITDA | ($206,000) | $569,000 | $1,174,000 |
| Interest Expense | $3,337 | $2,841 | $2,084 |
| Taxes Incurred | $0 | $137,165 | $293,414 |
| Net Profit | ($224,334) | $411,494 | $861,002 |
| Net Profit/Sales | -112.17% | 27.43% | 39.14% |
7.4 Projected Cash Flow
The table below outlines the company’s cash flows for FY 1999-2001. The required $2.5 million will be spent to acquire Mighty Cab’s operations ($1.25 million), as well as to purchase additional property ($250,000) and equipment ($200,000). An additional $500,000 will be spent on other short-term assets.
| Pro Forma Cash Flow | |||
| 1999 | 2000 | 2001 | |
| Cash Received | |||
| Cash from Operations | |||
| Cash Sales | $200,000 | $1,500,000 | $2,200,000 |
| Subtotal Cash from Operations | $200,000 | $1,500,000 | $2,200,000 |
| 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 | $2,500,000 | $0 | $0 |
| Subtotal Cash Received | $2,700,000 | $1,500,000 | $2,200,000 |
| Expenditures | 1999 | 2000 | 2001 |
| Expenditures from Operations | |||
| Cash Spending | $217,391 | $521,739 | $565,217 |
| Bill Payments | $200,095 | $519,573 | $739,266 |
| Subtotal Spent on Operations | $417,486 | $1,041,312 | $1,304,483 |
| Additional Cash Spent | |||
| Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 |
| Principal Repayment of Current Borrowing | $3,000 | $3,000 | $3,000 |
| Other Liabilities Principal Repayment | $0 | $0 | $0 |
| Long-term Liabilities Principal Repayment | $0 | $4,181 | $4,951 |
| Purchase Other Current Assets | $500,000 | $0 | $0 |
| Purchase Long-term Assets | $1,700,000 | $0 | $0 |
| Dividends | $0 | $0 | $0 |
| Subtotal Cash Spent | $2,620,486 | $1,048,493 | $1,312,434 |
| Net Cash Flow | $79,514 | $451,507 | $887,566 |
| Cash Balance | $124,514 | $576,021 | $1,463,587 |
7.5 Projected Balance Sheet
The table below provides City Taxi’s actual and projected balance sheets for 1999-2001.
| Pro Forma Balance Sheet | |||
| 1999 | 2000 | 2001 | |
| Assets | |||
| Current Assets | |||
| Cash | $124,514 | $576,021 | $1,463,587 |
| Other Current Assets | $513,400 | $513,400 | $513,400 |
| Total Current Assets | $637,914 | $1,089,421 | $1,976,987 |
| Long-term Assets | |||
| Long-term Assets | $1,775,000 | $1,775,000 | $1,775,000 |
| Accumulated Depreciation | $24,997 | $42,497 | $59,997 |
| Total Long-term Assets | $1,750,003 | $1,732,503 | $1,715,003 |
| Total Assets | $2,387,917 | $2,821,924 | $3,691,990 |
| Liabilities and Capital | 1999 | 2000 | 2001 |
| Current Liabilities | |||
| Accounts Payable | $15,451 | $45,145 | $62,160 |
| Current Borrowing | $7,000 | $4,000 | $1,000 |
| Other Current Liabilities | $25,400 | $25,400 | $25,400 |
| Subtotal Current Liabilities | $47,851 | $74,545 | $88,560 |
| Long-term Liabilities | $25,000 | $20,819 | $15,868 |
| Total Liabilities | $72,851 | $95,364 | $104,428 |
| Paid-in Capital | $2,537,000 | $2,537,000 | $2,537,000 |
| Retained Earnings | $2,400 | ($221,934) | $189,560 |
| Earnings | ($224,334) | $411,494 | $861,002 |
| Total Capital | $2,315,066 | $2,726,560 | $3,587,562 |
| Total Liabilities and Capital | $2,387,917 | $2,821,924 | $3,691,990 |
| Net Worth | $2,315,066 | $2,726,560 | $3,587,562 |
7.6 Business Ratios
The following table contains important business ratios from the taxi cab industry, as determined by the Standard Industry Classification (SIC) Index #4121, Taxi Cabs.
| Ratio Analysis | ||||
| 1999 | 2000 | 2001 | Industry Profile | |
| Sales Growth | 100.00% | 650.00% | 46.67% | 0.50% |
| Percent of Total Assets | ||||
| Other Current Assets | 21.50% | 18.19% | 13.91% | 45.90% |
| Total Current Assets | 26.71% | 38.61% | 53.55% | 63.00% |
| Long-term Assets | 73.29% | 61.39% | 46.45% | 37.00% |
| Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
| Current Liabilities | 2.00% | 2.64% | 2.40% | 29.10% |
| Long-term Liabilities | 1.05% | 0.74% | 0.43% | 27.00% |
| Total Liabilities | 3.05% | 3.38% | 2.83% | 56.10% |
| Net Worth | 96.95% | 96.62% | 97.17% | 43.90% |
| Percent of Sales | ||||
| Sales | 100.00% | 100.00% | 100.00% | 100.00% |
| Gross Margin | 65.00% | 91.00% | 94.77% | 82.50% |
| Selling, General & Administrative Expenses | 177.25% | 63.59% | 55.44% | 58.00% |
| Advertising Expenses | 25.00% | 10.00% | 9.09% | 1.00% |
| Profit Before Interest and Taxes | -110.50% | 36.77% | 52.57% | 2.60% |
| Main Ratios | ||||
| Current | 13.33 | 14.61 | 22.32 | 1.58 |
| Quick | 13.33 | 14.61 | 22.32 | 1.22 |
| Total Debt to Total Assets | 3.05% | 3.38% | 2.83% | 56.10% |
| Pre-tax Return on Net Worth | -9.69% | 20.12% | 32.18% | 3.60% |
| Pre-tax Return on Assets | -9.39% | 19.44% | 31.27% | 8.10% |
| Additional Ratios | 1999 | 2000 | 2001 | |
| Net Profit Margin | -112.17% | 27.43% | 39.14% | n.a |
| Return on Equity | -9.69% | 15.09% | 24.00% | n.a |
| Activity Ratios | ||||
| Accounts Payable Turnover | 12.42 | 12.17 | 12.17 | n.a |
| Payment Days | 31 | 20 | 26 | n.a |
| Total Asset Turnover | 0.08 | 0.53 | 0.60 | n.a |
| Debt Ratios | ||||
| Debt to Net Worth | 0.03 | 0.03 | 0.03 | n.a |
| Current Liab. to Liab. | 0.66 | 0.78 | 0.85 | n.a |
| Liquidity Ratios | ||||
| Net Working Capital | $590,063 | $1,014,876 | $1,888,427 | n.a |
| Interest Coverage | -66.22 | 194.13 | 554.85 | n.a |
| Additional Ratios | ||||
| Assets to Sales | 11.94 | 1.88 | 1.68 | n.a |
| Current Debt/Total Assets | 2% | 3% | 2% | n.a |
| Acid Test | 13.33 | 14.61 | 22.32 | n.a |
| Sales/Net Worth | 0.09 | 0.55 | 0.61 | n.a |
| Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |
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