Evergreen TV Productions
Financial Plan
The most important element in the financial plan is the critical need for additional capital to assist in business operations through the remaining start-up process, and to maintain a positive cash balance for the first fiscal quarters. We do not anticipate any changes to our financial plan through accounts receivables or inventory, as our company operates upon the “payment upon receipt” principal for all goods, and our inventory cycle does not meet the standard criteria.
Moving from a home office to a storefront with employees, introduces greater liabilities. During the past seven month start-up process, we have largely committed to EvergreenTV Productions through personal savings, cashed stocks, personal credit lines and personal long-term loan options.
Important Assumptions
The financial plan depends on important assumptions, most of which are shown in the following table. The key underlying assumptions are:
We assume access to equity capital and financing sufficient to follow and maintain our financial plan as shown in the tables. We anticipate our financing to hold higher long-term interest than our current loan against stock. We assume that as our company grows, we will be able to utilize a larger credit line, decreasing our expenses in cash. Likewise, our short-term credit line will be available with a lower short-term interest rate, making more cash available.
We assume opening and promoting three stores within the Tampa Bay area before reaching saturation. Likewise, we assume relatively quick initial growth within the Home Division, following our plan of two stores open within the first year, and 10 stores statewide within five years.
We assume many tv markets are, or will become, Internet proficient. We assume most colleges and universities are, or will become, Internet proficient. We assume slow initial growth within the B2B Division. However, the majority of our long-term payments are for one time, or long-term purchases which will not need to be replaced in the first five years.
General Assumptions | |||
Year 1 | Year 2 | Year 3 | |
Plan Month | 1 | 2 | 3 |
Current Interest Rate | 13.00% | 13.00% | 13.00% |
Long-term Interest Rate | 0.80% | 0.80% | 0.80% |
Tax Rate | 25.42% | 25.00% | 25.42% |
Other | 0 | 0 | 0 |
Key Financial Indicators
The benchmark chart shows the nature of our company. We estimate consistent turns on inventory, as our inventory is available for resale on a constant basis. In our Home Division, we do not keep inventory, but customers bring their photos to us. In our B2B Division, our inventory consists of news stories we will keep on hand for multiple sales. Several stations may purchase the same story, we simply make a copy of that story. Our blank tape inventory will be replenished monthly to avoid keeping a large inventory of tapes.
Our Gross Margin increases with increased sales, but as we have a very low direct cost of sales, this number will only increase fractionally compared to sales.
Sales and Operating Expenses are our closest measurements in this forecast. While sales increase dramatically, operating expenses increase with new stores, additional employees and taxes. However, by maximizing the number of employees within each store, we are also maximizing our location and limiting further expenses that additional storefronts would incur. We are also able to save drastically on advertising expenses, which would naturally increase with each new location.

Break-even Analysis
We assume running costs which include rent, utilities, office expenses, and an average of travel, advertising and miscellaneous costs. Miscellaneous costs are equal to quarterly costs such as business cards, brochures, bulk tape supplies and occasional equipment rental. Payroll increases every other month as we add new employees.

Break-even Analysis | |
Monthly Units Break-even | 51 |
Monthly Revenue Break-even | $10,303 |
Assumptions: | |
Average Per-Unit Revenue | $203.45 |
Average Per-Unit Variable Cost | $7.06 |
Estimated Monthly Fixed Cost | $9,946 |
Projected Profit and Loss
Profit and Loss projects look very good, with the usual start-up loss limited to the first two months. The monthly projections for the first year are included in the appendix.


Pro Forma Profit and Loss | |||
Year 1 | Year 2 | Year 3 | |
Sales | $206,300 | $814,116 | $1,421,860 |
Direct Cost of Sales | $7,155 | $32,770 | $59,450 |
Production Payroll | $33,000 | $166,500 | $385,000 |
Other | $0 | $0 | $0 |
Total Cost of Sales | $40,155 | $199,270 | $444,450 |
Gross Margin | $166,145 | $614,846 | $977,410 |
Gross Margin % | 80.54% | 75.52% | 68.74% |
Operating Expenses | |||
Sales and Marketing Expenses | |||
Sales and Marketing Payroll | $7,998 | $78,400 | $85,000 |
Advertising/Promotion | $20,000 | $20,000 | $30,000 |
Travel | $6,500 | $10,000 | $8,000 |
Miscellaneous | $9,500 | $7,500 | $10,000 |
Total Sales and Marketing Expenses | $43,998 | $115,900 | $133,000 |
Sales and Marketing % | 21.33% | 14.24% | 9.35% |
General and Administrative Expenses | |||
General and Administrative Payroll | $25,800 | $75,000 | $125,000 |
Sales and Marketing and Other Expenses | $0 | $0 | $0 |
Depreciation | $0 | $0 | $0 |
Leased Equipment | $0 | $0 | $0 |
Utilities | $1,260 | $3,600 | $6,000 |
Insurance | $1,040 | $2,880 | $4,800 |
Rent | $9,750 | $27,000 | $45,000 |
Payroll Taxes | $0 | $0 | $0 |
Other General and Administrative Expenses | $0 | $0 | $0 |
Total General and Administrative Expenses | $37,850 | $108,480 | $180,800 |
General and Administrative % | 18.35% | 13.32% | 12.72% |
Other Expenses: | |||
Other Payroll | $37,500 | $97,750 | $217,250 |
Consultants | $0 | $0 | $0 |
Contract/Consultants | $0 | $0 | $0 |
Total Other Expenses | $37,500 | $97,750 | $217,250 |
Other % | 18.18% | 12.01% | 15.28% |
Total Operating Expenses | $119,348 | $322,130 | $531,050 |
Profit Before Interest and Taxes | $46,797 | $292,716 | $446,360 |
EBITDA | $46,797 | $292,716 | $446,360 |
Interest Expense | $423 | $141 | $0 |
Taxes Incurred | $11,488 | $73,144 | $113,450 |
Net Profit | $34,886 | $219,431 | $332,910 |
Net Profit/Sales | 16.91% | 26.95% | 23.41% |
Projected Cash Flow
Cash flow projections are good, as shown in the annual table below, and the monthly table in the appendix. There are only two months of negative cash flow the foreseen the first year, and the all important cash balance shows steady increases.

Pro Forma Cash Flow | |||
Year 1 | Year 2 | Year 3 | |
Cash Received | |||
Cash from Operations | |||
Cash Sales | $206,300 | $814,116 | $1,421,860 |
Subtotal Cash from Operations | $206,300 | $814,116 | $1,421,860 |
Additional Cash Received | |||
Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 |
New Current Borrowing | $5,000 | $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 | $211,300 | $814,116 | $1,421,860 |
Expenditures | Year 1 | Year 2 | Year 3 |
Expenditures from Operations | |||
Cash Spending | $104,298 | $417,650 | $812,250 |
Bill Payments | $59,036 | $189,141 | $264,923 |
Subtotal Spent on Operations | $163,334 | $606,791 | $1,077,173 |
Additional Cash Spent | |||
Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 |
Principal Repayment of Current Borrowing | $2,830 | $2,170 | $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 | $166,164 | $608,961 | $1,077,173 |
Net Cash Flow | $45,136 | $205,155 | $344,687 |
Cash Balance | $59,236 | $264,391 | $609,079 |
Projected Balance Sheet
The balance sheet below and in the appendix show steady increase in net worth over the life of the plan.
Pro Forma Balance Sheet | |||
Year 1 | Year 2 | Year 3 | |
Assets | |||
Current Assets | |||
Cash | $59,236 | $264,391 | $609,079 |
Inventory | $1,480 | $19,672 | $14,136 |
Other Current Assets | $500 | $500 | $500 |
Total Current Assets | $61,216 | $284,563 | $623,715 |
Long-term Assets | |||
Long-term Assets | $0 | $0 | $0 |
Accumulated Depreciation | $0 | $0 | $0 |
Total Long-term Assets | $0 | $0 | $0 |
Total Assets | $61,216 | $284,563 | $623,715 |
Liabilities and Capital | Year 1 | Year 2 | Year 3 |
Current Liabilities | |||
Accounts Payable | $9,960 | $16,046 | $22,287 |
Current Borrowing | $2,170 | $0 | $0 |
Other Current Liabilities | $0 | $0 | $0 |
Subtotal Current Liabilities | $12,130 | $16,046 | $22,287 |
Long-term Liabilities | $0 | $0 | $0 |
Total Liabilities | $12,130 | $16,046 | $22,287 |
Paid-in Capital | $15,000 | $15,000 | $15,000 |
Retained Earnings | ($800) | $34,086 | $253,517 |
Earnings | $34,886 | $219,431 | $332,910 |
Total Capital | $49,086 | $268,517 | $601,427 |
Total Liabilities and Capital | $61,216 | $284,563 | $623,715 |
Net Worth | $49,086 | $268,517 | $601,427 |
Business Ratios
Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 7812, Motion Picture and Video Production, are shown for comparison.
Ratio Analysis | ||||
Year 1 | Year 2 | Year 3 | Industry Profile | |
Sales Growth | n.a. | 294.63% | 74.65% | 14.20% |
Percent of Total Assets | ||||
Inventory | 2.42% | 6.91% | 2.27% | 3.40% |
Other Current Assets | 0.82% | 0.18% | 0.08% | 46.90% |
Total Current Assets | 100.00% | 100.00% | 100.00% | 68.40% |
Long-term Assets | 0.00% | 0.00% | 0.00% | 31.60% |
Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
Current Liabilities | 19.82% | 5.64% | 3.57% | 41.60% |
Long-term Liabilities | 0.00% | 0.00% | 0.00% | 17.20% |
Total Liabilities | 19.82% | 5.64% | 3.57% | 58.80% |
Net Worth | 80.18% | 94.36% | 96.43% | 41.20% |
Percent of Sales | ||||
Sales | 100.00% | 100.00% | 100.00% | 100.00% |
Gross Margin | 80.54% | 75.52% | 68.74% | 0.00% |
Selling, General & Administrative Expenses | 63.71% | 46.92% | 43.99% | 74.80% |
Advertising Expenses | 9.69% | 2.46% | 2.11% | 1.60% |
Profit Before Interest and Taxes | 22.68% | 35.96% | 31.39% | 1.60% |
Main Ratios | ||||
Current | 5.05 | 17.73 | 27.98 | 1.67 |
Quick | 4.92 | 16.51 | 27.35 | 1.12 |
Total Debt to Total Assets | 19.82% | 5.64% | 3.57% | 58.80% |
Pre-tax Return on Net Worth | 94.48% | 108.96% | 74.22% | 1.80% |
Pre-tax Return on Assets | 75.76% | 102.82% | 71.56% | 4.50% |
Additional Ratios | Year 1 | Year 2 | Year 3 | |
Net Profit Margin | 16.91% | 26.95% | 23.41% | n.a |
Return on Equity | 71.07% | 81.72% | 55.35% | n.a |
Activity Ratios | ||||
Inventory Turnover | 7.63 | 3.10 | 3.52 | n.a |
Accounts Payable Turnover | 6.89 | 12.17 | 12.17 | n.a |
Payment Days | 27 | 24 | 26 | n.a |
Total Asset Turnover | 3.37 | 2.86 | 2.28 | n.a |
Debt Ratios | ||||
Debt to Net Worth | 0.25 | 0.06 | 0.04 | n.a |
Current Liab. to Liab. | 1.00 | 1.00 | 1.00 | n.a |
Liquidity Ratios | ||||
Net Working Capital | $49,086 | $268,517 | $601,427 | n.a |
Interest Coverage | 110.63 | 2,075.26 | 0.00 | n.a |
Additional Ratios | ||||
Assets to Sales | 0.30 | 0.35 | 0.44 | n.a |
Current Debt/Total Assets | 20% | 6% | 4% | n.a |
Acid Test | 4.92 | 16.51 | 27.35 | n.a |
Sales/Net Worth | 4.20 | 3.03 | 2.36 | n.a |
Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |