Wholesale Landscape Products Business Plan

Glen Mar Forest Products

Financial Plan

The following is the financial plan for Glen Mar Forest Products.

7.1 Break-even Analysis

The monthly break-even point is calculated and displayed in the following table and chart.

Wholesale landscape products business plan, financial plan chart image

Break-even Analysis


Monthly Revenue Break-even	$25,743

Assumptions:
Average Percent Variable Cost	31%
Estimated Monthly Fixed Cost	$17,700

7.2 Projected Profit and Loss

The following table and chart will highlight projected profit and loss for the next three years.

Pro Forma Profit and Loss
	Year 1	Year 2	Year 3
Sales	$333,500	$420,000	$510,000
Direct Cost of Sales	$104,200	$133,000	$154,000
Other Production Expenses	$0	$0	$0
Total Cost of Sales	$104,200	$133,000	$154,000

Gross Margin	$229,300	$287,000	$356,000
Gross Margin %	68.76%	68.33%	69.80%


Expenses
Payroll	$124,800	$140,000	$166,000
Sales and Marketing and Other Expenses	$18,000	$36,000	$46,000
Depreciation	$2,880	$2,880	$2,880
Leased Equipment	$0	$0	$0
Utilities	$6,000	$6,000	$6,000
Insurance	$6,000	$6,000	$6,000
Rent	$36,000	$36,000	$36,000
Payroll Taxes	$18,720	$21,000	$24,900
Other	$0	$0	$0

Total Operating Expenses	$212,400	$247,880	$287,780

Profit Before Interest and Taxes	$16,900	$39,120	$68,220
EBITDA	$19,780	$42,000	$71,100
Interest Expense	$9,480	$8,760	$7,940
Taxes Incurred	$2,226	$9,108	$18,084

Net Profit	$5,194	$21,252	$42,196
Net Profit/Sales	1.56%	5.06%	8.27%

7.3 Projected Cash Flow

The following table and chart highlight the projected cash flow for three years.

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

Cash from Operations
Cash Sales	$100,050	$126,000	$153,000
Cash from Receivables	$181,790	$280,601	$343,059
Subtotal Cash from Operations	$281,840	$406,601	$496,059

Additional Cash Received
Sales Tax, VAT, HST/GST Received	$0	$0	$0
New Current Borrowing	$0	$4,000	$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	$10,000	$0	$0
Subtotal Cash Received	$291,840	$410,601	$496,059

Expenditures	Year 1	Year 2	Year 3

Expenditures from Operations
Cash Spending	$124,800	$140,000	$166,000
Bill Payments	$170,595	$264,865	$298,698
Subtotal Spent on Operations	$295,395	$404,865	$464,698

Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out	$0	$0	$0
Principal Repayment of Current Borrowing	$0	$0	$1,200
Other Liabilities Principal Repayment	$0	$0	$0
Long-term Liabilities Principal Repayment	$9,600	$9,600	$9,600
Purchase Other Current Assets	$0	$0	$0
Purchase Long-term Assets	$0	$0	$0
Dividends	$0	$0	$0
Subtotal Cash Spent	$304,995	$414,465	$475,498

Net Cash Flow	($13,155)	($3,864)	$20,561
Cash Balance	$9,045	$5,181	$25,742

7.4 Projected Balance Sheet

The following table highlights the projected balance sheet for three years.

Pro Forma Balance Sheet
	Year 1	Year 2	Year 3
Assets

Current Assets
Cash	$9,045	$5,181	$25,742
Accounts Receivable	$51,660	$65,059	$79,000
Inventory	$15,950	$20,358	$23,573
Other Current Assets	$0	$0	$0
Total Current Assets	$76,655	$90,599	$128,315

Long-term Assets
Long-term Assets	$50,000	$50,000	$50,000
Accumulated Depreciation	$2,880	$5,760	$8,640
Total Long-term Assets	$47,120	$44,240	$41,360
Total Assets	$123,775	$134,839	$169,675

Liabilities and Capital	Year 1	Year 2	Year 3

Current Liabilities
Accounts Payable	$25,981	$21,393	$24,833
Current Borrowing	$0	$4,000	$2,800
Other Current Liabilities	$0	$0	$0
Subtotal Current Liabilities	$25,981	$25,393	$27,633

Long-term Liabilities	$90,400	$80,800	$71,200
Total Liabilities	$116,381	$106,193	$98,833

Paid-in Capital	$110,000	$110,000	$110,000
Retained Earnings	($107,800)	($102,606)	($81,354)
Earnings	$5,194	$21,252	$42,196
Total Capital	$7,394	$28,646	$70,842
Total Liabilities and Capital	$123,775	$134,839	$169,675

Net Worth	$7,394	$28,646	$70,842

7.5 Business Ratios

Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 2493, Reconstituted Wood Products, are shown for comparison.

Ratio Analysis
	Year 1	Year 2	Year 3	Industry Profile
Sales Growth	0.00%	25.94%	21.43%	8.10%

Percent of Total Assets
Accounts Receivable	41.74%	48.25%	46.56%	22.10%
Inventory	12.89%	15.10%	13.89%	16.70%
Other Current Assets	0.00%	0.00%	0.00%	27.00%
Total Current Assets	61.93%	67.19%	75.62%	65.80%
Long-term Assets	38.07%	32.81%	24.38%	34.20%
Total Assets	100.00%	100.00%	100.00%	100.00%

Current Liabilities	20.99%	18.83%	16.29%	36.60%
Long-term Liabilities	73.04%	59.92%	41.96%	15.70%
Total Liabilities	94.03%	78.76%	58.25%	52.30%
Net Worth	5.97%	21.24%	41.75%	47.70%

Percent of Sales
Sales	100.00%	100.00%	100.00%	100.00%
Gross Margin	68.76%	68.33%	69.80%	31.60%
Selling, General & Administrative Expenses	67.15%	63.13%	61.33%	18.10%
Advertising Expenses	3.60%	7.14%	7.84%	0.50%
Profit Before Interest and Taxes	5.07%	9.31%	13.38%	2.00%

Main Ratios
Current	2.95	3.57	4.64	1.61
Quick	2.34	2.77	3.79	0.98
Total Debt to Total Assets	94.03%	78.76%	58.25%	52.30%
Pre-tax Return on Net Worth	100.35%	105.98%	85.09%	4.20%
Pre-tax Return on Assets	5.99%	22.52%	35.53%	8.90%

Additional Ratios	Year 1	Year 2	Year 3
Net Profit Margin	1.56%	5.06%	8.27%	n.a
Return on Equity	70.25%	74.19%	59.56%	n.a

Activity Ratios
Accounts Receivable Turnover	4.52	4.52	4.52	n.a
Collection Days	56	72	74	n.a
Inventory Turnover	9.68	7.33	7.01	n.a
Accounts Payable Turnover	7.57	12.17	12.17	n.a
Payment Days	27	33	28	n.a
Total Asset Turnover	2.69	3.11	3.01	n.a

Debt Ratios
Debt to Net Worth	15.74	3.71	1.40	n.a
Current Liab. to Liab.	0.22	0.24	0.28	n.a

Liquidity Ratios
Net Working Capital	$50,674	$65,206	$100,682	n.a
Interest Coverage	1.78	4.47	8.59	n.a

Additional Ratios
Assets to Sales	0.37	0.32	0.33	n.a
Current Debt/Total Assets	21%	19%	16%	n.a
Acid Test	0.35	0.20	0.93	n.a
Sales/Net Worth	45.10	14.66	7.20	n.a
Dividend Payout	0.00	0.00	0.00	n.a