IWA Championship Wrestling
Financial Plan
Based on detailed financial projections from our Balance Sheet, if the company receives the sought after approximately $500,000 in funding, it will operate profitably..
7.1 Break-even Analysis
The following table and chart show our projected Break-even Analysis.
| Break-even Analysis | |
| Monthly Revenue Break-even | $281,711 |
| Assumptions: | |
| Average Percent Variable Cost | 23% |
| Estimated Monthly Fixed Cost | $216,650 |
7.2 Projected Profit and Loss
The table below contains the projected profit and loss information for IWA.
The IWA formula for success is based on consistent revenues generated from specific sponsorship packages and advertising revenues created by our television programming.
Within each weekly program there are 14 minutes of commercial advertising time broken down into either 60-second, 30-second, or 20-second spots. We are entitled to keep up to 10 minutes of that commercial time for re-sale.
Also, within the format of our television programming there are 5 basic “segments” plus an open and a close. It is our intent to find major sponsors to host at least 4 of these segments wherein each sponsor will contribute $250,000 annually to be the exclusive or “official” presentor of that segment of the show each week.
TV advertising revenue projections are based on the IWA selling 28 30-second spots per show, at a cost of $1,500, each adding up to $43,000 per show, or $504,000 in gross annual advertising sales. Less ad agency commissions (15%), this nets out to $428,000 in annual advertising revenue to the IWA.
Our pay-per-view income projections are based on our share (40%) of quarterly events with a 0.2% buy rate at $19.95 per household. This nets out to $3.8 million in annual pay-per-view revenues to the IWA.
Attendance revenue is modestly based on 1,500 tickets sold per month/event @ $10 each over the 12 shows per year. Site fees are based on a minimum of $20,000 per TV taping plus travel, rooms, and food. This nets out to $180,000 in annual gate attendance or site fees revenues to the IWA.
Merchandise projections at events are conservatively based on each of the 1,500 in attendance spending $1 each per show over the 12 shows per year. This nets out to $18,000 in annual live event merchandise revenues to the IWA.
Food and beverage revenues at live events ate based on each of the 1,500 in attendance spending $2 each per show over the 12 shows per year. This nets out to $ 36,000 in annual food and beverage revenues to the IWA.
All financial projects herein are conservative and within reason by industry standards.
| Pro Forma Profit and Loss | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | $5,538,000 | $14,398,800 | $35,277,060 |
| Direct Cost of Sales | $1,279,000 | $3,837,000 | $11,511,000 |
| Other | $0 | $0 | $0 |
| Total Cost of Sales | $1,279,000 | $3,837,000 | $11,511,000 |
| Gross Margin | $4,259,000 | $10,561,800 | $23,766,060 |
| Gross Margin % | 76.91% | 73.35% | 67.37% |
| Expenses | |||
| Payroll | $2,131,996 | $4,263,992 | $9,807,181 |
| Sales and Marketing and Other Expenses | $98,000 | $283,000 | $840,500 |
| Depreciation | $20,000 | $20,000 | $20,000 |
| Leased Equipment | $4,800 | $9,600 | $19,200 |
| Utilities | $4,800 | $9,600 | $19,200 |
| Insurance | $6,000 | $12,000 | $24,000 |
| Rent | $14,400 | $28,800 | $57,600 |
| Payroll Taxes | $319,799 | $639,599 | $1,471,077 |
| Other | $0 | $0 | $0 |
| Total Operating Expenses | $2,599,795 | $5,266,591 | $12,258,759 |
| Profit Before Interest and Taxes | $1,659,205 | $5,295,209 | $11,507,301 |
| EBITDA | $1,679,205 | $5,315,209 | $11,527,301 |
| Interest Expense | $30,313 | $21,156 | $13,997 |
| Taxes Incurred | $415,522 | $1,318,513 | $2,921,215 |
| Net Profit | $1,213,370 | $3,955,540 | $8,572,089 |
| Net Profit/Sales | 21.91% | 27.47% | 24.30% |
7.3 Projected Cash Flow
The following table and chart show our projected cash flow.
| Pro Forma Cash Flow | |||
| Year 1 | Year 2 | Year 3 | |
| Cash Received | |||
| Cash from Operations | |||
| Cash Sales | $1,384,500 | $3,599,700 | $8,819,265 |
| Cash from Receivables | $3,464,181 | $9,696,190 | $23,859,063 |
| Subtotal Cash from Operations | $4,848,681 | $13,295,890 | $32,678,328 |
| 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 | $172,000 | $0 | $0 |
| Subtotal Cash Received | $5,020,681 | $13,295,890 | $32,678,328 |
| Expenditures | Year 1 | Year 2 | Year 3 |
| Expenditures from Operations | |||
| Cash Spending | $2,131,996 | $4,263,992 | $9,807,181 |
| Bill Payments | $2,113,296 | $6,044,818 | $16,661,720 |
| Subtotal Spent on Operations | $4,245,292 | $10,308,810 | $26,468,901 |
| Additional Cash Spent | |||
| Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 |
| Principal Repayment of Current Borrowing | $72,000 | $0 | $0 |
| Other Liabilities Principal Repayment | $0 | $0 | $0 |
| Long-term Liabilities Principal Repayment | $60,589 | $61,589 | $81,589 |
| Purchase Other Current Assets | $0 | $0 | $0 |
| Purchase Long-term Assets | $1,000,000 | $2,000,000 | $2,000,000 |
| Dividends | $0 | $0 | $0 |
| Subtotal Cash Spent | $5,377,881 | $12,370,399 | $28,550,490 |
| Net Cash Flow | ($357,199) | $925,491 | $4,127,838 |
| Cash Balance | $92,801 | $1,018,292 | $5,146,130 |
7.4 Projected Balance Sheet
The Balance Sheet below contains important cash flow information, as well as assets, liabilities, and capital expectations.
| Pro Forma Balance Sheet | |||
| Year 1 | Year 2 | Year 3 | |
| Assets | |||
| Current Assets | |||
| Cash | $92,801 | $1,018,292 | $5,146,130 |
| Accounts Receivable | $689,319 | $1,792,229 | $4,390,960 |
| Inventory | $117,242 | $351,725 | $1,055,175 |
| Other Current Assets | $0 | $0 | $0 |
| Total Current Assets | $899,361 | $3,162,246 | $10,592,265 |
| Long-term Assets | |||
| Long-term Assets | $1,000,000 | $3,000,000 | $5,000,000 |
| Accumulated Depreciation | $20,000 | $40,000 | $60,000 |
| Total Long-term Assets | $980,000 | $2,960,000 | $4,940,000 |
| Total Assets | $1,879,361 | $6,122,246 | $15,532,265 |
| Liabilities and Capital | Year 1 | Year 2 | Year 3 |
| Current Liabilities | |||
| Accounts Payable | $176,580 | $525,514 | $1,445,033 |
| Current Borrowing | $0 | $0 | $0 |
| Other Current Liabilities | $0 | $0 | $0 |
| Subtotal Current Liabilities | $176,580 | $525,514 | $1,445,033 |
| Long-term Liabilities | $242,356 | $180,767 | $99,178 |
| Total Liabilities | $418,936 | $706,281 | $1,544,211 |
| Paid-in Capital | $329,505 | $329,505 | $329,505 |
| Retained Earnings | ($82,450) | $1,130,920 | $5,086,460 |
| Earnings | $1,213,370 | $3,955,540 | $8,572,089 |
| Total Capital | $1,460,425 | $5,415,965 | $13,988,054 |
| Total Liabilities and Capital | $1,879,361 | $6,122,246 | $15,532,265 |
| Net Worth | $1,460,425 | $5,415,965 | $13,988,054 |
7.5 Business Ratios
The following table contains information from the entertainment industry, as determined by the Standard Industry Classification (SIC) Index code 7999, Amusement and Recreation, Not Elsewhere Classified.
| Ratio Analysis | ||||
| Year 1 | Year 2 | Year 3 | Industry Profile | |
| Sales Growth | 0.00% | 160.00% | 145.00% | 15.20% |
| Percent of Total Assets | ||||
| Accounts Receivable | 36.68% | 29.27% | 28.27% | 5.00% |
| Inventory | 6.24% | 5.75% | 6.79% | 3.50% |
| Other Current Assets | 0.00% | 0.00% | 0.00% | 34.40% |
| Total Current Assets | 47.85% | 51.65% | 68.20% | 42.90% |
| Long-term Assets | 52.15% | 48.35% | 31.80% | 57.10% |
| Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
| Current Liabilities | 9.40% | 8.58% | 9.30% | 36.40% |
| Long-term Liabilities | 12.90% | 2.95% | 0.64% | 23.30% |
| Total Liabilities | 22.29% | 11.54% | 9.94% | 59.70% |
| Net Worth | 77.71% | 88.46% | 90.06% | 40.30% |
| Percent of Sales | ||||
| Sales | 100.00% | 100.00% | 100.00% | 100.00% |
| Gross Margin | 76.91% | 73.35% | 67.37% | 0.00% |
| Selling, General & Administrative Expenses | 54.85% | 45.88% | 42.93% | 76.60% |
| Advertising Expenses | 0.22% | 0.29% | 0.42% | 2.60% |
| Profit Before Interest and Taxes | 29.96% | 36.78% | 32.62% | 2.00% |
| Main Ratios | ||||
| Current | 5.09 | 6.02 | 7.33 | 1.17 |
| Quick | 4.43 | 5.35 | 6.60 | 0.75 |
| Total Debt to Total Assets | 22.29% | 11.54% | 9.94% | 59.70% |
| Pre-tax Return on Net Worth | 111.54% | 97.38% | 82.17% | 2.40% |
| Pre-tax Return on Assets | 86.67% | 86.15% | 74.00% | 6.00% |
| Additional Ratios | Year 1 | Year 2 | Year 3 | |
| Net Profit Margin | 21.91% | 27.47% | 24.30% | n.a |
| Return on Equity | 83.08% | 73.03% | 61.28% | n.a |
| Activity Ratios | ||||
| Accounts Receivable Turnover | 6.03 | 6.03 | 6.03 | n.a |
| Collection Days | 57 | 42 | 43 | n.a |
| Inventory Turnover | 10.91 | 16.36 | 16.36 | n.a |
| Accounts Payable Turnover | 12.97 | 12.17 | 12.17 | n.a |
| Payment Days | 27 | 20 | 20 | n.a |
| Total Asset Turnover | 2.95 | 2.35 | 2.27 | n.a |
| Debt Ratios | ||||
| Debt to Net Worth | 0.29 | 0.13 | 0.11 | n.a |
| Current Liab. to Liab. | 0.42 | 0.74 | 0.94 | n.a |
| Liquidity Ratios | ||||
| Net Working Capital | $722,781 | $2,636,732 | $9,147,232 | n.a |
| Interest Coverage | 54.74 | 250.29 | 822.11 | n.a |
| Additional Ratios | ||||
| Assets to Sales | 0.34 | 0.43 | 0.44 | n.a |
| Current Debt/Total Assets | 9% | 9% | 9% | n.a |
| Acid Test | 0.53 | 1.94 | 3.56 | n.a |
| Sales/Net Worth | 3.79 | 2.66 | 2.52 | n.a |
| Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |
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