Financial Plan

Financial Plan
The following sections outline important financial information.

8.1 Important Assumptions
The following table details important financial assumptions.
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
30.00%
30.00%
30.00%
Other
0
0
0
8.2 Break-even Analysis
The Break-even Analysis indicates what will be needed in monthly revenue to reach the break-even point.

 
Break-even Analysis
Monthly Revenue Break-even
$16,826
Assumptions:
Average Percent Variable Cost
50%
Estimated Monthly Fixed Cost
$8,413
8.3 Projected Profit and Loss
The following table presents projected profit and loss.
 
 
 
Pro Forma Profit and Loss

Year 1
Year 2
Year 3
Sales
$117,882
$290,581
$334,145
Direct Cost of Sales
$58,941
$145,291
$167,072
Other Costs of Goods
$0
$0
$0
Total Cost of Sales
$58,941
$145,291
$167,072
Gross Margin
$58,941
$145,291
$167,072
Gross Margin %
50.00%
50.00%
50.00%
Expenses


Payroll
$68,400
$83,000
$87,000
Sales and Marketing and Other Expenses
$2,500
$3,000
$3,000
Depreciation
$996
$996
$996
Rent
$11,000
$12,000
$12,000
Utilities
$3,300
$3,600
$3,600
Insurance
$3,000
$3,600
$3,600
Payroll Taxes
$10,260
$12,450
$13,050
Other
$1,500
$1,800
$1,800
Total Operating Expenses
$100,956
$120,446
$125,046
Profit Before Interest and Taxes
($42,015)
$24,845
$42,026
EBITDA
($41,019)
$25,841
$43,022
Interest Expense
$6,045
$5,700
$5,120
Taxes Incurred
$0
$5,743
$11,072
Net Profit
($48,060)
$13,401
$25,834
Net Profit/Sales
-40.77%
4.61%
7.73%
8.4 Projected Cash Flow

The following chart and table display projected cash flow.
Pro Forma Cash Flow

Year 1
Year 2
Year 3
Cash Received


Cash from Operations


Cash Sales
$117,882
$290,581
$334,145
Subtotal Cash from Operations
$117,882
$290,581
$334,145
Additional Cash Received


Sales Tax, VAT, HST/GST Received
$0
$0
$0
New Current Borrowing
$0
$10,000
$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
$0
$0
$0
Subtotal Cash Received
$117,882
$300,581
$334,145
Expenditures
Year 1
Year 2
Year 3
Expenditures from Operations


Cash Spending
$68,400
$83,000
$87,000
Bill Payments
$80,550
$194,234
$218,664
Subtotal Spent on Operations
$148,950
$277,234
$305,664
Additional Cash Spent


Sales Tax, VAT, HST/GST Paid Out
$0
$0
$0
Principal Repayment of Current Borrowing
$0
$200
$2,400
Other Liabilities Principal Repayment
$0
$0
$0
Long-term Liabilities Principal Repayment
$8,400
$9,000
$10,000
Purchase Other Current Assets
$0
$0
$0
Purchase Long-term Assets
$0
$0
$0
Dividends
$0
$0
$0
Subtotal Cash Spent
$157,350
$286,434
$318,064
Net Cash Flow
($39,468)
$14,147
$16,081
Cash Balance
$16,932
$31,079
$47,160
8.5 Projected Balance Sheet
The following table shows the projected balance sheet.
Pro Forma Balance Sheet

Year 1
Year 2
Year 3
Assets


Current Assets


Cash
$16,932
$31,079
$47,160
Inventory
$2,702
$6,659
$7,658
Other Current Assets
$1,500
$1,500
$1,500
Total Current Assets
$21,133
$39,238
$56,317
Long-term Assets


Long-term Assets
$5,000
$5,000
$5,000
Accumulated Depreciation
$996
$1,992
$2,988
Total Long-term Assets
$4,004
$3,008
$2,012
Total Assets
$25,137
$42,246
$58,329
Liabilities and Capital
Year 1
Year 2
Year 3
Current Liabilities


Accounts Payable
$18,697
$21,605
$24,253
Current Borrowing
$0
$9,800
$7,400
Other Current Liabilities
$0
$0
$0
Subtotal Current Liabilities
$18,697
$31,405
$31,653
Long-term Liabilities
$56,600
$47,600
$37,600
Total Liabilities
$75,297
$79,005
$69,253
Paid-in Capital
$15,000
$15,000
$15,000
Retained Earnings
($17,100)
($65,160)
($51,759)
Earnings
($48,060)
$13,401
$25,834
Total Capital
($50,160)
($36,759)
($10,924)
Total Liabilities and Capital
$25,137
$42,246
$58,329
Net Worth
($50,160)
($36,759)
($10,924)

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