Law Firm Business Plan

Wy'East Law Firm

Financial Plan

The following sections will outline important financial information.

7.1 Important Assumptions

The following table details important 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	25.42%	25.00%	25.42%
Other	0	0	0

7.2 Projected Profit and Loss

The following table and charts present the projected profit and loss.

Law firm business plan, financial plan chart image

Pro Forma Profit and Loss
	Year 1	Year 2	Year 3
Sales	$190,935	$212,103	$220,294
Direct Cost of Sales	$0	$0	$0
Other	$0	$0	$0
Total Cost of Sales	$0	$0	$0

Gross Margin	$190,935	$212,103	$220,294
Gross Margin %	100.00%	100.00%	100.00%


Expenses
Payroll	$112,150	$123,500	$127,500
Sales and Marketing and Other Expenses	$2,160	$2,160	$2,160
Depreciation	$1,668	$1,666	$1,666
Leased Equipment	$0	$0	$0
Utilities	$1,500	$1,500	$1,500
Rent	$2,400	$2,400	$2,400
Payroll Taxes	$16,823	$18,525	$19,125
Other	$0	$0	$0

Total Operating Expenses	$136,701	$149,751	$154,351

Profit Before Interest and Taxes	$54,235	$62,352	$65,943
EBITDA	$55,903	$64,018	$67,609
Interest Expense	$0	$0	$0
Taxes Incurred	$13,210	$15,588	$16,761

Net Profit	$41,024	$46,764	$49,182
Net Profit/Sales	21.49%	22.05%	22.33%

7.3 Break-even Analysis

The Break-even Analysis indicates what WLF will need in hours and revenue a month to reach the break-even point.

Break-even Analysis


Monthly Revenue Break-even	$11,392

Assumptions:
Average Percent Variable Cost	0%
Estimated Monthly Fixed Cost	$11,392

7.4 Projected Cash Flow

The following chart and table show anticipated cash flow.

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

Cash from Operations
Cash Sales	$47,734	$53,026	$55,074
Cash from Receivables	$112,707	$155,697	$163,912
Subtotal Cash from Operations	$160,441	$208,722	$218,986

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	$0	$0	$0
Subtotal Cash Received	$160,441	$208,722	$218,986

Expenditures	Year 1	Year 2	Year 3

Expenditures from Operations
Cash Spending	$112,150	$123,500	$127,500
Bill Payments	$31,394	$41,570	$41,800
Subtotal Spent on Operations	$143,544	$165,070	$169,300

Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out	$0	$0	$0
Principal Repayment of Current Borrowing	$0	$0	$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	$143,544	$165,070	$169,300

Net Cash Flow	$16,898	$43,652	$49,686
Cash Balance	$35,648	$79,300	$128,986

7.5 Projected Balance Sheet

The following table displays the projected balance sheet.

Pro Forma Balance Sheet
	Year 1	Year 2	Year 3
Assets

Current Assets
Cash	$35,648	$79,300	$128,986
Accounts Receivable	$30,494	$33,874	$35,183
Other Current Assets	$0	$0	$0
Total Current Assets	$66,141	$113,174	$164,168

Long-term Assets
Long-term Assets	$5,000	$5,000	$5,000
Accumulated Depreciation	$1,668	$3,334	$5,000
Total Long-term Assets	$3,332	$1,666	$0
Total Assets	$69,473	$114,840	$164,168

Liabilities and Capital	Year 1	Year 2	Year 3

Current Liabilities
Accounts Payable	$4,699	$3,302	$3,448
Current Borrowing	$0	$0	$0
Other Current Liabilities	$0	$0	$0
Subtotal Current Liabilities	$4,699	$3,302	$3,448

Long-term Liabilities	$0	$0	$0
Total Liabilities	$4,699	$3,302	$3,448

Paid-in Capital	$25,000	$25,000	$25,000
Retained Earnings	($1,250)	$39,774	$86,538
Earnings	$41,024	$46,764	$49,182
Total Capital	$64,774	$111,538	$160,721
Total Liabilities and Capital	$69,473	$114,840	$164,168

Net Worth	$64,774	$111,538	$160,721

7.6 Business Ratios

Industry profile ratios based on the NAICS code 541110, Offices of Lawyers, are shown in the table below.

Ratio Analysis
	Year 1	Year 2	Year 3	Industry Profile
Sales Growth	0.00%	11.09%	3.86%	8.50%

Percent of Total Assets
Accounts Receivable	43.89%	29.50%	21.43%	8.60%
Other Current Assets	0.00%	0.00%	0.00%	66.90%
Total Current Assets	95.20%	98.55%	100.00%	75.50%
Long-term Assets	4.80%	1.45%	0.00%	24.50%
Total Assets	100.00%	100.00%	100.00%	100.00%

Current Liabilities	6.76%	2.88%	2.10%	50.20%
Long-term Liabilities	0.00%	0.00%	0.00%	12.90%
Total Liabilities	6.76%	2.88%	2.10%	63.10%
Net Worth	93.24%	97.12%	97.90%	36.90%

Percent of Sales
Sales	100.00%	100.00%	100.00%	100.00%
Gross Margin	100.00%	100.00%	100.00%	0.00%
Selling, General & Administrative Expenses	78.70%	77.95%	77.55%	58.20%
Advertising Expenses	0.13%	0.11%	0.11%	0.50%
Profit Before Interest and Taxes	28.40%	29.40%	29.93%	3.40%

Main Ratios
Current	14.08	34.28	47.62	1.54
Quick	14.08	34.28	47.62	1.09
Total Debt to Total Assets	6.76%	2.88%	2.10%	63.10%
Pre-tax Return on Net Worth	83.73%	55.90%	41.03%	12.30%
Pre-tax Return on Assets	78.07%	54.29%	40.17%	33.40%

Additional Ratios	Year 1	Year 2	Year 3
Net Profit Margin	21.49%	22.05%	22.33%	n.a
Return on Equity	63.33%	41.93%	30.60%	n.a

Activity Ratios
Accounts Receivable Turnover	4.70	4.70	4.70	n.a
Collection Days	57	74	76	n.a
Accounts Payable Turnover	7.68	12.17	12.17	n.a
Payment Days	34	36	29	n.a
Total Asset Turnover	2.75	1.85	1.34	n.a

Debt Ratios
Debt to Net Worth	0.07	0.03	0.02	n.a
Current Liab. to Liab.	1.00	1.00	1.00	n.a

Liquidity Ratios
Net Working Capital	$61,442	$109,872	$160,721	n.a
Interest Coverage	0.00	0.00	0.00	n.a

Additional Ratios
Assets to Sales	0.36	0.54	0.75	n.a
Current Debt/Total Assets	7%	3%	2%	n.a
Acid Test	7.59	24.02	37.41	n.a
Sales/Net Worth	2.95	1.90	1.37	n.a
Dividend Payout	0.00	0.00	0.00	n.a