Earthly Clean
Financial Plan
The following section will 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 that approximately $3,500 is needed in monthly revenue to reach the break-even point.
| Break-even Analysis | |
| Monthly Revenue Break-even | $3,542 |
| Assumptions: | |
| Average Percent Variable Cost | 30% |
| Estimated Monthly Fixed Cost | $2,480 |
8.3 Projected Profit and Loss
The following table and charts illustrate the Projected Profit and Loss.
| Pro Forma Profit and Loss | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | $19,911 | $38,826 | $71,827 |
| Direct Cost of Sales | $5,973 | $11,648 | $21,548 |
| Other Costs of Goods | $0 | $0 | $0 |
| Total Cost of Sales | $5,973 | $11,648 | $21,548 |
| Gross Margin | $13,937 | $27,178 | $50,279 |
| Gross Margin % | 70.00% | 70.00% | 70.00% |
| Expenses | |||
| Payroll | $20,000 | $24,000 | $24,000 |
| Sales and Marketing and Other Expenses | $2,400 | $0 | $0 |
| Depreciation | $996 | $996 | $996 |
| Rent | $1,800 | $1,800 | $1,800 |
| Utilities | $660 | $660 | $660 |
| Insurance | $900 | $900 | $900 |
| Payroll Taxes | $3,000 | $3,600 | $3,600 |
| Total Operating Expenses | $29,756 | $31,956 | $31,956 |
| Profit Before Interest and Taxes | ($15,819) | ($4,778) | $18,323 |
| EBITDA | ($14,823) | ($3,782) | $19,319 |
| Interest Expense | $1,903 | $1,730 | $1,550 |
| Taxes Incurred | $0 | $0 | $5,032 |
| Net Profit | ($17,721) | ($6,508) | $11,741 |
| Net Profit/Sales | -89.00% | -16.76% | 16.35% |
8.4 Projected Cash Flow
The following table and chart presents the Projected Cash Flow.
| Pro Forma Cash Flow | |||
| Year 1 | Year 2 | Year 3 | |
| Cash Received | |||
| Cash from Operations | |||
| Cash Sales | $4,978 | $9,706 | $17,957 |
| Cash from Receivables | $9,199 | $23,672 | $44,367 |
| Subtotal Cash from Operations | $14,177 | $33,379 | $62,324 |
| 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 | $14,177 | $33,379 | $62,324 |
| Expenditures | Year 1 | Year 2 | Year 3 |
| Expenditures from Operations | |||
| Cash Spending | $20,000 | $24,000 | $24,000 |
| Bill Payments | $14,499 | $20,803 | $33,878 |
| Subtotal Spent on Operations | $34,499 | $44,803 | $57,878 |
| 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 | $1,800 | $1,800 | $1,800 |
| Purchase Other Current Assets | $0 | $0 | $0 |
| Purchase Long-term Assets | $0 | $0 | $0 |
| Dividends | $0 | $0 | $0 |
| Subtotal Cash Spent | $36,299 | $46,603 | $59,678 |
| Net Cash Flow | ($22,122) | ($13,225) | $2,646 |
| Cash Balance | $13,738 | $514 | $3,160 |
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 | $13,738 | $514 | $3,160 |
| Accounts Receivable | $5,734 | $11,181 | $20,685 |
| Other Current Assets | $0 | $0 | $0 |
| Total Current Assets | $19,472 | $11,694 | $23,844 |
| 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 | $23,476 | $14,702 | $25,856 |
| Liabilities and Capital | Year 1 | Year 2 | Year 3 |
| Current Liabilities | |||
| Accounts Payable | $2,137 | $1,672 | $2,884 |
| Current Borrowing | $0 | $0 | $0 |
| Other Current Liabilities | $0 | $0 | $0 |
| Subtotal Current Liabilities | $2,137 | $1,672 | $2,884 |
| Long-term Liabilities | $18,200 | $16,400 | $14,600 |
| Total Liabilities | $20,337 | $18,072 | $17,484 |
| Paid-in Capital | $30,000 | $30,000 | $30,000 |
| Retained Earnings | ($9,140) | ($26,861) | ($33,369) |
| Earnings | ($17,721) | ($6,508) | $11,741 |
| Total Capital | $3,139 | ($3,369) | $8,372 |
| Total Liabilities and Capital | $23,476 | $14,702 | $25,856 |
| Net Worth | $3,139 | ($3,369) | $8,372 |
8.6 Business Ratios
The following table details specific Business Ratios for Earthly Clean. While Earthly Clean sells cleaning products, the organizational structure of multi-level merchandising falls within the Standard Industrial Classification code system under Nonstore Retailers – Direct Selling Establishments. We most closely match SIC industry class: Party-plan merchandising – 5963.9907
| Ratio Analysis | ||||
| Year 1 | Year 2 | Year 3 | Industry Profile | |
| Sales Growth | 0.00% | 95.00% | 85.00% | 2.88% |
| Percent of Total Assets | ||||
| Accounts Receivable | 24.42% | 76.05% | 80.00% | 18.38% |
| Other Current Assets | 0.00% | 0.00% | 0.00% | 22.11% |
| Total Current Assets | 82.94% | 79.54% | 92.22% | 78.80% |
| Long-term Assets | 17.06% | 20.46% | 7.78% | 21.20% |
| Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
| Current Liabilities | 9.10% | 11.37% | 11.15% | 34.69% |
| Long-term Liabilities | 77.53% | 111.55% | 56.47% | 13.42% |
| Total Liabilities | 86.63% | 122.92% | 67.62% | 48.11% |
| Net Worth | 13.37% | -22.92% | 32.38% | 51.89% |
| Percent of Sales | ||||
| Sales | 100.00% | 100.00% | 100.00% | 100.00% |
| Gross Margin | 70.00% | 70.00% | 70.00% | 38.83% |
| Selling, General & Administrative Expenses | 158.62% | 38.79% | 30.20% | 25.49% |
| Advertising Expenses | 0.00% | 0.00% | 0.00% | 1.97% |
| Profit Before Interest and Taxes | -79.45% | -12.31% | 25.51% | 2.02% |
| Main Ratios | ||||
| Current | 9.11 | 7.00 | 8.27 | 2.01 |
| Quick | 9.11 | 7.00 | 8.27 | 0.79 |
| Total Debt to Total Assets | 86.63% | 122.92% | 67.62% | 55.49% |
| Pre-tax Return on Net Worth | -564.56% | 193.17% | 200.35% | 3.89% |
| Pre-tax Return on Assets | -75.49% | -44.26% | 64.87% | 8.75% |
| Additional Ratios | Year 1 | Year 2 | Year 3 | |
| Net Profit Margin | -89.00% | -16.76% | 16.35% | n.a |
| Return on Equity | -564.56% | 0.00% | 140.24% | n.a |
| Activity Ratios | ||||
| Accounts Receivable Turnover | 2.60 | 2.60 | 2.60 | n.a |
| Collection Days | 54 | 106 | 108 | n.a |
| Accounts Payable Turnover | 7.78 | 12.17 | 12.17 | n.a |
| Payment Days | 27 | 34 | 24 | n.a |
| Total Asset Turnover | 0.85 | 2.64 | 2.78 | n.a |
| Debt Ratios | ||||
| Debt to Net Worth | 6.48 | 0.00 | 2.09 | n.a |
| Current Liab. to Liab. | 0.11 | 0.09 | 0.16 | n.a |
| Liquidity Ratios | ||||
| Net Working Capital | $17,335 | $10,023 | $20,960 | n.a |
| Interest Coverage | -8.31 | -2.76 | 11.82 | n.a |
| Additional Ratios | ||||
| Assets to Sales | 1.18 | 0.38 | 0.36 | n.a |
| Current Debt/Total Assets | 9% | 11% | 11% | n.a |
| Acid Test | 6.43 | 0.31 | 1.10 | n.a |
| Sales/Net Worth | 6.34 | 0.00 | 8.58 | n.a |
| Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |
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