Solar Water Heater Distributor Business Plan

Sun Heat

Financial Plan

The following sections 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 what will be needed in monthly revenue to reach the break-even point.

Solar water heater distributor business plan, financial plan chart image

Break-even Analysis


Monthly Revenue Break-even	$29,872

Assumptions:
Average Percent Variable Cost	45%
Estimated Monthly Fixed Cost	$16,430

8.3 Projected Profit and Loss

The following table will indicate Projected Profit and Loss.

Pro Forma Profit and Loss
	Year 1	Year 2	Year 3
Sales	$240,309	$403,967	$523,389
Direct Cost of Sales	$108,139	$181,785	$235,525
Other Costs of Goods	$0	$0	$0
Total Cost of Sales	$108,139	$181,785	$235,525

Gross Margin	$132,170	$222,182	$287,864
Gross Margin %	55.00%	55.00%	55.00%


Expenses
Payroll	$118,400	$141,600	$151,600
Sales and Marketing and Other Expenses	$5,400	$5,400	$5,400
Depreciation	$12,396	$1,033	$1,033
Rent	$24,000	$25,000	$26,000
Utilities	$9,000	$750	$750
Insurance	$7,800	$7,800	$7,800
Payroll Taxes	$17,760	$21,240	$22,740
Other	$2,400	$2,400	$2,400

Total Operating Expenses	$197,156	$205,223	$217,723

Profit Before Interest and Taxes	($64,986)	$16,959	$70,141
EBITDA	($52,590)	$17,992	$71,174
Interest Expense	$0	$0	$0
Taxes Incurred	$0	$5,088	$21,042

Net Profit	($64,986)	$11,871	$49,099
Net Profit/Sales	-27.04%	2.94%	9.38%

8.4 Projected Cash Flow

The following chart and table will indicate Projected Cash Flow.

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

Cash from Operations
Cash Sales	$60,077	$100,992	$130,847
Cash from Receivables	$136,262	$273,031	$370,691
Subtotal Cash from Operations	$196,340	$374,022	$501,538

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	$196,340	$374,022	$501,538

Expenditures	Year 1	Year 2	Year 3

Expenditures from Operations
Cash Spending	$118,400	$141,600	$151,600
Bill Payments	$155,929	$247,529	$315,723
Subtotal Spent on Operations	$274,329	$389,129	$467,323

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	$274,329	$389,129	$467,323

Net Cash Flow	($77,989)	($15,107)	$34,215
Cash Balance	$16,011	$904	$35,119

8.5 Projected Balance Sheet

The following table will indicate the Projected Balance Sheet.

Pro Forma Balance Sheet
	Year 1	Year 2	Year 3
Assets

Current Assets
Cash	$16,011	$904	$35,119
Accounts Receivable	$43,969	$73,914	$95,765
Other Current Assets	$0	$0	$0
Total Current Assets	$59,980	$74,818	$130,883

Long-term Assets
Long-term Assets	$62,000	$62,000	$62,000
Accumulated Depreciation	$12,396	$13,429	$14,462
Total Long-term Assets	$49,604	$48,571	$47,538
Total Assets	$109,584	$123,389	$178,421

Liabilities and Capital	Year 1	Year 2	Year 3

Current Liabilities
Accounts Payable	$18,570	$20,504	$26,438
Current Borrowing	$0	$0	$0
Other Current Liabilities	$0	$0	$0
Subtotal Current Liabilities	$18,570	$20,504	$26,438

Long-term Liabilities	$0	$0	$0
Total Liabilities	$18,570	$20,504	$26,438

Paid-in Capital	$165,000	$165,000	$165,000
Retained Earnings	($9,000)	($73,986)	($62,115)
Earnings	($64,986)	$11,871	$49,099
Total Capital	$91,014	$102,885	$151,984
Total Liabilities and Capital	$109,584	$123,389	$178,421

Net Worth	$91,014	$102,885	$151,984

8.6 Business Ratios

The following table details important Business Ratios specific to Sun Heat as well as industry ratios for the Other Electric Power Generation industry, NAICS code 221119.

Ratio Analysis
	Year 1	Year 2	Year 3	Industry Profile
Sales Growth	0.00%	68.10%	29.56%	10.72%

Percent of Total Assets
Accounts Receivable	40.12%	59.90%	53.67%	10.41%
Other Current Assets	0.00%	0.00%	0.00%	40.72%
Total Current Assets	54.73%	60.64%	73.36%	51.79%
Long-term Assets	45.27%	39.36%	26.64%	48.21%
Total Assets	100.00%	100.00%	100.00%	100.00%

Current Liabilities	16.95%	16.62%	14.82%	12.65%
Long-term Liabilities	0.00%	0.00%	0.00%	40.12%
Total Liabilities	16.95%	16.62%	14.82%	52.77%
Net Worth	83.05%	83.38%	85.18%	47.23%

Percent of Sales
Sales	100.00%	100.00%	100.00%	100.00%
Gross Margin	55.00%	55.00%	55.00%	47.48%
Selling, General & Administrative Expenses	82.04%	52.06%	45.62%	13.69%
Advertising Expenses	0.00%	0.00%	0.00%	0.03%
Profit Before Interest and Taxes	-27.04%	4.20%	13.40%	9.26%

Main Ratios
Current	3.23	3.65	4.95	2.10
Quick	3.23	3.65	4.95	1.69
Total Debt to Total Assets	16.95%	16.62%	14.82%	60.03%
Pre-tax Return on Net Worth	-71.40%	16.48%	46.15%	7.72%
Pre-tax Return on Assets	-59.30%	13.74%	39.31%	19.31%

Additional Ratios	Year 1	Year 2	Year 3
Net Profit Margin	-27.04%	2.94%	9.38%	n.a
Return on Equity	-71.40%	11.54%	32.31%	n.a

Activity Ratios
Accounts Receivable Turnover	4.10	4.10	4.10	n.a
Collection Days	56	71	79	n.a
Accounts Payable Turnover	9.40	12.17	12.17	n.a
Payment Days	27	29	27	n.a
Total Asset Turnover	2.19	3.27	2.93	n.a

Debt Ratios
Debt to Net Worth	0.20	0.20	0.17	n.a
Current Liab. to Liab.	1.00	1.00	1.00	n.a

Liquidity Ratios
Net Working Capital	$41,410	$54,314	$104,446	n.a
Interest Coverage	0.00	0.00	0.00	n.a

Additional Ratios
Assets to Sales	0.46	0.31	0.34	n.a
Current Debt/Total Assets	17%	17%	15%	n.a
Acid Test	0.86	0.04	1.33	n.a
Sales/Net Worth	2.64	3.93	3.44	n.a
Dividend Payout	0.00	0.00	0.00	n.a