BikeArt
Financial Plan
The following sections will outline the important financial assumptions, key financial indicators, Break-even Analysis, profit and loss, cash flow, and balance sheet.
7.1 Important Assumptions
The following table highlights some of the important financial assumptions for BikeArt.
| 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 Break-even Analysis
The Break-even Analysis indicates $15,212 is needed in monthly revenue to reach the break-even point.
| Break-even Analysis | |
| Monthly Revenue Break-even | $15,212 |
| Assumptions: | |
| Average Percent Variable Cost | 50% |
| Estimated Monthly Fixed Cost | $7,606 |
7.3 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 | $145,760 | $294,220 | $316,332 |
| Direct Cost of Sales | $72,880 | $147,110 | $158,166 |
| Other | $0 | $0 | $0 |
| Total Cost of Sales | $72,880 | $147,110 | $158,166 |
| Gross Margin | $72,880 | $147,110 | $158,166 |
| Gross Margin % | 50.00% | 50.00% | 50.00% |
| Expenses | |||
| Payroll | $66,300 | $72,400 | $76,400 |
| Sales and Marketing and Other Expenses | $0 | $0 | $0 |
| Depreciation | $624 | $624 | $624 |
| Leased Equipment | $0 | $0 | $0 |
| Utilities | $1,200 | $1,200 | $1,200 |
| Insurance | $1,200 | $1,200 | $1,200 |
| Rent | $12,000 | $12,000 | $12,000 |
| Payroll Taxes | $9,945 | $10,860 | $11,460 |
| Other | $0 | $0 | $0 |
| Total Operating Expenses | $91,269 | $98,284 | $102,884 |
| Profit Before Interest and Taxes | ($18,389) | $48,826 | $55,282 |
| EBITDA | ($17,765) | $49,450 | $55,906 |
| Interest Expense | $1,745 | $1,258 | $703 |
| Taxes Incurred | $0 | $11,892 | $13,872 |
| Net Profit | ($20,134) | $35,676 | $40,706 |
| Net Profit/Sales | -13.81% | 12.13% | 12.87% |
7.4 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 | $145,760 | $294,220 | $316,332 |
| Subtotal Cash from Operations | $145,760 | $294,220 | $316,332 |
| 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 | $145,760 | $294,220 | $316,332 |
| Expenditures | Year 1 | Year 2 | Year 3 |
| Expenditures from Operations | |||
| Cash Spending | $66,300 | $72,400 | $76,400 |
| Bill Payments | $97,938 | $194,917 | $200,247 |
| Subtotal Spent on Operations | $164,238 | $267,317 | $276,647 |
| 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 | $4,783 | $5,270 | $5,825 |
| Purchase Other Current Assets | $0 | $0 | $0 |
| Purchase Long-term Assets | $0 | $0 | $0 |
| Dividends | $0 | $0 | $0 |
| Subtotal Cash Spent | $169,021 | $272,586 | $282,472 |
| Net Cash Flow | ($23,261) | $21,634 | $33,860 |
| Cash Balance | $18,339 | $39,973 | $73,833 |
7.5 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 | $18,339 | $39,973 | $73,833 |
| Inventory | $12,204 | $24,634 | $26,485 |
| Other Current Assets | $0 | $0 | $0 |
| Total Current Assets | $30,543 | $64,607 | $100,319 |
| Long-term Assets | |||
| Long-term Assets | $3,100 | $3,100 | $3,100 |
| Accumulated Depreciation | $624 | $1,248 | $1,872 |
| Total Long-term Assets | $2,476 | $1,852 | $1,228 |
| Total Assets | $33,019 | $66,459 | $101,547 |
| Liabilities and Capital | Year 1 | Year 2 | Year 3 |
| Current Liabilities | |||
| Accounts Payable | $13,236 | $16,270 | $16,476 |
| Current Borrowing | $0 | $0 | $0 |
| Other Current Liabilities | $0 | $0 | $0 |
| Subtotal Current Liabilities | $13,236 | $16,270 | $16,476 |
| Long-term Liabilities | $15,217 | $9,947 | $4,123 |
| Total Liabilities | $28,453 | $26,217 | $20,598 |
| Paid-in Capital | $25,000 | $25,000 | $25,000 |
| Retained Earnings | ($300) | ($20,434) | $15,242 |
| Earnings | ($20,134) | $35,676 | $40,706 |
| Total Capital | $4,566 | $40,242 | $80,948 |
| Total Liabilities and Capital | $33,019 | $66,459 | $101,547 |
| Net Worth | $4,566 | $40,242 | $80,948 |
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