Nursery
BUSINESS PLAN WONDERLAND NURSERY
416 S. Turner Street
Spokane, Washington 99204
This plan outlines how this business will provide Spokane with a specialty nursery and garden center that is stylish, respected, and consistent, and which is intelligently staffed with caring and well-informed employees. An unusual feature of this nursery is its café. This plan was provided by Ameriwest Business Consultants, Inc.
- EXECUTIVE SUMMARY
- OBJECTIVES & GOALS, AND STRATEGIES FOR ACHIEVING THEM
- BUSINESS DESCRIPTION, STATUS, & OUTLOOK
- MANAGEMENT & OWNERSHIP
- THE SERVICE (AN UNFILLED NEED) & UNIQUENESS OF SERVICE
- MARKET ANALYSIS
- MARKETING STRATEGIES
- FINANCIAL PLANS
EXECUTIVE SUMMARY
BUSINESS DESCRIPTION
The purpose of Wonderland Nursery is to provide Spokane with a nursery and garden center that is stylish, respected, and consistent, and which is intelligently staffed with caring and well-informed employees. The atmosphere is friendly and open. The nursery displays a new attitude. It treats customers like first-class citizens and tries to make them feel like they are at home. On the premises will also be a café to help our customers extend and enhance their visit to our premises. We offer a variety of related items such as pottery, specialty decorations, etc. The facility has a first-rate greenhouse. The services are offered at a competitive price and pricing will be reviewed periodically.
The nursery is normally open Monday, Tuesday, Wednesday, Thursday, Friday, and Saturday, from 9:00 A.M. through 5:00 P.M., and 10:00 A.M. to 4:00 P.M. on Sunday. The café hours are 9:00 A.M. to 5:00 P.M., Monday through Wednesday, 9:00 A.M. through 8:00 P.M. on Thursday through Saturday, and from 10:00 A.M. to 4:00 P.M. on Sunday.
CURRENT POSITION AND FUTURE OUTLOOK
The business is in a restructure mode. It is currently past due on its mortgage payment. Plans call for infusion of new investment in the amount of approximately $275,000 and a new loan of $800,000. Operations are conducted on a 5-acre site, located at 416 S. Turner Street, Spokane, Washington. On the average we serve from 10,000 to 12,000 customers per year. With new funding we plan to increase this amount by at least 15% per year in the future. This is a conservative estimate considering the past year saw a 25% increase in sales. To attain these goals we will use a combination of media advertising, flyers, and word-of mouth. Upon securing the new funding, the future appears very bright. The customers are there, the experience and ability are there, and with a restructure of the organization we are convinced the profit would be there. The café will only get better in its second full year of operation.
MANAGEMENT AND OWNERSHIP
The company is set up as a corporation with Susan Smyth and her husband Robert owning 100% of all outstanding stock. Susan serves as president, chief executive officer, and manager. She provides the leadership to run this company. She has over 5 years of experience as owner and operator of a nursery. Her retail sales background will continue to provide the guiding light for the operation. Susan oversees the entire operation and concentrates on advertising, legal matters, banking, insurance, purchasing, equipment purchases, public relations, and labor. Robert Smyth serves as treasurer and handles all maintenance and development. Helen Brown, office manager, handles sales, display, and backs up Susan in banking, purchasing, and planning. The business employs up to ten additional employees. These employees will be involved in cooking in the café, waiting on tables, and working as laborers. They will be a combination of part-time and full-time. When volume picks up, additional part-time or full-time employees will be hired as the workload requires. Ameriwest Business Consultants, Inc. will provide help in additional areas such as planning and general business advising when necessary and to supplement Susan's overall business knowledge. The services of an accountant, attorney, and a qualified insurance agent have been retained.
UNIQUENESS AND DIFFERENTIATION OF THE SERVICE
Wonderland Nursery is a specialty nursery and provides the ultimate in service and advice to customers. We tend to appeal to upper-end clientele, serious gardeners, and gardening professionals. Nowhere else in Washington does an operation combine the services of a nursery along with those of a café.
The idea of nursery and café is to provide customers with a informal, social setting, and atmosphere that does not exist in this part of the state. In addition we will cater to private parties and special groups in the café throughout the year.
The growth potential is virtually unlimited for the greater Spokane, Washington, area. The population is growing at an accelerated rate. It is rare in today's business world to find a true market void. That is exactly what Wonderland Nursery has done. It is a nursery along with a café for nursery customers and others in the community. Our facility has little true competition in Spokane.
FUNDS REQUIRED AND USAGE
Restructuring expenses will be approximately $1,075,0000. New investors will furnish approximately $275,000, and a new loan will furnish the balance of $800,000 in new funding.
The new funding will be used as follows: A) $1,000,000 to repay existing debt, B) $20,000 for paving, C) $5,000 for irrigation improvements, D) $10,000 in new inventory, E) $40,000 for reserves and miscellaneous expenses. The paving will make the property much more attractive to both nursery and café customers. The irrigation will save labor and cut losses. The inventory will bring in new customers and help even out the cash flow throughout the year.
PROJECTED 5-YEAR INCOME STATEMENT SUMMARY
| (MOST LIKELY CASE) | |||||
| Projected 1999 | Projected 2000 | Projected 2001 | Projected 2002 | Projected 2003 | |
| Total Revenue | 933,000 | 1,072,350 | 1,232,589 | 1,416,847 | 1,628,727 |
| Cost of Sales | 514,229 | 591,364 | 680,068 | 782,079 | 899,390 |
| Gross Profit | 418,771 | 480,986 | 552,521 | 634,768 | 729,337 |
| Selling, General, Expense | 344,137 | 371,264 | 402,338 | 437,939 | 478,734 |
| Income Before Taxes | 74,634 | 109,722 | 150,183 | 196,829 | 250,603 |
| Income Taxes | 17,390 | 30,347 | 45,317 | 62,577 | 82,473 |
| INCOME AFTER TAXES | 57,244 | 79,375 | 104,866 | 134,252 | 168,130 |
| (OPTIMISTIC CASE) | |||||
| Total Revenue | 1,119,600 | 1,286,820 | 1,479,107 | 1,700,216 | 1,954,472 |
| Cost of Sales | 617,075 | 709,637 | 816,082 | 938,495 | 1,079,268 |
| Gross Profit | 502,525 | 577,183 | 663,025 | 761,722 | 875,204 |
| Selling, General, Expense | 412,964 | 445,517 | 482,806 | 525,527 | 574,481 |
| Income Before Taxes | 89,561 | 131,666 | 180,220 | 236,195 | 300,724 |
| Income Taxes | 20,868 | 36,416 | 54,380 | 75,092 | 98,968 |
| INCOME AFTER TAXES | 68,693 | 95,250 | 125,839 | 161,102 | 201,756 |
| (PESSIMISTIC CASE) | |||||
| Projected 1999 | Projected 2000 | Projected 2001 | Projected 2002 | Projected 2003 | |
| Total Revenue | 746,400 | 857,880 | 986,071 | 1,133,478 | 1,302,982 |
| Cost of Sales | 411,383 | 473,091 | 544,054 | 625,663 | 719,512 |
| Gross Profit | 335,017 | 384,789 | 442,017 | 507,814 | 583,470 |
| Selling, General, Expense | 275,310 | 297,011 | 321,870 | 350,351 | 382,987 |
| Income Before Taxes | 59,707 | 87,778 | 120,146 | 157,463 | 200,482 |
| Income Taxes | 13,912 | 24,278 | 36,254 | 50,062 | 65,978 |
| INCOME AFTER TAXES | 45,795 | 63,500 | 83,893 | 107,402 | 134,504 |
Notes:
- The most likely case assumes 11,000 customers the first year after the restructuring. The optimistic case assumes revenues and expenses will increase 15% over the most likely case. The pessimistic case assumes revenues and expenses will decrease 15% below the most likely case above.
- Cost of goods sold for the nursery will equal 55% of sales and 35% for the cafe.
OBJECTIVES & GOALS, AND STRATEGIES FOR ACHIEVING THEM
- To provide a high quality service so that customers will perceive great value and give them the opportunity to interact with our professional staff.
- To service an average of 12,000 customers in 1999 and increase that by about 15% over the next four years.
- To repay the entire loan amount by the end of the fifteenth year and to provide the shareholders with an exceptionally stable income.
- Our goal is to become the premier nursery destination in Spokane, Washington, during the next two years.
- Wonderland Nursery plans to closely monitor changing technology to be certain that the company is using the latest and most cost effective equipment and that it keeps up with current trends in the marketplace.
When growth has stabilized we plan to add extra services for customer convenience such as organic produce, greater selection of products, especially seasonal, and continued growth of the food operations. In addition to the above goals we will survey our customers and make changes in our programs and add services to meet their changing ideas in the marketplace.
To obtain the first two sets of goals we will try to maximize sales with an extensive campaign to promote our services. We will utilize the radio stations and newspaper along with brochures, media advertising, pamphlets, use of coupons, referrals, and a variety of other advertising and marketing tools to reach the customer base of Spokane, Washington. We expect to flood the market with advertising until consumers become aware of us and more comfortable with our company. As we grow, word-of-mouth referrals will bring in increasing numbers of customers and we will reduce our reliance on advertising.
The dominant driving force behind our company will be profit and income and to provide the best possible related products and service.
To become the premier nursery in Spokane, Washington, we will offer outstanding quality, good hours, exceptional service, and reasonable pricing. We will listen to our customers and conduct surveys.
We will offer frequent user discounts. In the future we may consider diversification and enter new market areas such as providing organic produce.
BUSINESS DESCRIPTION, STATUS, & OUTLOOK
According to the Nursery Retailer , lawn and garden sales nationwide are expected to top $83 billion in 1999. Of this total, nearly $1 billion will be in Washington. In 1998, lawn and garden sales showed its first slow-down in growth since 1968. Even so, sales still topped the 1997 levels. Most experts attribute this aberrant downturn to one reason, namely El Nino. This year's growth rates are expected to return to normal levels of around 6% to 9%. With Spokane's exploding growth in population that has occurred during the last decade, local nursery sales should continue to be well in excess of national averages. In fact, when most nurseries experienced a flat growth rate in 1998, Wonderland Nursery experienced a 25% growth in sales.
Wonderland Nursery is a full service nursery and combines entertainment and limited dining at a competitive price. We have a bigger selection of products, more specialized plant selection and offer a much higher level of service than do our competitors. We try to promote an atmosphere that gives people a comfortable place to spend their time and money. Combining a nursery with a café is a relatively new concept for this part of the country. Susan Smyth will continue to operate the business as a corporation. The principal shareholders will be Susan and her husband. New investors will be brought on board and will assume up to a 49% share in ownership. With our new equipment, inventory selections, and property improvements we will also have definite market advantages. Ultimately, we will expand the business to achieve its full potential.
The biggest problem we face is restructuring the operation to give us the time and money needed to fully implement our plans and achieve our goals.
To maintain operations, the business maintains a nursery license, scale license, seed dealers license, health license, occupational use license, and sales tax license.
The future holds the promise for almost unlimited growth and income as the business matures and considers other markets and products. Complementary products such as organic produce, water gardening, newsletter, additional seasonal products, dances, and other functions at the café also can be considered in the future in response to customer surveys indicating their wants and needs. Enhanced food services will be offered in the future as the needs are demonstrated.
MANAGEMENT & OWNERSHIP
Susan Smyth once was a gardener for upper-class clients. She used this experience to develop Wonderland Nursery. The business was successful until the lease was lost on its original location. This precipitated a move to our present location. The move caused us to open grossly undercapitalized. We have managed to survive the past couple of years, but the restructuring we are planning will put us over the top toward achieving our full potential.
Wonderland Nursery will supplement its skills by using outside consultants in areas such as legal work, income tax preparation, insurance, and general business advising.
The business was set up as a corporation primarily for liability reasons and makes it easier to secure investors. To continue operation, as many as thirteen full-and part-time employees will be utilized to help in areas such as bartending, waiting on tables, and for labor. As the business grows, additional part-time or full-time employees may be added to handle the increased workload.
THE SERVICE (AN UNFILLED NEED) & UNIQUENESS OF THE SERVICE
The growth in families in Washington state is the ninth greatest in the country. The past decade has seen this segment of the population grow by more than thirty percent. It is growing five and a half times as fast as the general population.
The few existing nurseries that cater to our clientele are not nearly as knowledgeable or service oriented. They pay little attention to detail and customer satisfaction. Wonderland Nursery and its ownership will embrace the concept of trying to become a focal point for our clientele.
The timing for such a business is perfect. Given the proper kind of financial restructuring, a significant window of opportunity exists for Wonderland Nursery to take advantage of the huge growth of the area. This business will be providing the "Right Service at the Right Time."
It is rare in today's world that a true market void exists. Our service will meet the "unfilled need" described above by providing customers with competitively priced, high service nursery facilities combined with the services of a café on the premises. We are unique to Spokane, and indeed all of Washington.
Customers will be attracted to the nursery because our atmosphere, pricing, and facilities. They will be made to feel welcome and as part of the family.
Some major advantages Wonderland Nursery will have over potential competition and conventional nurseries are:
- Larger and newer facility
- Lower operating expenses than most
- Full service café on site (new concept)
- Location
- 6,000 name mailing list
- Wonderland Nursery will sponsor ethnic festivals and holidays
MARKET ANALYSIS
MARKET OVERVIEW, SIZE, AND SEGMENTS
This market segment has been relatively stable over the past five years.
The market areas we will concentrate on are Central and Western Spokane, Washington. These areas have been growing rapidly for the past several years and should continue for the foreseeable future. Once the concept catches on locally, we feel the potential is unlimited. As we grow we will have the financial capacity to carry on an advertising campaign on a regional basis.
The economy is in the midst of a particularly strong growth period. Many new jobs are being added to the local community. Ever increasing numbers of Californians are coming to this location. All of these factors are cause for a much greater interest in nurseries. All of this activity can only help our attempts to restructure this nursery.
Listed below are just some of the reasons that the Spokane, Washington, area is growing and why it is a good time to be running any kind of business that caters to this growth:
- The local economy is booming and virtually busting at the seams.
- Spokane, Washington, has become a magnet for religious organizations. More than 65 nationally based Christian organizations are headquartered here.
- Spokane, Washington, has a new airport and a nearby Free Trade Enterprise Zone that should grow and attract even more new businesses.
- The new Seattle Airport is open and provides an economic boost to the entire state, including Spokane, Washington.
- Gambling in nearby Oregon continues to draw many visitors and some new businesses.
- Every week, we see articles in the newspapers of California residents and companies relocating here.
- The world-renowned Five Star Hotel has completed an extensive remodeling.
- MCI and Quantum Electronics are undergoing large increases in their operations here that should add many hundreds of employees.
- Many experts predict Spokane, Washington, will become the second fastest growing city in the state between now and the year 2007.
- King County is predicted to become the largest county in the state by the year 2003.
- The local economy is now more diversified than it was when troubles occurred in the local economy in the late 1980s and early 1990s.
The estimated population of King County in 1999 is 500,000 people. The number of households is approaching 200,000. Currently, this market is growing at an annual rate of 3-5%. Projections see this trend continuing for the balance of this decade.
From the above figures it can readily be seen that the potential market for our services is huge. We feel with our pricing and value we will become a price and industry leader within two years.
CUSTOMER PROFILE
Our surveys have shown the following mix of patrons for our facilities:
- Majority are women
- Income of typical customers is in the $50,000 and up range
- Large numbers of professional gardeners
- Range of age of clientele is 35-75
- Majority of patrons are in the upper-income brackets
- Majority of our customers come from the 12345, 12346, 12347, 12348, and 12349 Zip code areas
Beyond the local market we could eventually tap into a more regional market. The advantage of our service is that it could appeal to all segments of the community. By expanding the role of the café, we can continue to become an even greater focal point for the local community.
COMPETITION
Our primary competition is the nurseries listed below. On a limited basis there are few competitors such as nurseries, landscapers, and related businesses.
The following table summarizes the local competition:
|
Competitor
Name |
Strengths | Weaknesses |
|
Handles Nursery
1004 N. Main |
Well established
Good local support Well maintained Brings in popular brands Potential to expand Owner well known in area Serves large portion of Mexican population |
Dirty and has bad smell
Filthy & small restrooms Poor security Allow underage patrons Poor facilities/ maintenance Lack of parking |
|
Figures Nursery
1000 E. State |
Good location
Good local support Owner prominent in Hispanic community |
Always filthy
Outdated facilities Failure to keep up with recent trends |
|
Gardners Palace
2815 Warner |
Newly remodeled
Sufficient parking Fair neighborhood Specialty nursery New owner |
Caters to upper class
Location is hard to find Very small Unfriendly personnel No amenities |
The marketplace is currently shared by the above outlined 3 major participants. This market is stable and increasing about 5-7% per year.
The driving force behind Wonderland Nursery is Susan Smyth. She has able support from her husband, Robert, and from Helen Brown, office manager, and Nancy White, file manager.
Risk Analysis
| RATINGS | |||
| ELEMENT | LOW | MEDIUM | HIGH |
| Industry (Maturity and Cyclicality) | X | ||
| Market/Local Economy | X | ||
| Competitive Position | X | ||
| Dependence upon other Companies | X | ||
| Vulnerability to Substitutes | X | ||
| Technology | X | ||
| Distribution | X | ||
| Regulatory Environment | X | ||
| Suppliers | X | ||
| Strategy | X | ||
| Assumptions | X | ||
| Finanical Performance | X | ||
| Management Performance | X | ||
| Inflation/Interest Rates | X | ||
| Others | X | ||
| Overall Risk | X | ||
Identification of Strengths & Weaknesses
| Functions | Strong | Average | Weak | Major Strengths and/or Weaknesses |
| (+) | (O) | (-) | Compared to Competitors | |
| General Administration | X | Hardworking, direct, effective, charismatic | ||
| (Management) | ||||
| Marketing | X | Original, consistently appealing | ||
| Finance/Planning | X | Will hire consultants to help | ||
| Human Resources | X | Better performance achievable | ||
| Operations | X | Energy to accomplish tasks | ||
| Production | X | |||
| Purchasing | X | High perceived quality | ||
| Distribution | X | |||
| Servicing | X | High customer satisfaction | ||
| Quality of Service | X | |||
| Company Policies | X | |||
| Product Mix | X | Several choices available | ||
| Product Features | X | |||
| Options | X | |||
| Warranties/Guarantees | X | |||
| Reliability | X | Best product and service available | ||
| Desirability | X | |||
| Advertising | X | Hire consultants to improve, lack of money | ||
| Market Leadership | X | Best independent around | ||
| Sales Force | X | |||
| Overhead | X | Existing levels are too high; can be greatly | ||
| reduced with new funding | ||||
| Pricing | X | Low for service | ||
| Delivery Time | X | |||
| Location | X | |||
| Facilities | X | Best combination around |
We feel we will have strengths in product features, management, marketing, human resources, quality of service, operations, product mix, reliability, desirability, highly trained sales force, pricing, location, and facilities.
We will have low risk exposure in the areas of technology, inflation/interest rates, regulatory environment, management ability, location, facilities, and suppliers.
We perceive medium risk exposure in the local economy, strategy, and vulnerability to substitutes, finance, and planning. We have retained the services of specialists to help in various areas such as marketing, accounting, legal, and general overall business operation advice.
We have a high degree of risk in this overhead and lack of working capital. With our proposed new funding, we should overcome most of our weaknesses.
MARKETING STRATEGIES
PRICING AND VALUE
Our intention is to raise the public's awareness of our company. We plan to review our prices and those of our competitors every three months. We will review direct material costs, direct labor costs, and total overhead expenses. We will continually monitor the cost of providing our service to each customer. We will offer various free or reduced rate programs to get customers acquainted with us.
Numerous package deals will be available to customers. The following examples are various marketing strategies we may try:
- Discounts for larger or repeat purchases
- Special party rates for the café
- We will continue the use of our newsletter to help promote value to our customers
SELLING TACTICS
Our company's marketing strategy will incorporate plans to promote our line of services through several different channels and on different levels of use. We will advertise heavily on the popular local radio stations and in newspapers.
We will try to satisfy the market void in this area for indoor entertainment. We will flood the market with advertising and try to go after our specific targets. We will try to capture their attention, pique their interest, and make them feel that they must have our services.
We will offer continuous promotional rates. The results sell themselves. We will offer discounts to frequent users. The more a customer uses our services the cheaper it will become for them.
We also are a MasterCard and Visa charge card merchant which enables us to more readily serve our customers.
In order to market our facility, we shall consider a variety of promotions including:
- Reserve certain hours for unique groups such as children, senior citizens, service clubs, adults, etc.
- Conduct special theme nights, use ethnic holidays, family night, charity promotion night, game night, contest night, etc.
- Cultivate local churches and women's organizations.
- Promote birthday parties.
- Early bird specials.
ADVERTISING, PROMOTION, AND DISTRIBUTION OF SERVICES
We recognize that the key to success at this time requires extensive promotion. Advertising goals include all of the following:
- Position the company as the premier nursery in Central/Western Spokane, Washington.
- Increase public awareness of Wonderland Nursery and its benefits.
- Increase public awareness of our company and establish a professional image.
- Maximize efficiency by continually monitoring media effectiveness.
- Consider a possible credit coupon in some of the advertisements.
- Develop a brochure or pamphlet to explain our service and company.
- Continue use of a distinctive business card and company letterhead.
- Use a mix of media to saturate the marketplace.
PUBLIC RELATIONS
We will develop a public relations policy that will help increase awareness of our company and product. To achieve these goals we will consider some or all of the following:
- Develop a press release and a company backgrounder as a public relations tool.
- Develop a telephone script to handle customer and advertiser contact.
- Develop a survey to be completed by customers to help determine the following:
- 1. How did they hear about us?
- 2. What influenced them to use our service?
- 3. How well did our service satisfy their needs?
- 4. How efficient was our service?
- 5. Did they have any problems getting through to us?
- 6. Did they shop competitors before selecting us?
- 7. How did they initially perceive our company and product?
- 8. Where are most of our customers located?
- 9. Do they have suggestions for improving our service or our approach to advertising?
- 10. What additional services would they like us to offer?
- 11. Would they recommend us to others?
- Maintain membership in the Chamber of Commerce to keep abreast of developments in the community and market trends.
FINANCIAL PLANS
Data Sheet #1
GENERAL:
Fiscal Year in which Projections/Calculations are to start ..............................................................................................1999
Number of Months in which Projections/Calculations are to start..........................................................................................1
The purpose for this analysis is Business Start-Up, Expansion, or Review ........................................................... START-UP
Owner's contribution to business (include both cash and time in dollar equivalency) ........................................$6,000,000.00
Indicate below if the figures are actual, annualized, or projected for each year in the analysis:
| 1999 | Projected |
| 2000 | Projected |
| 2001 | Projected |
| 2002 | Projected |
| 2003 | Projected |
INDICATE THE TYPE OF BUSINESS ENTITY YOU HAVE IN THE BOX TO THE RIGHT: C
| START-UP/EXPANSION EXPENSES: | EXPENSES FOR YEAR: | |||
| % of Sales | $ Amounts | |||
| Inventory | 160,000.00 | Advertising & Marketing Expenses | 2.59% | 0.00 |
| Advertising | 0.00 | Bad Debts | 0.00% | 0.00 |
| Telephone/Utilities | 0.00 | Contract Labor | 0.70% | 0.00 |
| Professional Fees | 0.00 | Depreciation | 0.00% | 4,500.00 |
| Organizational Expenses | 0.00 | Direct Labor Expenses | 3.28% | 0.00 |
| Furniture/Fixtures | 0.00 | Dues, Subscriptions, and Memberships | 0.00% | 1,000.00 |
| Land | 750,000.00 | Employee Reimbursement Expenses | 0.00% | .0.00 |
| Buildings | 300,000.00 | Freight/Shipping | 0.27% | 0.00 |
| Machinery/Equipment | 65,000.00 | Furniture or Fixtures Purchases | 0.00% | 1,000.00 |
| Rent Deposits | 0.00 | Insurance | 0.00% | 8,996.00 |
| Insurance | 0.00 | Lease Expenses | 0.00% | 0.00 |
| Leasehold Improvements | 0.00 | Leasehold Expenses | 0.00% | 0.00 |
| Licenses/Fees/Permits | 0.00 | Machinery & Equipment Purchases | 0.00% | 0.00 |
| Miscellaneous | 0.00 | Office Supplies and Postage | 0.16% | 0.00 |
| Property Improvements | 25,000.00 | Professional Fees | 0.00% | 4,250.00 |
| Property Taxes | 0.00 | Permits/Licenses | 0.00% | 1,940.00 |
| Other #3 | 0.00 | Rent | 0.00% | 0.00 |
| Other #4 | 0.00 | Repair & Maintenance | 0.00% | 1,700.00 |
| TOTAL | 1,300,000.00 | Salaries-Officers | 0.00% | 38,400.00 |
| LOAN DATA:(If Needed) | Salaries-Administrative | 0.00% | 0.00 | |
| Amount of Loan 1 | $800,000.00 | Salaries and Wages-Other | 10.56% | 0.00 |
| Term of Loan 1 (Months) | 180 | Salaries-Manager | 0.00% | 0.00 |
| Interest Rate for Loan 1 | 11% | Telephone/Utilities | 0.00% | 11,700.00 |
| First Year of Loan 1 | 1999 | Property Improvements | 0.00% | 2,550.00 |
| First Payment Month | 8 | Property Taxes | 0.00% | 9,000.00 |
| Other #3 | 0.00% | 0.00 | ||
| Amount of Loan 2 | $0.00 | Other #4 | 0.00% | 0.00 |
| Term of Loan 2 (Months) | 60 | Miscellaneous/Contingency Expenses | 2.50% | 0.00 |
| Interest Rate for Loan 2 | 0.00% | TOTAL FIRST YEAR EXPENSES INCLUDING INTEREST PAID | ||
| First Year of Loan 2 | 1999 | AND COST OF GOODS SOLD: | $858,366 | |
| First Payment Month | 1 | |||
| PERCENTAGE OF TOTAL PAYROLL ALLOTTED TO PAYROLL TAXES AND BENEFITS | 10.00% | |||
| PERCENTAGE OF NET SALES EXPECTED FOR THE COST OF GOODS SOLD: Café | 35.00% | |||
| PERCENTAGE OF NET SALES EXPECTED FOR THE COST OF GOODS SOLD: Nursery | 55.00% | |||
Data Sheet #2
| SOURCE/AMOUNTS OF INCOME FOR YEAR | 1999 |
| Nursery sales | $797,000.00 |
| Café sales | $130,000.00 |
| Source of Income #3 | $0.00 |
| Source of Income #4 | $0.00 |
| Other Income/Exp. (Net) | $6,000.00 |
| TOTAL INCOME | $933,000.00 |
| PERCENTAGE OF INCOME GROWTH | ||
| For Second Year | 2000 | 15.00% |
| For Third Year | 2001 | 15.00% |
| For Fourth Year | 2002 | 15.00% |
| For Fifth Year | 2003 | 15.00% |
| PERCENTAGE OF INCREASE IN EXPENSES: | |
| For Second Year | 5.00% |
| For Third Year | 5.25% |
| For Fourth Year | 5.50% |
| For Fifth Year | 5.75% |
| PERCENTAGE OF NET INCOME TO BE PAID OUT IN DIVIDENDS | ||
| For First Year | 1999 | 50.00% |
| For Second Year | 2000 | 60.00% |
| For Third Year | 2001 | 65.00% |
| For Fourth Year | 2002 | 70.00% |
| For Fifth Year | 2003 | 75.00% |
Number of Customers Expected to Serve the First Year: 12,000
Average Income received from each Customer: $77.75
| Operating Data | 1999 | 2000 | 2001 | 2002 | 2003 |
| Days Sales in Accounts Receivable | 20.0 | 20.0 | 20.0 | 20.0 | 20.0 |
| Days Materials Cost in Inventory | 30.0 | 30.0 | 30.0 | 30.0 | 30.0 |
| Days Finished Goods in Inventory | 45.0 | 45.0 | 45.0 | 45.0 | 45.0 |
| Days Materials Cost in Payables | 20.0 | 20.0 | 20.0 | 20.0 | 20.0 |
| Days Payroll Expenses accrued | 20.0 | 20.0 | 20.0 | 20.0 | 20.0 |
| Days Operating Expenses accrued | 25.0 | 25.0 | 25.0 | 25.0 | 25.0 |
RE-STRUCTURE EXPENSES
| Category | Amount |
| Cash and Working Capital | $28,150 |
| Material-Supplies-Inventory | 10,000 |
| Furniture and Fixtures | 25,500 |
| Equipment | 40,000 |
| Rent Deposits | 9,700 |
| License Fees/Permits | 1,000 |
| Insurance (First year paid in advance) | 1,800 |
| Utilities & Telephone | 500 |
| Legal, Professional, and Consulting Fees | 1,500 |
| Security System & Leasehold Improvements | 5,000 |
| Initial Entertainment Budget | 6,000 |
| Opening Advertisement & Promotion | 3,000 |
| Miscellaneous | 2,850 |
| TOTAL | $135,000 |
Projected First-Year Monthly Budget 1999
| Month | Start-Up | Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 |
| CASH RECEIPTS: | ||||||||
| Nursery Sales | $4,782 | $11,158 | $15,143 | $47,023 | $295,687 | $168,167 | $78,106 | |
| Café Sales | $3,510 | $4,160 | $4,940 | $6,500 | $13,000 | $20,020 | $20,020 | |
| Source of Income #3 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
| Source of Income #4 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
| Other Income/Expense (Net) | $500 | $500 | $500 | $500 | $500 | $500 | $500 | |
| Owner 's Equity | 600,000 | |||||||
| Loan | 800,000 | |||||||
| Total Cash Received | 1,400,000 | 8,792 | 15,818 | 20,583 | 54,023 | 309,187 | 188,687 | 98,626 |
| DISBURSEMENTS: | ||||||||
| Cost of Goods Sold/Inventory | 160,000 | $3,859 | $7,593 | $10,058 | $28,138 | $167,178 | $99,499 | $49,965 |
| Advertising / Marketing Exp. | 0 | $215 | $397 | $520 | $1,386 | $7,992 | $4,872 | $2,540 |
| Bad Debts | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
| Contract Labor | $58 | $107 | $141 | $375 | $2,164 | $1,320 | $688 | |
| Depreciation | $375 | $375 | $375 | $375 | $375 | $375 | $375 | |
| Direct Labor | $272 | $502 | $658 | $1,754 | $10,116 | $6,167 | $3,216 | |
| Dues/Subscrip./Memberships | $83 | $83 | $83 | $83 | $83 | $83 | $83 | |
| Employee Reimbursement Exp. | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
| Freight / Shipping | $22 | $41 | $54 | $144 | $832 | $508 | $265 | |
| Furniture or Fixtures Purchases | 0 | $83 | $83 | $83 | $83 | $83 | $83 | $83 |
| Insurance | 0 | $750 | $750 | $750 | $750 | $750 | $750 | $750 |
| Land | 750,000 | |||||||
| Buildings | 300,000 | |||||||
| Lease Expenses | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
| Leasehold Expenses | 0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
| Mach./Equipment Purchases | 65,000 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
| Organizational Expenses | 0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
| Office Supplies and Postage | $13 | $25 | $32 | $87 | $499 | $305 | $159 | |
| Payroll Taxes/Employee Benefits | $435 | $532 | $598 | $1,060 | $4,590 | $2,923 | $1,677 | |
| Professional Fees | 0 | $354 | $354 | $354 | $354 | $354 | $354 | $354 |
| Permits / Licenses | 0 | $162 | $162 | $162 | $162 | $162 | $162 | $162 |
| Rent | 0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
| Repair & Maintenance | $142 | $142 | $142 | $142 | $142 | $142 | $142 | |
| Salaries-Officers | $3,200 | $3,200 | $3,200 | $3,200 | $3,200 | $3,200 | $3,200 | |
| Salaries-Administrative | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
| Salaries and Wages-Other | $875 | $1,617 | $2,120 | $5,650 | $32,587 | $19,866 | $10,359 | |
| Salaries-Manager | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
| Telephone / Utilities | 0 | $975 | $975 | $975 | $975 | $975 | $975 | $975 |
| Property Improvements | 25,000 | $213 | $213 | $213 | $213 | $213 | $213 | $213 |
| Property Taxes | 0 | $750 | $750 | $750 | $750 | $750 | $750 | $750 |
| Other #3 | 0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
| Other #4 | 0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
| Misc./Contingency Expenses | 0 | $207 | $383 | $502 | $1,338 | $7,717 | $4,705 | $2,453 |
| Total Cash Paid Out | 1,300,000 | 13,043 | 18,283 | 21,770 | 47,019 | 240,763 | 147,250 | 78,409 |
| LOANS SECTION: | ||||||||
| Interest | 7,333 | 7,317 | 7,301 | 7,285 | 7,268 | 7,251 | 7,234 | |
| Principal | 1,759 | 1,776 | 1,792 | 1,808 | 1,825 | 1,842 | 1,858 | |
| Cash Pyts to Loans | 9,093 | 9,093 | 9,093 | 9,093 | 9,093 | 9,093 | 9,093 | |
| Taxable Income | -11,584 | -9,782 | -8,487 | -280 | 61,156 | 34,186 | 12,983 | |
| Income Tax (State & Federal) | 1,449 | 1,449 | 1,449 | 1,449 | 1,449 | 1,449 | 1,449 | |
| NET INCOME | -13,033 | -11,232 | -9,937 | -1,729 | 59,707 | 32,736 | 11,534 | |
| LOANS (Balance) | 800,000 | 798,241 | 796,465 | 794,673 | 792,865 | 791,040 | 789,198 | 787,340 |
| DIVIDENDS PAID | 2,385 | 2,385 | 2,385 | 2,385 | 2,385 | 2,385 | 2,385 | |
| BEGINNING CASH | 100,000 |
| Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | TOTALS |
| $53,399 | $71,730 | $19,925 | $10,361 | $21,519 | $797,000 |
| $14,950 | $11,960 | $10,010 | $8,970 | $11,960 | $130,000 |
| $0 | $0 | $0 | $0 | $0 | $0 |
| $0 | $0 | $0 | $0 | $0 | $0 |
| $500 | $500 | $500 | $500 | $500 | $6,000 |
| 68,849 | 84,190 | 30,435 | 19,831 | 33,979 | 933,000 |
| $34,602 | $43,638 | $14,462 | $8,838 | $16,021 | $483,850 |
| $1,770 | $2,167 | $775 | $500 | $867 | $24,000 |
| $0 | $0 | $0 | $0 | $0 | $0 |
| $479 | $587 | $210 | $136 | $235 | $6,500 |
| $375 | $375 | $375 | $375 | $375 | $4,500 |
| $2,240 | $2,743 | $981 | $634 | $1,097 | $30,379 |
| $83 | $83 | $83 | $83 | $83 | $1,000 |
| $0 | $0 | $0 | $0 | $0 | $0 |
| $184 | $226 | $81 | $52 | $90 | $2,500 |
| $83 | $83 | $83 | $83 | $83 | $1,000 |
| $750 | $750 | $750 | $750 | $750 | $8,996 |
| $0 | |||||
| $0 | |||||
| $0 | $0 | $0 | $0 | $0 | $0 |
| $0 | $0 | $0 | $0 | $0 | $0 |
| $0 | $0 | $0 | $0 | $0 | $0 |
| $0 | $0 | $0 | $0 | $0 | $0 |
| $111 | $135 | $48 | $31 | $54 | $1,500 |
| $1,266 | $1,478 | $734 | $587 | $783 | $16,664 |
| $354 | $354 | $354 | $354 | $354 | $4,250 |
| $162 | $162 | $162 | $162 | $162 | $1,940 |
| $0 | $0 | $0 | $0 | $0 | $0 |
| $142 | $142 | $142 | $142 | $142 | $1,700 |
| $3,200 | $3,200 | $3,200 | $3,200 | $3,200 | $38,400 |
| $0 | $0 | $0 | $0 | $0 | $0 |
| $7,215 | $8,835 | $3,160 | $2,041 | $3,534 | $97,860 |
| $0 | $0 | $0 | $0 | $0 | $0 |
| $975 | $975 | $975 | $975 | $975 | $11,700 |
| $213 | $213 | $213 | $213 | $213 | $2,550 |
| $750 | $750 | $750 | $750 | $750 | $9,000 |
| $0 | $0 | $0 | $0 | $0 | $0 |
| $0 | $0 | $0 | $0 | $0 | $0 |
| $1,709 | $2,092 | $748 | $483 | $837 | $23,175 |
| 56,661 | 68,986 | 28,286 | 20,389 | 30,605 | $771,464 |
| 7,217 | 7,200 | 7,183 | 7,165 | 7,148 | $86,902 |
| 1,875 | 1,893 | 1,910 | 1,928 | 1,945 | $22,211 |
| 9,093 | 9,093 | 9,093 | 9,093 | 9,093 | $109,113 |
| 4,970 | 8,004 | -5,034 | -7,723 | -3,774 | $74,634 |
| 1,449 | 1,449 | 1,449 | 1,449 | 1,449 | $17,390 |
| 3,521 | 6,555 | -6,483 | -9,172 | -5,223 | $57,244 |
| 785,464 | 783,572 | 781,662 | 779,734 | 777,789 | |
| 2,385 | 2,385 | 2,385 | 2,385 | 2,385 | $28,622 |
Projected Second-Year Monthly Budget 2000
| Month | Month 13 | Month 14 | Month 15 | Month 16 | Month 17 | Month 18 | Month 19 | Month 20 |
| CASH RECEIPTS: | ||||||||
| Nursery Sales | $5,499 | $12,832 | $17,414 | $54,076 | $340,040 | $193,392 | $89,822 | $61,409 |
| Café Sales | $4,037 | $4,784 | $5,681 | $7,475 | $14,950 | $23,023 | $23,023 | $17,193 |
| Source of Income #3 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
| Source of Income #4 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
| Other Income/Expense (Net) | $525 | $525 | $525 | $525 | $525 | $525 | $525 | $525 |
| Owner 's Equity | ||||||||
| Loan | ||||||||
| Total Cash Received | 10,061 | 18,141 | 23,620 | 62,076 | 355,515 | 216,940 | 113,370 | 79,126 |
| DISBURSEMENTS: | ||||||||
| Cost of Goods Sold/Inventory | $4,437 | $8,732 | $11,566 | $32,358 | $192,255 | $114,424 | $57,460 | $39,792 |
| Advertising / Marketing Exp. | $247 | $456 | $598 | $1,594 | $9,191 | $5,603 | $2,922 | $2,035 |
| Bad Debts | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
| Contract Labor | $67 | $124 | $162 | $432 | $2,489 | $1,517 | $791 | $551 |
| Depreciation | $394 | $394 | $394 | $394 | $394 | $394 | $394 | $394 |
| Direct Labor | $313 | $577 | $757 | $2,017 | $11,633 | $7,092 | $3,698 | $2,576 |
| Dues/Subscrip./Memberships | $88 | $88 | $88 | $88 | $88 | $88 | $88 | $88 |
| Employee Reimbursement Exp. | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
| Freight / Shipping | $26 | $48 | $62 | $166 | $957 | $584 | $304 | $212 |
| Furniture or Fixtures Purchases | $88 | $88 | $88 | $88 | $88 | $88 | $88 | $88 |
| Insurance | $787 | $787 | $787 | $787 | $787 | $787 | $787 | $787 |
| Land | ||||||||
| Buildings | ||||||||
| Lease Expenses | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
| Leasehold Expenses | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
| Mach./Equipment Purchases | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
| Organizational Expenses | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
| Office Supplies and Postage | $144 | $144 | $144 | $144 | $144 | $144 | $144 | $144 |
| Payroll Taxes/Employee Benefits | $468 | $580 | $655 | $1,187 | $5,247 | $3,330 | $1,897 | $1,423 |
| Professional Fees | $372 | $372 | $372 | $372 | $372 | $372 | $372 | $372 |
| Permits / Licenses | $170 | $170 | $170 | $170 | $170 | $170 | $170 | $170 |
| Rent | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
| Repair & Maintenance | $149 | $149 | $149 | $149 | $149 | $149 | $149 | $149 |
| Salaries-Officers | $3,360 | $3,360 | $3,360 | $3,360 | $3,360 | $3,360 | $3,360 | $3,360 |
| Salaries-Administrative | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
| Salaries and Wages-Other | $1,007 | $1,860 | $2,438 | $6,498 | $37,475 | $22,846 | $11,913 | $8,298 |
| Salaries-Manager | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
| Telephone / Utilities | $1,024 | $1,024 | $1,024 | $1,024 | $1,024 | $1,024 | $1,024 | $1,024 |
| Property Improvements | $223 | $223 | $223 | $223 | $223 | $223 | $223 | $223 |
| Property Taxes | $788 | $788 | $788 | $788 | $788 | $788 | $788 | $788 |
| Other #3 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
| Other #4 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
| Misc./Contingency Expenses | $238 | $440 | $577 | $1,539 | $8,875 | $5,410 | $2,821 | $1,965 |
| Total Cash Paid Out | 14,387 | 20,400 | 24,401 | 53,375 | 275,706 | 168,391 | 89,390 | 64,437 |
| LOANS SECTION: | ||||||||
| Interest | 7,130 | 7,112 | 7,094 | 7,075 | 7,057 | 7,038 | 7,019 | 7,000 |
| Principal | 1,963 | 1,981 | 1,999 | 2,018 | 2,036 | 2,055 | 2,074 | 2,093 |
| Cash Pyts to Loans | 9,093 | 9,093 | 9,093 | 9,093 | 9,093 | 9,093 | 9,093 | 9,093 |
| Taxable Income | -11,456 | -9,371 | -7,874 | 1,626 | 72,752 | 41,511 | 16,960 | 7,689 |
| Income Tax (State & Federal) | 2,529 | 2,529 | 2,529 | 2,529 | 2,529 | 2,529 | 2,529 | 2,529 |
| NET INCOME | -13,985 | -11,900 | -10,403 | -903 | 70,223 | 38,982 | 14,431 | 5,161 |
| LOANS (Balance) | 775,826 | 773,846 | 771,845 | 769,828 | 767,792 | 765,738 | 763,664 | 761,571 |
| DIVIDENDS PAID | 3,969 | 3,969 | 3,936 | 3,969 | 3,969 | 3,969 | 3,969 | 3,969 |
| Month 21 | Month 22 | Month 23 | Month 24 | TOTALS |
| $82,490 | $22,914 | $11,915 | $24,747 | $916,550 |
| $13,754 | $11,512 | $10,316 | $13,754 | $149,500 |
| $0 | $0 | $0 | $0 | $0 |
| $0 | $0 | $0 | $0 | $0 |
| $525 | $525 | $525 | $525 | $6,300 |
| 96,769 | 34,950 | 22,756 | 39,026 | $1,072,350 |
| $50,183 | $16,632 | $10,164 | $18,425 | $556,428 |
| $2,492 | $891 | $576 | $997 | $27,600 |
| $0 | $0 | $0 | $0 | $0 |
| $675 | $241 | $156 | $270 | $7,475 |
| $394 | $394 | $394 | $394 | $4,725 |
| $3,154 | $1,128 | $729 | $1,262 | $34,936 |
| $88 | $88 | $88 | $88 | $1,050 |
| $0 | $0 | $0 | $0 | $0 |
| $260 | $93 | $60 | $104 | $2,875 |
| $88 | $88 | $88 | $88 | $1,050 |
| $787 | $787 | $787 | $787 | $9,446 |
| $0 | ||||
| $0 | ||||
| $0 | $0 | $0 | $0 | $0 |
| $0 | $0 | $0 | $0 | $0 |
| $0 | $0 | $0 | $0 | $0 |
| $0 | $0 | $0 | $0 | $0 |
| $144 | $144 | $144 | $144 | $1,725 |
| $1,667 | $812 | $644 | $869 | $18,779 |
| $372 | $372 | $372 | $372 | $4,463 |
| $170 | $170 | $170 | $170 | $2,037 |
| $0 | $0 | $0 | $0 | $0 |
| $149 | $149 | $149 | $149 | $1,785 |
| $3,360 | $3,360 | $3,360 | $3,360 | $40,320 |
| $0 | $0 | $0 | $0 | $0 |
| $10,160 | $3,634 | $2,347 | $4,064 | $112,539 |
| $0 | $0 | $0 | $0 | $0 |
| $1,024 | $1,024 | $1,024 | $1,024 | $12,285 |
| $223 | $223 | $223 | $223 | $2,678 |
| $788 | $788 | $788 | $788 | $9,450 |
| $0 | $0 | $0 | $0 | $0 |
| $0 | $0 | $0 | $0 | $0 |
| $2,406 | $861 | $556 | $963 | $26,651 |
| 78,581 | 31,877 | 22,814 | 34,537 | $878,296 |
| 6,981 | 6,962 | 6,942 | 6,922 | $84,332 |
| 2,112 | 2,131 | 2,151 | 2,170 | $24,781 |
| 9,093 | 9,093 | 9,093 | 9,093 | $109,113 |
| 11,205 | -3,888 | -7,001 | -2,434 | $109,722 |
| 2,529 | 2,529 | 2,529 | 2,529 | $30,347 |
| 8,677 | -6,417 | -9,530 | -4,962 | $79,375 |
| 759,460 | 757,329 | 755,178 | 753,008 | |
| 3,969 | 3,969 | 3,969 | 3,969 | $47,625 |
Five-Year Income Statement
| Five-Year Analysis | ||||||||||
| Sales | Projected 1999 | Projected 2000 | Projected 2001 | Projected 2002 | Projected 2003 | |||||
| Sales | $927,000 | $1,066,050 | $1,225,958 | $1,409,852 | $1,621,329 | |||||
| Cost of sales | $514,229 | $591,364 | $680,068 | $782,079 | $899,390 | |||||
| Gross Profits | $412,771 | $474,686 | $545,890 | $627,773 | $721,939 | |||||
| Expenses: | ||||||||||
| Operating expenses | $252,735 | $282,207 | $315,900 | $354,427 | $398,491 | |||||
| Interest | $86,902 | $84,332 | $81,465 | $78,265 | $74,695 | |||||
| Depreciation | $4,500 | $4,725 | $4,973 | $5,247 | $5,548 | |||||
| Amortization | $0 | $0 | $0 | $0 | $0 | |||||
| Total expenses | $344,137 | $371,264 | $402,338 | $437,939 | $478,734 | |||||
| Operating income | $68,634 | $103,422 | $143,552 | $189,834 | $243,205 | |||||
| Other income and expenses | ||||||||||
| Gain (loss) on sale of assets | $0 | $0 | $0 | $0 | $0 | |||||
| Other (net) | $6,000 | $6,300 | $6,631 | $6,995 | $7,398 | |||||
| Subtotal | $6,000 | $6,300 | $6,631 | $6,995 | $7,398 | |||||
| Income before tax | $74,634 | $109,722 | $150,183 | $196,829 | $250,603 | |||||
| Taxes (Federal & State) | $17,390 | $30,347 | $45,317 | $62,577 | $82,473 | |||||
| Rate | 23.30% | 27.66% | 30.17% | 31.79% | 32.91% | |||||
| Net income | $57,244 | $79,375 | $104,866 | $134,252 | $168,130 | |||||
| Retained earnings-beginning | $0 | $28,622 | $60,372 | $97,076 | $137,351 | |||||
| Dividends paid | $28,622 | $47,625 | $68,162 | $93,977 | $126,097 | |||||
| Retained earnings-ending | $28,622 | $60,372 | $97,076 | $137,351 | $179,384 | |||||
| Detailed Supporting Information | ||||||||||
| Cost of sales | ||||||||||
| Direct labor | $30,479 | $34,936 | $40,176 | $46,203 | $53,133 | |||||
| Materials | $483,850 | $556,428 | $639,892 | $735,876 | $846,257 | |||||
| Other costs | ||||||||||
Five-Year Balance Statement
| FIVE-YEAR ANALYSIS | ||||||
| Projected | Projected | Projected | Projected | Projected | ||
| START-UP | 1999 | 2000 | 2001 | 2002 | 2003 | |
| ASSETS: | ||||||
| Cash and cash equivalents | $100,000 | $194,902 | $189,607 | $184,182 | $176,568 | $164,185 |
| Accounts Receivable | $0 | $50,795 | $58,414 | $67,176 | $77,252 | $88,840 |
| Inventory | $160,000 | $103,167 | $118,642 | $136,438 | $156,904 | $180,439 |
| Other current assets | $0 | $0 | $0 | $0 | $0 | $0 |
| Total Current Assets | $260,000 | $348,864 | $366,663 | $387,796 | $410,724 | $433,464 |
| FIXED ASSETS: | ||||||
| Land | $750,000 | $750,000 | $750,000 | $750,000 | $750,000 | $750,000 |
| Buildings | $300,000 | $300,000 | $300,000 | $300,000 | $300,000 | $300,000 |
| Machinery & Equipment | $65,000 | $65,000 | $65,000 | $65,000 | $65,000 | $65,000 |
| Furniture/Fixtures | $0 | $0 | $1,050 | $2,155 | $3,321 | $4,554 |
| Subtotal | $1,115,000 | $1,115,000 | $116,050 | $1,117,155 | $1,118,321 | $1,119,554 |
| Less-accumulated depreciation | $0 | $4,500 | $9,225 | $14,198 | $19,445 | $24,993 |
| Total Fixed Assets | $1,115,000 | $1,110,500 | $1,106,825 | $1,102,957 | $1,098,876 | $1,094,561 |
| INTANGIBLE ASSETS: | ||||||
| Cost | $0 | $0 | $0 | $0 | $0 | $0 |
| Less-accumulated amortization | $0 | $0 | $0 | $0 | $0 $0 | |
| Total Intangible Assets | $0 | $0 | $0 | $0 | $0 | $0 |
| Other Assets | $25,000 | $0 | $0 | $0 | $0 | $0 |
| Total Assets | $1,400,000 | $1,459,364 | $1,473,488 | $1,490,753 | $1,509,600 | $1,528,025 |
| LIABILITIES: | ||||||
| Accounts payable | $0 | $26,512 | $30,489 | $35,063 | $40,322 | $46,370 |
| Notes payable | $0 | $0 | $0 | $0 | $0 | $0 |
| Current portion of long-term debt | $22,211 | $24,781 | $27,649 | $30,848 | $34,418 | $38,401 |
| Income taxes | $0 | $0 | $0 | $0 | $0 | $0 |
| Accrued expenses | $0 | $26,441 | $29,619 | $33,255 | $37,416 | $42,178 |
| Other current liabilities | $0 | $0 | $0 | $0 | $0 | $0 |
| Total Current Liabilities | $22,211 | $77,734 | $87,757 | $99,166 | $112,156 | $126,949 |
| Long-term debt | $777,789 | $753,008 | $725,359 | $694,511 | $660,093 | $621,692 |
| Deferred income | $0 | $0 | $0 | $0 | $0 | $0 |
| Deferred income taxes | $0 | $0 | $0 | $0 | $0 | $0 |
| Other long-term liabilities | $0 | $0 | $0 | $0 | $0 | $0 |
| Total Liabilities | $800,000 | $830,742 | $813,116 | $793,677 | $772,249 | $748,641 |
| EQUITY: | ||||||
| Capital stock issues | $600,000 | $600,000 | $600,000 | $600,000 | $600,000 | $600,000 |
| Additional paid in capital | $0 | $0 | $0 | $0 | $0 | $0 |
| Retained earnings | $0 | $28,622 | $60,372 | $97,076 | $137,351 | $179,384 |
| Total Equity | $600,000 | $628,622 | $660,372 | $697,076 | $737,351 | $779,384 |
| Total Liabilities and Equity | $1,400,000 | $1,459,364 | $1,473,488 | $1,490,753 | $1,509,600 | $1,528,025 |
| "C" Corporation (Y/N) | Y | |||||
| Cash balance positive / (negative) | Positive | Positive | Positive | Positive | Positive | Positive |
| Amount sheet is out-of-balance | $0 | $0 | $0 | $0 | $0 | $0 |
| Amount cash flow out-of-balance | $0 | $0 | $0 | $0 | $0 | |
Five-Year Cash Flow Statement
| Projected | Projected | Projected | Projected | Projected | |
| 1999 | 2000 | 2001 | 2002 | 2003 | |
| Cash from operations | |||||
| Net earnings (loss) | $57,244 | $79,375 | $104,866 | $134,252 | $168,130 |
| Add-depreciation and amortization | $4,500 | $4,725 | $4,973 | $5,247 | $5,548 |
| Cash from operations | $61,744 | $84,100 | $109,839 | $139,499 | $173,678 |
| Cash provided (used) by operating activities | |||||
| Accounts Receivable | ($50,795) | ($7,619) | ($8,762) | ($10,076) | ($11,588) |
| Inventory | $56,833 | ($15,475) | ($17,796) | ($20,466) | ($23,535) |
| Other current assets | $0 | $0 | $0 | $0 | $0 |
| Other non-current assets | $25,000 | $0 | $0 | $0 | $0 |
| Accounts payable | $26,512 | $3,977 | $4,574 | $5,259 | $6,048 |
| Current portion of long-term debt | $2,570 | $2,868 | $3,199 | $3,570 | $3,983 |
| Income taxes | $0 | $0 | $0 | $0 | $0 |
| Accrued expenses | $26,441 | $3,178 | $3,636 | $4,161 | $4,762 |
| Other current liabilities | $0 | $0 | $0 | $0 | $0 |
| Dividends paid | ($28,622) | ($47,625) | ($68,162) | ($93,977) | ($126,097) |
| Net cash from operations | $57,939 | ($60,696) | ($83,311) | ($111,529) | ($146,427) |
| Investment transactions | |||||
| Increases (decreases) | |||||
| Land | $0 | $0 | $0 | $0 | $0 |
| Buildings and improvements | $0 | $0 | $0 | $0 | $0 |
| Equipment | $0 | $0 | $0 | $0 | $0 |
| Furniture/Fixtures | $0 | $1,050 | $1,105 | $1,166 | $1,233 |
| Intangible assets | $0 | $0 | $0 | $0 | $0 |
| Net cash from investments | $0 | $1,050 | $1,105 | $1,166 | $1,233 |
| Financing transactions | |||||
| Increases (decreases) | |||||
| Short-term notes payable | $0 | $0 | $0 | $0 | $0 |
| Long-term debt | ($24,781) | ($27,649) | ($30,848) | ($34,418) | ($38,401) |
| Deferred income | $0 | $0 | $0 | $0 | $0 |
| Deferred income taxes | $0 | $0 | $0 | $0 | $0 |
| Other long-term liabilities | $0 | $0 | $0 | $0 | $0 |
| Capital stock and paid in capital | $0 | $0 | $0 | $0 | $0 |
| Net cash from financing | ($24,781) | ($27,649) | ($30,848) | ($34,418) | ($38,401) |
| Net increase (decrease) in cash | $94,902 | ($5,295) | ($5,425) | ($7,614) | ($12,383) |
| Cash at beginning of period | $100,000 | $194,902 | $189,607 | $184,182 | $176,568 |
| Cash at the end of period | $194,902 | $189,607 | $184,182 | $176,568 | $164,185 |
| Common Size Income Statement | |||||||
| Projected | Projected | Projected | Projected | Projected | Industry | ||
| 1999 | 2000 | 2001 | 2002 | 2003 | 1999 | ||
| Revenue from Sales | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% | |
| Cost of Sales | 55.5% | 55.5% | 55.5% | 55.5% | 55.5% | 55.8% | |
| Gross Profit | 44.5% | 44.5% | 44.5% | 44.5% | 44.5% | 44.2% | |
| Operating Expenses | 37.1% | 34.8% | 32.8% | 31.1% | 29.5% | 38.1% | |
| Operating Profit | 7.4% | 9.7% | 11.7% | 13.5% | 15.0% | 6.1% | |
| Other Expen./Inc (Net) | 0.6% | 0.6% | 0.5% | 0.5% | 0.5% | -2.7% | |
| PRE-TAX PROFIT | 8.1% | 10.3% | 12.3% | 14.0% | 15.5% | 3.4% | |
| Income Taxes | 1.9% | 2.8% | 3.7% | 4.4% | 5.1% | 0.0% | |
| INCOME AFTER TAXES | 6.2% | 7.4% | 8.6% | 9.5% | 10.4% | 3.4% | |
| Common Size Balance Sheet | |||||||
| Cash & Equivalent | 13.4% | 12.9% | 12.4% | 11.7% | 10.7% | 7.0% | |
| Accounts Receivable | 3.5% | 4.0% | 4.5% | 5.1% | 5.8% | 10.5% | |
| Inventory | 7.1% | 8.1% | 9.2% | 10.4% | 11.8% | 35.7% | |
| Other Current | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.7% | |
| Total Current Assets | 23.9% | 24.9% | 26.0% | 27.2% | 28.4% | 53.9% | |
| Fixed Assets (Net) | 76.1% | 75.1% | 74.0% | 72.8% | 71.6% | 38.0% | |
| Intangibles | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 2.5% | |
| Other Assets | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 5.6% | |
| TOTAL ASSETS | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% | |
| Liabilities: | |||||||
| Accounts Payable | 1.8% | 2.1% | 2.4% | 2.7% | 3.0% | 13.2% | |
| Short-term Notes | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 6.6% | |
| Current Maturities (LTD) | 1.7% | 1.9% | 2.1% | 2.3% | 2.5% | 13.9% | |
| Income Taxes | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.3% | |
| Accrued Expenses | 1.8% | 2.0% | 2.2% | 2.5% | 2.8% | 8.0% | |
| Other Current Liabilities | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | |
| Total Current Liabilities | 5.3% | 6.0% | 6.7% | 7.4% | 8.3% | 42.0% | |
| Long-term Debt | 51.6% | 49.2% | 46.6% | 43.7% | 40.7% | 32.4% | |
| Other Non-Current | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 6.2% | |
| Total Liabilities | 56.9% | 55.2% | 53.2% | 51.2% | 49.0% | 80.6% | |
| TOTAL EQUITY | 43.1% | 44.8% | 46.8% | 48.8% | 51.0% | 19.4% | |
| Total Liabilities & Equity | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% | |
Average Monthly Break-Even Analysis 1999
| ——————Per Month-1st Year—————— | |||
| Cost Variables |
Optimistic
-20.00% |
Most Likely
Case |
Pessimistic
20.00% |
| FIXED COSTS: | |||
| Rentals/Leases | $0 | $0 | $0 |
| Salaries (Fixed/Officers) | $2,560 | $3,200 | $3,840 |
| Insurance | $600 | $750 | $900 |
| Depreciation & Amortization | $300 | $375 | $450 |
| Interest | $5,793 | $7,242 | $8,690 |
| Utilities/Phone | $780 | $975 | $1,170 |
| (Other fixed costs) | $0 | $0 | $0 |
| Total Fixed Costs | $10,033 | $12,542 | $15,050 |
| VARIABLE COSTS: | |||
| Cost of Goods Sold | $32,257 | $40,321 | $48,385 |
| Variable Labor/Wages | $6,524 | $8,155 | $9,786 |
| Advertising | $1,600 | $2,000 | $2,400 |
| Professional Services | $283 | $354 | $425 |
| (Other variable cost) | $6,527 | $8,159 | $9,791 |
| Total Variable Costs | $47,191 | $58,989 | $70,787 |
| SALES AND INCOME DATA: | |||
| Average Income Per Customer | $77.75 | $77.75 | $77.75 |
| Average # of Customers Per Month | $1,200.00 | $1,000.00 | $800.00 |
| RESULTS: | |||
| Fixed Costs per Customer | $8.36 | $12.54 | $18.81 |
| Variable Costs per Customer | $39.33 | $58.99 | $88.48 |
| Break-Even Number of Customers | $261.12 | $668.49 | ($1,402.14) |
| Number of Customers over Break-Even | $938.88 | $331.51 | $2,202.14 |
| Break-Even Sales Amount | $20,301.92 | $51,974.85 | ($109,016.33) |
| Gross Profit per Customer | $38.42 | $18.76 | ($10.73) |
| Gross Profit (over Break-Even) | $36,075.62 | $6,219.53 | ($23,636.56) |
Average Monthly Break-Even Analysis 2000
| ——————Per Month-1st Year—————— | |||
| Cost Variables |
Optimistic
-20.00% |
Most Likely
Case |
Pessimistic
20.00% |
| FIXED COSTS: | |||
| Rentals/Leases | $0 | $0 | $0 |
| Salaries (Fixed/Officers) | $2,688 | $3,360 | $4,032 |
| Insurance | $630 | $787 | $945 |
| Depreciation & Amortization | $315 | $394 | $473 |
| Interest | $5,622 | $7,028 | $8,433 |
| Utilities/Phone | $819 | $1,024 | $1,229 |
| (Other fixed costs) | $0 | $0 | $0 |
| Total Fixed Costs | $10,074 | $12,592 | $15,111 |
| VARIABLE COSTS: | |||
| Cost of Goods Sold | $37,095 | $46,369 | $55,643 |
| Variable Labor/Wages | $7,053 | $9,378 | $11,254 |
| Advertising | $1,840 | $2,300 | $2,760 |
| Professional Services | $298 | $372 | $446 |
| (Other variable cost) | $7,366 | $9,208 | $11,049 |
| Total Variable Costs | $54,101 | $67,627 | $81,152 |
| SALES AND INCOME DATA: | |||
| Average Income Per Customer | $77.71 | $77.71 | $77.71 |
| Average # of Customers Per Month | $1,380.00 | $1,150.00 | $920.00 |
| RESULTS: | |||
| Fixed Costs per Customer | $7.30 | $10.95 | $16.42 |
| Variable Costs per Customer | $39.20 | $58.81 | $88.21 |
| Break-Even Number of Customers | $261.64 | $666.23 | ($1,438.83) |
| Number of Customers over Break-Even | $1,118.36 | $483.77 | $2,358.83 |
| Break-Even Sales Amount | $20,331.17 | $51,770.73 | ($111,806.26) |
| Gross Profit per Customer | $38.50 | $18.90 | ($10.50) |
| Gross Profit (over Break-Even) | $43,059.83 | $9,143.53 | ($24,772.76) |
Break-Even Table Year 1
| Income per customer | $77.75 |
| Total fixed Costs | $12,541.50 |
| Variable costs per customer | $58.99 |
| # of customers | Total Revenues | Total Costs |
| 401.09 | $31,185 | $36,202 |
| 467.94 | $36,382 | $40,145 |
| 534.79 | $41,580 | $44,088 |
| 601.64 | $46,777 | $48,032 |
| 668.49 | $51,975 | $51,975 |
| 735.34 | $57,172 | $55,918 |
| 802.18 | $62,370 | $59,862 |
| 869.03 | $67,567 | $63,805 |
| 935.88 | $72,765 | $67,748 |
| 1002.73 | $77,962 | $71,692 |
Break-Even Table Year 2
| Income per customer | $77.71 | |
| Total fixed Costs | $12,592.32 | |
| Variable costs per customer | $58.81 | |
| # of customers | Total Revenues | Total Costs |
| 399.74 | 31,062 | 36,099 |
| 466.36 | 36,240 | 40,017 |
| 532.99 | 41,417 | 43,935 |
| 599.61 | 46,594 | 47,853 |
| 666.23 | 51,771 | 51,771 |
| 732.86 | 56,948 | 55,689 |
| 799.48 | 62,125 | 59,606 |
| 866.1 | 67,302 | 63,524 |
| 932.73 | 72,479 | 67,442 |
| 999.35 | 77,656 | 71,360 |
Rates of Return
| Net Income | IRR | MIRR | Annual Dividends | Total Assets | |
| Initial Investment | $(800,000) | ||||
| 1999 | $53,719 | N/A | -93.29% | $21,488 | $1,561,289 |
| 2000 | $76,138 | 0 | -20.48% | $45,683 | $1,578,125 |
| 2001 | $105,240 | 0 | 73.14% | $84,192 | $1,584,892 |
| 2002 | $140,511 | -22.14% | 154.12% | $112,409 | $1,597,513 |
| 2003 | $183,391 | -9.32% | 219.67% | $146,713 | $1,617,518 |
Assumptions:
Income figures are after taxes Dividend Payout = 50% of After Tax Income Reinvestment rate = 7%
IRR = International rate of return MIRR = Modified rate of return ROI = Rate of return on owner's investment ROA = Rate of return on total assets
IRR = the interest rate received for an investment and income that occur at regular periods. MIRR = adds the cost of funds and interest received on reinvestment of cash to the IRR.
| 1999 | 2000 | 2001 | 2002 | 2003 | |
| Return on Assets | 3.4% | 4.82% | 6.64% | 8.80% | 11.34% |
| Return on Investment | 2.69% | 5.71% | 10.52% | 14.05% | 18.34% |
| Income Per Share | $0.07 | $0.10 | $0.13 | $0.18 | $0.23 |
| Dividends Per Share | $0.03 | $0.06 | $0.11 | $0.14 | $0.18 |
Loan Compliance Covenants
| Year |
Net
Working Capital |
Current
Ratio |
Quick
Ragio |
EBIT/
Interest |
EBIT/
I+P |
EBIT/
Equity |
Z-Score |
| 1999 | $164,436 | 3.46 | 2.02 | 1.84 | 1.51 | 0.88 | 1.47 |
| 2000 | $192,278 | 3.54 | 2.08 | 2.29 | 0.21 | 0.83 | 1.67 |
| 2001 | $208,898 | 3.4 | 1.92 | 2.93 | 0.66 | 0.79 | 1.9 |
| 2002 | $230,503 | 3.3 | 1.78 | 3.74 | 3.82 | 0.75 | 2.19 |
| 2003 | $258,324 | 3.23 | 1.68 | 4.81 | 0 | 0.71 | 2.52 |
| Industry Median | N/A | 1.4 | 0.4 | 2 | N/A | 3 | N/A |
Annual Projections Summary
| Projection Period |
Gross
Profit |
After-Tax
Net Income |
Cash from
Operations |
Book
Equity |
| Start-Up/Base | $800,000 | |||
| 1999 | $413,022 | $53,719 | $73,719 | $832,231 |
| 2000 | $474,975 | $76,138 | $97,138 | $862,686 |
| 2001 | $555,722 | $105,240 | $127,343 | $883,734 |
| 2002 | $652,974 | $140,511 | $163,830 | $911,836 |
| 2003 | $770,508 | $183,391 | $208,050 | $948,514 |
Income Statement Chart
| Projected 1999 | Projected 2000 | Projected 2001 | Projected 2002 | Projected 2003 | |
| Sales | 927,000 | 1,066,050 | 1,225,958 | 1,409,852 | 1,621,329 |
| Cost of Sales | 514,229 | 591,364 | 680,068 782,079 | 899,390 | |
| Expenses | 344,137 | 371,264 | 402,338 | 437,939 | 478,734 |
| Operating Income | 68,634 | 103,422 | 143,552 | 189,834 | 243,205 |
| Income Taxes | 17,390 | 30,347 | 45,317 | 62,577 | 82,473 |
| Net Income | 57,244 | 79,375 | 104,866 | 134,252 | 168,130 |
Balance Sheet Chart
| 1999 | 2000 | 2001 | 2002 | 2003 | |
| Current Assets | 348,864 | 366,663 | 387,796 | 410,724 | 433,464 |
| Fixed Assets | 1,110,500 | 1,106,825 | 1,102,957 | 1,098,876 | 1,094,561 |
| Total Assets | 1,459,364, | 1,473,488 | 1,490,753 | 1,509,600 | 1,528,025 |
| Current Liabilities | 77,734 | 87,757 | 99,166 | 112,156 | 126,949 |
| Total Liabilities | 830,742 | 813,116 | 793,677 | 772,249 | 748,641 |
| Net Worth | 628,622 | 660,372 | 697,076 | 737,351 | 779,384 |
Growth Trends
| 1999 | 2000 | 2001 | 2002 | 2003 | |
| Cost of Goods Sold | $514,229 | $591,364 | $680,068 | $782,079 | $899,390 |
| Total Expenses | $344,137 | $371,264 | $402,338 | $437,939 | $478,734 |
| Total Revenue | $933,000 | $1,072,350 | $1,232,589 | $1,416,847 | $1,628,727 |
Net Income Growth
| 1999 | 2000 | 2001 | 2002 | 2003 | |
| Net Income | $57,244 | $79,375 | $104,866 | $134,252 | $168,130 |
Composition of Income - First Year
| 1999 | |
| Nursery Sales | $797,000 |
| Café Sales | $130,000 |
| Other Income/Exp. (Net) | $6,000 |
Breakdown of Expenses - First Year
| 1999 | |||
| Cost of Goods Sold | $483,850 | ||
| Labor Expenses | $183,303 | ||
| Interest Expenses | $86,902 | Total First Year Expenses | $858,366 |
| Rent, Utilities, Repairs | $13,400 | ||
| Other Expenses | $90,911 |
Selected Key Ratios Chart
| 5 Year-Average Business | Average Industry | |
| Current Ratio | 3.93 | 1.4 |
| Cost of Sales / Inventory | 4.98 | 5.7 |
| Cost of Sales / Payables | 19.4 | 20 |
| EBIT / Interest | 2.97 | 2 |
| Debt / Worth | 1.14 | 3 |
| Sales / Total Assets | 0.01 | 0.02 |
| Sales / Receivables | 18.25 | 40 |
Ratio Comparison
|
Projected
1999 |
Projected
2000 |
Projected
2001 |
Projected
2002 |
Projected
2003 |
Industry Ave.
1999 |
|
| Liquidity Ratios: | ||||||
| Current Ratio | 4.49 | 4.18 | 3.91 | 3.66 | 3.41 | 1.4 |
| Quick Ratio | 3.16 | 2.83 | 2.53 | 2.26 | 1.99 | 0.4 |
| Sales/Receivables | 18.25 | 18.25 | 18.25 | 18.25 | 18.25 | 40 |
| Day's Receivables | 20 | 20 | 20 | 20 | 20 | 9.13 |
| Cost of Sales/Inventory | 4.98 | 4.98 | 4.98 | 4.98 | 4.98 | 5.7 |
| Day's Inventory | 73.23 | 73.23 | 73.23 | 73.23 | 73.23 | 64.04 |
| Cost of Sales/Payables | 19.4 | 19.4 | 19.4 | 19.4 | 19.4 | 20 |
| Day's Payables | 18.82 | 18.82 | 18.82 | 18.82 | 18.82 | 18.25 |
| Sales/Work. Capital | 3.42 | 3.82 | 4.25 | 4.72 | 5.29 | 18.2 |
| EBIT/Interest | 1.86 | 2.3 | 2.84 | 3.51 | 4.36 | 2 |
| Net Profit +Depr.+Amort./C.L.T.D. | 2.49 | 3.04 | 3.56 | 4.05 | 4.52 | 2.4 |
| Leverage Ratios: | ||||||
| Fixed Assets / Tangible Net Worth | 1.77 | 1.68 | 1.58 | 1.49 | 1.4 | 2 |
| Debt / Worth | 1.32 | 1.23 | 1.14 | 1.05 | 0.96 | 3 |
| Operating Ratios: | ||||||
| Profit Before Tax / Tan. Net Worth | 11.87% | 16.62% | 21.54% | 26.69% | 32.15% | 21.20% |
| Profit Before Tax / Total Assets | 5.11% | 7.45% | 10.07% | 13.04% | 16.40% | 8.20% |
| Sales / Net Fixed Assets | 0.83% | 0.96% | 1.11% | 1.28% | 1.48% | 7.90% |
| Sales / Total Assets | 0.64% | 0.72% | 0.82% | 0.93% | 1.06% | 2.00% |
| Other Ratios / Numbers: | ||||||
| Officers Salaries (Actual) | $38,400 | $40,320 | $42,437 | $44,771 | $47,345 | N/A |
| Equity (Net Worth) | $628,622 | $660,372 | $697,076 | $737,351 | $779,384 | N/A |
| Loans Balance (Actual) | $777,789 | $753,008 | $725,359 | $694,511 | $660,093 | N/A |
| % Deprec., Amort./Sales | 0 | 0 | 0 | 0 | 0 | 2.3 |
| % Officers Compensation/Sales | 0.04 | 0.04 | 0.03 | 0.03 | 0.03 | 5.3 |
| Tangible Net Worth (NW-Intangibles) | $628,622 | $660,372 | $697,076 | $737,351 | $779,384 | N/A |
| Working Capital (Actual) | $271,130 | $278,906 | $288,630 | $298,568 | $306,515 | N/A |
| Gross Profit: | ||||||
| Key Percentages as a Percent of Gross Profit | ||||||
| Rent | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% |
| Interest Paid | 21.05% | 17.77% | 14.92% | 12.47% | 10.35% | 0.00% |
| Depreciation & Amortization | 1.09% | 1.00% | 0.91% | 0.84% | 0.77% | 0.00% |
| Officers Compensation | 9.30% | 8.49% | 7.77% | 7.13% | 6.56% | 0.00% |
| Taxes Paid | 4.21% | 6.39% | 8.30% | 9.97% | 11.42% | N/A |
RATIO ANALYSIS
Current Ratio is an approximate measure of a firm's ability to meet its current obligations and is calculated as Current Assets divided by Current Liabilities. This ratio shows an upward trend and indicates that if the company meets its goals it will be relatively more stable than the industry in general.
Revenue to Working Capital Ratio is a measure of the margin of protection for current creditors. This ratio is on a downward trend and indicates a good level of safety for creditors.
EBIT to Interest Ratio is a measure of ability to meet annual interest payments. Since this ratio is above industry averages, the company should have no problem servicing its debt and can even service greater amounts of debt.
The Current Maturities Coverage Ratio measures the ability to pay current maturities of long-term debt with cash flow from operations. It is calculated as Net Income Depreciation, Amortization divided by current portion of long-term debt. This ratio shows an upward trend which indicates the company should be better to service its debt than the average company.
The Fixed Assets to Tangible Net Worth Ratio measures the extent to which owner's equity has been invested in the business. Since this ratio is on a downward trend, it provides an even larger "cushion" to creditors in the event of liquidation.
The Debt to Equity Ratio expresses the relationship between capital contributed by creditors and capital contributed by owners. This ratio shows a downward trend which would seem to indicate that if the company meets its goals that it will provide greater long-term financial safety for creditors.
The Earnings before Taxes to Total Assets Ratio expresses the pre-tax return on total assets and measures the effectiveness of management in employing available resources. Since this ratio is above industry averages, the company would be more efficient than the industry in its effective employment of resources.
The Revenue to Total Assets Ratio is a general measure of ability to generate revenue in relation to total assets. This ratio is above industry averages which can indicate that the company is efficient in using available resources to generate revenue as compared to the industry.
The Depreciation, Amortization to Revenue Ratio is a general measure of cost to generate revenue under the matching principal. Since this ratio is consistently below industry averages it would seem to indicate that the company is more efficient generating revenue as compared to the industry.
CONCLUSIONS & SUMMARY
We feel that the type of company and service we are proposing is hitting the market at just the right time. We plan to fully repay the loan by the end of the third year. However, we will schedule repayments over ten years to give us flexibility. By applying our conservative projections, income for the first year is expected to be $21,194 after taxes and debt service. This will rise to $76,822 in the second and $124,363 by the fifth year. The business should be open for business by spring of 1997.
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