A 10-year SBA loan will be secured to cover start-up expenses and the first 2-3 months of salary, rent, taxes, insurance and credit card fees.
A line-of-credit up to $25,000 will be used to cover any monthly cash-flow shortage and greater than anticipated inventory requirements.
Sales growth is expected to be aggressive with projections of sales increases of 15% in year two and 17% in year three.
Profits will be reinvested to reduce debt, expand product lines and increase personnel, as needed.
clair de lune is a retail store, and will not be selling on credit. clair de lune will accept cash, checks and all major credit cards.
Marketing and advertising will be no greater than 6% of sales.
7.1 Important Assumptions
General Assumptions
Year 1
Year 2
Year 3
Year 4
Year 5
Plan Month
1
2
3
4
5
Current Interest Rate
9.00%
9.00%
9.00%
9.00%
9.00%
Long-term Interest Rate
9.00%
9.00%
9.00%
9.00%
9.00%
Tax Rate
30.00%
30.00%
30.00%
30.00%
30.00%
Other
0
0
0
0
0
7.2 Break-even Analysis
Break-even Analysis
Monthly Revenue Break-even
$34,528
Assumptions:
Average Percent Variable Cost
50%
Estimated Monthly Fixed Cost
$17,264
7.3 Projected Profit and Loss
Pro Forma Profit and Loss
Year 1
Year 2
Year 3
Year 4
Year 5
Sales
$439,558
$505,492
$591,469
$617,547
$691,653
Direct Cost of Sales
$219,779
$252,746
$295,735
$308,774
$345,827
Other Costs of Goods
$0
$0
$0
$0
$0
Total Cost of Sales
$219,779
$252,746
$295,735
$308,774
$345,827
Gross Margin
$219,779
$252,746
$295,735
$308,774
$345,827
Gross Margin %
50.00%
50.00%
50.00%
50.00%
50.00%
Expenses
Payroll
$100,645
$117,896
$127,041
$133,393
$140,063
Marketing and Advertising
$26,495
$30,000
$34,000
$36,000
$38,000
Depreciation
$3,000
$3,000
$3,000
$3,000
$3,000
Start-up inventory amortization
$0
$0
$0
$0
$0
Rent
$36,000
$36,000
$36,000
$36,000
$36,000
Packaging
$2,400
$2,400
$2,400
$2,400
$2,400
Cell Phone
$600
$600
$600
$600
$600
Travel
$4,800
$2,400
$2,400
$2,400
$2,400
Utilities
$7,200
$7,416
$7,638
$7,868
$8,104
Payroll Taxes
$0
$0
$0
$0
$0
Merchandiser
$1,800
$1,800
$1,800
$1,800
$1,800
Buying Consultant
$9,600
$0
$0
$0
$0
Web Design
$1,420
$1,000
$1,000
$1,000
$1,000
Insurance
$2,496
$2,621
$2,752
$2,890
$3,034
Credit Card Fees
$10,110
$11,626
$13,604
$14,204
$15,908
Accountant
$600
$600
$600
$600
$600
Total Operating Expenses
$207,166
$217,360
$232,835
$242,155
$252,909
Profit Before Interest and Taxes
$12,613
$35,386
$62,900
$66,619
$92,918
EBITDA
$15,613
$38,386
$65,900
$69,619
$95,918
Interest Expense
$13,024
$12,134
$11,126
$10,009
$8,787
Taxes Incurred
$0
$6,976
$15,532
$16,983
$25,239
Net Profit
($410)
$16,277
$36,241
$39,627
$58,891
Net Profit/Sales
-0.09%
3.22%
6.13%
6.42%
8.51%
7.4 Projected Cash Flow
Pro Forma Cash Flow
Year 1
Year 2
Year 3
Year 4
Year 5
Cash Received
Cash from Operations
Cash Sales
$439,558
$505,492
$591,469
$617,547
$691,653
Subtotal Cash from Operations
$439,558
$505,492
$591,469
$617,547
$691,653
Additional Cash Received
Sales Tax, VAT, HST/GST Received
$0
$0
$0
$0
$0
New Current Borrowing
$0
$0
$0
$0
$0
New Other Liabilities (interest-free)
$0
$0
$0
$0
$0
New Long-term Liabilities
$0
$0
$0
$0
$0
Sales of Other Current Assets
$0
$0
$0
$0
$0
Sales of Long-term Assets
$0
$0
$0
$0
$0
New Investment Received
$0
$0
$0
$0
$0
Subtotal Cash Received
$439,558
$505,492
$591,469
$617,547
$691,653
Expenditures
Year 1
Year 2
Year 3
Year 4
Year 5
Expenditures from Operations
Cash Spending
$100,645
$117,896
$127,041
$133,393
$140,063
Bill Payments
$225,880
$372,142
$424,501
$441,651
$489,058
Subtotal Spent on Operations
$326,525
$490,038
$551,542
$575,044
$629,121
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out
$0
$0
$0
$0
$0
Principal Repayment of Current Borrowing
$0
$0
$0
$0
$0
Other Liabilities Principal Repayment
$0
$0
$0
$0
$0
Long-term Liabilities Principal Repayment
$9,908
$10,540
$11,855
$12,968
$14,185
Purchase Other Current Assets
$0
$0
$0
$0
$0
Purchase Long-term Assets
$0
$0
$0
$0
$0
Dividends
$0
$0
$0
$0
$0
Subtotal Cash Spent
$336,433
$500,578
$563,397
$588,012
$643,306
Net Cash Flow
$103,125
$4,914
$28,072
$29,536
$48,347
Cash Balance
$121,325
$126,239
$154,311
$183,846
$232,194
7.5 Projected Balance Sheet
Pro Forma Balance Sheet
Year 1
Year 2
Year 3
Year 4
Year 5
Assets
Current Assets
Cash
$121,325
$126,239
$154,311
$183,846
$232,194
Inventory
$20,790
$23,908
$27,975
$29,208
$32,713
Other Current Assets
$0
$0
$0
$0
$0
Total Current Assets
$142,115
$150,147
$182,286
$213,055
$264,907
Long-term Assets
Long-term Assets
$15,000
$15,000
$15,000
$15,000
$15,000
Accumulated Depreciation
$3,000
$6,000
$9,000
$12,000
$15,000
Total Long-term Assets
$12,000
$9,000
$6,000
$3,000
$0
Total Assets
$154,115
$159,147
$188,286
$216,055
$264,907
Liabilities and Capital
Year 1
Year 2
Year 3
Year 4
Year 5
Current Liabilities
Accounts Payable
$31,234
$30,529
$35,281
$36,391
$40,537
Current Borrowing
$0
$0
$0
$0
$0
Other Current Liabilities
$0
$0
$0
$0
$0
Subtotal Current Liabilities
$31,234
$30,529
$35,281
$36,391
$40,537
Long-term Liabilities
$140,092
$129,552
$117,697
$104,729
$90,544
Total Liabilities
$171,326
$160,081
$152,978
$141,120
$131,081
Paid-in Capital
$21,750
$21,750
$21,750
$21,750
$21,750
Retained Earnings
($38,550)
($38,960)
($22,684)
$13,558
$53,185
Earnings
($410)
$16,277
$36,241
$39,627
$58,891
Total Capital
($17,210)
($934)
$35,308
$74,935
$133,826
Total Liabilities and Capital
$154,115
$159,147
$188,286
$216,055
$264,907
Net Worth
($17,210)
($934)
$35,308
$74,935
$133,826
7.6 Business Ratios
The following table outlines some of the more important ratios from the Women’s Accessory and Specialty Store industry. The final column, Industry Profile, details specific ratios based on the industry as it is classified by the Standard Industry Classification (SIC) code, 5632.
Ratio Analysis
Year 1
Year 2
Year 3
Year 4
Year 5
Industry Profile
Sales Growth
0.00%
15.00%
17.01%
4.41%
12.00%
2.95%
Percent of Total Assets
Inventory
13.49%
15.02%
14.86%
13.52%
12.35%
63.14%
Other Current Assets
0.00%
0.00%
0.00%
0.00%
0.00%
16.69%
Total Current Assets
92.21%
94.34%
96.81%
98.61%
100.00%
86.54%
Long-term Assets
7.79%
5.66%
3.19%
1.39%
0.00%
13.46%
Total Assets
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
Current Liabilities
20.27%
19.18%
18.74%
16.84%
15.30%
28.54%
Long-term Liabilities
90.90%
81.40%
62.51%
48.47%
34.18%
10.62%
Total Liabilities
111.17%
100.59%
81.25%
65.32%
49.48%
39.16%
Net Worth
-11.17%
-0.59%
18.75%
34.68%
50.52%
60.84%
Percent of Sales
Sales
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
Gross Margin
50.00%
50.00%
50.00%
50.00%
50.00%
44.19%
Selling, General & Administrative Expenses
53.53%
49.23%
46.13%
45.85%
43.61%
21.68%
Advertising Expenses
0.00%
0.00%
0.00%
0.00%
0.00%
2.27%
Profit Before Interest and Taxes
2.87%
7.00%
10.63%
10.79%
13.43%
3.56%
Main Ratios
Current
4.55
4.92
5.17
5.85
6.53
2.90
Quick
3.88
4.14
4.37
5.05
5.73
0.53
Total Debt to Total Assets
111.17%
100.59%
81.25%
65.32%
49.48%
50.96%
Pre-tax Return on Net Worth
2.38%
-2489.95%
146.64%
75.55%
62.87%
9.06%
Pre-tax Return on Assets
-0.27%
14.61%
27.50%
26.20%
31.76%
18.48%
Additional Ratios
Year 1
Year 2
Year 3
Year 4
Year 5
Net Profit Margin
-0.09%
3.22%
6.13%
6.42%
8.51%
n.a
Return on Equity
0.00%
0.00%
102.64%
52.88%
44.01%
n.a
Activity Ratios
Inventory Turnover
6.73
11.31
11.40
10.80
11.17
n.a
Accounts Payable Turnover
8.23
12.17
12.17
12.17
12.17
n.a
Payment Days
27
30
28
30
28
n.a
Total Asset Turnover
2.85
3.18
3.14
2.86
2.61
n.a
Debt Ratios
Debt to Net Worth
0.00
0.00
4.33
1.88
0.98
n.a
Current Liab. to Liab.
0.18
0.19
0.23
0.26
0.31
n.a
Liquidity Ratios
Net Working Capital
$110,882
$119,618
$147,005
$176,664
$224,370
n.a
Interest Coverage
0.97
2.92
5.65
6.66
10.57
n.a
Additional Ratios
Assets to Sales
0.35
0.31
0.32
0.35
0.38
n.a
Current Debt/Total Assets
20%
19%
19%
17%
15%
n.a
Acid Test
3.88
4.14
4.37
5.05
5.73
n.a
Sales/Net Worth
0.00
0.00
16.75
8.24
5.17
n.a
Dividend Payout
0.00
0.00
0.00
0.00
0.00
n.a
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