financial plan

income_statement.docx

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Income Statement
	Data for Year Ended
	Year 1	Year 2	Year 3
Sales	$798,000	$910,023	$1,010,069

Cost of Sales	400,073	450,230	499,780
	--------	--------	--------
Gross Profit	397,927	459,793	510,289

Wages Expense	45,000	50,000	55,000
Selling & Admin. Expenses	100,000	100,000	100,000
Depreciation	12,000	12,000	12,000
Other	52,000	52,000	52,000
	--------	--------	--------
Total Expenses	209,000	214,000	219,000
	--------	--------	--------
Net Income Before Interest & Taxes	188,927	245,793	291,289
Interest Expense	13,000	13,000	13,000
Taxes	37,785	49,159	58,258
	--------	--------	--------
Net Income After Taxes	$138,142	$183,634	$220,031
	========	========	========
Cumulative before tax earnings	175,927	408,720	687,009




Cash Needs Assessment
	Data for Year Ended
	Year 1	Year 2	Year 3
Sales	$798,000	$910,023	$1,010,069
Change in Receivables	-42,069	-23,017	-12,083
	--------	--------	--------
Cash From Sales	755,931	887,006	997,986
	--------	--------	--------
Cost of Sales	400,073	450,230	499,780
Change in Payables	-63,459	-63,069	-59,357
Change in Inventory	21,390	40,052	47,274
	--------	--------	--------
Cash Cost of Sales	358,004	427,213	487,697
	--------	--------	--------
Cash Margin	397,927	459,793	510,289


Cash Wages	45,000	50,000	55,000
Selling & Administrative	100,000	100,000	100,000
Other	52,000	52,000	52,000
Net change in other current items	-	-	-
	--------	--------	--------
Total Cash Expenses	209,000	214,000	219,000
	--------	--------	--------
Net Cash From Operations	188,927	245,793	291,289

Income Taxes	37,785	49,159	58,258
Interest Expense	-13,000	-13,000	-13,000
Investment and Financing Transactions
Purchase of Building	100,000	-	-
Issue (Retire) Long-term Debt	-	-	-80,000
Delivery Expense	5,000	5,000	5,000
Purchase Delivery Vehicles	80,000
	--------	--------	--------
Total Nonoperating Cash Changes	-15,679	-27,897	-13,469
	--------	--------	--------
Net Cash Increase (Dec)	-$62,537	$150,737	$121,562

Financial Plan. This section includes an MS Word section and an MS Excel section. NOTE: Online financial templates usually lead you astray. Therefore, you may not use them! You must build your own Excel® spreadsheets.

. Narrative assumptions or the premises for resource needs. (Note: For some reason, many students forget to include this section. Unfortunately, if you forget to do the narrative assumptions your grade will suffer!) You may bullet point these; in fact, that is typically a better format for assumptions. What is an assumption? It could be the number of units of your product you intend to sell; what price you will sell them for; the revenue growth rate you are assuming; the percentage of the selling price that will represent the COGS; your monthly rent; interest rate on any loan you take; etc. Anything that drives your revenues and expenses that is not generally known needs to have an assumption attached. That means that simple items purchased, such as computers and furniture, do not need assumptions. Only those things that are out of the ordinary or vary considerably need assumptions. Also include in here the legal form your business will take; that will have an impact on the taxes your company will pay (or won’t pay).

. Cash needs assessment (three years of a cash budget, done annually). Include all cash invested in or loaned to the business as well as all of your expenses that must be paid out. When estimating your cash needs, be sure to include all start-up expenses as well as ongoing cash needs until your business can sustain itself. Remember that this will be different from your income statement, since not all cash coming in to the business (such as bank loan money and founder investments) shows up on an income statement, and there could be some non-cash expense items on the income statement. Also, if you take a bank loan, only the interest shows up on the income statement; there is also, however, a principal portion of the payment that is a cash outflow.

. Pro-forma income statement (three years, done annually). All expenses must be broken down in detail. You cannot simply list SG&A and report one lump sum, for example.