STEP 13 – FINANCIAL STATEMENTS ANALYSIS
Benson & David Yard Care Limited’s projected financial statements for Year 1, Year 2, and Year 3 are represented below.
Pro forma cash flow
Pro Forma Cash Flow
Year 1
Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $31,311
$68,441
$73,391
Cash from Receivables $10,437
$22,814
$24,464
Subtotal Cash from Operations $41,748
$91,254
$97,854
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 $41,748
$91,254
$97,854
Expenditures Year 1
Year 2
Year 3
Expenditures from Operations
Cash Spending $35,300
$60,900
$60,900
Bill Payments $12,129
$20,205
$23,413
Subtotal Spent on Operations $47,429
$47,429
$84,313
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
$7,000
$0
Dividends $0
$0
$0
Subtotal Cash Spent $49,229
$89,905
$86,113
Net Cash Flow ($7,481)
$1,349
$11,741
Cash Balance $6,919
$8,268
$20,009
3-year income statement
The projected operating results for Benson & David Yard Care Limited’s 3-year planning period as shown in the pro-forma income statements below.
Projected cash flow
3-year pro forma balance sheet
The projected financial standings at the end of each fiscal year for the planning period are as shown below.
Pro forma balance sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $6,919
$8,268
$20,009
Accounts Receivable $0
$0
$0
Other Current Assets $0
$0
$0
Total Current Assets $6,919
$8,268
$20,009
Long-term Assets
Long-term Assets $4,750
$11,750
$11,750
Accumulated Depreciation $1,152
$3,704
$6,256
Total Long-term Assets $3,598
$8,046
$5,494
Total Assets $10,517
$16,314
$25,503
Liabilities and Capital Year 1
Year 2
Year 3
Current Liabilities
Accounts Payable $336 $1,779
$1,937
Current Borrowing $0
$0
$0
Other Current Liabilities $0
$0
$0
Subtotal Current Liabilities $336
$1,779
$1,937
Long-term Liabilities $17,650
$15,850
$14,050
Total Liabilities $17,986
$17,629
$15,987
Paid-in Capital $0
$0
$0
Retained Earnings ($300)
($7,469)
($1,316)
Earnings ($7,169)
$6,153
$10,831
Total Capital ($7,469)
($1,316)
$9,515
Total Liabilities and Capital $10,517
$16,314
$25,503
Net Worth ($7,469)
($1,316)
$9,515
Projected profit and loss
The table below represents the projected 3-year profit and loss for the business
Pro Forma Profit and Loss
Year 1
Year 3
Year 3
Sales $41,748
$91,254
$97,854
Direct Cost of Sales $2,922
$6,388
$6,850
Other $0
$0
$0
Total Cost of Sales $2,922
$6,388
$6,850
Gross Margin $38,826
$84,866
$91,004
Gross Margin % 93.00%
93.00%
93.00%
Expenses
Payroll $35,300
$60,900 $60,900
Sales and Marketing and Other Expenses $0
$0
$0
Depreciation $1,152
$2,552
$2,552
Leased Equipment $0
$0
$0
Utilities $0
$0
$0
Insurance $1,200 $1,200 $1,200
Licenses + bonded fees $1,200
$1,200
$1,200
Payroll Taxes $5,295
$9,135
$9,135
Other $0
$0
$0
Total Operating Expenses $44,147
$74,987
$74,987
Profit Before Interest and Taxes ($5,321)
$9,879
$16,017
EBITDA ($4,169)
$12,431
$18,569
Interest Expense $1,847
$1,675
$1,495
Taxes Incurred $0
$2,051
$3,691
Net Profit ($7,169)
$6,153
$10,831
Net Profit/Sales -17.17%
6.74%
11.07%
Break-even analysis
According to the projected income statement for Benson & David Yard Care Limited, the business is expected to run above the break-even point for each of the five years.
STEP 14 – LOAN & INVESTMENT PROPOSAL
Loan proposal
Benson & David Yard Care Limited is requesting a three-year loan amounting total of $75,000 in order to finance the start-up. The loan request can be collateralized, at least to some degree, where the title shall be on the truck and equipment. The proposed business has approximately $65,000 at hand as collateral for securing the loan.
Investment proposal
Benson & David Yard Care Limited shall use the loan requested as follows:
– A combined total of $65,000 shall be spent on purchasing a truck and equipment.
– The remaining loan proceeds shall be utilized to purchase necessary supplies i.e. fertilizer and other related chemicals.
