Machine Tooling Business Plan

Machine Tooling Inc.

This business plan was created with Business Plan Pro software, the fastest way to prepare a complete business plan.

With Business Plan Pro, you can open this plan (or any of the 500 others included in the product) and quickly customise it to match your business. Or you can use the software's step-by-step wisard to easily create a custom business plan from scratch. Learn more »

Finance

7.0 Finance

The company is seeking £500,000 for expansion purposes. The use of funds will be broken down as follows:

Marketing of new product lines	£30,000
Growth into new markets	£50,000
Purchasing additional equipment	£270,000
Working Capital	£100,000
Other (Debt Management)	£50,000

7.1 Projected Profit and Loss

The table below provides Machine Tooling's projected income statements for 2000-2002.

Profit and Loss

Pro Forma Profit and Loss
	2000	2001	2002
Sales	£1,960,000	£4,060,000	£5,260,000
Direct Costs of Goods	£400,000	£827,000	£1,069,000
Other	£0	£0	£0
	------------	------------	------------
Cost of Goods Sold	£400,000	£827,000	£1,069,000
Gross Margin	£1,560,000	£3,233,000	£4,191,000
Gross Margin %	79.59%	79.63%	79.68%
Expenses:
Payroll	£635,040	£910,000	£1,000,000
Sales and Marketing and Other Expenses	£167,900	£220,000	£265,000
Depreciation	£9,996	£30,000	£40,000
Quality Assurance	£93,800	£104,000	£125,000
General & Administrative	£96,000	£124,000	£174,000
Manufacturing & Engineering	£129,600	£130,000	£175,000
Machining & Systems Building	£86,400	£100,000	£110,000
Payroll Taxes (National Insurance)	£95,256	£136,500	£150,000
Other	£0	£0	£0
	------------	------------	------------
Total Operating Expenses	£1,313,992	£1,754,500	£2,039,000
Profit Before Interest and Taxes	£246,008	£1,478,500	£2,152,000
Interest Expense	£47,705	£29,150	£12,470
Taxes Incurred	£50,410	£362,338	£543,797
Net Profit	£147,893	£1,087,013	£1,595,733
Net Profit/Sales	7.55%	26.77%	30.34%

7.2 Projected Cash Flow

The company's projected cash flow statements are presented below.

• The existing current liabilities (£50,000 in total) are paid out in ten monthly payments of £5,000 each starting in March, 2000.
• The £500,000 long-term loan is expected to be secured in January, 2000 (two payments of £250,000 each are expected in January and February). This loan will be repaid quarterly over three years.
• In April, £50,000 from the expected loan will be used to completely repay the existing long-term obligations.
• After that, in May and June, 2000, the company will purchase additional equipment and buildings in the total amount of £270,000.
• In years 2001 and 2002, further capital expenditures in the amount of £200,000 and £300,000, respectively, are planned to accommodate for increased sales. In both cases, "ten year, straight-line" depreciation is assumed.

Cash



Cash Flow

Pro Forma Cash Flow
	2000	2001	2002
Cash Received
Cash from Operations:
Cash Sales	£490,000	£1,015,000	£1,315,000
Cash from Receivables	£1,352,925	£2,780,277	£3,793,730
Subtotal Cash from Operations	£1,842,925	£3,795,277	£5,108,730
Additional Cash Received
VAT, VAT, HST/GST Received	£0	£0	£0
New Current Borrowing	£0	£0	£0
New Other Liabilities (interest-free)	£0	£0	£0
New Fixed liabilities	£500,000	£0	£0
Sales of Other Current Assets	£0	£0	£0
Sales of Fixed assets	£0	£0	£0
New Investment Received	£0	£0	£0
Subtotal Cash Received	£2,342,925	£3,795,277	£5,108,730
Expenditures	2000	2001	2002
Expenditures from Operations:
Cash Spending	£138,658	£224,124	£284,739
Payment of Accounts Payable	£1,704,746	£2,814,733	£3,386,897
Subtotal Spent on Operations	£1,843,404	£3,038,857	£3,671,636
Additional Cash Spent
VAT, VAT, HST/GST Paid Out	£0	£0	£0
Principal Repayment of Current Borrowing	£50,000	£0	£0
Other Liabilities Principal Repayment	£0	£0	£0
Fixed liabilities Principal Repayment	£175,100	£166,800	£166,800
Purchase Other Current Assets	£0	£0	£0
Purchase Fixed assets	£270,000	£200,000	£300,000
Dividends	£0	£0	£0
Subtotal Cash Spent	£2,338,504	£3,405,657	£4,138,436
Net Cash Flow	£4,421	£389,620	£970,294
Cash Balance	£64,421	£454,041	£1,424,335

7.3 Balance Sheets - Projected

The company's projected balance sheets for 2000-2002 are presented below.

Balance Sheet

Pro Forma Balance Sheet
Assets
Current Assets	2000	2001	2002
Cash	£64,421	£454,041	£1,424,335
Accounts Receivable	£247,075	£511,798	£663,069
Stock	£135,600	£280,353	£362,391
Other Current Assets	£15,000	£15,000	£15,000
Total Current Assets	£462,096	£1,261,192	£2,464,794
Fixed assets
Fixed assets	£370,000	£570,000	£870,000
Accumulated Depreciation	£39,996	£69,996	£109,996
Total Fixed assets	£330,004	£500,004	£760,004
Total Assets	£792,100	£1,761,196	£3,224,798
Liabilities and Capital
Current Liabilities	2000	2001	2002
Accounts Payable	£79,307	£128,191	£162,860
Current Borrowing	£0	£0	£0
Other Current Liabilities	£10,000	£10,000	£10,000
Subtotal Current Liabilities	£89,307	£138,191	£172,860
Fixed liabilities	£374,900	£208,100	£41,300
Total Liabilities	£464,207	£346,291	£214,160
Paid-in Capital	£50,000	£50,000	£50,000
Retained Earnings	£130,000	£277,893	£1,364,905
Earnings	£147,893	£1,087,013	£1,595,733
Total Capital	£327,893	£1,414,905	£3,010,638
Total Liabilities and Capital	£792,100	£1,761,196	£3,224,798
Net Worth	£327,893	£1,414,905	£3,010,638

7.4 Untitled-2

The following table gives a detailed ratio analysis for Machine Tooling. The last column, Industry Profiles, is derived from the general machine industry, as described by the Standard Industry Classification (SIC) Index code 3569, General Industrial Machinery, NEC.

Ratios

Ratio Analysis
	2000	2001	2002	Industry Profile
Sales Growth	30.67%	107.14%	29.56%	-0.50%
Percent of Total Assets
Accounts Receivable	31.19%	29.06%	20.56%	24.80%
Stock	17.12%	15.92%	11.24%	26.10%
Other Current Assets	1.89%	0.85%	0.47%	24.20%
Total Current Assets	58.34%	71.61%	76.43%	75.10%
Fixed assets	41.66%	28.39%	23.57%	24.90%
Total Assets	100.00%	100.00%	100.00%	100.00%
Current Liabilities	11.27%	7.85%	5.36%	35.70%
Fixed liabilities	47.33%	11.82%	1.28%	18.50%
Total Liabilities	58.60%	19.66%	6.64%	54.20%
Net Worth	41.40%	80.34%	93.36%	45.80%
Percent of Sales
Sales	100.00%	100.00%	100.00%	100.00%
Gross Margin	79.59%	79.63%	79.68%	35.80%
Selling, General & Administrative Expenses	72.00%	52.86%	49.17%	20.80%
Advertising Expenses	2.27%	1.60%	1.33%	0.70%
Profit Before Interest and Taxes	12.55%	36.42%	40.91%	4.00%
Main Ratios
Current	5.17	9.13	14.26	2.20
Quick	3.66	7.10	12.16	1.15
Total Debt to Total Assets	58.60%	19.66%	6.64%	54.20%
Pre-tax Return on Net Worth	60.48%	102.43%	71.07%	7.30%
Pre-tax Return on Assets	25.04%	82.29%	66.35%	16.00%
Additional Ratios	2000	2001	2002
Net Profit Margin	7.55%	26.77%	30.34%	n.a
Return on Equity	45.10%	76.83%	53.00%	n.a
Activity Ratios
Accounts Receivable Turnover	5.95	5.95	5.95	n.a
Collection Days	59	45	54	n.a
Stock Turnover	3.00	3.98	3.33	n.a
Accounts Payable Turnover	21.55	22.34	21.01	n.a
Payment Days	21	13	16	n.a
Total Asset Turnover	2.47	2.31	1.63	n.a
Debt Ratios
Debt to Net Worth	1.42	0.24	0.07	n.a
Current Liab. to Liab.	0.19	0.40	0.81	n.a
Liquidity Ratios
Net Working Capital	£372,789	£1,123,001	£2,291,934	n.a
Interest Coverage	5.16	50.72	172.57	n.a
Additional Ratios
Assets to Sales	0.40	0.43	0.61	n.a
Current Debt/Total Assets	11%	8%	5%	n.a
Acid Test	0.89	3.39	8.33	n.a
Sales/Net Worth	5.98	2.87	1.75	n.a
Dividend Payout	0.00	0.00	0.00	n.a