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Artificial Flowers Import Business Plan

Fantastic Florals, Inc.

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Financial Plan

7.0 Financial Plan

• Fantastic Florals, Inc. projects the gross margin to be at approximately 25 percent. Sales projection for 1995 is at £1.1 million, increasing to £1.5 million in 1996 and £2 million in 1997.
• FFI is looking for an investor who would invest £75,000 for 20 percent of the company.
• Cash-flow analysis, balance sheet, business ratio, break-even analysis, and other financial details are shown in the appendix.

7.1 Important Assumptions

General assumptions in FFI's financial plan indicate the assumption of a stable economy without any major recessions or booms in both the U.S. and Indonesian economies.

General Assumptions

General Assumptions
	1995	1996	1997
Plan Month	1	2	3
Current Interest Rate	15.00%	15.00%	15.00%
Long-term Interest Rate	10.00%	10.00%	10.00%
Tax Rate	39.17%	40.00%	39.17%
Sales on Credit %	50.00%	50.00%	50.00%
Other	0	0	0

7.2 Key Financial Indicators

Key financial indicators for Fantastic Florals, Inc. include:

• Constant gross margins.
• Sales on credit.
• Net worth.
• Return on equity.

Benchmarks



7.3 Break-even Analysis

FFI's break-even analysis indicates that the firm has a strong balance of costs and sales. The break-even point is at just over 1200 units and close to £21,000.

Break-even Analysis



Break-even Analysis

Break-even Analysis:
Monthly Units Break-even	1,228
Monthly Revenue Break-even	£20,870
Assumptions:
Average Per-Unit Revenue	£17.00
Average Per-Unit Variable Cost	£11.00
Estimated Monthly Fixed Cost	£7,366

7.4 Projected Profit and Loss

Fantastic Florals, Inc. projects profits for every month of 1995 and on into both 1996 and 1997, in addition to positive growth margins for the same time periods.

Profit and Loss

Pro Forma Profit and Loss
	1995	1996	1997
Sales	£1,143,065	£1,517,009	£1,981,105
Direct Costs of Goods	£756,550	£1,009,915	£1,318,845
Shipping etc.	£40,235	£44,260	£48,688
	------------	------------	------------
Cost of Goods Sold	£796,785	£1,054,175	£1,367,533
Gross Margin	£346,280	£462,835	£613,573
Gross Margin %	30.29%	30.51%	30.97%
Expenses:
Payroll	£43,200	£80,000	£108,000
Sales and Marketing and Other Expenses	£84,455	£118,860	£162,302
Depreciation	£2,400	£2,640	£2,904
Leased Equipment	£0	£0	£0
Utilities	£2,400	£2,640	£2,904
Insurance	£7,200	£7,920	£8,712
Rent	£15,600	£17,160	£18,876
Payroll Taxes (National Insurance)	£7,776	£14,400	£19,440
Other	£0	£0	£0
	------------	------------	------------
Total Operating Expenses	£163,031	£243,620	£323,138
Profit Before Interest and Taxes	£183,249	£219,215	£290,435
Interest Expense	£7,292	£2,250	£625
Taxes Incurred	£69,503	£86,786	£113,509
Net Profit	£106,455	£130,179	£176,301
Net Profit/Sales	9.31%	8.58%	8.90%

7.5 Projected Cash Flow

FFI's cash balance is expected to increase each year, providing the necessary capital for expansion into different product lines and distribution channels.

Cash



Cash Flow

Pro Forma Cash Flow
	1995	1996	1997
Cash Received
Cash from Operations:
Cash Sales	£571,533	£758,505	£990,553
Cash from Receivables	£485,730	£730,435	£955,716
Subtotal Cash from Operations	£1,057,262	£1,488,939	£1,946,268
Additional Cash Received
VAT, VAT, HST/GST Received	£0	£0	£0
New Current Borrowing	£48,889	£0	£0
New Other Liabilities (interest-free)	£0	£0	£0
New Fixed liabilities	£0	£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	£1,106,151	£1,488,939	£1,946,268
Expenditures	1995	1996	1997
Expenditures from Operations:
Cash Spending	£134,076	£160,127	£207,751
Payment of Accounts Payable	£894,116	£1,241,016	£1,597,987
Subtotal Spent on Operations	£1,028,192	£1,401,143	£1,805,738
Additional Cash Spent
VAT, VAT, HST/GST Paid Out	£0	£0	£0
Principal Repayment of Current Borrowing	£62,221	£13,332	£8,336
Other Liabilities Principal Repayment	£0	£0	£0
Fixed liabilities Principal Repayment	£0	£0	£0
Purchase Other Current Assets	£0	£0	£0
Purchase Fixed assets	£0	£0	£0
Dividends	£0	£0	£0
Subtotal Cash Spent	£1,090,413	£1,414,475	£1,814,074
Net Cash Flow	£15,738	£74,464	£132,194
Cash Balance	£85,738	£160,203	£292,396

7.6 Projected Balance Sheet

The balance sheet indicates a positive and ever-increasing net worth for FFI, expected to reach close to £440,000 by 1997.

Balance Sheet

Pro Forma Balance Sheet
Assets
Current Assets	1995	1996	1997
Cash	£85,738	£160,203	£292,396
Accounts Receivable	£85,803	£113,873	£148,710
Stock	£133,182	£177,784	£232,168
Other Current Assets	£0	£0	£0
Total Current Assets	£304,723	£451,859	£673,273
Fixed assets
Fixed assets	£0	£0	£0
Accumulated Depreciation	£2,400	£5,040	£7,944
Total Fixed assets	(£2,400)	(£5,040)	(£7,944)
Total Assets	£302,323	£446,819	£665,329
Liabilities and Capital
Current Liabilities	1995	1996	1997
Accounts Payable	£142,300	£169,950	£220,496
Current Borrowing	£21,668	£8,336	£0
Other Current Liabilities	£0	£0	£0
Subtotal Current Liabilities	£163,968	£178,286	£220,496
Fixed liabilities	£0	£0	£0
Total Liabilities	£163,968	£178,286	£220,496
Paid-in Capital	£35,000	£35,000	£35,000
Retained Earnings	(£3,100)	£103,355	£233,533
Earnings	£106,455	£130,179	£176,301
Total Capital	£138,355	£268,533	£444,834
Total Liabilities and Capital	£302,323	£446,819	£665,329
Net Worth	£138,355	£268,533	£444,834

7.7 Business Ratios

The ratios illustrated in the table indicate strong, consistent growth. Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 5193, Flowers and Florist's Supplies, are shown for comparison.

Ratios

Ratio Analysis
	1995	1996	1997	Industry Profile
Sales Growth	0.00%	32.71%	30.59%	-8.50%
Percent of Total Assets
Accounts Receivable	28.38%	25.49%	22.35%	6.70%
Stock	44.05%	39.79%	34.90%	10.40%
Other Current Assets	0.00%	0.00%	0.00%	26.40%
Total Current Assets	100.79%	101.13%	101.19%	43.50%
Fixed assets	-0.79%	-1.13%	-1.19%	56.50%
Total Assets	100.00%	100.00%	100.00%	100.00%
Current Liabilities	54.24%	39.90%	33.14%	19.50%
Fixed liabilities	0.00%	0.00%	0.00%	21.40%
Total Liabilities	54.24%	39.90%	33.14%	40.90%
Net Worth	45.76%	60.10%	66.86%	59.10%
Percent of Sales
Sales	100.00%	100.00%	100.00%	100.00%
Gross Margin	30.29%	30.51%	30.97%	50.80%
Selling, General & Administrative Expenses	21.06%	21.93%	22.19%	34.40%
Advertising Expenses	1.05%	0.89%	0.76%	0.20%
Profit Before Interest and Taxes	16.03%	14.45%	14.66%	1.50%
Main Ratios
Current	1.86	2.53	3.05	2.09
Quick	1.05	1.54	2.00	1.03
Total Debt to Total Assets	54.24%	39.90%	33.14%	40.90%
Pre-tax Return on Net Worth	127.18%	80.80%	65.15%	1.10%
Pre-tax Return on Assets	58.20%	48.56%	43.56%	1.90%
Additional Ratios	1995	1996	1997
Net Profit Margin	9.31%	8.58%	8.90%	n.a
Return on Equity	76.94%	48.48%	39.63%	n.a
Activity Ratios
Accounts Receivable Turnover	6.66	6.66	6.66	n.a
Collection Days	43	48	48	n.a
Stock Turnover	8.00	6.50	6.43	n.a
Accounts Payable Turnover	7.26	7.46	7.48	n.a
Payment Days	26	45	43	n.a
Total Asset Turnover	3.78	3.40	2.98	n.a
Debt Ratios
Debt to Net Worth	1.19	0.66	0.50	n.a
Current Liab. to Liab.	1.00	1.00	1.00	n.a
Liquidity Ratios
Net Working Capital	£140,755	£273,573	£452,778	n.a
Interest Coverage	25.13	97.42	464.55	n.a
Additional Ratios
Assets to Sales	0.26	0.29	0.34	n.a
Current Debt/Total Assets	54%	40%	33%	n.a
Acid Test	0.52	0.90	1.33	n.a
Sales/Net Worth	8.26	5.65	4.45	n.a
Dividend Payout	0.00	0.00	0.00	n.a