Financial Plan for a Start Up

Business Plan
“Café Bistro” will be a premier retailer of coffee in UAE, operating in 3 markets, was formed in
2019. Its stock will be listed on NASDAQ for trade in June 2019 under the symbol “CB”. The
company will purchase high quality roasted coffee and sell a variety of coffee at its licensed café.

Mission

To maintain “Café Bistro” standing as a respected and most recognized brand in UAE.

Vision

Continue expanding number of stores, offer customers new coffee and become an employer of
choice.

Following is the financial forecasts for financial decision making purpose.

Assumptions

 Net profit must be at least 15%

 Plan how to get the financial resources
 Finance cost is 15% of loan amount
 Depreciation is 20% of cost of asset
 Corporate tax rate is 20%

CASH FLOW STATEMENT

Fiscal year ends in March 2019-03

Cash Flows From Operating Activities AED

Net income 4,518

Depreciation & amortization 1,306

Investment/asset impairment charges 38

Deferred income taxes
 715

Stock based compensation 250

Change in working capital 6,914

Accounts receivable 131

Inventory (41)

Prepaid expenses (677)

Accounts payable 392

Accrued liabilities
Income taxes payable

Other working capital 7,109

Other non-cash items (1,803)

Net cash provided by operating activities 11,938

Cash Flows From Investing Activities

Investments in property, plant, and equipment (1,976)

Acquisitions, net (703)

Purchases of investments (192)

Sales/Maturities of investments 504

Other investing activities 6

Net cash used for investing activities (2,362)

Cash Flows From Financing Activities

Debt issued 5,584

Debt repayment

Common stock issued 154

Common stock repurchased (7,134)

Excess tax benefit from stock based compensation

Dividend paid (1,743)

Other financing activities (104)

Net cash provided by (used for) financing activities (3,243)

Effect of exchange rate changes (40)

Net change in cash 6,294

Cash at beginning of period 2,462

Cash at end of period 8,756

Free Cash Flow

Operating cash flow 11,938

Capital expenditure (1,976)

Free cash flow 9,961

INTERPRETATION

Café Bistro depends upon its relationship with coffee bean producers, international trading
companies and exporter of the green product. These relations will be impacting on cash flows
and will be reinforcing the leadership role of the company in coffee industry.

INCOME STATEMENTS

Actual Forecast
Fiscal year ends in March 2019- 2020-3 2021-3 2022-3 2023-3
03
Revenue
24,720 27,192 29,911 32,902 36,193
Cost of revenue
17,368 19,105 21,015 23,117 25,428
Gross profit
7,352 8,087 8,896 9,786 10,764
Operating expenses
Depreciation @ 20%
1,759 1,935 2,128 2,341 2,575
Restructuring, merger and
acquisition (1,152) (1,267) (1,394) (1,533) (1,687)
Other operating expenses
2,938 3,232 3,555 3,910 4,302
Total operating expenses
3,545 3,900 4,289 4,718 5,190
Operating income
 3,806 4,187 4,605 5,066 5,572
Interest Expense @ 10%
170 187 206 226 249
Other income (expense)
2,144 2,358 2,594 2,854 3,139
Income before taxes
5,780 6,358 6,994 7,693 8,462
Provision for income taxes @ 10%
1,262 1,388 1,527 1,680 1,848
Net income from continuing
operations 4,518 4,970 5,467 6,013 6,615

INTERPRETATION

The company will be increasing its market share by opening new stores. The company will also
be buying certain espresso machines and coffee brewers for use in business operations that are
included in operating expenses. In the future, sale revenue will include domestic and
international sales income derived from sale of ready to drink products.

BALANCE SHEET

Fiscal year ends in March 2019-03 2020-03 2021-03

Assets
Current assets
Cash

Cash and cash equivalents 2,129 2,462 8,756

Short-term investments 134 229 182

Total cash 2,263 2,691 8,938

Receivables
 769 870 693

Inventories 1,378 1,364 1,400

Deferred income taxes

Prepaid expenses 350 358 507

Other current assets 955

Total current assets 4,760 5,283 12,494

Non-current assets
Property, plant and equipment

Gross property, plant and equipment 10,573 11,584 13,197

Accumulated Depreciation (6,040) (6,664) (7,268)

Net property, plant and equipment 4,534 4,920 5,929

Equity and other investments 1,496 1,024 602

Goodwill 1,720 1,539 3,542

Intangible assets 516 441 1,042

Deferred income taxes 885 795 135

Other long-term assets 418 363 412

Total non-current assets 9,569 9,082 11,662

Total assets 14,330 14,366 24,156
Liabilities and stockholders' equity
Liabilities
Current liabilities

Short-term debt 400 350

Accounts payable 731 782 1,179

Taxes payable 368 227 287

Accrued liabilities 755 754 910

Deferred revenues 1,171 1,288 1,643

Other current liabilities 1,122 1,169 1,316

Total current liabilities 4,547 4,221 5,684

Non-current liabilities

Long-term debt 3,202 3,933 9,090

Deferred revenues 6,776

Minority interest 7 7 6

Other long-term liabilities 690 755 1,430

Total non-current liabilities 3,899 4,695 17,303

Total liabilities 8,446 8,916 22,987
Stockholders' equity

Common stock 2 1 1

Additional paid-in capital 41 41 41

Retained earnings 5,950 5,563 1,457

Accumulated other comprehensive income (108) (156) (330)

Total stockholders' equity 5,884 5,450 1,170

Total liabilities and stockholders' equity 14,330 14,366 24,156

RATIOS
ANALYSIS
YEA YEA YEA
INDUSTR
R1 R2 R3
Y /
Ratio Ratio Ratio
ACCEPTA
s s s
BLE Ratios

HIGHER
Gross Profit
Gross Profit THAN
Margin
Total Sales 32% 31% 30% 33%

Net Income Net Income BETWEEN

Margin Total Sales 13.2 12.9 18.3 15% - 20%
 % % %

HIGHER
Return on Equity
Net Income THAN
(ROE)
Total Equity 48% 53% 386% 25%

HIGHER
Return on Assets
Net Income THAN
(ROA)
Total Assets 20% 20% 19% 20%

Current Assets - Current

Working Capital 213 1,062 6,810 N/A
Liabilities

HIGHER
Current Assets THAN
Current Ratio
1.046 1.251 2.198
Current Liabilities 8 6 1 0 2.00

Current Assets - HIGHER

Inventory THAN
Quick Ratio
0.743 0.928 1.951
Current Liabilities 8 5 8 1.00

LESS
Total Liabilities THAN
Debt to Equity
1.435 19.64
Total Owner's Equity 4 1.636 7 2.00

Debt to Total LESS

Assets Total Liabilities THAN
 0.589 0.620 0.951
Total Assets 4 6 6 1.00

Earnings Before Interest HIGHER

Interest Coverage
& Taxes THAN
Ratio
Interest Charges 47.58 42.36 22.39 3.00

INTERPRETATION

The company’s operations will be based on coffee beans purchasing, roasting and packaging
high altitude Arabica coffee. The price of the product will depend upon equilibrium between
supply and demand levels at the time of sale. The positive economic and political conditions will
not making any negative effects on cost of production and inventory levels.
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