Financial Plan

The general outlook of the Forever Flower Wedding Centerpiece business suggests that it

would be important to finance the business activities by the positive cash flows generated in the

ordinary course of operations. This would mean that it would be unnecessary to seek additional

investments from outside the business. The business line is not too capital-intensive. However,

we anticipate the fixed costs of the business to increase which will call for an immediate

coverage of some of the costs by revenue which shall have been additionally raised from events

sales. This approach looks promising and the expectations are that clients will be able to make

their orders with us efficiently and receive timely feedback. This plan is alive to the fact that for

floral businesses, a comprehensive financial plan is very necessary calling for the services of an

expert where needed.

Important Assumptions

The business will grow at a constant rate within the next three years. Tabulated General

Assumptions for the three years will be as follows

Year 1 Year 2 Year 3

Plan Month 1 2 3

Current Interest Rate 10.0% 12.5% 15.0%

Long-term Interest Rate 6.0% 8.0% 9.0%

Tax Rate 7.0% 9.0% 11.0%

Other 0 0 0
 Cost of Goods Sold Sheet

Particulars Year 1 Year 2 Year 3

Direct Costs

Inventory at the Start of the Year $225,000 $260,000 $311,000

Purchases $200,000 $230,000 $280,000

Total Cost of Goods Available for

$425,000 $490,000 $591,000
Sale

Inventory at End of Year $260,000 $311,000 $355,000

Cost of Goods Sold (COGS) $165,000 $179,000 $236,000

Indirect Cost estimates

Labor $120,000 $140,000 $150,000

Utilities $36,000 $42,000 $48,000

Packaging $10,000 $12,000 $14,000

Total Costs

Total Direct Costs $321,000 $331,000 $398,000

Total Indirect Costs $166,000 $194,000 $212,000

 Total Costs $487,000 $525,000 $610,000

Projected cash flow

Forever Flower Wedding Centerpiece business projects inflows and outflows that may

relate either directly or indirectly to the day-to-day operational activities. Below is a summary of

the forecasted pro forma cash flow which include subtotals for cash spent and received on

operations.

Cash Flow Statement

Cash Received Year 1 Year 2 Year 3

Cash from Operations

Cash Sales $328,000 $384,000 $448,000

Cash from Receivables $82,000 $96,000 $112,000

SUBTOTAL CASH FROM OPERATIONS $410,000 $480,000 $560,000

Additional Cash Received

Sales Tax and VAT Received $120 $160 $230

Sales of Other Current Assets $0 $0 $0

SUBTOTAL CASH RECEIVED $410,120 $480,160 $560,230

Expenditures Year 1 Year 2 Year 3

Expenditures from Operations

Cash Spending $84 $93,000 $102,500

Bill Payments $130,000 $152,000 $164,000

SUBTOTAL SPENT ON OPERATIONs $214,000 $245,000 $266,500

Additional Cash Spent

Sales Tax & VAT Paid Out $60 $94 $116

Principal Repayment of Current Borrowing $0 $0 $0

Dividends $0 $0 $0
SUBTOTAL CASH SPENT $214,060 $245,094 $266,616

Net Cash Flow $195,400 $235,066 $293,614

Cash Balance $175,000 $200,000 $276,000

Balance sheet

Below is a Projected Balance Sheet for Forever Flower for the first three years of

operation

Pro Forma Balance Sheet

Assets Year 1 Year 2 Year 3

Current Assets

Cash $175,000 $200,000 $276,000

Accounts Receivable $82,000 $96,000 $112,000

Inventory $225,000 $260,000 $311,000

Other Current Assets $25,000 $57,000 $99,000

TOTAL CURRENT ASSETS $507,000 $613,000 $798,000

Long-term Assets

Long-term Assets $115,000 $157,000 $205,000

Accumulated Depreciation $42,000 $67,000 $76,000

TOTAL LONG-TERM ASSETS $73,000 $90,000 $129,000

TOTAL ASSETS $580,000 $703,000 $927,000

Liabilities and Capital Year 1 Year 2 Year 3

Current Liabilities

Accounts Payable $56,000 $83,000 $94,000

Current Borrowing $0 $0 $0

SUBTOTAL CURRENT LIABILITIES $56,000 $83,000 $94,000

Long-term Liabilities $0 $0 $0

TOTAL LIABILITIES $56,000 $83,000 $94,000

Paid-in Capital $225,000 $315,000 $365,000

Retained Earnings $104,000 $26,000 $29,000

Earnings $195,000 $70,000 $175,000

TOTAL CAPITAL $524,000 $620,000 $833,000

TOTAL LIABILITIES AND CAPITAL $580,000 $703,000 $927,000

Break even analysis

There are certain assumptions that were made during the determination of the Break-

Even Data for Forever Flowers. It was assumed that there would be an average revenue per unit
would be $100 with estimated monthly fixed cost and variable costs as $240,000 and $20

respectively.

Base on the above data, the BEP sales can be determined as shown below.

¿ Costs
BEP =
Contribution Marin Per unit

240000
BEP =
(100−20)

BEP = 3000 units.

The BEP chart would then be as shown below.

The monthly breakeven units is $3000 while the monthly revenue is $120,000. The monthly

revenue break even is based on the Fixed costs associated with the normal operations of the

business. Other expenses make the break even point to be higher.

Forecasted Profit and loss

 Per the monthly and annual calculations, below are the predicted pro forma profit and

loss draft for the first 3 years.

Pro Forma Profit and Loss

Year 1 Year 2 Year 3

Sales $410,000 $480,000 $560,000

Total Cost of Sales $150,000 $165,000 $200,000

Gross Margin $260,000 $315,000 $360,000

Gross Margin % 63.41% 65.62% 64.29%

Expenses

Payroll $120,000 $140,000 $150,000

Sales and Marketing and Other Expenses $10,000 $12,000 $14,000

Workers compensation Insurance $4,000 $6,000 $8,000

Licensing and Bonding Requirements $2000 $2000 $2000

Insurance $2,000 $3,000 $4,000

Rent $40,0000 $40,000 $40,000

Signage Permit Fees $500 $500 $500

Utility Expenses $36,000 $42,000 $48,000

Total Operating Expenses $214,000 $245,500 $266,500

Profit Before Interest and Taxes $45,500 $69,500 $93,500

Interest Expense $0 $0 $0

Taxes Incurred $20,000 $23,000 $26,000

Net Profit $25,000 $46,500 $67,500

Net Profit/Sales 6.09% 9.68% 12.05%

Net Profit for the Three Years

Net Profit

1
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
Year 1
Year 2
Year 3