Financial Plan

We want to finance growth mainly through cash flow. We recognize that this means we will
have to grow more slowly than we might like.
The most important factor in our case is Payment days. We can't push our clients hard on
payment days. Therefore, we need to develop a permanent system of receivables financing,
using one of the established financial companies in that business.

7.2 Important Assumptions

Plan depends on the assumptions that are made in the following table. These are annual and
monthly assumptions that show the consistent growth of the company. Since we operate on a
monthly basis, we are assuming that the majority of the collections will be timely and in full.
Some of the underlying assumptions are:
1. We assume a healthy growth trend in the local real estate market, along with a
continued strong local economy.
2. We assume that we stay in line with the continuing advances in technology and
housing.

7.3 Key Financial Indicators

The following chart indicates our key financial indicators for the first three years. Growth in
both unit payments as well as increasing the percentage of growth margin.
Companys cash flow depends on the monthly collection from the client. We allow for a 25day grace period, after which unpaid accounts will inhibit our cash flow. However, since we
collect on a monthly basis, cash flow should maintain at a steady level.
TEAM
DH/DPH
PROJECT MANAGER
SR. ENGINEER (STRUCTURE)
SR. ENGINEER (FINISHING)
JR. ENGINEER
FOREMEN
SUPERVISOR
CIVIL WORK
PROJECT HEAD
PLANNING ENGINEER
ARCHITECT
PROJECT MANAGER
SENIOR ENGINEER (STRUCTURE)
SENIOR ENGINEER (FINISHING)
FOREMEN

0
20
20
20
20
20
20
20
0
20
20
20
20
20
20
20

100000
40000
35000
35000
25000
20000
20000
120000
40000
40000
45000
35000
35000
20000

0
2000000
800000
700000
700000
500000
400000
400000
0
2400000
800000
800000
900000
700000
700000
400000

SURVEYOR
ASSTT SURVEYOR
BILLING
DGM
SENIOR ENGINEER
MEP
DGM / AGM
SENIOR ENGINEER ELECTRICAL
SENIOR ENGINEER PLUMBING
SENIOR ENGINEER BILLING
FOREMEN
SAFETY
SAFETY OFFICER
SAFETY SUPERVISOR
SECURITY OFFICER
GUARD
ADMIN MANAGER
ADMIN ASSISTANT
STORE MANAGER
STORE ASSTT.
DATA ENTERY
SOFTWARE
AUTOCAD
ADOBE
PROFFESIONAL
MICROSOFT OFFICE
TALLY
INFRASTRUCTURE
IT
TELECOM

20
20
0
20
20
0
20
20
20
20
20
0
20
20
20
20
20
20
20
20
20

20000
15000
80000
40000
80000
35000
35000
35000
20000
35000
35000
25000
10000
40000
35000
30000
25000
15000

400000
300000
0
1600000
800000
0
1600000
700000
700000
700000
400000
0
700000
700000
500000
200000
800000
700000
600000
500000
300000
24400000

250000
250000
500000
500000
10000000
10000000
3000000
24500000

7.4 Break-even Analysis

The following table and chart summarize our break-even analysis. With per month fixed costs
and a variable per-unit cost, the number of units we will need to rent out to cover our monthly
costs is shown below.. According to the calculations, we will break-even within our first year
of operation.
The break-even assumes that all units will be occupied and that all payment will be paid in a
timely manner. This assumption is probably unrealistic; therefore our initial break-even per
unit will most likely be higher.

Break-even Analysis
Monthly Units Break-even
Monthly Revenue Break-even
Assumptions:
Average Per-Unit Revenue
Average Per-Unit Variable
Cost
Estimated Monthly Fixed Cost

41
27,63,200
68,000.22
3,57,000.71
13,10,100

7.5 Projected Profit and Loss

The projected profit and loss for company is shown on the following table. Sales are
increasing in 2014 and continue steadily after the third year. We show a net profit in 2016.
We are projecting a healthy gross margin for the first year. This is an aggressive projection
that will help our efforts to keep total cost of sales low while increasing gross margin. We
will also have very low marketing costs, due to the public exposure to the units, and good
word of mouth around the university area.
The planned projections are included in the attached Profit and Loss Table.
Pro Forma Profit and Loss
Sales
Direct Cost of Sales
Other Costs of Sales
Total Cost of Sales
Gross Margin
Gross Margin %
Expenses
Payroll
Marketing/Promotion
Depreciation
Leased Equipment
Utilities
Insurance
Maintenance
Rent
Payroll Taxes
Other
Total Operating
Expenses
Profit Before Interest
and Taxes
EBITDA
Interest Expense
Taxes Incurred
Net Profit
Net Profit/Sales

Year 1
4,37,38,000
2,30,00,900
0
2,30,00,900
2,07,37,100
47.41%

Year 2
5,38,49,800
2,55,74,000
0
2,55,74,000
2,82,75,800
52.51%

Year 3
6,12,75,600
2,73,13,600
0
2,73,13,6 00
3,39,62,000
55.42%

90,60,000
13,80,000
12,22,100
2,40,000
7,20,000
14,40,000
0
3,00,000
13,59,000
0
157,21,100

105,00,000
14,00,000
13,00,000
2,60,000
8,20,000
15,50,000
12,000
4,00,000
15,75,000
0
190,05,000

1,28,00,000
17,70,000
19,33,300
2,80,000
8,50,000
16,00,000
15,000
5,00,000
19,20,000
0
231,53,300

50,16,000

92,70,800

108,08,700

62,38,100
64,85,300
0
(14,69,300)
-3.36%

105,70,800
79,59,100
0
13,11,700
2.44%

127,42,000
93,55,200
0
14,53,500
2.37%

7.6 Projected Cash Flow

The following cash flow projections are a key part of company early success. The monthly
cash flow is shown in the illustration, with one bar representing the cash flow per month, and
the other the monthly balance. The annual cash flow figures are included here and the more
important detailed monthly numbers are included in the appendix.
Pro Forma Cash Flow
Year 1
Cash Received
Cash from Operations
Cash Sales

4,37,38,000

Year 2
5,38,49,800

Year 3
6,12,75,600

Subtotal Cash from Operations

Additional Cash Received
Sales Tax, VAT, HST/GST
Received
New Current Borrowing
New Other Liabilities (interestfree)
New Long-term Liabilities
Sales of Other Current Assets
Sales of Long-term Assets
New Investment Received
Subtotal Cash Received
Expenditures
Expenditures from Operations
Cash Spending
Bill Payments
Subtotal Spent on Operations
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid
Out
Principal Repayment of Current
Borrowing
Other Liabilities Principal
Repayment
Long-term Liabilities Principal
Repayment
Purchase Other Current Assets
Purchase Long-term Assets
Dividends
Subtotal Cash Spent
Net Cash Flow
Cash Balance

4,37,38,000

5,38,49,800

6,12,75,600

8,40,000
1,80,200

15,00,000
2,50,000

12,00,000
2,00,000

4,50,000
0
0
5,86,200
457,94,400
Year 1

513,00,000
0
0
6,00,000
1,074,99,800
Year 2

2,50,000
0
0
4,00,000
633,25,600
Year 3

90,60,000
318,09,400
408,69,400

105,00,000
408,94,600
513,94,600

128,00,000
447,31,200
575,31,200

2,75,000

5,00,000

10,00,000

65,000

1,00,000

1,00,000

23,12,100

24,46,900

41,64,500

0
1,080,00,000
0
1,515,21,500
(1,057,27,100)
54,05,900

0
570,00,000
0
1,114,41,500
(39,41,700)
14,64,300

0
0
0
627,95,7 00
5,29,900
19,94,100

7.7 Projected Balance Sheet

The balance sheet in the following table shows varying but managed net worth, and a
sufficiently healthy financial position. The monthly estimates are included in the appendix
and are a good indicator of annual value.

Pro Forma Balance Sheet

Year 1
Assets
Current Assets
Cash
Other Current Assets
Total Current Assets
Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets
Total Assets
Liabilities and Capital
Current Liabilities
Accounts Payable
Current Borrowing
Other Current Liabilities
Subtotal Current Liabilities
Long-term Liabilities
Total Liabilities
Paid-in Capital
Retained Earnings
Earnings
Total Capital
Total Liabilities and Capital
Net Worth

Year 2

Year 3

54,05,900
12,00,000
66,05,900

14,64,300
12,00,000
26,64,300

19,94,100
12,00,000
31,94,100

1,200,00,000
12,22,100
1,187,77,900
1,253,83,800
Year 1

1,770,00,000
25,22,100
1,744,77,900
1,771,42,200
Year 2

1,770,00,000
44,55,400
1,725,44,600
1,757,38,700
Year 3

35,04,800
10,65,000
1,15,200
46,85,000
1,061,37,900
1,108,22,900
251,86,200
(91,56,000)
(14,69,300)
145,60,900
1,253,83,800
145,60,900

33,48,300
20,65,000
2,65,200
56,78,500
1,549,91,000
1,606,69,500
257,86,200
(106,25,300)
13,11,700
164,72,600
1,771,42,200
164,72,600

37,05,900
22,65,000
3,65,2 00
63,36,100
1,510,76,500
1,574,12,600
261,86,200
(93,13,600)
14,53,500
183,26,100
1,757,38,700
183,26100

7.8 Business Ratios

The business ratios for the years of this plan are shown below. They point out liquidity, debt,
performance and some other important aspects. We expect to generate acceptable ratios for
our profitability and return

Ratio Analysis
Year 1
Sales Growth
Percent of Total Assets
Other Current Assets
Total Current Assets
Long-term Assets
Total Assets
Current Liabilities
Long-term Liabilities
Total Liabilities
Net Worth
Percent of Sales
Sales
Gross Margin
Selling, General & Administrative
Expenses
Advertising Expenses
Profit Before Interest and Taxes
Main Ratios
Current
Quick
Total Debt to Total Assets
Pre-tax Return on Net Worth
Pre-tax Return on Assets
Additional Ratios
Net Profit Margin
Return on Equity
Activity Ratios
Accounts Payable Turnover
Payment Days
Total Asset Turnover
Debt Ratios
Debt to Net Worth
Current Liab. to Liab.
Liquidity Ratios
Net Working Capital
Interest Coverage
Additional Ratios
Assets to Sales
Current Debt/Total Assets
Acid Test
Sales/Net Worth
Dividend Payout

0.00%

Year 2
23.12%

Year 3
13.79%

Industry Profile
4.77%

0.96%
5.27%
94.73%
100.00%
3.74%
84.65%
88.39%
11.61%

0.68%
1.50%
98.50%
100.00%
3.21%
87.50%
90.70%
9.30%

0.68%
1.82%
98.18%
100.00%
3.61%
85.97%
89.57%
10.43%

40.83%
46.21%
53.79%
100.00%
12.55%
35.36%
47.91%
52.09%

100.00%
47.41%
50.77%

100.00%
52.51%
50.07%

100.00%
55.42%
53.05%

100.00%
100.00%
59.39%

2.79%
11.47%

2.41%
17.22%

3.16%
17.64%

0.88%
2.37%

1.41
1.41
88.39%
-10.09%
-1.17%
Year 1
-3.36%
-10.09%

0.47
0.47
90.70%
7.96%
0.74%
Year 2
2.44%
7.96%

0.50
0.50
89.57%
7.93%
0.83%
Year 3
2.37%
7.93%

1.90
1.28
59.42%
0.30%
0.73%

9.96
27
0.35

12.17
31
0.30

12.17
29
0.35

n.a
n.a
n.a

7.61
0.04

9.75
0.04

8.59
0.04

n.a
n.a

19,209
0.77

(30,143)
1.16

(31,420)
1.16

n.a
n.a

2.87
4%
1.41
3.00
0.00

3.29
3%
0.47
3.27
0.00

2.87
4%
0.50
3.34
0.00

n.a
n.a
n.a
n.a
n.a

n.a
n.a