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2MBA
Financial Plan

9.1 Underlying Assumptions

9.2 Financial Highlights (Best Case Scenario)

9.3 Financial Ratios

RatiosYear 1Year 2Year 3Year 4Year 5
Gross Margin30%37%40%41%42%
NPAT % Total Assets39%20%29%35%34%
Quick Ratio120%209%227%324%449%
Inventory Turnover 9.509.6210.0510.2810.42

9.4 Breakeven Point

MVU4 units per week$3,000,000 annual sales
La Barista13 units per week$4,400,000 annual sales
Annual Sales($million)
MBA, Inc. Profits ($million)

9.5 Financial Proformas

Cash FlowYear 1Year 2Year 3Year 4Year 5
Opening cash balance-535,8191,789,9762,962,8075,763,924
Cash Inflows 
Capital funds621,4001,000,000   
Sales6,080,00013,187,20021,826,68831,136,23641,155,624
Total Cash Inflows6,701,40014,187,20021,826,68831,136,23641,155,624
Cash Outflows 
Purchase of equipment150,000500,000500,000500,000 500,000
Assembly-MVU4,678,1495,560,3145,782,7276,014,0366,014,036
Manufacturing La Barista-3,550,9508,616,97214,082,59419,971,679
Factory rent84,000174,720272,563374,320385,659
Maintenance91,200197,808327,400467,044617,334
Research & Development240,000439,6801,559,6671,556,8122,057,781
Training60,000120,000120,000120,000120,000
Marketing Budget120,000600,000480,000480,000480,000
Factory/Office wages411,200640,000770,000850,000930,000
Federal Income Tax20,893378,885875,8481,803,5702,751,060
State Income Tax6,139111,325257,345529,931808,326
License Fees304,000659,3601,091,3341,556,8122,057,781
Dividends Paid-----
Total Cash Outflows6,165,58112,933,04320,653,85728,335,11936,693,657
Net cash flow535,8191,254,1571,172,8312,801,1174,461,967
Closing Cash balance535,819 1,789,9762,962,8075,763,924 10,225,891

 

Inventory Management Year 1Year 2Year 3Year 4Year 5
Start up Inventory040140240340
Unit Sales3801280248036804880
Manufacturing4201380258037804980
Closing inventory40140240340440

 

Tax Reconciliation Year 1Year 2Year 3Year 4Year 5
Net cash flow535,8191,254,1571,172,8312,801,1174,461,967
Less Equity Injection(621,400)(1,000,000)---
Less Depreciation(30,000)(130,000)(230,000)(330,000)(430,000)
Add: Capital Expenditure150,000500,000500,000500,000500,000
Add Tax Paid27,032490,2101,133,1932,333,5013,559,387
Add:---- -
Add: Dividends Paid---- -
Taxable Income61,4511,114,3682,576,0245,304,6188,091,354
Federal Tax Liability20,893378,885875,8481,803,5702,751,060
State Tax Liability6,139111,325257,345529,931808,326
 27,032490,2101,133,1932,333,5013,559,387

Refer Appendix I for Financial Analysis Worksheets

9.6 Sensitivity Analysis

The first scenario to consider is that the Nestle contract does not materialize, in which case the investor will not be required to provide any funds. Should Nestle's requirements not meet expectations then production of the MVU could be scaled back. Of course this would impact on 2MBA, Inc.'s ability to provide funding for the subsequent La Barista production facilities. For example, if the MVU production was reduced to 30 units per month and there was no other external funding than that contemplated in the Offer, 2MBA, Inc. would not be able to fund the second La Barista production facility until Year 5. Under the above eventuality the investor would be entitled to claw back the Management Team's equity to 30%, thereby increasing their own equity to 50%. The investors IRR would then calculate to 72% (refer 2MBA, Inc. sensitivity analysis Appendix I). The majority of cash expenditure is related to production and sales volumes and allowances have been made in the Nestle contract for raw material and labor cost increases to be reflected in the selling price of the MVU. It is envisaged that similar type arrangements will be put in place for La Barista.

9.7 Source and Application of Funds

SourceApplication
JAJA Equity
$121,400

Investor Equity
$500,000




Investor Equity
$1,000,000
MVU Assembly equipment
$150,000

Raw materials (2 months)
$250,000

Working Capital
$250,000

La Barista Production Equipment
$500,000

Raw Materials (4 months)
$250,000

Working Capital
$250,000

9.8 Critical Risks and Problems

Risk DimensionPerceived Risk
DevelopmentZero
ManagementLow/Moderate
MarketingLow/Moderate
FinancialLow/Moderate
ValuationLow
FinancingLow/Moderate
ExitLow/Moderate

See Appendix B for further explanation of Risks and Problems.


2MBA
Table of ContentsAppendices
0. Executive Summary
1. The Offer
2. The Products
3. The Organization
4. Strategic Analysis
5. Key Strategic Issues
6. Marketing Plan
7. Production Plan
8. Organization Plan
9. Financial Plan
A. Internal Environment Analysis
B. Critical Risks and Problems
C. SWOT Analysis
D. Testimonials
E. Production Layout
F. Action Plan
G. Team Member Details
H. Reference Sources
I. Financial Analysis Worksheets
All information herein is confidential and belongs to 2MBA, Inc.