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 Fabrica – Financial Plan

7.1 Highlights of results

7.1.1. Income statement

Year 2000 2001 2002 2003 2004
Net Sales 935,476 7,115,474 5,870,898 7,776,928 12,470,861
Cost of Goods 412,661 1,421,619 1,286,864 1,754,950 2,320,684
Gross margin % 55.98 80.02 78.08 77.43 81.39
Net income after tax 40,651 2,902,627 2,430,598 3,280,708 5,949,583
Net income % of sales 4.35 40.79 41.4 42.19 47.71

7.1.2. Balance Sheet

Year 2000 2001 2002 2003 2004
Current Assets 391,319 2,084,052 1,996,374 1,274,252 12,143,432
Fixed Assets 513,625 756,254 1,105,168 1,719,225 1,074,940
Total Assets 1,004,944 2,940,306 3,201,543 3,093,477 3,318,372
Total Liabilities 64,472 234,446 174,564 207,553 284,459
Net worth 940,472 2,705,859 3,026,978 2,885,924 3,033,913

7.1.3. Cashflow

Year 2000 2001 2002 2003 2004
Cash from Operations 2,04,283 3,165,687 844,515 3,949,482 6,593,869
Net Cashflow 242,447 1,301,507 1,357,439 449,269 830,039
Dividends 1,137,239 2,109,479 3,421,762 5,801,595

7.2 Key assumptions

Inflation

We have not attempted to incorporate inflation ‘in our projections. Although there will undoubtedly be inflation in Thailand, it will not have any major or predictable impact on our business. All costs are shown in real 1999 amounts.

Currency

Our working financial plans were produced ‘in US dollars, the currency in which most revenues will occur and many costs will occur. Capital equipment costs will be ‘incurred in baht, affected by any change in the baht : dollar exchange rate. We have assumed a conservative rate of 3 5 : 1, which applied for most of the first quarter of 1999.

Personnel Costs

All personnel costs show a real increase of 8% per year, reflecting our need to reward our workers exceptionally well in order to keep their performance at levels that will hold waste and defects to absolute minimums. This again is the highest expense that can reasonably be projected.

Key Equipment Costs

All KS loom models will be made in Thailand. As the installed base grows, we expect a decrease in unit cost ultimately reaching 20%.

Capacity Utilization

As operation of a KS loom is essentially similar to running a large production loom, we anticipate no learning delays wherever experienced skilled labor is concerned. There is practically no need to allow for downtime, so the only important consideration ‘in capacity planning is the uncertainty of order flow. For our Bangkok sample center, we have planned a two-shift operation, with 30% excess capacity; this would be able to handle 195% of forecast volume on a three-shift basis. For licensees, we have projected capacity enough to meet forecast requirements plus 30% on a single shift. We will be able to confirm whether or not these allowances are enough to meet our service standards during the period when we are selling only in Thailand, with capacity for the US launch already installed.

7.3 Sources and uses of funds

YEAR 1999 2000 2001 2002 2003 2004
Sources of Funds
Initial capital – founders 510,000 0 0 0 0 0
Investors 0 490,000 0 0 0 0
TOTAL 510,000 490,000 0 0 0 0
Uses of Funds
Deposit for buildings 14,286 0 0 0 0 0
Machinery 91,429 502,857 497,143 754,286 1,274,286 0
Factory Equipment 37,143 14,286 0 0 0 0
Patents 100,000 0 0 0 0 0
Office Furniture 28,571 4,571 0 0 0 0
Vehicles 33,714 12,857 0 0 0 0
Pre-operating Expenses 42,730 0 0 0 0 0
TOTAL 347,873 534,571 497,143 754,286 1,274,286 0

7.4 Performance and Sensitivity Analysis

7.4.1 Ratios

Ratio 2000 2001 2002 2003 2004
Current Ratio 6.07 8.89 11.44 6.14 7.54
Debt: Equity 0.07 0.09 0.06 0.07 0.09
Return on Equity % 4.32 107.27 80.3 113.68 196.1

7.4.2 NPV Sensitivity Analysis (US$)

NPV IRR
CASES Revenue Expenses Revenue Expenses
15% increase 5,170,743 3,847,627 201.15 159.57
10% increase 4,868,618 3,989,980 193.18 165.39
5% increase 4,566,241 4,128,479 184.73 170.90
Base Case 4,263,865 4,263,865 176.14 176.14
5% decrease 3,961488 4,399,250 167.42 181.42
10% decrease 3,657,146 4,530,055 158.36 186.73
15% decrease 3,348,376 4,669,486 148.73 192.08
20% decrease 3,039606 4,804,292 138.96 197.46

Sensitivity Analysis

Change


Fabrica Co., Ltd.
Table of Contents Appendices
0. Executive Summary
1. Company
2. People
3. Product
4. Market
5. Marketing Strategy
6. Operations Strategy
7. Financial Plan
8. The Deal
Sample Production Costs
Glossary of Terms
Patentable Features
Sample Order Flow
Financial Assumptions
Investment Structure
Yearly Income Statement
Yearly Cash Flow
Yearly Balance Sheet
Monthly & Quarterly
Proprietary to Fabrica Co., Ltd.

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