The following sections describe the financial position of Gigmasters.
7.1 Important Assumptions
Our basic financial accounting assumptions are outlined below.
| General Assumptions |
| Plan Month | 1 | 2 | 3 |
| Current Interest Rate | 10.00% | 10.00% | 10.00% |
| Long-term Interest Rate | 10.00% | 10.00% | 10.00% |
| Tax Rate | 25.42% | 25.00% | 25.42% |
| Other | 0 | 0 | 0 |
The Break-even Analysis below demonstrates how much Gigmasters needs to sell every month to make a profit.
Break-even Analysis |
| Monthly Revenue Break-even | $12,512 |
| Average Percent Variable Cost | 0% |
| Estimated Monthly Fixed Cost | $12,512 |
7.3 Projected Profit and Loss
The profit and loss projections in the chart and table below present the key increase in sales, profits, and gross margin.
The company estimates it will not achieve profitability in the first year, especially since we project the need to hire two additional full-time employees late in the year to assist with marketing and administrative responsibilities. Their goals will be to increase overall traffic to the site, increase the percentage of customers who fill out gig requests and increase the percentage of gig requests that result in bookings.
| Pro Forma Profit and Loss |
| Direct Cost of Sales | $0 | $0 | $0 |
| Other | $0 | $0 | $0 |
| Total Cost of Sales | $0 | $0 | $0 |
| Gross Margin | $89,017 | $470,227 | $1,622,858 |
| Gross Margin % | 100.00% | 100.00% | 100.00% |
| Payroll | $104,796 | $224,784 | $246,780 |
| Sales and Marketing and Other Expenses | $28,388 | $93,873 | $220,259 |
| Depreciation | $0 | $0 | $0 |
| Rent | $16,960 | $33,360 | $36,000 |
| Payroll Taxes | $0 | $0 | $0 |
| Other | $0 | $0 | $0 |
| Profit Before Interest and Taxes | ($61,127) | $118,210 | $1,119,819 |
| EBITDA | ($61,127) | $118,210 | $1,119,819 |
| Interest Expense | $70 | $0 | $0 |
| Taxes Incurred | $0 | $29,553 | $284,621 |
| Net Profit/Sales | -68.75% | 18.85% | 51.46% |
7.4 Projected Cash Flow
The chart and table below show the projected cash flow for the company.
Pro Forma Cash Flow |
| Cash from Operations | | | |
| Cash Sales | $89,017 | $470,227 | $1,622,858 |
| Cash from Receivables | $1,125 | $0 | $0 |
| Subtotal Cash from Operations | $90,142 | $470,227 | $1,622,858 |
| Additional Cash Received | | | |
| Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 |
| New Current Borrowing | $0 | $0 | $0 |
| New Other Liabilities (interest-free) | $0 | $0 | $0 |
| New Long-term Liabilities | $0 | $0 | $0 |
| Sales of Other Current Assets | $0 | $0 | $0 |
| Sales of Long-term Assets | $0 | $0 | $0 |
| New Investment Received | $70,000 | $0 | $0 |
| Subtotal Cash Received | $160,142 | $470,227 | $1,622,858 |
| Expenditures from Operations | | | |
| Cash Spending | $104,796 | $224,784 | $246,780 |
| Bill Payments | $38,633 | $150,684 | $509,310 |
| Subtotal Spent on Operations | $143,429 | $375,468 | $756,090 |
| Additional Cash Spent | | | |
| Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 |
| Principal Repayment of Current Borrowing | $0 | $0 | $0 |
| Other Liabilities Principal Repayment | $0 | $0 | $0 |
| Long-term Liabilities Principal Repayment | $4,200 | $0 | $0 |
| Purchase Other Current Assets | $0 | $0 | $0 |
| Purchase Long-term Assets | $0 | $5,000 | $25,000 |
| Dividends | $0 | $0 | $0 |
| Subtotal Cash Spent | $147,629 | $380,468 | $781,090 |
| Cash Balance | $28,306 | $118,065 | $959,832 |
7.5 Projected Balance Sheet
The following Balance Sheet outlines the key assets and liabilities for Gigmasters.
| Pro Forma Balance Sheet |
| Current Assets | | | |
| Cash | $28,306 | $118,065 | $959,832 |
| Accounts Receivable | $0 | $0 | $0 |
| Other Current Assets | $0 | $0 | $0 |
| Total Current Assets | $28,306 | $118,065 | $959,832 |
| Long-term Assets | | | |
| Long-term Assets | $1,510 | $6,510 | $31,510 |
| Accumulated Depreciation | $0 | $0 | $0 |
| Total Long-term Assets | $1,510 | $6,510 | $31,510 |
| Total Assets | $29,816 | $124,575 | $991,342 |
| Current Liabilities | | | |
| Accounts Payable | $6,785 | $12,886 | $44,456 |
| Current Borrowing | $0 | $0 | $0 |
| Other Current Liabilities | $0 | $0 | $0 |
| Subtotal Current Liabilities | $6,785 | $12,886 | $44,456 |
| Long-term Liabilities | $0 | $0 | $0 |
| Total Liabilities | $6,785 | $12,886 | $44,456 |
| Paid-in Capital | $85,657 | $85,657 | $85,657 |
| Retained Earnings | ($1,429) | ($62,626) | $26,031 |
| Earnings | ($61,197) | $88,658 | $835,198 |
| Total Capital | $23,031 | $111,688 | $946,887 |
| Total Liabilities and Capital | $29,816 | $124,575 | $991,342 |
| Net Worth | $23,031 | $111,688 | $946,887 |
The following table presents important business ratios for the business services industry, as determined by the Standard Industry Classification Index (SIC) code 7389, Business Services, NEC.
| Ratio Analysis |
| Sales Growth | 421.59% | 428.24% | 245.12% | 8.20% |
| Accounts Receivable | 0.00% | 0.00% | 0.00% | 26.30% |
| Other Current Assets | 0.00% | 0.00% | 0.00% | 44.20% |
| Total Current Assets | 94.94% | 94.77% | 96.82% | 74.30% |
| Long-term Assets | 5.06% | 5.23% | 3.18% | 25.70% |
| Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
| Current Liabilities | 22.76% | 10.34% | 4.48% | 49.00% |
| Long-term Liabilities | 0.00% | 0.00% | 0.00% | 13.80% |
| Total Liabilities | 22.76% | 10.34% | 4.48% | 62.80% |
| Net Worth | 77.24% | 89.66% | 95.52% | 37.20% |
| Sales | 100.00% | 100.00% | 100.00% | 100.00% |
| Gross Margin | 100.00% | 100.00% | 100.00% | 0.00% |
| Selling, General & Administrative Expenses | 192.29% | 88.32% | 50.53% | 81.40% |
| Advertising Expenses | 19.98% | 16.71% | 12.36% | 1.70% |
| Profit Before Interest and Taxes | -68.67% | 25.14% | 69.00% | 2.10% |
| Current | 4.17 | 9.16 | 21.59 | 1.49 |
| Quick | 4.17 | 9.16 | 21.59 | 1.17 |
| Total Debt to Total Assets | 22.76% | 10.34% | 4.48% | 62.80% |
| Pre-tax Return on Net Worth | -265.72% | 105.84% | 118.26% | 4.20% |
| Pre-tax Return on Assets | -205.25% | 94.89% | 112.96% | 11.30% |
| Net Profit Margin | -68.75% | 18.85% | 51.46% | n.a |
| Return on Equity | -265.72% | 79.38% | 88.20% | n.a |
| Accounts Receivable Turnover | 0.00 | 0.00 | 0.00 | n.a |
| Collection Days | 0 | 0 | 0 | n.a |
| Accounts Payable Turnover | 6.69 | 12.17 | 12.17 | n.a |
| Payment Days | 27 | 23 | 19 | n.a |
| Total Asset Turnover | 2.99 | 3.77 | 1.64 | n.a |
| Debt to Net Worth | 0.29 | 0.12 | 0.05 | n.a |
| Current Liab. to Liab. | 1.00 | 1.00 | 1.00 | n.a |
| Net Working Capital | $21,521 | $105,178 | $915,376 | n.a |
| Interest Coverage | -873.24 | 0.00 | 0.00 | n.a |
| Assets to Sales | 0.33 | 0.26 | 0.61 | n.a |
| Current Debt/Total Assets | 23% | 10% | 4% | n.a |
| Acid Test | 4.17 | 9.16 | 21.59 | n.a |
| Sales/Net Worth | 3.87 | 4.21 | 1.71 | n.a |
| Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |
