Questions On The Financial Plan

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Financial Plan Important Assumptions The financial plan depends on important assumptions, most of which shown in the table. The one key underlying assumption is: • Cash & Carry Building Supply assumes that during a time of recession the market will be low due to no one building houses. Table: General Assumptions General Assumptions Year 1 Year 2 Year 3 Year 4 Year 5 Plan Month 1 2 3 4 5 Current Interest Rate 8.00% 8.00% 8.00% 8.00% 8.00% Long-term Interest Rate 8.00% 8.00% 8.00% 8.00% 8.00% Tax Rate 30.00% 30.00% 30.00% 30.00% 30.00% Other 0 0 0 0 0 Break-even Analysis The Break-even Analysis has determined approximate break-even sales as shown below. There will be a constant monitor on this number in an attempt to lower it. Once again, it is believed that efficiencies, experience, and knowledge will help in decreasing the break-even number. Sales are expected to be well in excess of this number for each month. Table: Break-even Analysis Break-even Analysis Monthly Revenue Break-even $102,932 Assumptions: Average Percent Variable Cost 55% Estimated Monthly Fixed Cost $45,915 Chart: Break-even Analysis Projected Profit and Loss The Profit and Loss statement makes it very clear which areas will need attention. Payroll is by far the largest expense the company incurs (besides cost of goods sold). Staff will need to be managed and hours regulated so that hours worked correlate to sales. Emphasis will be placed on minimizing
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