Financial Plan for Desklib

This document provides a detailed financial plan for Desklib, an online library for study material. It includes information on the sources and application of funds, a detailed equipment list, pro forma cash flow statement, projected income statement, ratio analysis, and more. The document also includes assumptions made for the financial plan and a bibliography of sources used.

ASSUMPTION SHEET 2
SOURCES AND APPLICATION OF FUNDS 3
DETAILED EQUIPMENT LIST 3
PRO FORMA CASH FLOW STATEMENT 5
PROJECTED INCOME STATEMENT 6
RATIO ANALYSIS 8
BIBLIOGRAPHY 9

Financial Plan
ASSUMPTION SHEET
Our company created assumption sheet to let us know about the running of our finance
and the money we need. After conducting research, we found that the revenue in the
Fitness segment had reached $266m in 2019 with a growth of 6.1% resulting in a market
volume of $338m by 2023. This is based from the evidence provided in the Statistics
Portal website. We are expected to have 40-50 costumers a day in our location, because
our business is still small, and this is based on FTA Academy information. Our business
will also have same amount of customers at the beginning that range from 40-50. 70%
of the costumers use the practice field and 30% use the gym zone and the fitness area.
Let us say that 60% of the costumers have membership which is 40*30= $1200 per
month. Let us assume the rest they get within a day is through day pass. The day pass
cost $7.00, 15*7= $105 per day. $1200* 12 months will be $14,400 per year, and $105*
365 day will be $383,25 per year. In total it will be $52,725. We will start with 4 staff at a
payment of $20 per hour and we will increase the staff members with the increase in
costumers. The financial plan is prepared based on the important assumptions which
are represented in the table indicated below. These assumptions are annual based and
it is recognized from the initial stage that these collection days are very important, but
these are not the main factor, which can be influenced very easily. It is also assumed
that the interest rate burden on employees & tax rates all are based on realistic and
conservative assumptions. Other than these most important assumptions are;
 Assumption that the economy is strong and there is not major recession
 It is also assumed that there is not any change in the economic policy in the
coming years which can make products of our clients obsolete and outdated
The below table indicates the major financial assumptions of the business plan
Rate of interest 10%
Rate of interest for long term 10%
Taxation rate (Canada tax rate) 15%
SOURCES AND APPLICATION OF FUNDS
The finance for the academy will be gained from the two main sources. One would be
personal investment while other will be loan which will be gained from the bank. 50%
investment will be the part of personal investment while the remaining investment will
be sourced with the assistance of bank. All of the finance will not be used instantly in
the academy and most of machinery and equipment will be taken on lease to be on the
safe side. The company has planned to make investment time to time and make
improvement in the academy will be made after the customers will start to enroll in the
academy. The figures are assumed
Sources of Funds
year 1
Equity $950,000

Loans/Debt $950,000
Total sources of Funds
$1,900,00
0
Application of Funds
General startup cost
Organizational Cost $500,000
Prepaid Expenses 0
Opening inventory /Office supplies $100,000
Facility costs
Cost of equipments $200,000
Cost of forming policies $150,000
Cost of recruiting trainers $250,000
Total startup cost
$1,200,00
0
Leasehold Improvement $50,000
Equipment cost $20,069
Total Application of Funds
$1,270,06
9
Remaining Funds (Cash reserves) $629,931
DETAILED EQUIPMENT LIST
There are equipments, which are necessary to run the activities by the customers at
gym. Therefore, the detailed equipment list is prepared to ensure the availability of all
equipments in the fitness academy.
There is the need of more assets as the Academy will be providing services related
fitness; therefore, the users will use more equipment. In addition, users will also need
more than one pair at a time as without the equipments the operations of the academy
may be compromise. It has been estimated that the cost of equipment’s will be $10069
in the first year. In next year, cost will increase as these users and demand will increase.
Therefore, cost estimation also has been set as per the requirements. Given below is the
cost of each item for the academy with the prices mentioned.
Description Estimated cost ($)
Dumbbells 500
Treadmills 659
Fitness Equipment 200
Power Tower 500
Stair Climbers 600
Recumbent Exercise 210
Inversion Table 200
Yoga mats 100
Weights and Barbells 600
Cardio Equipment 500
Boxing equipment’s 200

Fitness Accessories 500
Activity trackers 200
Strength training 500
Weight bench Set 500
Body Rider 3500
Everlast 100
Body Massager 500
Total 10069
PRO FORMA CASH FLOW STATEMENT
(Refer to excel file)
PROJECTED INCOME STATEMENT
It is assumed that the sales of the Academy in its first year in business are $224,000.
Based on the assumption, a projected income statement of the company is being
prepared.
Year 1 ($)
Sales 224000
Direct costs 0
Total cost of goods sold 0
Gross profit 224000
Operating Expenses
Rent 12000
Utilities 4500
Salaries-Employees 18120
Advertising 6000
Office Supplies 400
Insurance 2400
Maintenance and cleaning 2500
Professional fees 2500
Payroll taxes 8000
license’s 1000
Telephone 2000
Depreciation 2510
Other Expenses 2000
Total Operating Expenses 63930
EBIT 160070
Tax 0
Interest 5578

Net Profit 58352
Opening balance sheet
Opening balance sheet
Assets
Year 1 ($)
(1st April
2019)
Year 2 ($)
(1st April
2020)
Current assets
Cash and marketable securities 43,500 70,000
Account receivables 63,974 48,000
Inventory/ office supplies 3,000 4,000
Prepaid Expenses 2,000 1,000
Other current assets 6,000 7,500
Total current assets 118,474 130,500
Fixed assets
Equipment’s/Furniture/Fixture 20,000 30,000
less: depreciation 1,500 8,000
Leasehold improvement 3,000 2,200
Land/Building 4,000 3,000
Vehicles 64,000 50,000
other fixed assets 9,500 15,500
Total fixed assets 102,000 108,700
Other assets 1,500 13,500
Organizational fees 1,000 700
Total other assets 2,500 14,200
Total Assets 222,974 253,400
Liabilities
Current Liabilities
Short term loans 2,500 2,000
Account Payables 3,000 4,200
other current liabilities 5,000 3,500
Total Current liabilities 10,500 9,700

Long term Liabilities
Long term loans 62,000 62,000
Mortgage payable 3,000 4,000
Loan from shareholders 1,000 2,000
other long-term debts & obligations 5,700 3,500
Total long-term Liabilities 71,700 71,500
Total Liabilities 82,200 81,200
Equity
Equity at the start of period 65,000 35,000
Plus, profit 60,000 250,500
Minus: owner Drawings 0 0
Total Equity 125,000 285,500
Total Liabilities & Equity 207,2000 366,700
Closing balance sheet
Closing balance sheet
Assets
Year 1 ($)
(31st March
2020)
Year 2 ($)
(31st March
2021)
Current assets
Cash and marketable securities 23500 90000
Account receivables 23974 68331
Inventory/ office supplies 1000 3000
Prepaid Expenses 0 0
Other current assets 3000 4500
Total current assets 51474 165831
Fixed assets
Equipment’s/Furniture/Fixture 10069 29729
less: depreciation 2510 8710
Leasehold improvement 1000 1200
Land/Building 0 0
Vehicles 74000 80000

other fixed assets 7499 35000
Total fixed assets 95078 154639
Other assets 4500 33500
Organizational fees 1500 1700
Total other assets 6000 30000
Total Assets 152552 350470
Liabilities
Current Liabilities
Short term loans 1500 0
Account Payables 1000 1200
other current liabilities 2000 1500
Total Current liabilities 4500 2700
Long term Liabilities
Long term loans 42000 42000
Mortgage payable 2000 1887
Loan from shareholders 0 0
other long-term debts & obligations 700 3500
Total long-term Liabilities 44700 47387
Total Liabilities 49200 50087
Equity
Equity at the start of period 45000 45000
Plus, profit 58352 255383
Minus: owner Drawings 0 0
Total Equity 103352 300383
Total Liabilities & Equity 152552 350470
RATIO ANALYSIS
Ratio analysis is a tool which is used to measure the performance of the company over
the period of time with the assistance of different types of the ratios. The following
table is indicting the ratios of the
Year 1 Year 2
Current Ratio Times 11.43867 61.41889

Debt to Equity Ratio % 43.25025 15.77553
Gross Margins % 100 100
Net Profit Margins % 26.05 85.12767
ROI % 38.25056 72.86872
ROE % 56.45948 85.01913
Current ratio times are calculated by dividing the total current assets by the total
current liabilities. In this case, the calculation is made on the closing account of both the
years. It is seen that in the second year the current ratio times have increased which
proves that the company has done well within the year.
The calculation of the debt to equity ratio is made by dividing the operating income with
debt services. In this case it is seen that the 2nd year debt to equity ratio is better than
the first year. This indicates that the financial leverage of the company is high in the
second year.
The gross margin % is calculated by the gross margin and the revenue. In this case, it is
seen that the gross margin % is same for both years which indicates that not much
improvement has been made in the company over the two years.
The net profit margin % is calculated by dividing the sales revenue by the net income.
The calculation shows that the net profit margin of the Academy has decreased in the
second year indicating that the expenses of the company have decreased. This is good
as the company can enhance its profit
The calculation of the ROI is done by Net Profit/Total investment*100. The calculation
shows that there is an increase in the ROI of the company, which means that the cost of
investment has yielded high results for the company.
The calculation of the ROE is done by dividing the net income by the equity of the
shareholders. The result shows that the ROE of the Academy has increased which means
that the return from the assets is high of the company.
The break-even analysis is done by dividing the desired profit by the contribution margin
and adding with the break even units. In this case, the break-even analysis is done by
using the following:
Break even analysis of year 1
26.05/100=0.26
Break even analysis of year 2
85.12/100=0.8512

BIBLIOGRAPHY
(n.d.). Retrieved from https://www.statista.com/outlook/313/108/fitness/canada
Designblendz. (2018). 4 REASONS WHY GOOD ARCHITECTURE IS IMPORTANT. Retrieved
February 12, 2019, from https://www.designblendz.com/blog/4-reasons-why-
good-architecture-is-important
Robert Singer. (2017). Accounting for Leases Under the New Standard, Part 1. Retrieved
February 12, 2019, from https://www.cpajournal.com/2017/08/23/accounting-
leases-new-standard-part-1/