Profit and Loss Profit. Loss Statement For year beginning January, 2001 Year 1 Year 2 Year 3 Sales Less cost of sales: Material Labor/benefits/taxes Total cost of sales Gross profit Operating expenses: Salaries & Wages Sales Commissions Rent Maintenance Equipment Rental Insurance Utilities Office Supplies Marketing/Advertising Travel Entertainment Depreciation Total operating expenses Operating income Interest expense Net income 6,000,000 8,380,000 11,125,000 600,000 838,000 1,112,500 3,525,000 4,923,250 6,535,938 4,125,000 5,761,250 7,648,438 1,875,000 2,618,750 3,476,563 461,250 506,250 551,250 375,000 523,750 695,313 108,000 144,000 180,000 18,000 21,600 25,200 13,100 15,720 18,864 13,200 18,000 21,600 18,000 23,400 26,400 37,650 41,416 45,557 98,250 117,900 141,480 183,400 220,080 264,096 77,980 105,275 142,118 13,380 13,380 13,380 1,417,210 1,750,771 2,125,257 457,790 867,979 1,351,305 82,375 80,697 35,910 375,415 787,283 1,315,395 Sales - Includes existing consulting contracts currently in place, and assumes adding additional contracts each month. The average contract amounts to $30,000 on an annual basis, with payments on those contracts received in various months throughout the year. The total number of clients is expected to grow from 183 in 2000 to 200 in 2001, 280 in 2002, and 371 in 2003. Material Cost of Sales - Assumes a constant 10% of sales. Materials include the purchase of secondary market research, technology costs, and the hard assets related to the generation of reports and marketing/advertising materials. Labor/benefits/taxes (Cost of Sales) - Assumes a constant 47% of sales. Most of the costs of goods/services sold lie in this area, due to the labor-intensive nature of the consulting industry. These costs are consistent with historical data. Salaries & Wages - The portion of wages that is not directly attributable to revenue generation. In other words, not consultant related costs. Five staff per office is assumed. Sales Commissions - Assumed to be 5 percent of gross sales, plus a 25% cost of payroll taxes/benefits. A percentage of sales commissions are shared with support staff. Rent - Assumes five offices in 2001, with two additional offices each year in 2002 and 2003. Marketing/Advertising - Includes billboards, mailers, newsletters, etc., with 20% increases assumed each year as new offices are opened. Travel - Assumed to be a considerable cost, due to large territories for consultants. Entertainment - Assumed to be a corresponding expense with sales cal...
Profit and Loss Profit. Loss Statement For year beginning January, 2001 Year 1 Year 2 Year 3 Sales Less cost of sales: Material Total cost of sales Gross profit Operating expenses: Salaries & Wages Professional Services Rent Maintenance Equipment Rental Insurance Utilities Office Supplies Postage Marketing/Advertising Travel Entertainment Amortization Depreciation Total operating expenses Operating income Interest expense Net income 109,600 132,000 222,400 27,305 32,590 55,007 27,305 32,590 55,007 82,295 99,410 167,393 7,500 1,500 19,596 900 1,200 1,920 2,160 900 780 10,200 1,150 325 1,650 1,000 8,250 1,100 19,596 900 1,800 2,160 2,160 900 900 11,400 1,600 600 1,650 1,000 25,500 1,300 39,204 1,500 2,400 4,200 3,900 900 1,200 13,200 2,750 900 3,025 1,833 50,781 54,016 101,812 31,514 180 45,394 0 65,581 0 31,334 45,394 65,581 Sales - Assumptions are based on anticipated sales for one HydroHut location, until March of the third year, when a second location is scheduled to open. Below is a breakdown summary of forecasted sales: Sales Category Sales Forecast For year beginning January, 2001 Year 1 Year 2 Year 3 Retail Walk-In 100,100 107,000 189,100 Corporate 0 8,000 13,000 Special Events 9,500 17,000 20,300 Total Sales 109,600 132,000 222,400 Cost of Sales - Calculated based on industry average information. Specifically, retail walk-in sales have a 25% cost of sales, corporate sales have a 22% cost of sales, and special event sales have a 24% cost of sales. Salaries & Wages - Based on one planned part-time employee in years 1 & 2, with two additional part-time employees in year 3. Marketing/Advertising - HydroHut will promote functional still water drinks to customers via newspaper advertisements, public relations activities, flyers, and group discounts. Rent, Maintenance, Insurance, Utilities, and Travel - Reflects the higher expenses that will result from the second location opening in March of year 3.
