Bubble and Bee Organic - Pro Forma Modeling Template

Assumptions and Decision 2014 2015 2016 2017

Method 1: Revenue Growth Rate 9% <<Modify model to assume constant for all three years

IS Line Items
Marketable Security Interest Rate 1.5% <<Modify IS to reflect interest earned on Marketable Securities
COGS % of Sales 20% 21% 21%
Selling Expense % of Sales 25% 26% 27%
General & Admin Variable Expense % of Sales 5%
General & Admin Fixed Expense $ 675,000 $ 725,000 $ 775,000
Depreciation Expenses:
Existing Equipment $ 95,221 $ 95,221 $ 95,221
New Equipment $ - $ 10,000 $ 10,000
Existing Bank Loan Interest Rate 4%
Tax Rate 0% 0% 0%
Dividends Paid $ 175,000 $ 175,000 $ 175,000

BS Line Items
Working Cash % of Sales 3% 3% 3% <<Modify BS Cash to reflect working capital and Excess Cash as plug
AR% of Sales 2% 2% 2%
Inventory % of Sales 8% 8% 8%
Net Additions to PPE $ 100,000
AP% of Sales 4% 4% 4%
Accrued Liabilities % of Sales 0% 0% 0%
Changes to Existing Bank Loan <<Remove as input and use bank loan as debt plug
Changes to Long Term Liabilities $ - $ - $ -
Changes to Members Equity $ - $ - $ -

Income Statement (in $)

2014 2015 2016 2017
Revenues 1,776,168 1,936,023 2,110,265 2,300,189
Cost of Goods Sold 357,597 387,205 443,156 483,040
Gross Margin 1,418,571 1,548,818 1,667,110 1,817,149
Marketable Security Interest - - 432 <<Interest Earned from Excess Cash
Expenses
Selling 439,512 484,006 548,669 621,051
General & Administrative Variable 82,514 96,801 105,513 115,009
General & Administrative Fixed 572,776 675,000 725,000 775,000
Depreciation 87,221 95,221 105,221 105,221
Total Expenses 1,182,023 1,351,028 1,484,403 1,616,282
EBIT 236,548 197,791 182,706 201,300 <<modified to include MS interest
Net Interest Expense 7,535 4,208 2,131 1,114
Taxable Income 229,013 193,582 180,575 200,185
Taxes - - - -
Net Income 229,013 193,582 180,575 200,185
Dividends Paid 175000 175,000 175,000 175,000
Addition to Retained Earnings 54,013 18,582 5,575 25,185

Balance Sheet
2013 2014 2015 2016 2017
Assets
Current Assets
Excess Cash/MarketSec 0 - - 57,594 << Cash plug as first plug
Working Cash 25,567 43,008 58,080.69 63,307.96 69,005.67 <<Working Capital cash
Receivables 32,375 35,525 38,720 42,205 46,004
Inventories 131,250 143,937 154,882 168,821 184,015
Total Current Assets 189,192 222,470 251,683 274,334 356,619
Fixed Assets
PP&E 395,785 470,185 470,185 570,185 570,185
Less Depreciation 120,221 207,442 302,663 407,884 513,105
Total Fixed Assets 275,564 262,743 167,522 162,301 57,080

Total Assets 464,756 485,213 419,205 436,635 413,699

Liabilities & Shareholder's Equity

Current Liabilities
Accounts Payable 44,625 53,286 77,441 84,411 92,008
Accrued Liabilities - - - - -
Bank Loan 201,796 159,579 50,834 55,719 - <<Bank loan as second plug
Total Current Liabilities 246,421 212,865 128,275 140,130 92,008
Long Term Liabilities - - - - -
Total Liabilities 246,421 212,865 128,275 140,130 92,008

Shareholder's Equity
Member's Equity 150,000 150,000 150,000 150,000 150,000
Retained Earnings 68,335 122,348 140,930 146,506 171,691
Total Shareholder's Equ 218,335 272,348 290,930 296,506 321,691

Total Liabilities and Shareholde 464,756 485,213 419,205 436,635 413,699

Check 1: TA-TLE=0? - - -
Check 2: Change BS MS = CF Stmt net inc Cash? 0 - (0)

TA w/o Excess Cash 419,205 436,635 356,105

TLE w/o ST Bank Loan 368,371 380,916 413,699
Excess Cash(revolver) (50,834) (55,719) 57,594

Cash Flow Statement

Cash Provided (used) by Operations 2014 2015 2016 2017

Net Income 229,013 193,582 180,575 200,185
Plus Depreciation 87,221 95,221 105,221 105,221
Change in Working Capital
Decrease (increase) in Cash (17,441) (15,073) (5,227) (5,698) <<New working Capital CF
Decrease (increase) in Receivables (3,150) (3,195) (3,485) (3,798)
Decrease (increase) in Inventory (12,687) (10,945) (13,939) (15,194)
Increase (decrease) in Accts. Payable 8,661 24,155 6,970 7,597
Increase (decrease) in Accrued Liabilities - - - -
Cash Provided (used) by Operations 291,617 283,745 270,114 288,313
Cash Provided (used) by Investments
Additions to PP&E (74,400) - (100,000) -
Other Investments - -
Cash Provided (used) by Investments (74,400) - (100,000) -
Cash Provided (used) by Financing Activities
Additions (reductions) to Debt (42,217) (108,745) 4,886 (55,719)
Net issues of Stock - - - -
(Dividends - Owner Draws) (175,000) (175,000) (175,000) (175,000)
Cash Provided (used) by Financing Activities (217,217) (283,745) (170,114) (230,719)
Net increase (decrease) in cash - - - 57,594

Ratios 2014 2015 2016 2017

Liquidity
Current Ratio 0.90 1.39 1.96 2.72
Quick Ratio 0.30 0.51 0.75 1.20

Cash Conversion Cycle

Inventory to Sale (DIO or DSI) 140.44 140.84 133.31 133.31
Sale to Cash (DSO) 6.98 7.00 7.00 7.00
Purchase to Payment (DPO) 49.97 61.62 66.65 66.65
Cash Conversion Cycle (in days) 97.45 86.23 73.65 73.65

Leverage Ratios
Total Debt to Assets 0.48 0.38 0.31 0.27
Cash Interest Coverage 42.97 69.63 135.11 275.06
Times Interest Coverage (TIE) 31.39 47.00 85.73 180.64
Financial Leverage Ratio 1.782 1.441 1.473 1.286
Profitability Ratios
Gross Profit Margin 79.9% 80.0% 79.0% 79.0%
Operating Profit Margin 13.3% 10.2% 8.7% 8.8%
Net Profit Margin 12.9% 10.0% 8.6% 8.7%
NOPAT Margin 13.3% 10.2% 8.7% 8.8%

Efficiency & Return Measures

Sales to Total Assets 3.74 4.28 4.93 5.41
Operating Return on Assets 49.8% 43.7% 42.7% 47.3%
Return on Equity 93.3% 68.7% 61.5% 64.8%
Return on Assets 48.2% 42.8% 42.2% 47.1%
Inventory Turnover 2.60 2.59 2.74 2.74
Total Asset Turnover 3.74 4.28 4.93 5.41
Bubble and Bee Organic - Pro Forma Modeling Template

Assumptions and Decision 2014 2015 2016 2017

Method 1: Revenue Growth Rate 9% <<Modify model to assume constant for all three years

IS Line Items
Marketable Security Interest Rate 1.5% <<Modify IS to reflect interest earned on Marketable Securities
COGS % of Sales 20% 21% 21%
Selling Expense % of Sales 25% 26% 27%
General & Admin Variable Expense % of Sales 5%
General & Admin Fixed Expense $ 600,000 $ 650,000 $ 700,000 <<numbers change due to less rent & personnel needed for 3 locations
Depreciation Expenses:
Existing Equipment $ 95,221 $ 95,221 $ 95,221
New Equipment $ - $ 10,000 $ 10,000
Building 30 years $ 36,667 $ 36,667 $ 36,667 <<30 year straight line depreciation of proposed new building
Existing Bank Loan Interest Rate 4%
Tax Rate 0% 0% 0%
Dividends Paid $ 175,000 $ 175,000 $ 175,000

BS Line Items
Working Cash % of Sales 3% 3% 3% <<Modify BS Cash to reflect working capital and Excess Cash as plug
AR% of Sales 2% 2% 2%
Inventory % of Sales 8% 8% 8%
Net Additions to PPE $ 1,100,000 $ 100,000
AP% of Sales 4% 4% 4%
Accrued Liabilities % of Sales 0% 0% 0%
Changes to Existing Bank Loan <<Remove as input and use bank loan as debt plug
Changes to Long Term Liabilities $ 959,292 $ (32,283) $ (33,938) <<Building loan payments seen in row 37 & 38
Changes to Members Equity $ - $ - $ -

Building Loan Purchase Price $ 1,100,000

Percent Down 10%
Loan Amount $ 990,000
Interest Rate 5%
Number years 20
Annual Loan Payment ($79,440.16)
Payment Schedule
Beginning Balance $ 990,000 $ 959,292 $ 927,010
Interest $ 48,732 $ 47,158 $ 45,502
Principal $ 30,708 $ 32,283 $ 33,938
Ending Balance $ 959,292 $ 927,010 $ 893,071

Income Statement (in $)

2014 2015 2016 2017
Revenues 1,776,168 1,936,023 2,110,265 2,300,189
Cost of Goods Sold 357,597 387,205 443,156 483,040
Gross Margin 1,418,571 1,548,818 1,667,110 1,817,149
Marketable Security Interest - - - <<Interest Earned from Excess Cash
Expenses
Selling 439,512 484,006 548,669 621,051
General & Administrative Variable 82,514 96,801 105,513 115,009
General & Administrative Fixed 572,776 600,000 650,000 700,000
Depreciation 87,221 95,221 105,221 105,221
Total Expenses 1,182,023 1,276,028 1,409,403 1,541,282
EBIT 236,548 272,791 257,706 275,868 <<modified to include MS interest
Net Interest Expense 7,535 55,276 54,146 50,686 <<modified to include mortgage interest
Taxable Income 229,013 217,514 203,561 225,182
Taxes - - - -
Net Income 229,013 217,514 203,561 225,182
Dividends Paid 175000 175,000 175,000 175,000
Addition to Retained Earnings 54,013 42,514 28,561 50,182

Balance Sheet
2013 2014 2015 2016 2017
Assets
Current Assets
Excess Cash/MarketSec 0 - - - << Cash plug as first plug
Working Cash 25,567 43,008 58,080.69 63,307.96 69,005.67 <<Working Capital cash
Receivables 32,375 35,525 38,720 42,205 46,004
Inventories 131,250 143,937 154,882 168,821 184,015
Total Current Assets 189,192 222,470 251,683 274,334 299,025
Fixed Assets
PP&E 395,785 470,185 1,570,185 1,670,185 1,670,185
Less Depreciation 120,221 207,442 302,663 407,884 513,105
Total Fixed Assets 275,564 262,743 1,267,522 1,262,301 1,157,080

Total Assets 464,756 485,213 1,519,205 1,536,635 1,456,105

Liabilities & Shareholder's Equity

Current Liabilities
Accounts Payable 44,625 53,286 77,441 84,411 92,008
Accrued Liabilities - - - - -
Bank Loan 201,796 159,579 167,609 181,792 77,421 <<Bank loan as second plug
Total Current Liabilities 246,421 212,865 245,050 266,203 169,428
Long Term Liabilities - - 959,292 927,010 893,071
Total Liabilities 246,421 212,865 1,204,343 1,193,212 1,062,500

Shareholder's Equity
Member's Equity 150,000 150,000 150,000 150,000 150,000
Retained Earnings 68,335 122,348 164,862 193,423 243,605
Total Shareholder's Equ 218,335 272,348 314,862 343,423 393,605

Total Liabilities and Sharehold 464,756 485,213 1,519,205 1,536,635 1,456,105

Check 1: TA-TLE=0? - - -
Check 2: Change BS MS = CF Stmt net inc Cash? 0 - -

TA w/o Excess Cash 1,519,205 1,536,635 1,456,105

TLE w/o ST Bank Loan 1,351,596 1,354,843 1,378,684
Excess Cash(revolver) (167,609) (181,792) (77,421)

Cash Flow Statement

Cash Provided (used) by Operations 2014 2015 2016 2017

Net Income 229,013 217,514 203,561 225,182
Plus Depreciation 87,221 95,221 105,221 105,221
Change in Working Capital
Decrease (increase) in Cash (17,441) (15,073) (5,227) (5,698) <<New working Capital CF
Decrease (increase) in Receivables (3,150) (3,195) (3,485) (3,798)
Decrease (increase) in Inventory (12,687) (10,945) (13,939) (15,194)
Increase (decrease) in Accts. Payable 8,661 24,155 6,970 7,597
Increase (decrease) in Accrued Liabilities - - - -
Cash Provided (used) by Operations 291,617 307,677 293,100 313,309
Cash Provided (used) by Investments
Additions to PP&E (74,400) (1,100,000) (100,000) -
Other Investments - -
Cash Provided (used) by Investments (74,400) (1,100,000) (100,000) -
Cash Provided (used) by Financing Activities
Additions (reductions) to Debt (42,217) 967,323 (18,100) (138,309)
Net issues of Stock - - - -
(Dividends - Owner Draws) (175,000) (175,000) (175,000) (175,000)
Cash Provided (used) by Financing Activities (217,217) 792,323 (193,100) (313,309)
Net increase (decrease) in cash - - - -

Ratios 2014 2015 2016 2017

Liquidity
Current Ratio 0.90 1.04 1.03 1.32
Quick Ratio 0.30 0.38 0.40 0.51

Cash Conversion Cycle

Inventory to Sale (DIO or DSI) 140.44 140.84 133.31 133.31
Sale to Cash (DSO) 6.98 7.00 7.00 7.00
Purchase to Payment (DPO) 49.97 61.62 66.65 66.65
Cash Conversion Cycle (in days) 97.45 86.23 73.65 73.65

Leverage Ratios
Total Debt to Assets 0.48 0.71 0.78 0.75
Cash Interest Coverage 42.97 6.66 6.70 7.52
Times Interest Coverage (TIE) 31.39 4.94 4.76 5.44
Financial Leverage Ratio 1.782 4.825 4.474 3.699
Profitability Ratios
Gross Profit Margin 79.9% 80.0% 79.0% 79.0%
Operating Profit Margin 13.3% 14.1% 12.2% 12.0%
Net Profit Margin 12.9% 11.2% 9.6% 9.8%
NOPAT Margin 13.3% 14.1% 12.2% 12.0%

Efficiency & Return Measures

Sales to Total Assets 3.74 1.93 1.38 1.54
Operating Return on Assets 49.8% 27.2% 16.9% 18.4%
Return on Equity 93.3% 74.1% 61.8% 61.1%
Return on Assets 48.2% 21.7% 13.3% 15.0%
Inventory Turnover 2.60 2.59 2.74 2.74
Total Asset Turnover 3.74 1.93 1.38 1.54
Input Assumptions
Retained
Revenue Growth Rate: 9%
$300,000
2015 Selling Expense % of sales: 25%
$250,000
Decisions:

Retaine Earnings
2015 2016 2017 $200,000

Owner Draw: $ 175,000 $ 175,000 $ 175,000 $150,000

Percent Down on Building: 10% $100,000

$50,000

KPI: $0
2014 20
Year of Interest: 2015
Reta i ned Earni ng
ROE - Rent
Rent Space Buy Building
ST Bank Loan Balance $ 50,834 $ 167,609
Retained Earnings $ 140,930 $ 164,862
Revenues $ 1,936,023 $ 1,936,023
Net Income $ 193,582 $ 217,514
Cash Provided by Operations $ 283,745 $ 307,677

Net Profit Margin 10.0% 11.2%

Return on Equity 68.7% 74.1%
Quick Ratio 0.51 0.38
Times Interest Earned 47.00 4.94
Financial Leverage 1.44 4.82
 Retained Earnings versus ROE
$300,000 100.0%
90.0%
$250,000 80.0%
$200,000 70.0%
60.0%
$150,000 50.0%

ROE
40.0%
$100,000 30.0%
$50,000 20.0%
10.0%
$0 0.0%
2014 2015 2016 2017
Reta i ned Earni ngs - Rent Reta i ned Ea ri ngs - Buy
ROE - Rent ROE - Buy