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 Table of Contents

This is a business plan. It does not imply an offering of securities.

1.0 Executive Summary.....................................................................................................................1

Chart: Highlights...........................................................................................................................1
1.1 Objectives....................................................................................................................................1
1.2 Mission...........................................................................................................................................2
1.3 Keys to Success.........................................................................................................................2
2.0 Company Summary......................................................................................................................2
2.1 Start-up Summary....................................................................................................................2
Table: Start-up Funding.............................................................................................................3
Table: Start-up..............................................................................................................................4
3.0 Products and Services.................................................................................................................4
3.1 Product and Service Description.........................................................................................5
3.2 Sourcing........................................................................................................................................5
3.3 Technology...................................................................................................................................5
3.4 Competitive Comparison........................................................................................................5
3.5 Future Products and Services...............................................................................................6
4.0 Market Analysis Summary.........................................................................................................6
4.1 Market Segmentation..............................................................................................................7
Chart: Market Analysis (Pie).....................................................................................................8
Table: Market Analysis................................................................................................................8
4.1.1 Market Trends.....................................................................................................................8
4.2 Service Business Analysis......................................................................................................8
4.2.1 Competition and Buying Patterns...............................................................................9
4.2.2 Business Participants.......................................................................................................9
5.0 Strategy and Implementation Summary...........................................................................10
5.1 Marketing Strategy.................................................................................................................10
5.1.1 Pricing Strategy...............................................................................................................10
5.1.2 Promotion Strategy........................................................................................................11
5.2 Competitive Edge....................................................................................................................11
6.0 Sales Forecast..............................................................................................................................11
Table: Sales Forecast................................................................................................................11
Chart: Sales Monthly.................................................................................................................12
Chart: Sales by Year..................................................................................................................12
7.0 Management Summary.............................................................................................................13
7.1 Personnel Plan..........................................................................................................................13
Table: Personnel..........................................................................................................................13
8.0 Financial Plan................................................................................................................................13
Table: General Assumptions...................................................................................................13
8.1 Break-even Analysis...............................................................................................................14
Chart: Break-even Analysis....................................................................................................14
Table: Break-even Analysis....................................................................................................14
8.2 Projected Profit and Loss.....................................................................................................15
8.2 Projected Profit and Loss.....................................................................................................15
Chart: Profit Yearly.....................................................................................................................15
Page
 Table of Contents

Chart: Gross Margin Monthly.................................................................................................15

Chart: Gross Margin Yearly.....................................................................................................16
Table: Profit and Loss................................................................................................................17
Chart: Profit Monthly.................................................................................................................16
8.3 Projected Cash Flow...............................................................................................................18
Chart: Cash...................................................................................................................................18
Table: Cash Flow.........................................................................................................................19
8.4 Projected Balance Sheet......................................................................................................20
8.4 Projected Balance Sheet......................................................................................................20
Table: Balance Sheet.................................................................................................................20
8.5 Business Ratios........................................................................................................................20
Table: Ratios.................................................................................................................................21
Table: Sales Forecast..........................................................................................................................1
Table: Personnel....................................................................................................................................2
Table: Personnel....................................................................................................................................2
Table: General Assumptions.............................................................................................................3
Table: General Assumptions.............................................................................................................3
Table: Profit and Loss..........................................................................................................................4
Table: Profit and Loss..........................................................................................................................4
Table: Cash Flow...................................................................................................................................5
Table: Cash Flow...................................................................................................................................5
Table: Balance Sheet...........................................................................................................................6
Table: Balance Sheet...........................................................................................................................6

Page
 Tucson Electronics

1.0 Executive Summary

Tucson is a start-up business located in the West end of Tucson Arizona. The company
specializes in the repair and sales of home electronics, specifically home entertainment
electronics, including TV, DVDs VCRs and CD players.

We will target people who place great importance in their entertainment equipment and own
higher-end electronics, where repairing them would be more cost effective than replacing them.
Many low end VCRs for example, are priced so low, people find it more cost effective and
convenient to purchase a new product than to get the existing one repaired.

The company is owned and managed by James Munroe, a retired Navy Commander with a
degree in electrical engineering from the University of Texas-Austin. He is a certified electronics
technician with various brand companies. He will also employ his son to help with running and
growing the business.

Chart: Highlights

Highlights

$300,000

$270,000

$240,000

$210,000
Sales
$180,000
Gross Margin
$150,000

$120,000 Net Profit

$90,000

$60,000

$30,000

$0
Year 1 Year 2 Year 3

1.1 Objectives

Tucson Electronics (TE) is a growth-oriented business. Its ten year goal is to become a regional
leader in TV/VCR/home stereo repair, with shops in the Tucson and Phoenix area. With this in
mind, the objectives over the next three years for Tucson Electronics are the following:

 Achieve steady growth in sales revenues by year three.

 Achieve local market share (in the Tucson area) of approximately 20% by year five.
 Expand product line to include authorized satellite service installation and new home
entertainment electronics sales.

Page 1
 Tucson Electronics

1.2 Mission

The mission of Tucson Electronics is to provide high quality, convenient and comprehensive
TV/DVD/VCR and home electronics repair at a low cost. The most important aspect of our
business is trust. It is the goal of our firm to have 100% customer satisfaction in regards to
quality, friendliness and time to completion, and discover new ways to exceed the expectations
of our customers while doing so at the lowest possible cost.

1.3 Keys to Success

In the TV/VCR repair industry a company builds its client base one customer at a time and
mostly through established marketing practices (ads, billboards, etc.). With this in mind, the
keys to success for Tucson Electronics are:

 High-quality work.
 Attention to professional appearances at all times.
 Knowledgeable technicians that are friendly, customer oriented, and will take the time to
explain to customers the intricate nature of our business and our work.
 Maintaining a highly aggressive managerial oversight on costs to provide our services at the
lowest price.

2.0 Company Summary

Tucson Electronics is envisioned to be the low cost leader in TV/DVD/VCR and home stereo
repair for the Tucson area that will also be able to eventually provide satellite TV
installation/servicing and new electronics sales, making it the local leader in comprehensive
electronic sales/services.

The company will be a sole proprietorship registered in the state of Arizona and owned by Mr.
James Munroe. The firm will have facilities on 530 W. Prince Ave. The initial facilities will
contain a sales area, repair room in the back of the shop, office space and storage for parts and
equipment.

The company is seeking a loan in order to finance the start of operations for the company. The
owners will be putting up additional capital of their own as equity.

2.1 Start-up Summary

The data obtained for the start-up table comes from research done in the Tucson area with
other small electronics shops who have started their own business, in addition to Mr. Munroe's
previous experience within the industry. Inflation has been taken into account between the
estimates of these fellow business owners (and when they started) and the current prices for
expensed items. Much of the equipment to go into the facilities such as tools, are currently
owned by Mr. Munroe.

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 Tucson Electronics

Table: Start-up Funding

Start-up Funding
Start-up Expenses to Fund $26,300
Start-up Assets to Fund $51,200
Total Funding Required $77,500

Assets
Non-cash Assets from Start-up $15,000
Cash Requirements from Start-up $36,200
Additional Cash Raised $0
Cash Balance on Starting Date $36,200
Total Assets $51,200

Liabilities and Capital

Liabilities
Current Borrowing $0
Long-term Liabilities $15,400
Accounts Payable (Outstanding Bills) $0
Other Current Liabilities (interest-free) $13,600
Total Liabilities $29,000

Capital

Planned Investment
James Munroe $26,500
Janet Munroe $22,000
Additional Investment Requirement $0
Total Planned Investment $48,500

Loss at Start-up (Start-up Expenses) ($26,300)

Total Capital $22,200

Total Capital and Liabilities $51,200

Total Funding $77,500

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 Tucson Electronics

Table: Start-up
Start-up

Requirements

Start-up Expenses
Legal $500
Stationery etc. $200
Advertising $10,000
Phone $200
Insurance $400
Rent $4,000
Utilities $400
Facilities refurbishment $8,000
Computer $2,000
Other $600
Total Start-up Expenses $26,300

Start-up Assets
Cash Required $36,200
Start-up Inventory $3,000
Other Current Assets $8,000
Long-term Assets $4,000
Total Assets $51,200

Total Requirements $77,500

3.0 Products and Services

Tucson Electronics offers a wide range of services as outlined in the detailed sections below. It
is ultimately the goal of the company to offer a one-stop facility for all home entertainment
needs, including both sales and servicing. In this way the company can offer greater perceived
value for the customer than many other shops which only offer sales or services.

The industry is highly competitive with suppliers having a great deal of power in setting and
negotiating the prices of their products and services to repair shops. In addition, because the
customers see the service as undifferentiated and a "commodity" with little value separation
between competitors, buyer power is also very high. Finally, the barriers to entry are
moderately low, and the large number of competitors in this field, including substitutes (such as
do-it-yourself work) mean that the pricing for such services is very competitive. The only way
to have an advantage in this industry is a low cost leadership principal applied aggressively or
to create higher switching costs through the building of strong business-to-customer ties. It is
the aim of Tucson Electronics to create a competitive advantage through both the low cost
strategy and by offering greater value through its broader product and service line.

Tucson Electronics will initially have only one factory trained and certified technician in the
person of Mr. Munroe. As the company grows and expands, Mr. Munroe will hire trained and
certified technicians who are able to prove they have superior customer awareness and
interaction. It is the company's professional people who will fulfill the firm's contracts and goals.
The largest part of the company's expenses will be in labor costs.

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 Tucson Electronics

3.1 Product and Service Description

Tucson Electronics provides a wide range of home entertainment repair services. These include:

 Repair and cleaning of  home and car stereos and CB radios.
 Repair and cleaning of TVs.
 Repair and cleaning of VCRs and DVDs.
 Sale of used TVs, stereos, VCRs and DVDs.
 Free estimates on repair jobs.
 Authorized warranty servicing on all major brands of home entertainment systems.
 House calls and free pickup and delivery.

Future products and services that Tucson Electronics will prepare to institute include
TV/VCR/DVD rental, satellite TV installation and servicing, sales of new TVs, DVDs, VCRs and
stereos, and repair/sale of microwave ovens. Mr. Munroe is also investigating the possibility of
offering a new product line of home entertainment cabinets at some future date.

3.2 Sourcing

Tucson Electronics will be obtaining most of its parts through established dealers and directly
through the manufacturers of the relevant electronics. As part of the company's low cost
strategy, the company will seek to purchase parts in large quantities whenever possible to take
advantage of volume discounts. In addition, the company will aggressively seek to procure its
parts from local suppliers in order to start forming close relations with such companies. It is the
ultimate aim of Tucson Electronics to form strategic partnerships with such companies in order
to lower overall costs of parts.

A large part of Tucson Electronics enhanced services will be free pickup and delivery of
electronics to a person's home. Mr. Munroe's cousin, Mr. Thomas Porter, owns Caesar Courier
Services, a local company providing pickup and delivery services. Mr. Porter has agreed to
provide these services to Tucson Electronics' clients at discounted prices to Mr. Munroe.

3.3 Technology

The technological revolution in computers has enhanced our abilities to diagnose and repair our
clients home electronics. Tucson Electronics will remain on the cutting edge by instituting the
use of computer diagnostic equipment in its shop. The company will continue to seek new ways
to provide a better service through technology.

3.4 Competitive Comparison

The electronics repair industry is highly competitive. Each company within this field has high
labor costs, low margins, and a high intensity of competition.

Suppliers have a great deal of power in setting and negotiating the prices of their products and
services to repair shops. This is due to the fact that the suppliers who absorb the greatest
amounts of cash from repair shops are large electronic manufacturing companies such as
Panasonic, Emerson, Toshiba, etc. These companies are more consolidated than the repair
industry, have deeper pockets, an almost limitless number of substitute customers, and finally
they are the single most important supplier to the electronic repair industry. Therefore, these

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 Tucson Electronics

companies can set whatever price they wish to. Furthermore, labor is the single most important
expense in this industry, and salaries for such individuals are well known and not very flexible.

 In addition, because the customers see the service as undifferentiated and a "commodity" with
little value separation between competitors (if they offer a suitable level of quality) buyer power
is also very high. Additionally, the costs of our services are not cheap, and buyers are willing to
search for the most favorable combination of price and acceptable service.

 The barriers to entry and exit are moderately low in this industry. Switching costs are virtually
non-existent and the costs to entry and exist the market are low. The large number of
competitors in this field including substitutes mean that pricing for such services are very
competitive. The only way to have an advantage in this industry is a low cost leadership
principal applied aggressively to all aspects of the business or to build up customer relations to
a point where the switching costs are raised.

Based on this analysis, Tucson Electronics will pursue a low cost leadership strategy as its
primary competitive advantage. Furthermore, the company will simultaneously build up its
product and service line to take advantage of the limited opportunity to create higher switching
costs through enhanced value creation and to spread out costs.

3.5 Future Products and Services

Future products and services that Tucson Electronics will prepare to institute include
TV/VCR/DVD rental, satellite TV installation and servicing, sales of new TVs, DVDs VCRs and
stereos, and repair/sale of microwave ovens. Mr. Munroe is also investigating the possibility of
offering a new product line of home entertainment cabinets at some future date.

Tucson Electronics will start implementing these new products or services in the following time
periods:

 Repair/sale of microwave ovens (3rd Qtr 2004).

 Satellite TV installation and servicing (3rd Qtr 2005).
 TV/VCR/DVD rental (2nd Qtr 2006).
 Sales of new TVs/DVDs/VCRs (4th Qtr 2006).

The capital investment needed for such expansion will primarily come from the company's
accumulated operating cash account. It is anticipated that some of these product/service
expansions that require significant inventory, such as new sales, may require additional cash
inflow such as loans. The company will be preparing proposals for various lending institutions in
anticipation of this need.

Presently the product that is really driving the electronics repair market is computers. While
Tucson Electronics is not currently positioned to take advantage of this situation, it is the long-
term goal of Tucson electronics to incorporate computer repair services within the company.
Once the firm is able to generate enough cash to retain the services of a computer repair
technician, the company will evaluate the viability of such a move. It is anticipated that this
service will be offered sometime after 1st Qtr 2007.

4.0 Market Analysis Summary

There are approximately 332,500 households in the greater Tucson area, which includes
suburbs such as Green Valley, Ina, and South Tucson. Virtually all of these households have
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 Tucson Electronics

TVs, VCRs, etc. Tucson Electronics segments its market into product categories that reflect the
estimated number of each electronic device currently being used in the greater Tucson area,
since each of these devices may fail at any time and require our services. In addition the
growth rate of each product emplaced in the home is based on the current sales growth of each
product. Presently, the fastest growing product, in terms of sales, is the DVD player. It is
anticipated that the DVD will replace the VCR within the next three to five years as movie rental
stores replace their existing VHS movies with DVD. The largest segment is the home and car
stereo segment, since usually a household has more than one of these systems. The company
will be focusing on servicing all of these systems, and not focusing on one over the other.

4.1 Market Segmentation

Tucson Electronics has segmented the households in the Tucson area as follows:

 Couples with children.

 Couples without children (including Baby Boomers).
 Retired people.
 Students living in multi-unit housing.
 Single people living alone.
 Single people living with roommates.

Tucson will target the following segments.

Middle class couples without children. This group will tend to have a higher disposable
income since they have two incomes but do not have the expense of children. They prioritize
socializing and spend a fair amount of time entertaining in their home and in the homes of their
friends. For this reason they will spend more on their electronic equipment.

Single men living alone or with roommates. This group is not the largest segment for us,
but potentially one of the most profitable, since single men tend to prioritize their home
entertainment equipment. They will spend a greater percentage of their income on high-quality
TV and stereo equipment.

Baby boomers. Baby boomers are reaching the age where their children have left home and
they have more disposable income than when their children were young and living at home.
They are more tech savvy than the generation before them and appreciate the good things in
life. They like to spend time in their homes, now that the children are out of the house.

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 Tucson Electronics

Chart: Market Analysis (Pie)

Market Analysis (Pie)

TVs

VCRs

DVDs

Stereo Systems

Microwave Ovens

Table: Market Analysis

Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
TVs 3% 415,875 428,351 441,202 454,438 468,071 3.00%
VCRs -2% 310,645 304,432 298,343 292,376 286,528 -2.00%
DVDs 25% 106,400 133,000 166,250 207,813 259,766 25.00%
Stereo Systems 12% 875,500 980,560 1,098,227 1,230,014 1,377,616 12.00%
Microwave Ovens 8% 282,625 305,235 329,654 356,026 384,508 8.00%
Total 8.67% 1,991,045 2,151,578 2,333,676 2,540,667 2,776,489 8.67%

4.1.1 Market Trends

The market demand for electronics repair has been relatively stable over the past decade. With
the advent of DVD players, the market is seeing more highly trained technicians needed. As
technology progresses, long-term planners within this market expect to see new opportunities
for electronics repair quickly arise. Such devices as cellular telephones, PDAs and other new
electronics may have a role to play in the people who have a broad vision in this field.

4.2 Service Business Analysis

Much of the electronics repair industry analysis is contained in the competitive comparison
section. However, the key points are that the industry is highly competitive and that most firms
have little power to affect the forces that influence them or to affect the price levels that the
market determines. In essence, Tucson Electronics operates in a purely competitive
environment where the demand curve is horizontal. In other words the company is free to
service electronics at maximum capacity without effecting the price or demand for its services.

Page 8
 Tucson Electronics

With this type of environment, and with customers seeing such services as a "commodity" the
only strategy open to companies in this field is the low cost leadership approach.

Tucson Electronics is fortunate in that Janet Munroe, Mr. Munroe's wife works in cost analysis
for Wal-Mart, one of the country's best low cost companies. Mrs. Munroe has agreed to furnish
cost analysis services to Tucson Electronics for free.

The low cost leadership strategy will not be simple to achieve. Realistically speaking, because of
the fragmented nature of the industry, Tucson Electronics will only seek a low cost leadership in
the Tucson region for the first seven to ten years of operations. In order to capture this position
and achieve its benefits of high market share and profitability, the company is expected to have
higher start-up costs and lower profits within the first few years as the company invests in
better and more efficient facilities and equipment than most competitors and engages in
aggressive pricing to capture market share. The company will rigorously evaluate every aspect
of the company to improve efficiency and lower costs. Mrs. Munroe is preparing an analysis of
the company's value chain and cost drivers to identify where costs can be lowered and which
aspects of the business Mr. Munroe must focus on. It is expected that management will expend
a great deal of energy in cost management and the reduction of things such as marginal
customer accounts and marketing expenses. Once in operation, management will concentrate
on developing established procedures that will create the most effective service experience.
Finally, as part of this low cost leadership strategy, the company plans to vertically integrate to
include original sales and broad services that will spread costs and serve all major customer
types so as to build volume.

4.2.1 Competition and Buying Patterns

Customers traditionally purchase services in this industry because of effective advertising and
reputation. The customers wish to be reassured that they will receive prompt and reliable
service and have an understanding service representative will listen to their problems and seek
to solve them in a fast and professional manner. Therefore image during the entire service
experience is crucial to maintain word-of-mouth marketing and keep a low curn rate. Currently
the largest problem that faces small firms is product/service awareness. By the use of effective
and widespread advertising, Tucson Electronics expects to be able to capitalize on the weakness
of the the "mom and pop" outfits style of passive promotion (such as Yellow Page ads) and to
leverage greater product awareness into higher market share. There is no seasonality to this
industry although there is some slight increase in servicing sales during the Christmas season.

4.2.2 Business Participants

As stated before, the electronic repair industry is highly fragmented. In fact, there are so many
small providers that any company in this industry is facing a purely competitive environment.
Approximately 23,700 electronic repair firms exist in the country today. Firms within this field
range in sizes from the "mom and pop" outfits such as Dave's Electronics and Kachina Repair 
in downtown Tucson to regional companies like Magnolia Hi-Fi and the national chains such as
Circuit City. Not all of these firms are purely repair outfits. In fact all of the larger firms make
the majority of their revenue in original sales. It is these companies that have the largest
market share and have the opportunity to compete by differentiating on customer service or
product/service range.

As stated before, Tucson Electronics will seek a low cost leadership approach in the local Tucson
region first. Its goals are not to directly compete with the larger companies who could
effectively out compete Tucson Electronics. Instead, the company will seek to outprice the local
"mom and pop" outfits and acquire their market share in order to then compete with the
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 Tucson Electronics

regional firms. There are eight such "mom & pop" firms that will be Tucson Electronics' main
competitors in its first few years of operation. They are:

 Dave's Electronics.
 Kachina Repair.
 Cactus Repair and Appliance.
 Miller TV.
 Robb's Repair.
 Sam the TV Man.
 Teletron Service Co.
 Ferndale TV Shoppe.

5.0 Strategy and Implementation Summary

The following sections outline Tucson Electronic's strategy and implementation summary.

5.1 Marketing Strategy

The company has a strong program of marketing its services that include the following:

1. Flyers.
2. Direct mailers.
3. Discounts.
4. Newspaper ads.
5. Yellow Pages.
6. Referrals through other local businesses.
7. Radio ads.
8. Billboards.
9. Web banners on local information sites.

The company's aim is to overcome the traditional small firm's passive form of advertising and
promotion by sending our message to the customer, instead of having the customer look for a
firm when they need our services. The share development graph below shows how the
company plans to build market share through service awareness, value creation, competitive
price, availability, and attractive service experience, all leading to the purchasing of our
services. The numbers given in the graph give the estimated percentages of those customers
who respond favorably to each marketing step. These numbers multiplied together give us an
estimated aggregate market share of approximately 16%. The company expects to achieve this
by year four.

5.1.1 Pricing Strategy

Tucson Electronics exists in a purely competitive environment where each firm must be a price
taker. In other words, the firm has no ability to affect the market price of its services,
regardless of how many TVs/DVDs or VCRs it repairs. In this case, therefore, marginal revenue
(the revenue incurred by producing or servicing one more unit) is equal to the price charged.
Furthermore, because the demand curve is essentially horizontal, Tucson Electronics can
service electronics at total capacity without effecting the price.

What all of this means for the company is that the we must seek to charge our clients at the
market price (or lower). Research has shown that the average price is approximately $75 per
electronic device. As long as marginal costs do not exceed revenues, the company's method to
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 Tucson Electronics

maximize short-run profits is to service the various electronic devices at maximum capacity.
This means that Tucson Electronics can expect an long-term ROA of approximately 14%.

5.1.2 Promotion Strategy

The company's promotion strategy will take the form of flyers, direct mailers, price discounts,
billboards, radio ads and advertisements in newspapers and yellow pages. TE expects to spend
a large amount on marketing in the first two years in order to build up product awareness and
service value in the minds of our customers.

5.2 Competitive Edge

Tucson Electronics' competitive edge lies in its ability to provide quality and fast electronic
repair at lower cost than any local small competitor. This positioning of the company provides
protection against the power of suppliers by creating more flexibility to cope with increasing
costs. In addition, this approach will provide returns even during economic downturns and when
other unforeseen problems arise.

6.0 Sales Forecast

Since the electronic repair industry is, operationally, a job-shop environment, it is somewhat
difficult to estimate sales. For job-shops, each individual product or service is tailored or unique
to that job, and is only initiated once an order is made. However, the sales forecast reflect the
professional opinion of Mr. Munroe in how many sales he will make.

The sales forecast is based on the estimated number of electronics the company could service
that are currently emplaced in the homes in Tucson. This is conservatively estimated at
about two million units. From that number it is assumed that approximately 3% of all those will
fail in any year. These two numbers multiplied together give us yearly market demand for our
services. With an aggressive promotional strategy, a 10% market share is assumed by
year three and multiplied by the estimated market demand. This is then multiplied by the
estimated price per unit to arrive at the yearly sales figure assumed for year three (once the
company's marketing efforts have paid off). This number is then decreased by a logical amount
to estimate the first two years of revenue.

Table: Sales Forecast

Sales Forecast
Year 1 Year 2 Year 3
Sales
TVs $46,250 $49,025 $52,604
VCRs $51,600 $54,696 $58,689
DVDs $36,500 $38,690 $41,514
Stereo Systems $57,700 $61,162 $65,627
Microwave Ovens $5,900 $84,000 $90,132
Total Sales $197,950 $287,573 $308,566

Direct Cost of Sales Year 1 Year 2 Year 3

TVs $4,625 $6,000 $6,000
VCRs $5,160 $7,200 $7,200
DVDs $3,650 $8,400 $8,400
Stereo Systems $5,770 $7,200 $7,200
Microwave Ovens $590 $7,200 $7,200
Subtotal Direct Cost of Sales $19,795 $36,000 $36,000

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 4 Mo
Month 5
Tucson Electronics

1 Month
MonthMonth 2 Month
3
Chart: Sales Monthly

Sales Monthly

$24,000

$21,000 TVs
$18,000 VCRs
$15,000
DVDs
$12,000
Stereo Systems
$9,000
Microwave Ovens
$6,000

$3,000

$0

Chart: Sales by Year

Sales by Year

$280,000
TVs
$240,000
VCRs
$200,000
DVDs
$160,000
Stereo Systems
$120,000
Microwave Ovens
$80,000

$40,000

$0
Year 1 Year 2 Year 3

Page 12
 Tucson Electronics

7.0 Management Summary

Mr. James Munroe is a retired Navy Commander with a degree in electrical engineering from
the University of Texas-Austin. During his naval career, Mr. Munroe gained extensive
experience in project management, engineering, and electronics systems. During his leisure
time, Mr. Munroe sought to expand his experiences in electronics by becoming a certified
electronics technician with various brand companies. Mr. Munroe is now seeking to leverage this
experience into a growth-oriented business that will be able to eventually compete with the
largest firms in the industry.

Mr. Munroe will also be employing the services of his son Samuel, who desires to eventually
take over the business. Samuel Munroe has been attending a local trade school and is expected
to graduate with a degree in electronics in the summer of 2002.

7.1 Personnel Plan

Tucson Electronics' initial staffing will consist of Mr. Munroe, his son, and two part-time
technician trainees. Accounting, bookkeeping, and marketing consulting services will be
outsourced. The company's intermediate goal is to have four full-time, fully trained technicians
at the original facility, plus a full-time office manager. However, management has decided to
await future developments before determining the best time to bring on such personnel.

Table: Personnel

Personnel Plan
Year 1 Year 2 Year 3
Mr. James Munroe $36,000 $36,000 $36,000
Mr. Samuel Munroe $24,000 $28,000 $32,000
Part-time technician $14,400 $28,000 $28,000
Part-time technician $14,400 $28,000 $28,000
Part-time technician $0 $15,000 $15,000
Total People 4 5 5

Total Payroll $88,800 $135,000 $139,000

8.0 Financial Plan

The following sections outline the financial plan for Tucson Electronics.

Table: General Assumptions

General Assumptions
Year 1 Year 2 Year 3
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 30.00% 30.00% 30.00%
Other 0 0 0

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 Tucson Electronics

8.1 Break-even Analysis

The company's break-even analysis is based on an average company's running costs within this
industry, including payroll, and its fixed costs for such things as rent, utilities, etc. As Tucson
Electronics operates as a job-shop, with each task a unique, customized service, it is difficult to
estimate revenue per unit and variable costs. The reader must understand that there is a high
degree of variance within these estimates.

The reader will also note that the company is not expected to reach its break-even point until
the last three months of sales of the first year.

Chart: Break-even Analysis

Break-even Analysis

$12,000

$9,000

$6,000

$3,000

$0

($3,000)

($6,000)

($9,000)

($12,000)

($15,000)
$0 $6,000 $12,000 $18,000 $24,000 $30,000
$3,000 $9,000 $15,000 $21,000 $27,000 $33,000

Table: Break-even Analysis

Break-even Analysis

Monthly Revenue Break-even $17,844

Assumptions:
Average Percent Variable Cost 10%
Estimated Monthly Fixed Cost $16,059

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 Tucson Electronics

8.2 Projected Profit and Loss

The following table and charts are the projected profit and loss for Tucson Electronics.

Chart: Profit Yearly

Profit Yearly

$20,000

$16,000

$12,000

$8,000

$4,000

$0

($4,000)

($8,000)

($12,000)

Year 1 Year 2 Year 3

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 Tucson Electronics

Chart: Gross Margin Monthly

Gross Margin Monthly

$21,000

$18,000

$15,000

$12,000

$9,000

$6,000

$3,000

$0
Month 1 Month 3 Month 5 Month 7 Month 9 Month 11
Month 2 Month 4 Month 6 Month 8 Month 10 Month 12

Chart: Gross Margin Yearly

Gross Margin Yearly

$270,000

$240,000

$210,000

$180,000

$150,000

$120,000

$90,000

$60,000

$30,000

$0
Year 1 Year 2 Year 3

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 Tucson Electronics

Chart: Profit Monthly

Profit Monthly

$6,000

$5,000

$4,000

$3,000

$2,000

$1,000

$0

($1,000)

($2,000)

($3,000)

($4,000)

Month 1 Month 3 Month 5 Month 7 Month 9 Month 11

Month 2 Month 4 Month 6 Month 8 Month 10 Month 12

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 Tucson Electronics

Table: Profit and Loss

Pro Forma Profit and Loss

Year 1 Year 2 Year 3
Sales $197,950 $287,573 $308,566
Direct Cost of Sales $19,795 $36,000 $36,000
Other Production Expenses $0 $0 $0
Total Cost of Sales $19,795 $36,000 $36,000

Gross Margin $178,155 $251,573 $272,566

Gross Margin % 90.00% 87.48% 88.33%

Expenses
Payroll $88,800 $135,000 $139,000
Sales and Marketing and Other Expenses $28,600 $36,000 $26,000
Depreciation $1,992 $2,000 $2,000
Leased Equipment $6,000 $2,000 $2,000
Utilities $4,800 $5,000 $5,000
Insurance $7,200 $7,400 $7,400
Rent $42,000 $44,000 $44,000
Payroll Taxes $13,320 $20,250 $20,850
Other $0 $0 $0

Total Operating Expenses $192,712 $251,650 $246,250

Profit Before Interest and Taxes ($14,557) ($77) $26,316

EBITDA ($12,565) $1,923 $28,316
Interest Expense $1,370 $1,000 $640
Taxes Incurred $0 $0 $7,703

Net Profit ($15,927) ($1,077) $17,973

Net Profit/Sales -8.05% -0.37% 5.82%

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 Tucson Electronics

8.3 Projected Cash Flow

The following chart and table is the projected cash flow for Tucson Electronics.

Chart: Cash

Cash

$40,000

$35,000

$30,000

$25,000
Net Cash Flow
$20,000
Cash Balance
$15,000

$10,000

$5,000

$0

Month 1 Month 3 Month 5 Month 7 Month 9 Month 11

Month 2 Month 4 Month 6 Month 8 Month 10 Month 12

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 Tucson Electronics

Table: Cash Flow

Pro Forma Cash Flow

Year 1 Year 2 Year 3
Cash Received

Cash from Operations

Cash Sales $197,950 $287,573 $308,566
Subtotal Cash from Operations $197,950 $287,573 $308,566

Additional Cash Received

Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $1,000 $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 $0 $3,000 $0
Subtotal Cash Received $198,950 $290,573 $308,566

Expenditures Year 1 Year 2 Year 3

Expenditures from Operations

Cash Spending $88,800 $135,000 $139,000
Bill Payments $111,148 $153,960 $147,510
Subtotal Spent on Operations $199,948 $288,960 $286,510

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $1,000 $0 $0
Other Liabilities Principal Repayment $3,600 $3,600 $3,600
Long-term Liabilities Principal Repayment $3,600 $3,600 $3,600
Purchase Other Current Assets $0 $2,000 $3,000
Purchase Long-term Assets $0 $5,000 $5,000
Dividends $0 $0 $0
Subtotal Cash Spent $208,148 $303,160 $301,710

Net Cash Flow ($9,198) ($12,587) $6,856

Cash Balance $27,002 $14,415 $21,270

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 Tucson Electronics

8.4 Projected Balance Sheet

The following table is the projected balance sheet for Tucson Electronics.

Table: Balance Sheet

Pro Forma Balance Sheet

Year 1 Year 2 Year 3
Assets

Current Assets
Cash $27,002 $14,415 $21,270
Inventory $2,794 $6,110 $3,360
Other Current Assets $8,000 $10,000 $13,000
Total Current Assets $37,796 $30,525 $37,630

Long-term Assets
Long-term Assets $4,000 $9,000 $14,000
Accumulated Depreciation $1,992 $3,992 $5,992
Total Long-term Assets $2,008 $5,008 $8,008
Total Assets $39,804 $35,533 $45,638

Liabilities and Capital Year 1 Year 2 Year 3

Current Liabilities
Accounts Payable $11,731 $12,737 $12,069
Current Borrowing $0 $0 $0
Other Current Liabilities $10,000 $6,400 $2,800
Subtotal Current Liabilities $21,731 $19,137 $14,869

Long-term Liabilities $11,800 $8,200 $4,600

Total Liabilities $33,531 $27,337 $19,469

Paid-in Capital $48,500 $51,500 $51,500

Retained Earnings ($26,300) ($42,227) ($43,304)
Earnings ($15,927) ($1,077) $17,973
Total Capital $6,273 $8,196 $26,169
Total Liabilities and Capital $39,804 $35,533 $45,638

Net Worth $6,273 $8,196 $26,169

8.5 Business Ratios

The Business ratios give an overall idea of how profitable, and at what risk level, Tucson
Electronics will operate at. The ratio table gives both time series analysis and cross-sectional
analysis by including industry average ratios. Industry Profile ratios are based on Standard
Industrial Classification (SIC) code 7622, Radio and Television Repair. As can be seen from the
comparison between industry standards and Tucson Electronics own ratios, there are some
differences. Most of these are due to the fact that there is a very large variance in assets,
liabilities, financing, and net income between companies in this industry due to the vast
differences in company size. The reader will also note that there is a fair amount of variability
between the various years. This is due to the fact that the company is expected to grow quickly
and have a large variance in profitability from year to year at first.

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 Tucson Electronics

Overall the company's projections show a company that faces the usual risks of companies in
this industry and one that will be profitable in the long-run. The company shows that it has
higher advertising and start-up costs than other competitors, however management has
deliberately overstated costs and minimized profits in order to create a "safe" or "buffer" zone
in case of hard times or other unforeseeable problems. Pre-tax return on net worth and pre-tax
return on assets appears to be very high, especially within the first two years, however again
this is due to the fact that the company will be facing highly variable revenue and costs over
the first few years.

Table: Ratios

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth n.a. 45.28% 7.30% 6.10%

Percent of Total Assets

Inventory 7.02% 17.20% 7.36% 19.00%
Other Current Assets 20.10% 28.14% 28.48% 27.50%
Total Current Assets 94.96% 85.91% 82.45% 76.90%
Long-term Assets 5.04% 14.09% 17.55% 23.10%
Total Assets 100.00% 100.00% 100.00% 100.00%

Current Liabilities 54.59% 53.86% 32.58% 36.90%

Long-term Liabilities 29.65% 23.08% 10.08% 15.80%
Total Liabilities 84.24% 76.93% 42.66% 52.70%
Net Worth 15.76% 23.07% 57.34% 47.30%

Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 90.00% 87.48% 88.33% 0.00%
Selling, General & Administrative Expenses 97.70% 87.54% 82.32% 83.50%
Advertising Expenses 7.07% 8.69% 4.86% 0.50%
Profit Before Interest and Taxes -7.35% -0.03% 8.53% 3.10%

Main Ratios
Current 1.74 1.60 2.53 2.26
Quick 1.61 1.28 2.30 1.47
Total Debt to Total Assets 84.24% 76.93% 42.66% 52.70%
Pre-tax Return on Net Worth -253.90% -13.14% 98.12% 7.00%
Pre-tax Return on Assets -40.01% -3.03% 56.26% 14.70%

Additional Ratios Year 1 Year 2 Year 3

Net Profit Margin -8.05% -0.37% 5.82% n.a
Return on Equity -253.90% -13.14% 68.68% n.a

Activity Ratios
Inventory Turnover 10.71 8.09 7.60 n.a
Accounts Payable Turnover 10.47 12.17 12.17 n.a
Payment Days 27 29 31 n.a
Total Asset Turnover 4.97 8.09 6.76 n.a

Debt Ratios
Debt to Net Worth 5.35 3.34 0.74 n.a
Current Liab. to Liab. 0.65 0.70 0.76 n.a

Liquidity Ratios
Net Working Capital $16,065 $11,388 $22,761 n.a
Interest Coverage -10.63 -0.08 41.12 n.a

Additional Ratios
Assets to Sales 0.20 0.12 0.15 n.a

Page 22
 Tucson Electronics

Current Debt/Total Assets 55% 54% 33% n.a

Acid Test 1.61 1.28 2.30 n.a
Sales/Net Worth 31.56 35.09 11.79 n.a
Dividend Payout 0.00 0.00 0.00 n.a

Page 23
 Appendix

Table: Sales Forecast

Sales Forecast
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Sales
TVs 0% $3,000 $3,200 $3,400 $3,550 $3,550 $3,550 $3,700 $3,700 $4,000 $4,800 $4,800 $5,000
VCRs 0% $3,500 $3,600 $3,700 $3,900 $3,900 $3,900 $4,000 $4,200 $4,500 $5,100 $5,400 $5,900
DVDs 0% $2,000 $2,200 $2,200 $2,400 $2,400 $2,400 $2,600 $2,600 $3,000 $4,200 $5,000 $5,500
Stereo Systems 0% $4,000 $4,000 $4,100 $4,400 $4,400 $4,400 $4,600 $4,800 $5,400 $5,600 $6,000 $6,000
Microwave Ovens 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $400 $2,500 $3,000
Total Sales $12,500 $13,000 $13,400 $14,250 $14,250 $14,250 $14,900 $15,300 $16,900 $20,100 $23,700 $25,400

Direct Cost of Sales Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
TVs $300 $320 $340 $355 $355 $355 $370 $370 $400 $480 $480 $500
VCRs $350 $360 $370 $390 $390 $390 $400 $420 $450 $510 $540 $590
DVDs $200 $220 $220 $240 $240 $240 $260 $260 $300 $420 $500 $550
Stereo Systems $400 $400 $410 $440 $440 $440 $460 $480 $540 $560 $600 $600
Microwave Ovens $0 $0 $0 $0 $0 $0 $0 $0 $0 $40 $250 $300
Subtotal Direct Cost of Sales $1,250 $1,300 $1,340 $1,425 $1,425 $1,425 $1,490 $1,530 $1,690 $2,010 $2,370 $2,540

Page 1
 Appendix

Table: Personnel

Personnel Plan
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Mr. James Munroe 0% $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000
Mr. Samuel Munroe 0% $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000
Part-time technician 0% $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200
Part-time technician 0% $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200
Part-time technician 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total People 4 4 4 4 4 4 4 4 4 4 4 4

Total Payroll $7,400 $7,400 $7,400 $7,400 $7,400 $7,400 $7,400 $7,400 $7,400 $7,400 $7,400 $7,400

Page 2
 Appendix

Table: General Assumptions

General Assumptions
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Plan Month 1 2 3 4 5 6 7 8 9 10 11 12
Current Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
Long-term Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
Tax Rate 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00%
Other 0 0 0 0 0 0 0 0 0 0 0 0

Page 3
 Appendix

Table: Profit and Loss

Pro Forma Profit and Loss

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Sales $12,500 $13,000 $13,400 $14,250 $14,250 $14,250 $14,900 $15,300 $16,900 $20,100 $23,700 $25,400
Direct Cost of Sales $1,250 $1,300 $1,340 $1,425 $1,425 $1,425 $1,490 $1,530 $1,690 $2,010 $2,370 $2,540
Other Production Expenses $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Cost of Sales $1,250 $1,300 $1,340 $1,425 $1,425 $1,425 $1,490 $1,530 $1,690 $2,010 $2,370 $2,540

Gross Margin $11,250 $11,700 $12,060 $12,825 $12,825 $12,825 $13,410 $13,770 $15,210 $18,090 $21,330 $22,860
Gross Margin % 90.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00%

Expenses
Payroll $7,400 $7,400 $7,400 $7,400 $7,400 $7,400 $7,400 $7,400 $7,400 $7,400 $7,400 $7,400
Sales and Marketing and Other $2,200 $2,200 $2,200 $2,200 $2,200 $2,200 $2,200 $2,200 $2,200 $2,200 $3,400 $3,200
Expenses
Depreciation $166 $166 $166 $166 $166 $166 $166 $166 $166 $166 $166 $166
Leased Equipment $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500
Utilities $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400
Insurance $600 $600 $600 $600 $600 $600 $600 $600 $600 $600 $600 $600
Rent $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500
Payroll Taxes 15% $1,110 $1,110 $1,110 $1,110 $1,110 $1,110 $1,110 $1,110 $1,110 $1,110 $1,110 $1,110
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Operating Expenses $15,876 $15,876 $15,876 $15,876 $15,876 $15,876 $15,876 $15,876 $15,876 $15,876 $17,076 $16,876

Profit Before Interest and Taxes ($4,626) ($4,176) ($3,816) ($3,051) ($3,051) ($3,051) ($2,466) ($2,106) ($666) $2,214 $4,254 $5,984
EBITDA ($4,460) ($4,010) ($3,650) ($2,885) ($2,885) ($2,885) ($2,300) ($1,940) ($500) $2,380 $4,420 $6,150
Interest Expense $126 $123 $121 $118 $116 $113 $111 $108 $114 $112 $109 $98
Taxes Incurred $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Net Profit ($4,752) ($4,299) ($3,937) ($3,169) ($3,167) ($3,164) ($2,577) ($2,214) ($780) $2,102 $4,145 $5,886
Net Profit/Sales -38.01% -33.07% -29.38% -22.24% -22.22% -22.21% -17.29% -14.47% -4.62% 10.46% 17.49% 23.17%

Page 4
 Appendix

Table: Cash Flow

Pro Forma Cash Flow

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Cash Received

Cash from Operations

Cash Sales $12,500 $13,000 $13,400 $14,250 $14,250 $14,250 $14,900 $15,300 $16,900 $20,100 $23,700 $25,400
Subtotal Cash from Operations $12,500 $13,000 $13,400 $14,250 $14,250 $14,250 $14,900 $15,300 $16,900 $20,100 $23,700 $25,400

Additional Cash Received

Sales Tax, VAT, HST/GST Received 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $1,000 $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Investment Received $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Received $12,500 $13,000 $13,400 $14,250 $14,250 $14,250 $14,900 $15,300 $17,900 $20,100 $23,700 $25,400

Expenditures Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Expenditures from Operations

Cash Spending $7,400 $7,400 $7,400 $7,400 $7,400 $7,400 $7,400 $7,400 $7,400 $7,400 $7,400 $7,400
Bill Payments $281 $8,469 $9,445 $9,800 $9,944 $9,851 $9,853 $9,983 $10,002 $10,307 $10,837 $12,377
Subtotal Spent on Operations $7,681 $15,869 $16,845 $17,200 $17,344 $17,251 $17,253 $17,383 $17,402 $17,707 $18,237 $19,777

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $1,000
Other Liabilities Principal Repayment $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300
Long-term Liabilities Principal Repayment $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300
Purchase Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Purchase Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Spent $8,281 $16,469 $17,445 $17,800 $17,944 $17,851 $17,853 $17,983 $18,002 $18,307 $18,837 $21,377

Net Cash Flow $4,219 ($3,469) ($4,045) ($3,550) ($3,694) ($3,601) ($2,953) ($2,683) ($102) $1,793 $4,863 $4,023

Page 5
 Appendix
Cash Balance $40,419 $36,950 $32,904 $29,354 $25,661 $22,060 $19,107 $16,425 $16,322 $18,116 $22,979 $27,002

Table: Balance Sheet

Pro Forma Balance Sheet

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Assets Starting Balances

Current Assets
Cash $36,200 $40,419 $36,950 $32,904 $29,354 $25,661 $22,060 $19,107 $16,425 $16,322 $18,116 $22,979 $27,002
Inventory $3,000 $1,750 $1,450 $1,474 $1,568 $1,568 $1,568 $1,639 $1,683 $1,859 $2,211 $2,607 $2,794
Other Current Assets $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000
Total Current Assets $47,200 $50,169 $46,400 $42,378 $38,922 $35,228 $31,628 $28,746 $26,108 $26,181 $28,327 $33,586 $37,796

Long-term Assets
Long-term Assets $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000
Accumulated Depreciation $0 $166 $332 $498 $664 $830 $996 $1,162 $1,328 $1,494 $1,660 $1,826 $1,992
Total Long-term Assets $4,000 $3,834 $3,668 $3,502 $3,336 $3,170 $3,004 $2,838 $2,672 $2,506 $2,340 $2,174 $2,008
Total Assets $51,200 $54,003 $50,068 $45,880 $42,258 $38,398 $34,632 $31,584 $28,780 $28,687 $30,667 $35,760 $39,804

Liabilities and Capital Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Current Liabilities
Accounts Payable $0 $8,155 $9,119 $9,468 $9,615 $9,522 $9,520 $9,650 $9,659 $9,947 $10,424 $11,972 $11,731
Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $1,000 $1,000 $1,000 $0
Other Current Liabilities $13,600 $13,300 $13,000 $12,700 $12,400 $12,100 $11,800 $11,500 $11,200 $10,900 $10,600 $10,300 $10,000
Subtotal Current Liabilities $13,600 $21,455 $22,119 $22,168 $22,015 $21,622 $21,320 $21,150 $20,859 $21,847 $22,024 $23,272 $21,731

Long-term Liabilities $15,400 $15,100 $14,800 $14,500 $14,200 $13,900 $13,600 $13,300 $13,000 $12,700 $12,400 $12,100 $11,800
Total Liabilities $29,000 $36,555 $36,919 $36,668 $36,215 $35,522 $34,920 $34,450 $33,859 $34,547 $34,424 $35,372 $33,531

Paid-in Capital $48,500 $48,500 $48,500 $48,500 $48,500 $48,500 $48,500 $48,500 $48,500 $48,500 $48,500 $48,500 $48,500
Retained Earnings ($26,300) ($26,300) ($26,300) ($26,300) ($26,300) ($26,300) ($26,300) ($26,300) ($26,300) ($26,300) ($26,300) ($26,300) ($26,300)
Earnings $0 ($4,752) ($9,051) ($12,988) ($16,157) ($19,324) ($22,489) ($25,065) ($27,280) ($28,060) ($25,958) ($21,813) ($15,927)
Total Capital $22,200 $17,448 $13,149 $9,212 $6,043 $2,876 ($289) ($2,865) ($5,080) ($5,860) ($3,758) $387 $6,273
Total Liabilities and Capital $51,200 $54,003 $50,068 $45,880 $42,258 $38,398 $34,632 $31,584 $28,780 $28,687 $30,667 $35,760 $39,804

Net Worth $22,200 $17,448 $13,149 $9,212 $6,043 $2,876 ($289) ($2,865) ($5,080) ($5,860) ($3,758) $387 $6,273

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