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Legal Page
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Table of Contents

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

Chart: Highlights.......................................................................................................................................2
1.1 Objectives................................................................................................................................................2
1.2 Mission....................................................................................................................................................2
1.3 Keys to Success.......................................................................................................................................2
2.0 Company Summary.....................................................................................................................................3
2.1 Start-up Summary...................................................................................................................................3
Table: Start-up...........................................................................................................................................3
...................................................................................................................................................................3
2.2 Company Ownership..............................................................................................................................4
3.0 Services.......................................................................................................................................................5
4.0 Market Analysis Summary.........................................................................................................................6
4.1 Market Segmentation..............................................................................................................................6
Table: Market Analysis.............................................................................................................................6
Chart: Market Analysis (Pie)....................................................................................................................7
4.2 Target Market Segment Strategy............................................................................................................7
4.3 Service Business Analysis......................................................................................................................8
4.3.1 Competition and Buying Patterns....................................................................................................8
5.0 Strategy and Implementation Summary.....................................................................................................8
5.1 Competitive Edge....................................................................................................................................9
5.2 Marketing Strategy..................................................................................................................................9
5.3 Sales Strategy..........................................................................................................................................9
5.3.1 Sales Forecast.................................................................................................................................10
Table: Sales Forecast..........................................................................................................................10
Chart: Sales Monthly..........................................................................................................................10
5.4 Milestones.............................................................................................................................................11
Table: Milestones....................................................................................................................................11
Chart: Milestones....................................................................................................................................12
6.0 Web Plan Summary...................................................................................................................................12
6.1 Website Marketing Strategy.................................................................................................................12
6.2 Development Requirements..................................................................................................................12
7.0 Management Summary.............................................................................................................................12
7.1 Personnel Plan.......................................................................................................................................14
Table: Personnel......................................................................................................................................14
8.0 Financial Plan............................................................................................................................................14
8.1 Important Assumptions.........................................................................................................................14
Table: General Assumptions...................................................................................................................14
.....................................................................................................................................................................14
8.2 Break-even Analysis.............................................................................................................................15
Chart: Break-even Analysis....................................................................................................................15
Table: Break-even Analysis....................................................................................................................15
.....................................................................................................................................................................15
Page 1

Table of Contents

8.3 Projected Profit and Loss......................................................................................................................16

Chart: Gross Margin Monthly................................................................................................................16
Chart: Profit Monthly..............................................................................................................................17
Chart: Profit Yearly.................................................................................................................................17
Table: Profit and Loss.............................................................................................................................17
8.4 Projected Cash Flow.............................................................................................................................18
Table: Cash Flow....................................................................................................................................18
Chart: Cash..............................................................................................................................................19
8.5 Projected Balance Sheet........................................................................................................................20
Table: Balance Sheet...............................................................................................................................20
.....................................................................................................................................................................20
8.6 Business Ratios.....................................................................................................................................21
Table: Ratios...........................................................................................................................................21
Table: Sales Forecast.........................................................................................................................................1
...........................................................................................................................................................................1
Table: Personnel................................................................................................................................................2
...........................................................................................................................................................................2
Table: General Assumptions.............................................................................................................................3
...........................................................................................................................................................................3
Table: Profit and Loss.......................................................................................................................................4
...........................................................................................................................................................................4
Table: Cash Flow..............................................................................................................................................5
...........................................................................................................................................................................6
Table: Balance Sheet.........................................................................................................................................7

Page 2

Green Investments

1.0 Executive Summary

Green Investments (GI) is a financial service company that focuses on stocks of
environmentally responsible companies. The Washington-based L.L.C. is lead by Sarah Lewis
and Steve Burke. GI uses financial research purchased from Bear Stearns and in-house
environmental responsibility analysis to make recommendations to clients.
Services
GI has developed a criteria-based marker system which is easy and effective in evaluating a
wide range of different companies on their environmental impact. Only financially
prudent/performing companies are evaluated, ensuring that its recommendations make both
financial and environmental sense.
Competitive Edge
GI will leverage the proprietory evaluation system to quickly gain market share. The system is
convenient and based on extensive research, providing a streamlined overview of the
environmental performance of the companies.
Market
GI will concentrate on the unserved niche of environmental investing within the financial
services market. GI faces indirect competition from environmentally responsible mutual funds,
which do a similar job in assessing a company's environmental performance but do not allow
for investing in individual equity.
Management Team
GI is lead by two experienced managers, Sarah Lewis, and Steve Burke. Sarah has a masters
degree in environmental studies and has worked for the Environmental Protection Agency
where she was responsible for preparing environmental impact statements. Steve has an MBA
and has worked for Salomon Smith Barney where he developed an extensive amount of
networking contacts.
GI addresses a previously ignored niche of the financial services market. GI will generate
$230,000 and $261,000 in sales in year two and three respectively.

Page 1

Green Investments

Chart: Highlights

Highlights
$240,000
$200,000
$160,000

Sales

$120,000

Gross Margin

$80,000

Net Profit

$40,000
$0
($40,000)
($80,000)
Year 1

Year 2

Year 3

1.1 Objectives

To become the premier environmental investment firm.

Attract more people into making investments based on environmental actions of the
prospective companies, in effect raising the awareness of and supporting investments in
companies that act on environmental concerns.
Continue to drive down the costs associated with investment research as it relates to
environmental criteria.

1.2 Mission
Green Investments' mission is to become the premier financial service organization that makes
investment in companies with outstanding environmental records and practices. Green
Investments, through comprehensive research and well thought out and verifiable marker
criteria will be able to identify sound environmental investments. By offering the highest level of
services, Green Investments will succeed as a company as well as have a positive impact on
our environment.
1.3 Keys to Success

Develop a workable, accurate set of environmental markers for a wide range of

environmental impacts a company faces.
Purchase high-quality financial performance investment research, recognizing that there is
no value added for Green Investments doing this research themselves.
Price the service so that there is a good profit margin while remaining competitive.

Page 2

Green Investments

2.0 Company Summary

Green Investments is a Washington-based financial service company that is concentrating on
the niche of environmentally responsible companies. The company is owned by Steve Burke
and Sarah Lewis. It has been formed as a L.L.C.
2.1 Start-up Summary
The following equipment will be needed for start up:

Phone system (5 line).

Workstation computers (4), back end server, DSL Internet connection, and laser printer.
Office furniture, meeting room and waiting room furniture.
Monthly service charge for Bears Stearns software.
Fax machine, copier, lighting, and assorted office supplies.

Table: Start-up

Start-up
Requirements
Start-up Expenses
Legal
Stationery etc.
Brochures
Licenses
Insurance
Research and Development
Other
Total Start-up Expenses

$5,000
$500
$500
$2,000
$500
$9,000
$2,500
$20,000

Start-up Assets
Cash Required
Other Current Assets
Long-term Assets
Total Assets

$79,000
$7,000
$19,000
$105,000

Total Requirements

$125,000

Page 3

Green Investments

Table: Start-up Funding

Start-up Funding
Start-up Expenses to Fund
Start-up Assets to Fund
Total Funding Required

$20,000
$105,000
$125,000

Assets
Non-cash Assets from Start-up
Cash Requirements from Start-up
Additional Cash Raised
Cash Balance on Starting Date
Total Assets

$26,000
$79,000
$0
$79,000
$105,000

Liabilities and Capital

Liabilities
Current Borrowing
Long-term Liabilities
Accounts Payable (Outstanding Bills)
Other Current Liabilities (interest-free)
Total Liabilities

$0
$0
$0
$0
$0

Capital
Planned Investment
Investor 1
Investor 2
Additional Investment Requirement
Total Planned Investment

$75,000
$50,000
$0
$125,000

Loss at Start-up (Start-up Expenses)

Total Capital

($20,000)
$105,000

Total Capital and Liabilities

$105,000

Total Funding

$125,000

2.2 Company Ownership

Steve Burke and Sarah Lewis equally own Green Investments. While they initially were going to
create a S Corporation as the business formation, they decided to form as a L.L.C. as a means
to avoid double taxation found with a corporation yet realizing the benefits of personal liability
avoidance.

Page 4

Green Investments

3.0 Services
Green Investments is a financial service company that offers investment advice specifically for
stocks. GI purchases fiscal performance research from Bear Stearns, one of the highest
respected firms in the market. In addition to solid financial performance criteria, GI has
developed a set of environmental markers by which it can analyze and grade the attractiveness
of the environmental impact that a company has.
As mentioned earlier, the economic performance of a company is rated by the financial firm
Bear Stearns. Green Investments purchases Bear Stearns research based on recognition that
there is no value added to do this research. The confidence of the research is quite high
because of the firm performing it. If Bear Stearns' research or another firm of comparable
quality was not available Green Investments would have to rethink the decision to farm out this
research.
Green Investments has developed a comprehensive set of environmental markers for which a
company and their environmental impact can be evaluated. The following areas are evaluated:

Energy usage
Water usage
Recycling program
Paper consumption and procurement
Chemical cleaning usage
Ground maintenance impact
Formal environmental policy
Recycling rate

All of the markers include current, next stage, and long run benchmarks.
Green Investments takes the list of recommended investments from Bear Stearns and then
applies environmental marker criteria to narrow the list down. The result is a list of possible
investments (stocks) that are recommended because of their fiscal and environmental
performance. Green Investments attempts to make evaluations of companies in a wide range of
sectors allowing the customer to make the choice as to what type of company/industry that
they would like to invest in.
Green Investments' service charge is similar to a typical brokerage fee system based on a
percentage. While Green Investments is a bit more expensive than other standard financial
services companies because of the additional research required, the variance is not that
material, particularly to customers that want good performing stocks but only want to invest
with environmentally sound companies.
Several recent well respected studies indicate that "green" stocks are not inherently under
performing. Actually it is just the reverse, companies that make decisions with environmental
considerations in mind generally perform better.

Page 5

Green Investments

4.0 Market Analysis Summary

Green Investments has identified two distinct groups of target customers. These two groups of
customers are distinguished by their household wealth. They have been grouped as customers
with <$1 million and >$1 million in household wealth. The main characteristic that makes both
of these groups so attractive is their desire to make a difference in the world by making
investment decisions that take into account environmental factors.
The financial services industry has many different niches. Some advisors provide general
investment services. Others will only offer one type of investments, maybe just mutual funds or
might concentrate on bonds. Other service providers will concentrate on a specific niche like
technology or socially responsible companies.
4.1 Market Segmentation
Green Investments has segmented the target market into two distinct groups. The groups can
be differentiated by their difference in household wealth, households of <$1 million and >$1
million.

<$1 million (household worth): These customers are middle class people who have a
concern for the environment and are taking personal action through their choosing of stock
investments based on companies with both strong economic and environmental
performance records. Because these people do not have an over abundance of money they
choose stocks that are of moderate risk. Generally, this group has 35%-45% of their
portfolio in stocks, the remaining percentages in other types of investments.

>$1 million (household worth): These customers are upper middle class to upper class.
They have amassed over $1 million in savings and are fairly savvy investors (themselves or
the people they hire). These people are generally concerned about the rate of return of their
investments but also have environmental concerns.

Some characteristics that are shared by both target segments include:

Vehicles are chosen with environmental concerns in mind. This means they are unlikely to
own a SUV, they may in fact be one of the first adopters of the new hybrids (gas/electric
vehicles).
Many of the people commute by bike, car pool or use public transportation when possible.
Active recyclers, both at work as well as at home.
Retail purchases are made with environmental concerns in mind.
A higher percentage of these people relative to the general population are vegetarians.
For recreational sports, particularly outdoor sports, the people are more likely to enjoy
hiking, XC skiing, and other human powered activities instead of golf, downhill skiing,
snowmobiling, and jet skiing, all sports that are destructive to the environment.

Table: Market Analysis

Market Analysis
Potential Customers
<$1 million worth customers

Year 1

Year 2

Year 3

Year 4

Year 5

1,232,000

1,330,560

1,437,005

1,551,965

1,676,122

Growth
8%

CAGR
8.00%

Page 6

Green Investments

>$1 million worth customers

Total

7%
7.85%

223,090
1,455,090

238,706
1,569,266

255,415
1,692,420

273,294
1,825,259

292,425
1,968,547

7.00%
7.85%

Chart: Market Analysis (Pie)

Market Analysis (Pie)

<$1 million worth customers

>$1 million worth customers

4.2 Target Market Segment Strategy

Green Investments has chosen the previously mentioned target market segments because of
the ideological beliefs and the fact that these beliefs translate into the customer groups needing
services that Green Investments can provide. While the people can always purchase shares of
an environmentally responsible mutual fund, a way that they can exercise their beliefs, mutual
funds are just one type of investments. The downside of investments are their relatively low
rate of return (relative to good stocks) and the inability to receive personalized service and the
ability to make custom choices beyond the type of mutual fund.
Therefore, Green Investments has chosen these specific customer segments because it is a
market group that has unmet needs. These groups have the money and willingness for an
environmental investment, yet their only current choice is a mutual fund. Green Investments
has chosen to distinguish the two market segments by household worth since this characteristic
provides useful behavioral information regarding the different people.

Page 7

Green Investments

4.3 Service Business Analysis

Green Investments participates within the financial service industry. This multi-billion dollar
($14.8) industry services a wide range of people and companies with financial services such as
investments. There are many different types of investments offered including but not limited to:

Bonds
Treasury bills
Stocks, mutual funds
Insurance policies
Annuities
IRAs

Within the industry, customers are served by a wide range of service providers including:

Large national firms such as Merrill Lynch or Charles Schwaab

Franchises
Individual firms
Online brokers

Buying decisions are often based on who you know or familiarity that the person may have with
a specific company. Most of the service providers can provide a similar menu of investment
options.
Fee structures vary from firm to firm. Many are percentage based on the amount of money the
client investments. Some firms charge hourly rates while other firms charge a quarterly
management fee. The fee structures are set in stone for some service providers while others
take a more flexible approach and are willing to work with the customer to set up special
arrangements.
4.3.1 Competition and Buying Patterns
Green Investments has no direct competitors that offer environmentally sound stock
investment services. All of the current environmental investment options are mutual fund
based. Examples of this type of mutual funds include Janus, Citizen Funds, Sierra Club
Environmental Fund, and Portfolio 21.
Other competitors that Green Investments faces are the typical range of financial advisors.
These indirect competitors provide customers with a wide range of different investment options.
They could always place an investment order for a specific company, but these specific
competitors do not do any independent research on the environmentalism of different
companies.
5.0 Strategy and Implementation Summary
Green Investments will leverage its sustainable competitive edge of independent environmental
research based on a custom set of criteria based markers for an objective measure of
a company's dedication to environmentalism. The competitive edge will be marketed by using
the mantra of "think globally, act locally." This marketing slogan will encourage people to do
their part in regards to helping the environment through responsible investing. The sales

Page 8

Green Investments

campaign will rely on metrics that indicate environmental investments can and do outperform
the S&P 500 Index.
5.1 Competitive Edge
Green Investments' competitive edge is the environmental marker criteria that when applied
indicates which economic performing companies with solid environmental commitments. The
markers are effective for extremely valuable for several reasons:

Meaningful: They are based on extensive research, providing a streamlined overview of the
environmental performance of the companies.
Context-based: Allows a high degree of comparability with similar businesses.
Convenient: Far easier to use than large scale internal audits.

The key here is the fact that an objective, easy to apply, and accurate measurement system
has been developed to provide environmental analysis for any company that has the markers
applied to them. No one else offers this type of service as an information source for the decision
making process of stock investments.
5.2 Marketing Strategy
"Think globally, act locally." This well known and concise mantra simply suggests everyone
should do their part. Green Investments services allows people to make investments based on
their conscience. So many people want to do good but are unsure how to. Green Investments'
services allows people to do the right thing, with no real cost relative to the other options.
Green Investments' returns are better than the S&P 500 Index.
The marketing effort will concentrate on Green Investments' ability to empower people to make
a substantial difference in this world while getting a great return on their money. Green
Investments will use magazine advertisements and community based marketing (networking,
sponsorship and participation in seminars) to increase visibility for Green Investments and the
services offered. The advertisements will be a steady way that people will become aware of the
investment options as well as some visibility for the company itself. The community
involvement implicitly accepts the premise that good business relies on networking (inter
relationships, both business and personal) to be a significant source of business and good will.
Green Investments will participate in numerous on-topic events and seminars that will display
them as experts as well as give them a podium to describe the different services.
5.3 Sales Strategy
The sales strategy will rely on using quantitative evidence the recommended companies
outperform the S&P 500 Index. In 1999-2001, Green Investments' chosen companies
outperformed the index by 2.4%. This is a significant amount. The sales strategy will
concentrate on that by making smart green investments, you can achieve better then average
returns on your money. A sales packet will be assembled and distributed to prospective
customers that shows the better than average historic returns that Green Investments
recommended companies enjoy.

Page 9

Green Investments

5.3.1 Sales Forecast

The sales forecast is being done in a conservative fashion to avoid any inflated expectations
that might not be able to be obtained. The first several months will be slow. Green Investments
has projected steady, incremental growth in sales. This can be explained as a function of the
increased proficiency in terms of sales for Green Investments as well as an increased
awareness of Green Investments by the target customers. Please review the following table and
chart for numerical and graphical representations of the future year's sales forecasts.
Table: Sales Forecast

Sales Forecast
Year 1

Year 2

Year 3

<$1 million worth customers

>$1 million worth customers
Total Sales

$54,746
$22,889
$77,635

$156,665
$73,633
$230,298

$178,225
$83,766
$261,991

Direct Cost of Sales

<$1 million worth customers
>$1 million worth customers
Subtotal Direct Cost of Sales

Year 1
$8,212
$3,433
$11,645

Year 2
$23,500
$11,045
$34,545

Year 3
$26,734
$12,565
$39,299

Sales

Chart: Sales Monthly

Sales Monthly
$12,000
$10,000
$8,000

<$1 million worth customers

$6,000

>$1 million worth customers

$4,000
$2,000

Month 12

Month 11

Month 10

Month 9

Month 8

Month 7

Month 6

Month 5

Month 4

Month 3

Month 2

Month 1

$0

Page 10

Green Investments

5.4 Milestones
Green Investments has identified several milestones which will act as ambitious yet achievable
goals for the organization. By establishing the goals, the need to reach them will develop an
implicit incentive for all organizational members to work hard to achieve the milestones.

Business plan completion: The business plan is the roadmap for the organization. There is
value in the process of the writing of the business plan, forcing the writers to analyze a
multitude of issues.

First account of over $1 million invested: This would be a significant amount of money
for an individual account and the organization will strive to achieve many of these
customers.

Profitability: An eventual necessity.

Revenue of $250,000: With the achievement of this milestone and the previous one, there
will be a clear reaffirmation that the business model is successful.

Table: Milestones
Milestones
Milestone
Business plan completion
First $ million account
Profitability
Revenue of $250K
Totals

Start Date
1/1/2003
1/1/2003
1/1/2003
1/1/2003

End Date
2/1/2003
4/15/2004
6/1/2005
9/15/2004

Budget
$0
$0
$0
$0
$0

Manager
Sarah & Steve
Sarah
Steve
Sarah

Department
Planning
Sales
Accounting
Sales

Page 11

Green Investments

Chart: Milestones

Milestones

Business plan completion

First $ million account

Profitability

Revenue of $250K

Q1 `03

Q2

Q3

Q4

Q1 `04

Q2

Q3

Q4

Q1 `05 Q2

6.0 Web Plan Summary

The website will be used as a marketing tool to provide interested people with information
regarding Green Investments and the services they provide. The site will be fairly basic, an
introduction to Green Investments.
6.1 Website Marketing Strategy
The website will be marketed via spoken word of Green Investments personnel, on printed
literature, as well as submission to popular Internet search engines such as Google!.
6.2 Development Requirements
The development requirements for the website will not be significant due to the simple nature
of the site acting as an informational site as opposed to more complex websites that include
ecommerce activities or more interactive features. A computer science student will be used for
the design and construction of the site.
7.0 Management Summary
Green Investments will be lead by the founding team of Sarah Lewis and Steve Burke. Sarah
has an undergraduate and Masters in environmental studies from the University of Burlington.
After Sarah obtained the degrees she moved to Washington DC where she worked for the
Environmental Protection Agency (EPA) for four years, performing environmental impact
statements for a variety of industries, companies, and projects. Sarah was also a project
manager for Janus in their evaluation department where they performed company wide
environmental assessments of companies that were perspective investments for the fund.

Page 12

Green Investments

The other member of Green Investments management team is Steve Burke. Steve hails from a
financial background. Steve has an undergraduate degree in Finance from Seattle University
and a MBA from the University of Washington. After school Steve went to work for Salomon
Smith Barney in their investment department for eight years.

Page 13

Green Investments

7.1 Personnel Plan

Sarah: Company research, development of markers, sales.

Steve: Sales, accounting and finance, account management, and marketing.
Account manager: Customer support for their investment accounts.
Administrative assistant: Assorted odd and ends.
Bookkeeper: Handles the day to day accounts receivables and payable duties.
Research assistant: Assisting Sarah on her research.

The positions will be phased in on an as needed basis. Please review the following chart for
personnel forecasts.
Table: Personnel

Personnel Plan
Sarah
Steve
Account Manager
Administrative Assistant
Bookkeeper
Research Assistant
Total People
Total Payroll

Year 1

Year 2

Year 3

$30,000
$30,000
$27,000
$15,000
$10,000
$8,250
6

$40,000
$40,000
$36,000
$15,000
$12,000
$9,000
6

$40,000
$40,000
$36,000
$15,000
$12,000
$9,000
6

$120,250

$152,000

$152,000

8.0 Financial Plan

The following sections will outline important financial information.
8.1 Important Assumptions
The following table details important Financial Assumptions.
Table: General Assumptions

General Assumptions
Plan Month
Current Interest Rate
Long-term Interest Rate
Tax Rate
Other

Year 1

Year 2

Year 3

1
10.00%
10.00%
30.00%
0

2
10.00%
10.00%
30.00%
0

3
10.00%
10.00%
30.00%
0

Page 14

Green Investments

8.2 Break-even Analysis

The Break-even Analysis is shown in the following table and chart.

Chart: Break-even Analysis

Break-even Analysis
$15,000
$12,000
$9,000
$6,000
$3,000
$0
($3,000)
($6,000)
($9,000)
($12,000)
$0

$6,000
$3,000

$9,000

$12,000
$18,000
$24,000
$30,000
$15,000
$21,000
$27,000
$33,000

Table: Break-even Analysis

Break-even Analysis
Monthly Revenue Break-even

$15,225

Assumptions:
Average Percent Variable Cost
Estimated Monthly Fixed Cost

15%
$12,941

Page 15

Green Investments

8.3 Projected Profit and Loss

The following table will indicate Projected Profit and Loss.

Chart: Gross Margin Monthly

Gross Margin Monthly

$11,000
$10,000
$9,000
$8,000
$7,000
$6,000
$5,000
$4,000
$3,000
$2,000
$1,000
$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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Green Investments

Chart: Profit Monthly

Profit Monthly
$0
($2,000)
($4,000)
($6,000)
($8,000)
($10,000)
($12,000)
Month 1
Month 3
Month 5
Month 7
Month 9
Month 11
Month 2
Month 4
Month 6
Month 8
Month 10
Month 12

Chart: Profit Yearly

Profit Yearly

$20,000
$0
($20,000)
($40,000)
($60,000)
($80,000)
Year 1

Year 2

Year 3

Table: Profit and Loss

Pro Forma Profit and Loss

Sales

Year 1

Year 2

Year 3

$77,635

$230,298

$261,991

Page 17

Green Investments

Direct Cost of Sales

Other Costs of Sales
Total Cost of Sales

$11,645
$0
$11,645

$34,545
$0
$34,545

$39,299
$0
$39,299

Gross Margin
Gross Margin %

$65,990
85.00%

$195,753
85.00%

$222,692
85.00%

Payroll
Sales and Marketing and Other Expenses
Depreciation
Rent
Utilities
Insurance
Payroll Taxes
Other

$120,250
$0
$3,804
$7,800
$1,800
$1,800
$18,038
$1,800

$152,000
$0
$317
$7,800
$1,800
$1,800
$22,800
$1,800

$152,000
$0
$317
$7,800
$1,800
$1,800
$22,800
$1,800

Total Operating Expenses

$155,292

$188,317

$188,317

Profit Before Interest and Taxes

EBITDA
Interest Expense
Taxes Incurred

($89,301)
($85,497)
$73
$0

$7,436
$7,753
$220
$2,165

$34,375
$34,692
$120
$10,277

Net Profit
Net Profit/Sales

($89,374)
-115.12%

$5,051
2.19%

$23,979
9.15%

Expenses

8.4 Projected Cash Flow

The following table and chart will indicate Projected Cash Flow.
Table: Cash Flow

Pro Forma Cash Flow

Year 1

Year 2

Year 3

$77,635
$77,635

$230,298
$230,298

$261,991
$261,991

$0
$3,000
$0
$0
$0
$0
$0
$80,635

$0
$0
$0
$0
$0
$0
$0
$230,298

$0
$0
$0
$0
$0
$0
$0
$261,991

Year 1

Year 2

Year 3

$120,250
$38,394
$158,644

$152,000
$71,497
$223,497

$152,000
$84,646
$236,646

$0

$0

$0

Cash Received
Cash from Operations
Cash Sales
Subtotal Cash from Operations
Additional Cash Received
Sales Tax, VAT, HST/GST Received
New Current Borrowing
New Other Liabilities (interest-free)
New Long-term Liabilities
Sales of Other Current Assets
Sales of Long-term Assets
New Investment Received
Subtotal Cash Received
Expenditures
Expenditures from Operations
Cash Spending
Bill Payments
Subtotal Spent on Operations
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out

Page 18

Green Investments

Principal Repayment of Current Borrowing

Other Liabilities Principal Repayment
Long-term Liabilities Principal Repayment
Purchase Other Current Assets
Purchase Long-term Assets
Dividends
Subtotal Cash Spent

$300
$0
$0
$0
$0
$0
$158,944

$1,000
$0
$0
$0
$0
$0
$224,497

$1,000
$0
$0
$0
$0
$0
$237,646

Net Cash Flow

Cash Balance

($78,308)
$692

$5,801
$6,492

$24,345
$30,837

Chart: Cash

Cash
$80,000
$70,000
$60,000
$50,000
$40,000

Net Cash Flow

$30,000

Cash Balance

$20,000
$10,000
$0

Month 12

Month 11

Month 10

Month 9

Month 8

Month 7

Month 6

Month 5

Month 4

Month 3

Month 2

Month 1

($10,000)

Page 19

Green Investments

8.5 Projected Balance Sheet

The following table will indicate the Projected Balance Sheet.
Table: Balance Sheet

Pro Forma Balance Sheet

Year 1

Year 2

Year 3

$692
$7,000
$7,692

$6,492
$7,000
$13,492

$30,837
$7,000
$37,837

$19,000
$3,804
$15,196
$22,888

$19,000
$4,121
$14,879
$28,371

$19,000
$4,438
$14,562
$52,399

Year 1

Year 2

Year 3

Accounts Payable
Current Borrowing
Other Current Liabilities
Subtotal Current Liabilities

$4,561
$2,700
$0
$7,261

$5,994
$1,700
$0
$7,694

$7,043
$700
$0
$7,743

Long-term Liabilities
Total Liabilities

$0
$7,261

$0
$7,694

$0
$7,743

$125,000
($20,000)
($89,374)
$15,626
$22,888

$125,000
($109,374)
$5,051
$20,677
$28,371

$125,000
($104,323)
$23,979
$44,656
$52,399

$15,626

$20,677

$44,656

Assets
Current Assets
Cash
Other Current Assets
Total Current Assets
Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets
Total Assets
Liabilities and Capital
Current Liabilities

Paid-in Capital
Retained Earnings
Earnings
Total Capital
Total Liabilities and Capital
Net Worth

Page 20

Green Investments

8.6 Business Ratios

The following table indicates Business Ratios found within the industry of financial services as
well as ratios specific to Green Investments. Please note that while there are some similarities
between the general financial service industry and Green Investments, GI is more unusual in
that they do their own assessment of companies, beyond typical research.
Table: Ratios

Ratio Analysis
Year 1

Year 2

Year 3

Industry Profile

n.a.

196.64%

13.76%

8.79%

Other Current Assets

Total Current Assets
Long-term Assets
Total Assets

30.58%
33.61%
66.39%
100.00%

24.67%
47.56%
52.44%
100.00%

13.36%
72.21%
27.79%
100.00%

44.18%
76.27%
23.73%
100.00%

Current Liabilities
Long-term Liabilities
Total Liabilities
Net Worth

31.73%
0.00%
31.73%
68.27%

27.12%
0.00%
27.12%
72.88%

14.78%
0.00%
14.78%
85.22%

38.61%
13.60%
52.21%
47.79%

100.00%
85.00%
200.12%
0.00%
-115.03%

100.00%
85.00%
82.81%
0.00%
3.23%

100.00%
85.00%
75.85%
0.00%
13.12%

100.00%
100.00%
82.68%
1.66%
1.37%

1.06
1.06
31.73%
-571.95%
-390.49%

1.75
1.75
27.12%
34.90%
25.43%

4.89
4.89
14.78%
76.71%
65.37%

1.59
1.22
3.09%
60.22%
7.76%

Sales Growth
Percent of Total Assets

Percent of Sales
Sales
Gross Margin
Selling, General & Administrative Expenses
Advertising Expenses
Profit Before Interest and Taxes
Main Ratios
Current
Quick
Total Debt to Total Assets
Pre-tax Return on Net Worth
Pre-tax Return on Assets
Additional Ratios

Year 1

Year 2

Year 3

Net Profit Margin

Return on Equity

-115.12%
-571.95%

2.19%
24.43%

9.15%
53.70%

n.a
n.a

9.42
27
3.39

12.17
26
8.12

12.17
28
5.00

n.a
n.a
n.a

0.46
1.00

0.37
1.00

0.17
1.00

n.a
n.a

$430
-1,231.74

$5,798
33.80

$30,094
286.46

n.a
n.a

0.29
32%
1.06
4.97

0.12
27%
1.75
11.14

0.20
15%
4.89
5.87

n.a
n.a
n.a
n.a

Activity Ratios
Accounts Payable Turnover
Payment Days
Total Asset Turnover
Debt Ratios
Debt to Net Worth
Current Liab. to Liab.
Liquidity Ratios
Net Working Capital
Interest Coverage
Additional Ratios
Assets to Sales
Current Debt/Total Assets
Acid Test
Sales/Net Worth

Page 21

Green Investments

Dividend Payout

0.00

0.00

0.00

n.a

Page 22

Appendix
Table: Sales Forecast

Sales Forecast
Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

$2,500
$0
$2,500

$3,545
$0
$3,545

$4,545
$2,136
$6,681

$5,878
$2,763
$8,641

$6,335
$2,977
$9,312

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

$7,558
$3,552
$11,110

$8,255
$3,880
$12,135

$8,656
$4,068
$12,724

Sales
<$1 million worth customers
>$1 million worth customers
Total Sales
Direct Cost of Sales

0%
0%

$0
$0
$0
Month 1

$0
$0
$0
Month 2

$0
$0
$0
Month 3

$7,474
$3,513
$10,987
Month 9

Month 10

Month 11

Month 12

<$1 million worth customers

$0

$0

$0

$375

$532

$682

$882

$950

$1,121

$1,134

$1,238

$1,298

>$1 million worth customers

$0

$0

$0

$0

$0

$320

$414

$447

$527

$533

$582

$610

Subtotal Direct Cost of Sales

$0

$0

$0

$375

$532

$1,002

$1,296

$1,397

$1,648

$1,667

$1,820

$1,909

Page 1

Appendix
Table: Personnel

Personnel Plan
Sarah
Steve
Account Manager
Administrative Assistant
Bookkeeper
Research Assistant
Total People
Total Payroll

0%
0%
0%
0%
0%
0%

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

$2,500
$2,500
$0
$0
$0
$0
2

$2,500
$2,500
$0
$0
$0
$750
3

$2,500
$2,500
$1,500
$1,500
$1,000
$750
6

$2,500
$2,500
$2,000
$1,500
$1,000
$750
6

$2,500
$2,500
$2,500
$1,500
$1,000
$750
6

$2,500
$2,500
$3,000
$1,500
$1,000
$750
6

$2,500
$2,500
$3,000
$1,500
$1,000
$750
6

$2,500
$2,500
$3,000
$1,500
$1,000
$750
6

$2,500
$2,500
$3,000
$1,500
$1,000
$750
6

$2,500
$2,500
$3,000
$1,500
$1,000
$750
6

$2,500
$2,500
$3,000
$1,500
$1,000
$750
6

$2,500
$2,500
$3,000
$1,500
$1,000
$750
6

$5,000

$5,750

$9,750

$10,250

$10,750

$11,250

$11,250

$11,250

$11,250

$11,250

$11,250

$11,250

Page 2

Appendix
Table: General Assumptions

General Assumptions
Plan Month

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

10

11

Month 12
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
Tax 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%

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

Page 3

Appendix
Table: Profit and Loss

Pro Forma Profit and Loss

Month 4

Month 5

Month 6

Month 7

Month 8

Month 10

Month 11

Month 12

Sales

Month 1
$0

$0

$0

$2,500

$3,545

$6,681

$8,641

$9,312

$10,987

$11,110

$12,135

$12,724

Direct Cost of Sales

$0

$0

$0

$375

$532

$1,002

$1,296

$1,397

$1,648

$1,667

$1,820

$1,909

Other Costs of Sales

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Total Cost of Sales

$0

$0

$0

$375

$532

$1,002

$1,296

$1,397

$1,648

$1,667

$1,820

$1,909

Gross Margin
Gross Margin %

Month 2

Month 3

Month 9

$0

$0

$0

$2,125

$3,013

$5,679

$7,345

$7,916

$9,339

$9,444

$10,315

$10,816

0.00%

0.00%

0.00%

85.00%

85.00%

85.00%

85.00%

85.00%

85.00%

85.00%

85.00%

85.00%

$5,000

Expenses
Payroll

$5,750

$9,750

$10,250

$10,750

$11,250

$11,250

$11,250

$11,250

$11,250

$11,250

$11,250

Sales and Marketing and

Other Expenses
Depreciation

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$317

$317

$317

$317

$317

$317

$317

$317

$317

$317

$317

$317

Rent

$650

$650

$650

$650

$650

$650

$650

$650

$650

$650

$650

$650

Utilities

$150

$150

$150

$150

$150

$150

$150

$150

$150

$150

$150

$150

Insurance

$150

$150

$150

$150

$150

$150

$150

$150

$150

$150

$150

$150

$750
$150

$863
$150

$1,463
$150

$1,538
$150

$1,613
$150

$1,688
$150

$1,688
$150

$1,688
$150

$1,688
$150

$1,688
$150

$1,688
$150

$1,688
$150

Total Operating Expenses

$7,167

$8,030

$12,630

$13,205

$13,780

$14,355

$14,355

$14,355

$14,355

$14,355

$14,355

$14,355

Profit Before Interest and

Taxes
EBITDA

($7,167)

($8,030)

($12,630)

($11,080)

($10,766)

($8,676)

($7,010)

($6,439)

($5,016)

($4,911)

($4,040)

($3,539)

($6,122)

Payroll Taxes
Other

15%

($6,850)

($7,713)

($12,313)

($10,763)

($10,449)

($8,359)

($6,693)

($4,699)

($4,594)

($3,723)

($3,222)

Interest Expense

$0

$0

$0

$0

$0

$0

$0

$0

$0

$25

$25

$23

Taxes Incurred

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

($7,167)

($8,030)

($12,630)

0.00%

0.00%

0.00%

Net Profit
Net Profit/Sales

($11,080)

($10,766)

-443.18%

-303.70%

($8,676)
-129.85%

($7,010)

($6,439)

($5,016)

($4,936)

($4,065)

($3,561)

-81.13%

-69.14%

-45.65%

-44.43%

-33.50%

-27.99%

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

$0

$0

$0

$2,500

$3,545

$6,681

$8,641

$9,312

$10,987

$11,110

$12,135

$12,724

Subtotal Cash from Operations

$0

$0

$0

$2,500

$3,545

$6,681

$8,641

$9,312

$10,987

$11,110

$12,135

$12,724

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$3,000

$0
$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

$0

$0

$0

$2,500

$3,545

$6,681

$8,641

$9,312

$10,987

$14,110

$12,135

$12,724

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 10

Month 11

Month 12

$5,000

$5,750

$9,750

$10,250

$10,750

$11,250

$11,250

$11,250

$11,250

$11,250

$11,250

$11,250

$62

$1,854

$1,983

$2,578

$3,020

$3,262

$3,799

$4,087

$4,193

$4,437

$4,484

$4,636

$5,062

$7,604

$11,733

$12,828

$13,770

$14,512

$15,049

$15,337

$15,443

$15,687

$15,734

$15,886

Sales Tax, VAT, HST/GST Paid Out

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Principal Repayment of Current

Borrowing
Other Liabilities Principal
Repayment
Long-term Liabilities Principal
Repayment
Purchase Other Current Assets

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$300

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$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

$5,062

$7,604

$11,733

$12,828

$13,770

$14,512

$15,049

$15,337

$15,443

$15,687

$15,734

$16,186

($5,062)

($7,604)

($11,733)

($10,328)

($10,225)

($7,831)

($6,409)

($6,025)

($4,456)

($1,577)

($3,599)

($3,461)

Additional Cash Received

Sales Tax, VAT, HST/GST Received
New Current Borrowing

Expenditures

0.00%

Month 9

Expenditures from Operations

Cash Spending
Bill Payments
Subtotal Spent on Operations
Additional Cash Spent

Subtotal Cash Spent

Net Cash Flow

Page 5

Appendix
Cash Balance

$73,938

$66,335

$54,602

$44,275

$34,049

$26,218

$19,809

$13,785

$9,329

$7,752

$4,153

$692

Page 6

Appendix
Table: Balance Sheet

Pro Forma Balance Sheet

Month 1
Assets

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Starting
Balances

Current Assets
Cash
Other Current Assets
Total Current Assets

$79,000
$7,000
$86,000

$73,938
$7,000
$80,938

$66,335
$7,000
$73,335

$54,602
$7,000
$61,602

$44,275
$7,000
$51,275

$34,049
$7,000
$41,049

$26,218
$7,000
$33,218

$19,809
$7,000
$26,809

$13,785
$7,000
$20,785

$9,329
$7,000
$16,329

$7,752
$7,000
$14,752

$4,153
$7,000
$11,153

$692
$7,000
$7,692

$19,000
$0
$19,000
$105,000

$19,000
$317
$18,683
$99,621

$19,000
$634
$18,366
$91,701

$19,000
$951
$18,049
$79,651

$19,000
$1,268
$17,732
$69,007

$19,000
$1,585
$17,415
$58,464

$19,000
$1,902
$17,098
$50,316

$19,000
$2,219
$16,781
$43,590

$19,000
$2,536
$16,464
$37,249

$19,000
$2,853
$16,147
$32,476

$19,000
$3,170
$15,830
$30,582

$19,000
$3,487
$15,513
$26,666

$19,000
$3,804
$15,196
$22,888

Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets
Total Assets
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
Current Borrowing
Other Current Liabilities
Subtotal Current Liabilities

$0
$0
$0
$0

$1,788
$0
$0
$1,788

$1,897
$0
$0
$1,897

$2,477
$0
$0
$2,477

$2,912
$0
$0
$2,912

$3,136
$0
$0
$3,136

$3,663
$0
$0
$3,663

$3,947
$0
$0
$3,947

$4,045
$0
$0
$4,045

$4,288
$0
$0
$4,288

$4,330
$3,000
$0
$7,330

$4,478
$3,000
$0
$7,478

$4,561
$2,700
$0
$7,261

Long-term Liabilities
Total Liabilities

$0
$0

$0
$1,788

$0
$1,897

$0
$2,477

$0
$2,912

$0
$3,136

$0
$3,663

$0
$3,947

$0
$4,045

$0
$4,288

$0
$7,330

$0
$7,478

$0
$7,261

Paid-in Capital
Retained Earnings
Earnings
Total Capital
Total Liabilities and Capital

$125,000
($20,000)
$0
$105,000
$105,000

$125,000
($20,000)
($7,167)
$97,833
$99,621

$125,000
($20,000)
($15,197)
$89,804
$91,701

$125,000
($20,000)
($27,826)
$77,174
$79,651

$125,000
($20,000)
($38,906)
$66,095
$69,007

$125,000
($20,000)
($49,672)
$55,328
$58,464

$125,000
($20,000)
($58,347)
$46,653
$50,316

$125,000
($20,000)
($65,357)
$39,643
$43,590

$125,000
($20,000)
($71,796)
$33,204
$37,249

$125,000
($20,000)
($76,812)
$28,188
$32,476

$125,000
($20,000)
($81,748)
$23,252
$30,582

$125,000
($20,000)
($85,813)
$19,187
$26,666

$125,000
($20,000)
($89,374)
$15,626
$22,888

Net Worth

$105,000

$97,833

$89,804

$77,174

$66,095

$55,328

$46,653

$39,643

$33,204

$28,188

$23,252

$19,187

$15,626

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