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Publisher (Marketing Focused) Business Plan


THE GROUP PUBLISHING


3245 Rawlins Blvd.
Memphis, TN 38101


This plan for a publishing company demonstrates the entrepreneurs' commitment to what they feel is the most important aspect of their business: marketing. Distribution, pricing, exposure, and networking are all covered in the plan's body, reassuring the lender that they have confronted the biggest threats to success. This plan was compiled using Business Plan Pro, by Palo Alto Software.





  • EXECUTIVE SUMMARY
  • COMPANY SUMMARY
  • PRODUCTS
  • MARKET ANALYSIS SUMMARY
  • STRATEGY AND IMPLEMENTATION SUMMARY
  • MANAGEMENT SUMMARY
  • FINANCIAL PLAN

EXECUTIVE SUMMARY

The Group Publishing, Inc. is the publisher of Artists in Business magazine. The magazine, which has already printed an initial issue in July/August 1996, is directed at artists at all levels of business throughout the United States. The management of The Group Publishing is targeting a total combined circulation of 206,000 in year one, increasing to 310,000 by the end of year three. The magazine will be published bi-monthly with increased press runs throughout the first three years. Sample distribution, organizational sales, and direct mail to targeted lists of artists will be utilized to build subscriptions.

In addition, The Group Publishing will market books via direct marketing and through established artist distribution channels. The direct marketing of The Group Publishing books will be implemented through its magazine readership base.

Publishing is a high profit and high margin business. The key to success is successful marketing. The Group has a highly focused multi-dimensional sales and marketing plan to build its total circulation base quickly. The same channels and methods were utilized to establish a circulation of 500,000 in the first year for the Visionary Artist periodical.

Successful execution of The Group's plan will produce sales revenues of $3.1 million in year one, $4.8 million in year two, and $6.4 million in year three. Net profit will reach $2.4 million in year three. Margins are in excess of 38% after tax.



Objectives

The initial objectives of The Group are as follows:

  1. To raise seed capital of $150,000 to ensure publication by February 1997 and to establish a cash reserve to market subscriptions.
  2. To have 90,000 subscribers by the end of year one through direct sampling and marketing.
  3. To have an additional 50,000 subscribers by the end of year one through organizational sales.
  4. To have 10,000 more two-year subscriptions sold.
  5. To publish two 36-page issues initially with press runs of 50,000 promotional copies each.
  6. To go to 48 pages by issue number three and increase press runs to 75,000 promotional copies.
  7. Increase to 100,000 promotional copies in issues five and six.
  8. Increase average ad page cost from $1,819 to $2,618 by the end of the first year.
  9. To sell an average of 17.5 ad pages per issue throughout year one.


Mission

Artists in Business magazine is for the artist who is a worker at any level. The magazine has a commitment to be a platform to profile artists who are representing artistic vision in the marketplace and who can both encourage and provide role models to other men and women. The Group Publishing, through its magazine, books, and editorial content, will be a vessel to inform artists about artistic principles in everyday business and will encourage interaction among artists as business people. Our mission is to promote the concept of "community" in the workplace.

Keys to Success

The keys to success are:

  • Attaining targeted circulation levels.
  • Controlling costs while spending the maximum on subscription marketing in year one.
  • Carefully monitoring response rates of all media executions.
  • Follow-on marketing of two to four book titles in the first year.
  • Attaining targeted advertising sales revenues.
  • Having quality editorial content in each issue.
  • Making all production and distribution dates in a timely fashion for each issue.


COMPANY SUMMARY

The Group Publishing, Inc. began as a joint concept between two avocational artists, Red Brushwielder, an advertising executive, and Thallos Green, a former insurance executive and owner of the "Artists in Business" name. Mr. Green will promote Artists in Business as a radio program for syndication (a separate business entity).

Mr. Green is licensing the "Artists in Business" name to The Group Publishing, Inc. for the sum of $1 (one dollar). Mr. Green will also receive one page of advertising at no charge in each and every issue of the magazine and one page of editorial in each issue (as the founder of the magazine). It is expected that the radio show produced by Mr. Green will be a powerful promotional vehicle for the magazine.

The Group Publishing, Inc. will have exclusive rights to Artists in Business for all print media, electronic media (Internet home page, CD-ROM, interactive publications, etc.), catalogue business, and possible seminars and workshops devoted to the artistic business person.



Company Ownership

Red Brushwielder is the founder of The Group Publishing, Inc. a newly formed Southwest "C" corporation. He currently owns all its stock.

Equity investment in the company is now being made available to outside investors for the first time. The purpose of this investment is to raise the needed "seed" capital to launch the magazine. An initial Private Placement offering to raise from $150K to $375K is in progress. The minimum amount of the offering would be sufficient to publish the first new issue in 1997. Money raised in excess of the minimum will enable full-scale sampling and marketing of subscriptions. It is possible that no further investment may be needed. However, it cannot be assured that additional capital will not be required in the future or that sufficient capital will be available to continue publication.



Company Locations and Facilities

The Group Publishing, Inc. has current offices in downtown Memphis, Tennessee. The office is fully equipped and functional. It is not anticipated that expanded facilities will be needed for the first few years of the plan. All business, management and editorial functions will be performed there. All printing, mailing, warehousing, and fulfillment is outsourced.



PRODUCTS

The Group Publishing will publish Artists in Business magazine. The magazine is high gloss, 48 pages, contemporary in look and appeal. Quality art content is the constant goal. The magazine will be entertaining, newsworthy, and thought-provoking. It will appeal to a broad artist readership. No magazine like it is available today.

The Group Publishing will also publish softcover and hardcover books. Certain titles will be published in softcover "trade" size. Others (called "booklets" in this plan) will be similar to "paperback" size. Contemporary arts themes will prevail, particularly those that deal with the demands placed on both business and family life by today's business climate.



MARKET ANALYSIS SUMMARY

The target market is broadly based and is defined as the artist business person at all levels in any organization.

Market segments are defined by organizational affiliation.

Media strategy and execution may vary by segment.



STRATEGY AND IMPLEMENTATION SUMMARY

Our strategy is based on serving a clearly defined niche market well. By having an identifiable market with available lists and related memberships, the management of The Group believes we can exceed publishing industry standards for conversion of potential subscribers. Committed artists are a passionate and loyal clientele. A thirst exists for the published periodical product that Artists in Business will provide. The initial issue, published in late summer of 1996 met with rave reviews at booksellers and distributors conventions and was profiled on Arts News radio. The task is to reach and inform the target market. The strategy is to combine sampling, direct mail, and group membership solicitation to build circulation through both subscriptions and newsstand distribution. Multi-channel distribution principles will be employed. Each has a differing margin structure but the combination will maximize the potential reach of the magazine.



Marketing Strategy

New subscriptions are both sample and media based. Sampling will be done to both known art organization members and to artist mailing lists. Several of these databases are already available to The Group. Artists in Business has access to a list of 100,000 artist business leaders. All will be sampled with the magazine.

Sample runs will be: 50,000 issues on the first and second runs, 75,000 issues on the second and third runs, and 100,000 issues on the fifth and sixth issues of 1997. All cost associated with these sampling programs are included in the advertising and promotion budgets for those months. A total of $362,000 will be spent on direct-mailed sampling geared to subscription.

In alternate months, print media will be used. Arts publications will be employed. New Brush magazine, Colours magazine, and Artistic License Today will have the early insertions. As subscription base grows, secular media will be used later in the year. Inc. magazine and Business Week are likely choices.


Finally, sales to arts supply and retail bookstores through magazine distributors will also be accomplished. Key distributors have already expressed interest in the publication.

All sales projections through this multi-channel approach will reflect the different pricing and margin considerations pertinent to each.



Pricing Strategy

The Artists in Business magazine will sell for $3.95 per single issue on the newsstand. A one-year subscription is $16.95. A two-year subscription is $29.95. "Trade" soft-cover books will sell for $14.95. Paperback size "booklets" will sell for $7.95. Future hardcover books will sell for $19.95 to $22.95. No hardcover sales are projected in this 3-year plan.



Promotion Strategy

In addition to advertising, direct mail, and media executions, public relations exposure will benefit magazine circulation significantly. Red Brushwielder has already appeared and been interviewed on arts news radio programs four times. Tapes of these interviews are available. In one instance more than 1,800 calls were received requesting subscription information from a single program.

Red Brushwielder has also been asked to tape programs for a Memphis radio station on the subject of artists in the workplace.

Promotion strategy for sales through organizations to their memberships includes a split of the first year's subscription revenue with the selling organization.



Distribution Strategy

Distribution of magazines and books through retail channels are projected at retail less 60%.

Subscriptions through organizations are projected at list less 50%.

All direct sales are booked at full revenue. Cost of product is deducted for 6 issues per year. Fulfillment costs are expensed.

Direct sales of books are billed to credit cards and drop shipped. The magazine is an ideal vehicle to promote these sales.

Future sales are planned directly over the Internet from the AIB web site.



Strategic Alliances

The strategic alliance with Thallos Green and his AIB radio broadcasts holds great potential. Thallos plans to syndicate the broadcasts on arts news radio stations across the U.S.



Sales Strategy

Our combined sales strategy of sampling, direct mail, and organizations will result in the following first-year sales goals:

  • 90,000 one-year subscriptions.
  • 50,000 one-year subscriptions through organizations.
  • 10,000 two-year subscriptions.

Four book titles are factored in the second half of the year. Two are "trade" and two are "booklets." Sales goals are modest.

The following sections illustrate annual revenue over the next three years of $3.1, $4.8, and $6.4 million respectively.



Sales Forecast

We have forecasted our sales by product, by month, over the first year of sales development. Years two and three are cumulative totals only. All sales project the relevant unit cost and margin differences to reflect discounts, commissions, and revenue splits.

Discount on ad revenue is 15% agency commission and 20% sales commission for a total of 35%.

All product costs for subscriptions are based on $.40 per issue, 6 issues for one year, 12 issues for two years.

The only cost not included is an author's royalty on book sales, expected to be 15%. These royalty costs are incurred on the P & L statement as an expense item.

Unit Sales 1997 1998 1999
Mag Subscript Sales 1 Yr 90,000 120,000 150,000
Mag Subscript Sales 2 Yr 10,000 20,000 30,000
Mag Subscript Sales Whsl 50,000 50,000 50,000
Newsstand Sales Whsl 56,500 72,000 80,000
Ad Revenue Pages 118 150 150
Book Sales—Direct 27,500 50,000 80,000
Book Sales—Whsl 5,000 20,000 30,000
Booklet Sales—Direct 14,500 30,000 50,000
Booklet Sales—Whsl 0 15,000 20,000
Other 0 0 0
Total Unit Sales 253,618 377,150 490,150
Unit Prices      
Mag Subscript Sales 1 Yr $16.95 $16.95 $16.95
Mag Subscript Sales 2 Yr $29.95 $29.95 $29.95
Mag Subscript Sales Whsl $8.50 $8.50 $8.50
Newsstand Sales Whsl $0.99 $0.99 $0.99
Ad Revenue Pages $2,252.29 $3,365.00 $3,976.00
Book Sales—Direct $14.95 $14.95 $14.95
Book Sales—Whsl $5.98 $5.98 $5.98
Booklet Sales—Direct $7.95 $7.95 $7.95
Booklet Sales—Whsl $0.00 $3.18 $3.18
Other $0.00 $0.00 $0.00
SALES      
Mag Subscript Sales 1 Yr $1,525,500 $2,034,000 $2,542,500
Mag Subscript Sales 2 Yr $299,500 $599,000 $898,500
Mag Subscript Sales Whsl $425,000 $425,000 $425,000
Newsstand Sales Whsl $55,935 $71,280 $79,200
Ad Revenue Pages $265,770 $504,750 $596,400
Book Sales—Direct $411,125 $747,500 $1,196,000
Book Sales—Whsl $29,900 $119,600 $179,400
Booklet Sales—Direct $115,275 $238,500 $397,500
Booklet Sales—Whsl $0 $47,700 $63,600
Other $0 $0 $0
Total Sales $3,128,005 $4,787,330 $6,378,100
Direct Unit Costs      
Mag Subscript Sales 1 Yr $2.40 $2.40 $2.40
Mag Subscript Sales 2 Yr $4.80 $4.80 $4.80
Mag Subscript Sales Whsl $2.40 $2.40 $2.40
Newsstand Sales Whsl $0.40 $0.40 $0.40
Ad Revenue Pages $788.02 $1,178.00 $1,392.00
Book Sales—Direct $2.99 $2.99 $2.99
Book Sales—Whsl $2.99 $2.99 $2.99
Booklet Sales—Direct $1.59 $1.59 $1.59
Booklet Sales—Whsl $0.00 $1.59 $1.59
Other $0.00 $0.00 $0.00
Direct Cost of Sales 1997 1998 1999
Mag Subscript Sales 1 Yr $216,000 $288,000 $360,000
Mag Subscript Sales 2 Yr $48,000 $96,000 $144,000
Mag Subscript Sales Whsl $120,000 $120,000 $120,000
Newsstand Sales Whsl $22,600 $28,800 $32,000
Ad Revenue Pages $92,986 $176,700 $208,800
Book Sales—Direct $82,225 $149,500 $239,200
Book Sales—Whsl $14,950 $59,800 $89,700
Booklet Sales—Direct $23,055 $47,700 $79,500
Booklet Sales—Whsl $0 $23,850 $31,800
Other $0 $0 $0
Subtotal Direct Cost of Sales $619,816 $990,350 $1,305,000




Total Sales by Month in Year 1

  Sales
Jan $21,250
Feb 142,485
Mar 169,875
Apr 257,180
May 229,450
Jun 299,279
Jul 274,770
Aug 346,879
Sep 300,700
Oct 390,361
Nov 304,675
Dec 391,101


Milestones

Important milestones are:

  • Raising "seed" capital.
  • Publishing magazine by February.
  • Launching subscription marketing programs.
  • Achieving subscription goals.


MANAGEMENT SUMMARY

With production and fulfillment services outsourced, The Group Publishing, Inc. has a need for general management, editorial, artistic, sales and marketing, and financial expertise.



Management Team

Red Brushwielder (44), President & CEO, Publisher & Editor


Mr. Brushwielder founded and successfully grew an advertising agency over a thirteen-year period. He is accomplished in both publishing and direct marketing. One of his largest clients over the years has been Payne's Gray Publishers, Inc. a NASDAQ public company and art book publisher.

Mr. Brushwielder has a total of 20 years experience in advertising and publishing. His advertising clients have included UltraCharge, Ripken Brothers Piano Company, Magnolia Software, Venetian Department Stores, and CDI Payroll Services. Red Brushwielder attended the University of South Carolina.

Ochre & Sienna Burnt, Executive Editors


Ochre (50) and Sienna (48) are the founders of Painting Restoration, which has the mission of restoring old family portraits. They are accomplished authors, with the titles Restoring the Early Portrait and Demolishing Portrait Forgeries to their credit. Ochre served in the U.S. Navy, serving three deployments in Vietnam as a helicopter pilot.

Ochre holds a B.A. in Economics from the University of Connecticut, an M.B.A. from California Lutheran College, and a Master's of Art Education from the University of North Carolina at Charlotte. Sienna holds a B.S. in Education from the University of Connecticut.


John Crimson (50), Interim Chief Financial Officer


Mr. Crimson was last VP and Treasurer for Holiday Inn Worldwide. He previously was President of a $30 million dollar credit union. John has a B.A. in Finance from the College of Wooster in Ohio and an M.B.A. in Finance from Emory University.


Timothy Clark (48), VP of Corporate Development


Mr. Clark has successfully raised capital for both public and private companies and has written and executed strategic growth plans as both an executive and as a consultant. He has previously been in executive positions with three growth stage companies and also was part of a turnaround team that successfully righted a failed venture-backed start-up. In his early career he held sales and marketing management positions with Lever Brothers Company and the LCR Division of Squibb, Inc., both in Chicago and New York. He is skilled in Strategic Planning and Capital Formation. Mr. Clark holds a B.A. in Marketing from the University of Notre Dame.



Management Team Gaps

An art director is needed. Also a freelance artist. Ad sales manager and circulation manager are factored in as needed.



Personnel Plan

Salaries for key people have been figured according to a hierarchical scale.

  1997 1998 1999
Production      
Other $0 $0 $0
Subtotal $0 $0 $0
Sales and Marketing Personnel      
Ad Sales Mgr. $36,000 $40,000 $44,000
Subscription Mgr. $15,000 $30,000 $33,000
Name or title $0 $0 $0
Other $0 $0 $0
Subtotal $51,000 $70,000 $77,000
General and Administrative Personnel      
Red Brushwielder, CEO $60,000 $66,000 $72,000
Ochre & Sienna Burnt, Executive Editors $52,800 $60,000 $66,000
John Crimson, CFO $12,000 $52,000 $60,000
Executive Assistant $18,000 $22,000 $24,000
Timothy Clark, VP Corporate Dev. $18,000 $36,000 $48,000
Other $0 $0 $0
Subtotal $160,800 $236,000 $270,000
  1997 1998 1999
Other Personnel      
Art Director $52,800 $60,000 $66,000
Freelance Artist $6,000 $6,000 $6,000
Bookkeeper $5,400 $0 $0
Other $0 $0 $0
Subtotal $64,200 $66,000 $72,000
Total Headcount 0 0 0
Total Payroll $276,000 $372,000 $419,000
Payroll Burden $55,200 $74,400 $83,800
Total Payroll Expenditures $331,200 $446,400 $502,800


FINANCIAL PLAN

After initial capitalization, growth can be financed largely through internal cash flow provided subscription targets are met. In the event of a sales shortfall, marketing can be cut back temporarily to preserve cash. Or, more likely, additional investment may be sought to re-accelerate productive campaigns if growth demands more funding.

The company created by this plan will generate cash as soon as subscription base reaches critical mass.



Important Assumptions

The key element of our assumptions is six inventory turns per year. This reflects the issues of the magazine as well as ad revenue. Ad space is treated as an inventory item.

Subscriptions are paid in advance. Only 10% of receivables are collected in 30 days, primarily from wholesale accounts. These are notoriously slow payers, so care must be taken not to let these collections run past 60 days. This will be more significant if book sales become a higher-than-expected percentage of revenue.


General Assumptions

  1997 1998 1999
Short-term Interest Rate % 8.00% 8.00% 8.00%
Long-term Interest Rate % 8.00% 8.00% 8.00%
Payment Days Estimator 30 30 30
Collection Days Estimator 30 30 30
Inventory Turnover Estimator 6.00 6.00 6.00
Tax Rate % 33.00% 33.00% 33.00%
Expenses in Cash % 30.00% 30.00% 30.00%
Sales on Credit % 10.00% 10.00% 10.00%
Personnel Burden % 20.00% 20.00% 20.00%


Key Financial Indicators

We expect varying changes in critical profit variables. We expect margins and expenses to be consistently controlled and net profit to increase nicely. Furthermore, we predict inventory turns will slow down somewhat in the third year due to the burden of higher inventories for increasing book sales.



Breakeven Analysis

This breakeven analysis is applicable to the early 1997 time frame only. Key fixed costs are pegged at $40K per month. This represents the "burn" rate prior to major acceleration of marketing plans. Thus, if subscriptions didn't flow in as planned, this represents the point at which the company could continue to survive without increasing marketing. In that event, management could "buy" time to raise additional capital.

Average unit cost per magazine is $.40 and average unit revenue is $2.82 (a weighted average of subscriptions over one and two years and newsstand sales). Thus, the company could survive on a breakeven basis as soon as 16,529 magazines are sold per month.

Breakeven Analysis  
Monthly Units Breakeven 16,529
Monthly Sales Breakeven $46,612
Assumptions  
Average Per-Unit Revenue $2.82
Average Per-Unit Variable Cost $0.40
Estimated Monthly Fixed Cost $40,000


Projected Profit and Loss

We expect net income to hit $1 million in year one and $2.4 million in year three. Margin will improve from 32% to 38% of sales as subscriptions mature and marketing costs decrease.


Income Statement

  1997 1998 1999
Sales $3,128,005 $4,787,330 $6,378,100
Direct Cost of Sales $619,816 $990,350 $1,305,000
Production payroll $0 $0 $0
Other $0 $0 $0
Total Cost of Sales $619,816 $990,350 $1,305,000
Gross Margin $2,508,189 $3,796,980 $5,073,100
Gross Margin % 80.18% 79.31% 79.54%
OPERATING EXPENSES      
Sales and Marketing Expenses      
Sales and Marketing Payroll $51,000 $70,000 $77,000
Advertising/Promotion $386,176 $72,000 $90,000
Author's Royalties—15% $83,446 $173,000 $276,000
Travel $7,500 $9,000 $11,000
Entertainment & Meals $2,400 $3,000 $3,600
Miscellaneous $12,000 $15,000 $18,000
Other $0 $0 $0
Total Sales and Marketing Expenses $542,522 $342,000 $475,600
Sales and Marketing % 17.34% 7.14% 7.46%
GENERAL AND ADMINISTRATIVE EXPENSES      
General and Administrative Payroll $160,800 $236,000 $270,000
Payroll Burden $55,200 $74,400 $83,800
Depreciation $0 $0 $0
Leased Equipment $10,200 $12,500 $14,000
Telephone $7,200 $7,500 $7,800
Utilities $9,000 $10,000 $10,500
Postage $138,200 $279,000 $465,000
Insurance $12,000 $12,000 $14,000
Rent $30,000 $30,000 $36,000
Other $0 $0 $0
Total General and Admin Expenses $422,600 $661,400 $901,100
General and Administrative % 13.51% 13.82% 14.13%
OTHER EXPENSES 1997 1998 1999
Other Payroll $64,200 $66,000 $72,000
Contract/Consultants $0 $0 $0
Total Other Expenses $64,200 $66,000 $72,000
Other % 2.05% 1.38% 1.13%
Total Operating Expenses $1,029,322 $1,069,400 $1,448,700
Profit Before Interest and Taxes $1,478,867 $2,727,580 $3,624,400
Interest Expense Short-term $0 $0 $0
Interest Expense Long-term $0 $0 $0
Taxes Incurred $488,026 $900,101 $1,196,052
Net Profit $990,841 $1,827,479 $2,428,348
Net Profit/Sales 31.68% 38.17% 38.07%


Projected Cash Flow

If we assume an initial $150K capital infusion, at no point does the company run out of cash. At the end of year three a cash balance of $5.3 million has been created.

Cash flow in year one is critical. Note that early contributions on a monthly basis are minimal and only gain momentum in the second half of the year. If shortfalls occur early on more capital may be required.


Pro-Forma Cash Flow

  1997 1998 1999
Net Profit $990,841 $1,827,479 $2,428,348
PLUS      
Depreciation $0 $0 $0
Change in Accounts Payable $144,445 $32,377 $69,875
Current Borrowing (repayment) $0 $0 $0
Increase (decrease) Other Liabilities $0 $0 $0
Long-term Borrowing (repayment) $0 $0 $0
Capital Input $150,000 $0 $0
Subtotal $1,285,286 $1,859,855 $2,498,223
LESS      
Change in Accounts Receivable $39,110 $20,747 $19,890
Change in Inventory $163,374 $97,667 $82,937
Change in Other ST Assets $0 $0 $0
Capital Expenditure $0 $0 $0
Dividends $0 $0 $0
Subtotal $202,484 $118,414 $102,827
Net Cash Flow $1,082,801 $1,741,441 $2,395,396
Cash Balance $1,149,801 $2,891,243 $5,286,639

Projected Balance Sheet

At the end of year three the company has a net worth of $5.5 million dollars. It might be an attractive IPO candidate or an attractive acquisition.



Pro-Forma Balance Sheet

ASSETS Starting Balances      
Short-term Assets   1997 1998 1999
Cash $67,000 $1,149,801 $2,891,243 $5,286,639
Accounts Receivable $0 $39,110 $59,857 $79,747
Inventory $0 $163,374 $261,041 $343,978
Other Short-term Assets $0 $0 $0 $0
Total Short-term Assets $67,000 $1,352,286 $3,212,141 $5,710,364
LONG-TERM ASSETS        
Capital Assets $0 $0 $0 $0
Accumulated Depreciation $0 $0 $0 $0
Total Long-term Assets $0 $0 $0 $0
Total Assets $67,000 $1,352,286 $3,212,141 $5,710,364
Liabilities and Capital        
Accounts Payable $0 $144,445 $176,821 $246,696
Short-term Notes $0 $0 $0 $0
Other Short-term Liabilities $0 $0 $0 $0
Subtotal Short-term Liabilities $0 $144,445 $176,821 $246,696
Long-term Liabilities $0 $0 $0 $0
Total Liabilities $0 $144,445 $176,821 $246,696
Paid in Capital $150,000 $300,000 $300,000 $300,000
Retained Earnings ($83,000) ($83,000) $907,841 $2,735,319
Earnings $0 $990,841 $1,827,479 $2,428,348
Total Capital $67,000 $1,207,841 $3,035,319 $5,463,667
Total Liabilities and Capital $67,000 $1,352,286 $3,212,141 $5,710,364
Net Worth $67,000 $1,207,841 $3,035,319 $5,463,667


Business Ratios

Our business ratios are limited in value since the company projects no debt. This will also be an advantage if debt capital is desired later without dilution to shareholders.


Ratio Analysis

Profitability Ratios 1997 1998 1999 RMA
Gross Margin 80.18% 79.31% 79.54% 0
Net Profit Margin 31.68% 38.17% 38.07% 0
Return on Assets 73.27% 56.89% 42.53% 0
Return on Equity 82.03% 60.21% 44.45% 0
Activity Ratios        
AR Turnover 8 8 8 0
Collection Days 23 38 40 0
Inventory Turnover 7.59 4.67 4.31 0
Accts Payable Turnover 6.39 6.39 6.39 0
Total Asset Turnover 2.31 1.49 1.12 0
Debt Ratios 1997 1998 1999 RMA
Debt to Net Worth 0.12 0.06 0.05 0
Short-term Liab. to Liab. 1 1 1 0
Liquidity Ratios        
Current Ratio 9.36 18.17 23.15 0
Quick Ratio 8.23 16.69 21.75 0
Net Working Capital $1,207,841   $3,035,319 $5,463,667 0
Interest Coverage 0 0 0 0
Additional Ratios        
Assets to Sales 0.43 0.67 0.9 0
Debt/Assets 11% 6% 4% 0
Current Debt/Total Assets 11% 6% 4% 0
Acid Test 7.96 16.35 21.43 0
Asset Turnover 2.31 1.49 1.12 0
Sales/Net Worth 2.59 1.58 1.17 0

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