Table of Content

    Do you want to start record label business?

    Are you thinking about starting music production company? A music production or a record label company is a trademark or brand associated with music videos and recordings. A record label company manages the production, manufacture, marketing, distribution, promotion, and copyright enforcement for the music recordings while also engaging itself with the development of new artists and talent sourcing.

    The music industry is one of the biggest and most profitable industries since music is loved by nearly every person out there. But starting a business in this industry isn’t easy and there are a lot of things which need to be considered and addressed before this startup. In case, you don’t know how to start your own record label business, you can take help from this business plan written for a record label startup ‘R&N Entertainment.’

    The first thing you must do is to make a comprehensive business plan for your startup. The professional business planning will help you in acquiring the license for your business and will also help you take important decisions for the startup. It will help you define your services, identify your target market, prepare your sales and marketing strategies, and develop a personnel and financial plan. Most importantly, it will help you acquire investors for your startup if you need any.

    Executive Summary

    2.1 The Business

    R&N Entertainment will be an international record label which will manage the production, manufacture, marketing, distribution, promotion, and copyright enforcement for the music recordings.

    2.2 Management

    R&N Entertainment is a joint venture started by Randy Hilsly and Nash Jonson, whereby both parties have equally shared investment, shared ownership, shared governance, as well as shared returns and risks. Both Randy and Nash have served at executive positions in Warner Music Group, which is among the Big-Three Labels. Due to their extensive experience, the owners know how to write a business plan for a record label and how to start music production company.

    2.3 Customers

    With the advent of the internet, it has now become very easier for the record labels to enhance their range of operations and target a broader audience. We will be targeting a global audience and our customers will include people from all backgrounds, areas, religions, and colors.

    2.4 Business Target

    Our main business targets are as follows:

    Record Label Business Plan - 3 Years Profit Forecast

    Bank/SBA Business Plan
    Document for raising debt funding from financial institutions to meet the expectations of the banks, SBA, and government agencies.

    Company Summary

    3.1 Company Owner

    R&N Entertainment is a joint venture started by Randy Hilsly and Nash Jonson, whereby both parties have equally shared investment, shared ownership, shared governance, as well as shared returns and risks. Both Randy and Nash have served at executive positions in Warner Music Group, which is among the Big-Three Labels.

    3.2 Why the Business is being started

    Both the owners of the R&N Entertainment share a common vision of bringing the music industry back to its past heights. The quality of music is getting deteriorated day-by-day due to many reasons. We, at R&N Entertainment, will ensure that the new generation gets the best of music, and also gets a touch of the contemporary classical music. With this shared mission in mind, the owners have created an ingenious record label business model which is meant to succeed and excel the competitors.

    3.3 How the Business will be started

    R&N Entertainment will be started in Houston in a leased location which was previously used as a restaurant. The facility requires a lot of work so that it can be converted into a recording studio and the company will hire a contractor for that purpose. In addition to the usual inventory, the company will procure professional headphones, microphones, track recorders, mixing consoles, reference monitors, keyboards, a music workstation, audio editing software, computers and other accessories. The financial experts have forecasted following costs needed to start a music production company:

    Record Label Business Plan - Startup cost
    The detailed startup requirements are given below:

    Start-up Expenses  
    Legal $55,300
    Consultants $0
    Insurance $32,750
    Rent $32,500
    Research and Development $32,750
    Expensed Equipment $32,750
    Signs $1,250
    TOTAL START-UP EXPENSES $187,300
    Start-up Assets $220,875
    Cash Required $332,500
    Start-up Inventory $32,625
    Other Current Assets $232,500
    Long-term Assets $235,000
    TOTAL ASSETS $121,875
    Total Requirements $245,000
    START-UP FUNDING
    START-UP FUNDING $273,125
    Start-up Expenses to Fund $151,875
    Start-up Assets to Fund $123,000
    TOTAL FUNDING REQUIRED $0
    Assets $23,125
    Non-cash Assets from Start-up $18,750
    Cash Requirements from Start-up $0
    Additional Cash Raised $18,750
    Cash Balance on Starting Date $21,875
    TOTAL ASSETS $373,125
    Liabilities and Capital $0
    Liabilities $0
    Current Borrowing $0
    Long-term Liabilities $0
    Accounts Payable (Outstanding Bills) $0
    Other Current Liabilities (interest-free) $0
    TOTAL LIABILITIES $0
    Capital $620,125
    Planned Investment $620,125
    Investor 1 $0
    Investor 2 $0
    Other $0
    Additional Investment Requirement $0
    TOTAL PLANNED INVESTMENT $620,125
    Loss at Start-up (Start-up Expenses) $313,125
    TOTAL CAPITAL $251,875
    TOTAL CAPITAL AND LIABILITIES $251,875
    Total Funding $255,000

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    Services for customers

    Before you think about how to make your own music production company, you must decide what services will you provide to the singers and musicians you will be contracting with so as to attract them towards your company. You must also consider what kind of music will you be providing to the audience that will guarantee sales and will add value to your company. This will also help you in deciding the record label business structure for your company that’s why it must be considered before starting your own recording studio.

    Note

    R&N Entertainment will manage the production, manufacture, marketing, distribution, promotion, and copyright enforcement for the music recordings.

    The services of the company with reference to the revenue generation are categorized as follows:

    • Record Retail Sales: The company will distribute its records and albums to various music retail outlets located across the country. It will contribute the biggest chunk of our revenue after the revenue generated by online sales.
    • Online Record Sales: The company will engage in a large-scale sale of records and albums through digital channels and online platforms. Online record sales will be the biggest revenue generator for the company since sales trends are changing and most of the people prefer to buy online as compared to retail outlets.
    • Live Concerts: The company will also arrange concerts and events whereby the contracted singers and musicians will perform. The live concerts are being planned for two reasons, to generate sales and to promote the brand.
    • Contract Buy-outs: In the music industry, it is a usual trend that bigger labels buy the contracts of emerging and promising artists from the smaller labels. This contract buy-out rapidly generates a high revenue for the smaller and newly-emerging labels.

    Marketing Analysis of music studio business

    The most important component of an effective record label business plan is its accurate marketing analysis and a good music studio business plan can only be developed after this stage. If you are starting on a smaller scale, you can do marketing analysis yourself by taking help from this record label business plan sample or other sample record label business plans available online. If you are starting on a larger scale, it is always best to seek the counsel of marketing experts for developing a good recording studio business plan. The success or failure of a business totally depends upon its marketing strategy which can only be developed on the basis of accurate marketing analysis. Therefore, it must be considered before you develop your record company business plan.

    R&N Entertainment acquired the services of marketing experts to carry out the marketing analysis for its music label business plan. The owners also went through various recording studio business plans available online before developing their own music production business plan.

    Strategic/Operational Business Plan

    5.1 Market Trends

    For learning the market trends in this industry, you will have to carry out an in-depth research. You can take help from this record label business plan template or other record label business plans available on the internet. This record label business plan template free can be freely used for getting all industry and market trends, you should know to start a record label business plan. The record label industry is an older one but it spread widely in the 1990s, when the independent tables, home studios, and consumer recording technology became more common. The global revenue of the music industry started decreasing from 2002 due to many factors, the biggest one of which was the changing tides in the world of technology which enabled artists to release their tracks directly on the internet without the need of record labels. The industry kept dropping until 2013 when it was valued to be $15 billion, the lowest revenue recorded since 2002.

    However, it again started increasing in magnitude and grew by 8.1% till 2017, making its value to be around $17.3 billion. This renewed growth was the result of record companies’ ongoing investment, not only in music artists but also in digital innovation that enriched fans’ experiences and harnessed technology like voice-controlled home speakers and similar devices. With the increasing digitalization, fans’ engagement with streaming and especially the paid subscription audio streaming also increased. The result was that digital revenues accounted for more than half (54%) of the revenue generated by the global recording industry. By the end of 2017, 176 million users were estimated to be paid subscribers and out of those 176 million, 64 million were added during the same year. Still, the total revenue generated by this industry was just 68.4% of what it was during its peak in 1999. These stats show the struggle, this industry has faced due to increased digitalization but, on the other hand, this digitalization can also prove a useful tool for record labels industry provided that use it wisely. If we were to summarize the whole thing, we can say that a record label startup can succeed only if it pays special attention to its strong online presence.

    5.2 Marketing Segmentation

    After you have identified the industry and market trends, you should now identify your target market and must observe how your target market is categorized into your customer groups. Identifying the target market segmentation is very important for music production company business plan since it helps in creating effective marketing strategies. And since the target market of a record label is usually the people living across the globe, the marketing segmentation is more or less the same for nearly all businesses in this industry. That’s why you can also have an idea about your target market segmentation from this record label business plan example or free record label business plan samples available online. A successful and efficient marketing strategy can only be developed after you completely know your potential customers hence you must pay special attention to this part of your music production studio business plan. Previously, when the internet wasn’t as popular as it is now, the record labels just relied on sales of recordings from the retail outlets and their target market used to be somewhat limited. But with the advent of the internet, it has now become very easier for the record labels to enhance their range of operations and target a broader audience. So, if a record label is based in the United States, its target market isn’t just restricted to the United States. Thanks to the internet, record labels can now target a global audience.

    R&N Entertainment will also target a global audience, out of which, our experts have identified the following categories:

    Record Label Business Plan - Marketing Segmentation

    The detailed marketing segmentation of our target audience is as follows:

    5.2.1 Digital Customers:

    Our first and the most important group will be the customers which will be digitally linked to us. As mentioned earlier, we plan to target a global audience which is only possible by maintaining a strong online presence across all online platforms including company website, social media pages, the official app as well as online retailers like Amazon and Alibaba. Our digital customers can access our records by various means. Music files from the artists may be downloaded free of charge or for a fee that is paid via PayPal or another online payment system. Hard copy CDs can also be purchased by online retailers in addition to direct downloads. Digital sales contributed to more than half (54%) of the revenue generated by global record sales as of 2017, so this is the main area where we will focus our efforts. We will create special strategy for business for targeting our digital customers located across the globe.

    5.2.2 Retail Customers:

    Our second target group comprises of those customers who will buy our records from the retail outlets located across the United States. Initially, we will provide our records in the hard form, only in the United States but by the end of the second year, we hope to create a distribution network in Europe. This customer group will also generate a lot of revenue since music is loved by nearly every teen and adult in the United States.

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    5.2.3 Live Audience:

    The third target group comprises the audience or customers who will attend our live events and concerts. We will arrange concerts on a regular basis in all major cities of the United States. Through these concerts, we not only aim to generate sales but we also aim to promote our artists and our brand. Although these live events will not directly create a lot of revenue they will indirectly do so by promoting us.

    The detailed market analysis of our potential customers is given in the following table:

    Market Analysis
    Potential Customers Growth Year 1 Year 2 Year 3 Year 4 Year 5 CAGR
    Digital Customers 52% 22,334 32,344 43,665 52,544 66,432 10.00%
    Retail Customers 30% 12,867 14,433 15,999 17,565 19,131 15.32%
    Live Audience 18% 8,322 9,455 10,655 12,867 14,433 10.00%
    Total 100% 43,523 56,232 70,319 82,976 99,996 9.54%

    5.3 Business Target

    After the global recording market endured about 15 years of revenue decline, the companies in this industry are striving for fueling this recent return to growth and for ensuring that the artists receive fair value for music creation. Our main business targets to be achieved as milestones over the course of next three years are as follows:

    • To become the best record label in Houston within next three years of launch by providing high-quality services
    • To achieve the net profit margin of $10k per month by the end of the first year, $15k per month by the end of the second year, and $25k per month by the end of the third year
    • To balance the initial cost of the startup with earned profits by the end of the second year
    • To increase the retail distribution setup and target European market by the end of the second year

    These business targets are extremely realistic and can be achieved by creating engaging ways for fans to access music on multiple services and platforms.

    5.4 Product Pricing

    This sample business plan for a record label will also help you in deciding the product pricing strategy for your record label company. After considering the market demands, we have priced our services in the similar ranges as of our competitors. This pricing strategy has been carefully selected considering many factors, especially the competition provided by the established record labels, especially the Big-Three Labels of the United States.

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    Strategy

    After you have identified the market demand, market trends, and the potential customers of the startup, you must now define an effective strategy for attracting those customers toward you. Like marketing analysis, sales strategy is also an important component of a good dental business plan and it must be properly developed before thinking about how to write a business plan for a record label.

    6.1 Competitive Analysis

    The record label industry is one of the most competitive industries in the United States and it is nearly impossible for a startup to survive in such environment unless it has a clear competitive edge over its competitors. Therefore you must consider it before you start your own recording studio. Our main competitive advantage will be our talented artists which will be sought by proper talent sourcing methods. We will also attract the famous artists by making “360” deals with them which will give us rights and percentages to artist’s touring, merchandising, and endorsements. In exchange for these rights and for ensuring the maximum retainage of good artists, we will pay higher percentages of CD sales, will have more patience with artist development, and will give higher advance payments to artists.

    6.2 Sales Strategy

    After carrying out a detailed analysis, our experts came up with the following brilliant ideas to advertise and sell ourselves.

    • We will ensure a strong presence across all online platforms including company website, social media pages, the official app as well as online retailers like Amazon and Alibaba.
    • We will advertise ourselves in magazines, newspapers, TV stations, and social media.
    • We will arrange free concerts for the initial three months of our launch so as to promote ourselves.
    • Sponsor relevant TV shows and radio programs.
    • Place adverts on both print and electronic media platforms.

    6.3 Sales Monthly

    Our monthly sales are forecasted as follows:

    Record Label Business Plan - Sales Monthly

    6.4 Sales Yearly

    Our yearly sales are forecasted as follows:

    Record Label Business Plan - Sales Yearly

    6.5 Sales Forecast

    Our forecasted sales are given below.

    Record Label Business Plan - Unit Sales

    Sales Forecast      
    Unit Sales Year 1 Year 2 Year 3
    Online Record Sales 1,887,030 2,680,320 2,588,240
    Record Retail Sales 802,370 815,430 823,540
    Live Concerts 539,320 770230 1,002,310
    Contract Buy-outs 265,450 322,390 393,320
    TOTAL UNIT SALES 3,494,170 4,588,370 4,807,410
    Unit Prices Year 1 Year 2 Year 3
    Online Record Sales $140.00 $150.00 $160.00
    Record Retail Sales $600.00 $800.00 $1,000.00
    Live Concerts $700.00 $800.00 $900.00
    Contract Buy-outs $650.00 $750.00 $850.00
    Sales
    Online Record Sales $2,149,800 $2,784,000 $3,383,200
    Record Retail Sales $120,050 $194,500 $268,500
    Live Concerts $50,110 $71,600 $93,000
    Contract Buy-outs $139,350 $194,600 $249,850
    TOTAL SALES
    Direct Unit Costs Year 1 Year 2 Year 3
    Online Record Sales $0.70 $0.80 $0.90
    Record Retail Sales $0.40 $0.45 $0.50
    Live Concerts $0.30 $0.35 $0.40
    Contract Buy-outs $3.00 $3.50 $4.00
    Direct Cost of Sales
    Online Record Sales $989,300 $1,839,000 $2,679,700
    Record Retail Sales $66,600 $119,900 $173,200
    Live Concerts $17,900 $35,000 $52,100
    Contract Buy-outs $19,400 $67,600 $115,800
    Subtotal Direct Cost of Sales $1,294,100 $1,699,400 $2,104,700

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    Personnel plan

    Preparing personnel plan is also an important to start music production company so make sure to duly consider it before thinking about how to start your own recording studio. The personnel plan of our company is as follows.

    7.1 Company Staff

    Randy will act as the General Manager of the company while Nash will act as the chief financial officer. In addition to that, the company will initially hire following people:

    • 3 Accountants for maintaining financial and other records
    • 5 Sales Executives responsible for marketing and discovering new ventures
    • 5 Recording Artists for recording the tracks of musicians
    • 10 Technical Assistants for providing technical support throughout the process
    • 4 Assistants for undertaking various day-to-day tasks.
    • 4 Social Media Assistant for managing the company’s social media pages.
    • 4 SEO/SEM specialists for ensuring a strong online presence across all platforms.
    • 2 Customer Representatives for interacting with customers
    • 4 Editors for editing the audio/video recordings
    • 10 Distributors/ drivers for distributing the recordings to the retail outlets located across the country
    • 3 Cleaners for maintaining a clean environment

    All the employees will be hired by following strict testing procedures and will also be trained before onboarding.

    7.2 Average Salary of Employees

    The following table shows the forecasted data about the salaries of the employees for the next three years. These salaries are just an estimate and are also expected to deviate but the overall expenses will be more or less the same.

     Personnel Plan      
    Year 1 Year 2 Year 3
    Accountants $85,000 $95,000 $105,000
    Sales Executives $45,000 $50,000 $55,000
    Recording Artists $550,000 $650,000 $750,000
    Technical Assistant $410,000 $440,000 $480,000
    Assistants $152,000 $159,000 $166,000
    Social Media Assistant $145,000 $152,000 $159,000
    SEO/SEM Specialists $50,000 $55,000 $60,000
    Customer Representatives $87,000 $94,000 $101,000
    Editors $42,000 $45,000 $48,000
    Distributors/ Drivers $152,000 $159,000 $166,000
    Cleaners $42,000 $45,000 $48,000
    Total Salaries $562,000 $599,000 $646,000

    Financial Plan

    Just like the other plans, you must also prepare a detailed financial plan covering all financial aspects of your startup. You can also take help from this sample business plan for record label. The financial plan should craft a detailed map of the costs of startup, inventory, payroll, equipment, rent, utilities and how these costs will be covered by the earned profits. Also, make sure to carry out a detailed profit and loss analysis before getting to think about how to start your own music production company. Our financial plan outlines the development of the company over the next three years and is specifically developed to achieve the company’s short-term as well as the long-term objectives.

    8.1 Important Assumptions

     General Assumptions      
    Year 1 Year 2 Year 3
    Plan Month 1 2 3
    Current Interest Rate 10.00% 11.00% 12.00%
    Long-term Interest Rate 10.00% 10.00% 10.00%
    Tax Rate 26.42% 27.76% 28.12%
    Other 0 0 0

    8.2 Brake-even Analysis

    Record Label Business Plan - Brake-even Analysis

     Brake-Even Analysis  
    Monthly Units Break-even 5530
    Monthly Revenue Break-even $159,740
    Assumptions:
    Average Per-Unit Revenue $260.87
    Average Per-Unit Variable Cost $0.89
    Estimated Monthly Fixed Cost $196,410

    8.3 Projected Profit and Loss

     Pro Forma Profit And Loss      
    Year 1 Year 2 Year 3
    Sales $309,069 $385,934 $462,799
    Direct Cost of Sales $15,100 $19,153 $23,206
    Other $0 $0 $0
    TOTAL COST OF SALES $15,100 $19,153 $23,206
    Gross Margin $293,969 $366,781 $439,593
    Gross Margin % 94.98% 94.72% 94.46%
    Expenses
    Payroll $138,036 $162,898 $187,760
    Sales and Marketing and Other Expenses $1,850 $2,000 $2,150
    Depreciation $2,070 $2,070 $2,070
    Leased Equipment $0 $0 $0
    Utilities $4,000 $4,250 $4,500
    Insurance $1,800 $1,800 $1,800
    Rent $6,500 $7,000 $7,500
    Payroll Taxes $34,510 $40,726 $46,942
    Other $0 $0 $0
    Total Operating Expenses $188,766 $220,744 $252,722
    Profit Before Interest and Taxes $105,205 $146,040 $186,875
    EBITDA $107,275 $148,110 $188,945
    Interest Expense $0 $0 $0
    Taxes Incurred $26,838 $37,315 $47,792
    Net Profit $78,367 $108,725 $139,083
    Net Profit/Sales 30.00% 39.32% 48.64%

    8.3.1 Profit Monthly

    Record Label Business Plan - Profit Monthly

    8.3.2 Profit Yearly

    Record Label Business Plan - Profit Yearly

    8.3.3 Gross Margin Monthly

    Record Label Business Plan - Gross Margin Monthly

    8.3.4 Gross Margin Yearly

    Record Label Business Plan - Gross Margin Yearly

    8.4 Projected Cash Flow

    Record Label Business Plan - Projected Cash Flow

     Pro Forma Cash Flow      
    Cash Received Year 1 Year 2 Year 3
    Cash from Operations
    Cash Sales $40,124 $45,046 $50,068
    Cash from Receivables $7,023 $8,610 $9,297
    SUBTOTAL CASH FROM OPERATIONS $47,143 $53,651 $59,359
    Additional Cash Received
    Sales Tax, VAT, HST/GST Received $0 $0 $0
    New Current Borrowing $0 $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 $0 $0
    SUBTOTAL CASH RECEIVED $47,143 $53,651 $55,359
    Expenditures Year 1 Year 2 Year 3
    Expenditures from Operations
    Cash Spending $21,647 $24,204 $26,951
    Bill Payments $13,539 $15,385 $170,631
    SUBTOTAL SPENT ON OPERATIONS $35,296 $39,549 $43,582
    Additional Cash Spent
    Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
    Principal Repayment of Current Borrowing $0 $0 $0
    Other Liabilities Principal Repayment $0 $0 $0
    Long-term Liabilities Principal Repayment $0 $0 $0
    Purchase Other Current Assets $0 $0 $0
    Purchase Long-term Assets $0 $0 $0
    Dividends $0 $0 $0
    SUBTOTAL CASH SPENT $35,296 $35,489 $43,882
    Net Cash Flow $11,551 $13,167 $15,683
    Cash Balance $21,823 $22,381 $28,239

    8.5 Projected Balance Sheet

     Pro Forma Balance Sheet      
    Assets Year 1 Year 2 Year 3
    Current Assets
    Cash $184,666 $218,525 $252,384
    Accounts Receivable $12,613 $14,493 $16,373
    Inventory $2,980 $3,450 $3,920
    Other Current Assets $1,000 $1,000 $1,000
    TOTAL CURRENT ASSETS $201,259 $237,468 $273,677
    Long-term Assets
    Long-term Assets $10,000 $10,000 $10,000
    Accumulated Depreciation $12,420 $14,490 $16,560
    TOTAL LONG-TERM ASSETS $980 $610 $240
    TOTAL ASSETS $198,839 $232,978 $267,117
    Liabilities and Capital Year 1 Year 2 Year 3
    Current Liabilities
    Accounts Payable $9,482 $10,792 $12,102
    Current Borrowing $0 $0 $0
    Other Current Liabilities $0 $0 $0
    SUBTOTAL CURRENT LIABILITIES $9,482 $10,792 $12,102
    Long-term Liabilities $0 $0 $0
    TOTAL LIABILITIES $9,482 $10,792 $12,102
    Paid-in Capital $30,000 $30,000 $30,000
    Retained Earnings $48,651 $72,636 $96,621
    Earnings $100,709 $119,555 $138,401
    TOTAL CAPITAL $189,360 $222,190 $255,020
    TOTAL LIABILITIES AND CAPITAL $198,839 $232,978 $267,117
    Net Worth $182,060 $226,240 $270,420

    8.6 Business Ratios

     Ratio Analysis        
    Year 1 Year 2 Year 3 Industry Profile
    Sales Growth 4.35% 30.82% 63.29% 4.00%
    Percent of Total Assets
    Accounts Receivable 5.61% 4.71% 3.81% 9.70%
    Inventory 1.85% 1.82% 1.79% 9.80%
    Other Current Assets 1.75% 2.02% 2.29% 27.40%
    Total Current Assets 138.53% 150.99% 163.45% 54.60%
    Long-term Assets -9.47% -21.01% -32.55% 58.40%
    TOTAL ASSETS 100.00% 100.00% 100.00% 100.00%
    Current Liabilities 4.68% 3.04% 2.76% 27.30%
    Long-term Liabilities 0.00% 0.00% 0.00% 25.80%
    Total Liabilities 4.68% 3.04% 2.76% 54.10%
    NET WORTH 99.32% 101.04% 102.76% 44.90%
    Percent of Sales
    Sales 100.00% 100.00% 100.00% 100.00%
    Gross Margin 94.18% 93.85% 93.52% 0.00%
    Selling, General & Administrative Expenses 74.29% 71.83% 69.37% 65.20%
    Advertising Expenses 2.06% 1.11% 0.28% 1.40%
    Profit Before Interest and Taxes 26.47% 29.30% 32.13% 2.86%
    Main Ratios
    Current 25.86 29.39 32.92 1.63
    Quick 25.4 28.88 32.36 0.84
    Total Debt to Total Assets 2.68% 1.04% 0.76% 67.10%
    Pre-tax Return on Net Worth 66.83% 71.26% 75.69% 4.40%
    Pre-tax Return on Assets 64.88% 69.75% 74.62% 9.00%
    Additional Ratios Year 1 Year 2 Year 3
    Net Profit Margin 19.20% 21.16% 23.12% N.A.
    Return on Equity 47.79% 50.53% 53.27% N.A.
    Activity Ratios
    Accounts Receivable Turnover 4.56 4.56 4.56 N.A.
    Collection Days 92 99 106 N.A.
    Inventory Turnover 19.7 22.55 25.4 N.A.
    Accounts Payable Turnover 14.17 14.67 15.17 N.A.
    Payment Days 27 27 27 N.A.
    Total Asset Turnover 1.84 1.55 1.26 N.A.
    Debt Ratios
    Debt to Net Worth 0 -0.02 -0.04 N.A.
    Current Liab. to Liab. 1 1 1 N.A.
    Liquidity Ratios
    Net Working Capital $120,943 $140,664 $160,385 N.A.
    Interest Coverage 0 0 0 N.A.
    Additional Ratios
    Assets to Sales 0.45 0.48 0.51 N.A.
    Current Debt/Total Assets 4% 3% 2% N.A.
    Acid Test 23.66 27.01 30.36 N.A.
    Sales/Net Worth 1.68 1.29 0.9 N.A.
    Dividend Payout 0 0 0 N.A.

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