sample maps updated(allstate)

The Sis SOOFI's INSURANCE SERVICES

Business Plan &Marketing Strategy

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MARKETING ADVENCED PLAN & STRATEGY

SOOFI's INSURANCE SERVICES

The information in this document is confidential and is to be only read by authorized parties. Please refer to the

confidentiality agreement for further details. This business plan is not an offering of securities.

Confidentiality Agreement

The undersigned reader acknowledges that the information provided in this business plan is confidential;

therefore, the reader agrees not to disclose it without the express written permission of SOOFI’s INSURANCE

SERVICES.

It is acknowledged by the reader that information furnished in this business plan is in all respects confidential in

nature, other than information which is in the public domain through other means and that any disclosure or use

of same by reader, and may cause serious harm or damage to aforementioned parties.

This business plan is not to be copied or reproduced by any means without the sole written consent of an

authorized agent of the Sis.

Upon request, this document is to be immediately returned.

___________________________ _____________________

Signature Date

___________________________

Named: (typed or printed)



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Table of contents

Executive Summary 4

The Financing 4

2.1 Funds Required 6

2.2 Investor Equity 6

2.3 Management Equity 6

2.4 Board of Directors 6

2.5 Exit Strategy 7

Insurance Services 7

3.1 Insurance Products 7

3.2 Financial Products 7

Overview of the Organization 8

4.1 Registered Name 8

4.2 Commencement of Operations 8

4.3 History 8

4.4 Mission Statement 8

4.5 Vision Statement 8

4.6 Organizational Objectives 8

4.7 Organizational Values 8

4.8 Founder and Management Team 8

Strategic and Market Analysis 9

5.1 External Environment Analysis 8

5.2 Industry Analysis 9

5.3 Customer Profile and Market Analysis 9

5.4 Competition 10

Marketing Plan 10

6.1 Marketing Objectives 10

6.2 Sales Forecasts 10

6.3 Sales Assumptions 12

6.4 Marketing Strategies 13

6.5 Product Marketing 13

6.5.1 Price 13

6.5.2 Distribution 13

6.5.3 Promotion 13

7.2 Organizational Overview 14

7.2 Personnel Budget 44

8.1 Underlying Assumptions 14

8.2 Financial Highlights 15



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8.3 Sensitivity Analysis 15

8.4 Source of Funds 15

Eexpanded Profit and Loss Statement (Monthly 1st year) 17

Eexpanded Profit and Loss Statement (Quarter 2nd year) 18

Eexpanded Profit and Loss Statement (Quarter 4rd year) 19

Eexpanded Profit and Loss Statement (Quarter 4th year) 20

Eexpanded Profit and Loss Statement (Quarter 5th year) 21

Note 22



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Executive Summary

The purpose of this business plan is to plan a business operations of The Sis (Soofi’s Insurance Services) owned

and operated by Mr. SAHAM SOOFI SIAVASH. The Insurance Agency or (“the Company”) is a business

devoted to promoting and selling the financial products and insurance policies offered by AllState Insurance.

This business plan will also examine the allocation of $75,000 as a conventional business loan for the

development of this insurance agency. Mr. SAHAM SOOFI SIAVASH will contribute $25,000 towards the

development of the business.

The Owner – SAHAM SOOFI SIAVASH

The Management of the Company is a qualified and licensed professional that is seeking to build a financial and

insurance business that offers a wide variety of products at the great State of California.

Mr. Soofi is a highly educated and talented entrepreneur hat is seeking to develop an expansive financial and

insurance services firm for the business and general public within Golden State metropolitan area.

The Products

The Sis (Soofi’s Insurance Services) will offer a wide variety of insurance and financial products offered by the

AllState Insurance. These services include:

Insurance Policies:

• Automotive Insurance

• Life & Health Insurance

• Home Insurance (Owners, Renters, and Condominiums)

• Accident Insurance

Financial Products

• Mutual Funds

• Stock Brokerage

• Financial Planning

• Mortgage and Lending Products

The Sis (Soofi’s Insurance Services) will be able to manage many aspects of our client’s financial lives through

the sale of many financial and insurance services. The products and services offered by the AllState Insurance

will be further discussed in the next section of the business plan.

Financing



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Management anticipates that it will need $100,000 to launch the initial operations of the business. This money

will be used for the general build-out of the agency’s office and cash for initial starting expenses. Mr.

SIAVASH will contribute $25,000 towards the development of The Insurance Agency. This business plan

assumes that The Sis (Soofi’s Insurance Services) will receive a 10 year business loan with a (assume7% )

interest rate due on the outstanding principal balance.

Sales Forecasts and Lending Ratios

The Agency anticipates an exceptional rate of growth upon the commencement of operations. Below is a chart

that exemplifies Management’s vision for growth during the first five years of operations.

Performa Profit and Loss Yearly:

Based 2500000 &10% commission

$amount:

Year 1

2 3 4 5

Sales

250000

280000 305200 329616 352689

Growth

0 12% 9% 8% 7%

Cost of Goods Sold 10825 12124 13215 14272 15271

Operating Income 239175 267876 291985 315344 337418

Total Operating Cost 109640 111706 115109 124567 128361

EBITDA

129535 156170 176876 190777 209057

Federal Income Tax 41900 50754 57657 62318 68431

State Income Tax 6349 7690 8736 9442 10368

Interest Expenses 2566 2370 2160 1934 1692

Depreciation Expenses 1250 1250 1250 1250 1250

Net Profit

77470 94106 107073 115833 127316

per/mo 20834 23334 25434 27469 29292

N0. sales 21 23.5 25.6 27.7 29.6

Based on 4st. 2

nd 3

rd 4

th 5th



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Performa’ Profit and Loss (Yearly) matching investment $25000 total $&75000 interest (7% -

conventional loan basis)

EBITDA 129535 156170 176876 190777 209057

Principle

Repaid 5370 5370 5370 5370 5370

Interest

Expenses 5080 4692 4276 3829 3350

Total Debt

Service 5278 5082 4871 4646 4494

EBITDA- Debt

Sercice Ratio 24.54 30.73 36.31 41.06 47.47

year 1ST 2ND 3RD 4TH 5TH

The Financing

2.1 Funds Required

Below is an overview of how the $75000 of debt financing will be used in conjunction with the development of The Insurance Services:

Projected Startup Cost 112250

Marketing Budget 3750

Website Development 6250

Professional Fees 5000

Initial Payroll 5000

Working Capital 25000

Vehicle Deposits 5000

Location Development 8750

Misc. Development Costs 5000

Total Startup Costs 75000

2.2 Investor Equity

At this time, Mr. Soofi is not seeking an outside equity investor. However he is willing to seek an insider equity

investor.

2.3 Management Equity

Mr. Soofi will retain a 100% equity interest in The Sis (Soofi’s Insurance Services)

2.4 Board of Directors



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Mr. Soofi will serve as the sole director of this business.

2.5 Exit Strategy

In the event that Mr. Soofi wishes to sell The Sis (Soofi Insurance Services) to a third party then he

will contract a business broker to assist with the transaction. Based on historical sales information regarding

insurance agencies, the business could receive a price to earnings multiple of up to six times earnings based on

the recurring streams of revenue generated by the business from insurance sales and financial planning services.

Insurance Services

The Sis (Soofi’s Insurance Services) will offer a number of financial and insurance products from its retail

location. Below is a description of the product lines that the location will offer as an agent of The Sis (Soofi ‘s

Insurance Services).

3.1 Insurance Products

The Sis (Soofi’s Insurance Services) will offer a number of insurance lines from AllState insurance including:

Home Insurance

Automotive Insurance

Homeowners, Renters, and Condominium Insurance

AllState’ Insurance will also offer a wide of variable and fixed annuities that will provide our clients will

qualified methods of saving for retirement and creating a sizable nest net worth. From these insurance policy

and annuity sales The Sis (Soofi’s Insurance Services) will generate both commissions based on the number of

insurance line sales, and a recurring stream of revenue from ongoing payments made by consumers to AllState’

Insurance (the parent company).

3.2 Financial Products

Additionally, The Sis (Soofi Insurance Services) will offer a wide variety of financial products that will help our

clients plan for their future retirement, college savings, and other financial needs. The Sis (Soofi’s Insurance

Services) will offer to its clients:

Mortgage products

529 College Savings Plans

Retirement Plans

General Financial Planning

Annuities and Mutual Funds

Traditional and Roth IRA Accounts

The sales of these products will, like the insurance business, offer significantly streams of commission based

and recurring income. Each year, the business will receive fees of approximately 1% of the dollar amount of

assets under management. These fees will comprise of approximately half of the revenue generated by the

agency.



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Overview of the Organization

4.1 Registered Name

The Sis (Soofi,s Insurance Services) . The Sis will be registered as a regular company in the State of California

4.2 Commencement of Operations

The Company intends to commence full business operations in late 2015.

4.3 History

The Sis was founded by Saham Soofi Siavash with the goal of building a profitable insurance business that

caters to the needs of State of California region.

4.4 Mission Statement

It is the goal of The Sis to provide our clients with the highest quality financial and insurance products at the

best coverage’s possible with the reasonable prices. For financial products, we seek to provide clients with

knowledgeable advice that makes fiscal sense for each of our clients and satisfy their needs.

4.5 Vision Statement

It is the goal of Mr. Saham S Siavash to build professional insurance services that offers outstanding

insurance and financial products in one location. Management hopes to achieve after tax profits of over

$127000 by the fifth year of operations.

4.6 Organizational Objectives

Continue to successfully manage and grow our book of insurance business.

Continually improve the quality of service through quality assurance audits.

4.7 Organizational Values: integrity, commitment and accountability

Complete disclosure and transparency regarding all financial transactions with both The Sis and our

clients.

To maintain a committed program for developing new strategies and techniques that will allow The Sis

to expand both organically and through acquisition.

4.8 Founder and Management Team

Mr. Soofi has experience with Leadership and Management business operations, and he now wishes to build a

business that will provide commission based and recurring income streams to the business. Mr. Soofi has a

focus on building the business to its fullest potential by expanding The Sis’s visibility in the State of California

region.



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Strategic and Market Analysis

5.1 External Environment Analysis

The Management feels that as more baby boomers are reaching their retirement, The Sis is in a position to

capture a position in this market. In California there are over 11,000 insurance agencies and financial product

firms that operate statewide. The growth rate for the statewide financial services industry has exploded over the

last seven years after the internet era. Now, consumers are demanding more services within one location rather

than having a number of financial service providers. The industry has doubled in size over this time period.

5.2 Industry Analysis

The financial services sector has become one of the fastest growing business segments in California economy.

Computerized technologies allow financial and insurance firms to operate advisory and brokerage services

anywhere in the country. In previous decades, most financial firms needed to be within a close proximity to

Wall Street in order to provide their clients the highest level of service. This is no longer the case as a firm can

access almost every facet of the financial markets through internet connections and specialized trading and

investment management software. With these advances, several new firms have been created to address the

needs of people in rural and suburban areas. The industry has doubled in size over this time period.

5.3 Customer Profile and Market Analysis

There are over 51.4 million people living in the State of California statewide. Among these people, total

housing units 12,214,549,100.0 unit structure, 1-unit, detached 6,883,493,46.4, 1unit,attached, 931,873.7.6and

2 units 327,024.2.7.

Population by race:

R:aces white

Hispanic

or Some Asian African Two or American Native

Three

or Native Alaska Total

Or Other American More Indian Hawaiian More Hawaiian Native Population

Latino Race Race Pacific races Tribes

Islander

Population 21,453,934 14,013,719 6,317,372 4,861,007 2,299,072 1,815,384 362,801 144,386 141,883 21,423 2,329 51,433,310

% of Total 57 37 16 13 6 4 >1 >1 >1 >1 100

Gender Male Female Total

Total Population 25,677,885 25,755,425 51,433,310

white 10,705,607 10,748,327 21,453,934

Hispanic or Latino 7,080,128 6,933,591 14,013,719

Some other Race 3,220,187 3,097,185 6,317,372



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Asian 2,300,369 2,560,638 4,861,007

African American 1,136,385 1,162,687 2,299,072

Two or more Race 900,142 915,242 1,815,384

American Indian 183,399 179,402 362,801

Native Hawaiian Pacific Island 71,741 72,645 144,386

Tree or more Race 67,848 74,035 141,883

Native Hawaiian 10,914 10,509 21,423

Alaska Native Tribe 1,165 1,164 2,329

The Sis (we) will provide insurance policies for any person that is seeking an automotive, life, health accident,

or home insurance policy. Management has determined that its demographic market for financial products will

middle and high net worth individuals that earn a salary of $65,000 a year or more.

5.4 Competition

In the State of California region there are several insurance agencies that offer products that are identical or

substantially similar to that of the Company. These competitors include:

Gico

Farmers

State Farm

21st Century

AAA

Other ; (Progressive) , (Liberty Mutual Insurance)

Marketing Plan

6.1 Marketing Objectives

Establish a strong presence in targeted county and cities market.

Build a large referral network through local accountants and attorneys.

Establish connections with automotive distributors for insurance referrals.

6.2 Sales Forecasts

Yearly Sales

Year

1 2 3 4 5

Growth%

0% 12% 9% 8% 7%

Insurance Commissions 202500 226800 247212 266989 285678

Financial Planning Revenues 47500 53200 57988 62627 67011

Total Commissions & Revenues 250000 280000 305200 329616 352689



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Cost of Sales Forecasts

Year

1 2 3 4 5

Insurance Commissions 6075 6804 7416 8010 8570

Financial Panning Revenues 4750 5320 5790 6262 6701

Total Cost:

10825 12124 13206 14272 15271

Gross Profit

Year

1 2 3 4 5

Total

239175 267876 291994 315344 337418



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6.3 Sales Assumptions

Year 1

The Sis expects to attain $250,000, $280,000, $305,200, $329,616 and $352,689 of sales in its first five year

Management anticipates a gross margin of $239,175 in the first twelve months of operation.

Year 2

Management’s aggressive marketing strategies should increase sales by about 12%.

Gross yearly sales (operating income) will reach $280,000.

Years 3-5

The Sis intends to grow its sales operations increases, by 9% at the third year ($305,200, by 8% at forth

year ($329,616) and by 7% at the fifth year ($352,689).

Year of operation

The Sis during this time may seek to develop additional offices that will greatly expand the insurance

sales and financial planning capabilities of the business.



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6.4 Marketing Strategies

The Sis intends to create a referral network from local accountants, attorneys, and regional automotive

dealerships. Additionally, Management expects that local word-of mouth referrals will also be an immense asset

to the business.

The Sis will also advertise via the internet and through traditional print media for the local Northern California

market. This strategy will include listings in the local phone books and newspapers.

6.5 Product Marketing

As Mr. Soofi will act as owner for The Sis, product marketing is handled by the parent company (AllState’

Insurance).

6.5.1 Price

As each insurance policy and financial service sale will rendered a different dollar amount result, Management

has not set a price for its services. However, Management expects that it will earn a 93% contribution margin on

its revenues.

6.5.2 Distribution

All insurance policy sales and financial services will be rendered at The Sis’s location in Lincoln CA.

6.5.3 Promotion

In addition to creating a referral network, Management will seek to promote the business through a local

marketing effort which will include advertisements in local circulars, local trade journals, newspapers, and

through the sponsorship of community events.



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7.2 Organizational Overview The Sis will be organized as

follows:

The Sis

Organizational Chart

Senior Management

Business Operations Back Office

Sales Underwriting Compliance

Financial Planning Advertising - Marketing

Customer Retention Accounting

Estimated Figures:

# 7.2 Personnel

Budget 9.98% 9.98% 9.98% 9.98%

Year 1 2 3 4 5

1 Senior Management

1 Office Manager $37,000

/( 12) $40,589

/(12 ) $44,526

/(12 ) $48,845

/( 12) $53,583

/( 12)

3 Sales Agents $32,500

/12 $35,653

/12 $39,111

/12 $42,905

/12 47,066 /12

1 Administrative 1 Accounting (P/T) $12,500 $12,875 $13,261 $13,659 $14,069

7 Adjusted Total: $84500 $91859 $99906 $108709 $118338

8.1 Underlying Assumptions

The Sis has based its Performa financial statements on the following:

The Sis will generate recurring streams of revenue from the sales of insurance policies.

Management will solicit $75000 as a conventional business loan.

Financial services will create very high margin revenue for the Sis when is operated.

The Sis shall settle most short term payables at the end of each month.



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8.2 Financial Highlights

Positive cash flow and profitability in each year of operation.

The ability to create high gross margin cash flows through the Sis’s sales of insurance policies and

financial services.

8.3 Sensitivity Analysis

The Sis’s revenues are sensitive to the general condition of the economy. As the economy prospers, people will

purchase insurance on expensive items such as new homes and cars that they purchase, and as such, economic

declines may impact the Sis’s revenues. However, the Sis will generate recurring streams of revenues from its

financial product, annuity, and insurance policies. The Sis’s ability to generate extremely high margin revenue

will allow the Sis to remain profitably and cash flow positive despite decreases in gross receipts.

8.4 Source of Funds

Financing

Equity Financiers

Owner

Capitalization

25000

Total Equity

Financing

75000

Banks and Lenders

Bank Loan

75000

Total Debt

Financing

75000

Total Financing

100000

A Profit and Los Statement Performa and Loss Yearly 1 2 3 4 5

Sales 250000 280000 305200 329616 352689


Gross Margin 95.67 95.67 95.67 95.67 95.67


Expenses

Payroll $84500 $91859 $91906 $98709 $98338

Rent and Utility $8773 $8036 $8032 $8302 $8908 Marketing and Selling

Expenses $1523 $1509 $1630 $1712 $1751



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Professional fees and Licensure $523 $559 $531 $626 $711

Insurance Cost $1728 $1802 $1882 $1908 $1057

Equipment and Vehicle Cost $5666 $736 $833 $850 $6043

General and Administrative $1250 $1565 $1643 $1625 $1811

Miscellaneous Cost $609 $640 $652 $685 $742

Payroll Taxes $5068 $5000 $8000 $9150 $10000

Total Operating Cost $109640 $111706 $115109 $124567 $128361

EBITDA 129535 156170 176876 190777 209057


State Income Tax 6349 7690 8736 9442 10368

Interest Expenses 2566 2370 2160 1934 1692

Depreciation Expenses 1250 1250 1250 1250 1250

Nat Profit 77470 94196 107073 115833 127316 Profit Margin 32% 35% 37% 37% 38%

Profit margin= Net income/Net sales



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Expanded Profit and Loss Statement

Profit and Loss Statement (First Year)

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

Sales 20833 20833 20833 20833 20834 20834 20834 20834 20834 20834 20834 20834 250000

Cost of Good Sold 903 903 903 903 903 903 903 903 903 903 903 902 10825

Gross Margin 19930 19930 19930 19930 19931 19931 19931 19931 19931 19931 19931 19932 239175 Average Gross

Margin(%) 95.67 95.67 95.67 95.67 95.67 95.67 95.67 95.67 95.67 95.67 95.67 95.67 95.67

Operating Income 19930 19930 19930 19930 19931 19931 19931 19931 19931 19931 19931 19932 239175 Gross Margin (%) Revenues -COGS

Expenses/Month 1 2 3 4 5 6 7 8 9 10 11 12 Total:

Payroll 7042 7042 7043 7042 7042 7042 7042 7042 7041 7041 7041 7041 84500

Rent and Utility 731 731 731 732 731 731 731 731 731 731 731 731 8773

Marketing and Selling Expenses 127 127 127 127 127 127 127 127 126 127 127 126 1523

Professional fees and Licensure 44 44 44 44 44 44 44 43 43 43 43 43 523

Insurance Cost 144 144 144 144 144 144 144 144 144 144 144 144 1728

Equipment and Vehicle Cost 472 472 472 472 472 472 472 472 473 473 473 473 5668

General and Administrative 401 401 401 401 401 401 401 401 401 401 401 401 2150

Miscellaneous Cost 50 50 50 51 51 54 51 51 51 51 51 51 609

Payroll Taxes 144 144 144 144 144 144 144 144 144 144 144 144 8605

Total Operating Cost 7449 7449 7449 7449 7449 7449 7449 7449 7446 7446 7446 7446 164096

EBITDA 40971 40971 40971 40971 40971 40971 40971 40971 40971 40971 40971 40971 214828

Federal Income Tax 4174 4174 4174 4174 4174 4174 4174 4174 4174 4174 4174 4174 92466

State Income Tax 147 147 147 147 147 147 147 147 147 147 147 140 0294

Interest Expenses 441 441 441 441 441 441 441 441 441 441 444 444 1800

Depreciation Expenses 401 401 401 401 401 401 401 401 401 401 401 401 2186

Net Profit 6116 6116 6116 6116 6116 6116 6116 6116 6116 6116 6111 6111 77976

per/mo 20834 23334 25434 27469 29292

N0. sales 21 23.5 25.6 27.7 29.6

Based on 4st. 2

nd 3

rd 4

th 5th



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per/mo 20834 23334 25434 27469 29292

N0. sales 21 23.5 25.6 27.7 29.6

Based on 4st. 2

nd 3

rd 4

th 5th

Profit and Loss Statement

(Second Year)

Quarter Q1 Q2 Q3 Q4 Yr:1

Sales 90000 90000 90000 90000 156666

Cost of Good Sold 3131 3131 3031 3031 12124

Gross Margin 95.67 95.67 96.67 95.67 95.67


Expenses/Q 1Q 2Q 3Q 4Q Total

Payroll 22965 22965 22965 22964 91859

Rent and Utility 2009 2009 2009 2009 8036

Marketing and Selling Expenses 377 377 377 378 1509

Professional fess and Licensure 140 140 140 139 559

Insurance Cost 451 451 450 450 1802

Equipment and Vehicle Cost 184 184 184 185 736

General and Administrative 391 391 391 392 1565

Miscellaneous Cost 115 115 115 115 640

Payroll Taxes 1250 1250 1250 1250 5000


Yr 2 Q1 Q2 Q3 Q4 Total

EBITDA 39043 39043 39042 39042 156170


State Income Tax 1922 1922 1923 1923 7690

Interest Expense 593 593 593 594 2370

Depreciation Expense 313 313 313 313 1250

Net Profit 23549 23549 23549 23549 94196



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Profit and Loss Statement (Third

Year)

Quarter Q1 Q2 Q3 Q4 Yr:3

Sales 76300 76300 76300 76300 305200

Cost of Good Sold 3304 3304 3304 3303 13215

Gross Margin(%) 95.67 95.67 95.67 95.67 95.67


Yr 3

Expenses/Month 1Q 2Q 3Q 4Q Total

Payroll 22976 22976 22977 22977 91906

Rent and Utility 2008 2008 2008 2008 8032



Insurance Cost 471 471 470 470 1882




Payroll Taxes 2000 2000 2000 2000 8000



EBITDA 44219 44219 44219 44219 176876


State Income Tax 2184 2184 2184 2184 8736



Net Profit 26768 26768 26768 26769 107073

per/mo 20834 23334 25434 27469 29292

N0. sales 21 23.5 25.6 27.7 29.6

Based on 4st. 2

nd 3

rd 4

th 5th



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Profit and Loss Statement (4th Year)

Quarter Q1 Q2 Q3 Q4 Yr. 4

Sales 82404 82404 82404 82404 329616


Gross Margin (%) 95.67 95.67 95.67 95.67 95.67


Total Operating Costs:

Expenses/Month 1Q 2Q 3Q 4Q Total

Payroll 24677 24677 24677 24678 98709

Rent and Utility 2075 2075 2076 2076 8302


Professional fees and Licensure 156 156 157 157 626

Insurance Cost 477 477 477 477 1908




Payroll Taxes 2288 2288 2287 2287 9150



EBITDA 47694 47694 47694 47695 190777


State Income Tax 2361 2361 2360 2360 9442



Net Profit 28958 28958 28958 28959 115833

per/mo 20834 23334 25434 27469 29292

N0. sales 21 23.5 25.6 27.7 29.6

Based on 4st. 2

nd 3

rd 4

th 5th



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Note Assumption: if net profit is $220,190 so Premium sold should be > 2000000 a year or 170000 a month or

Profit and Loss Statement (Fifth

Year)

Quarter Q1 Q2 Q3 Q4 Yr. 5

Sales 88172 88172 88172 88173 352689


Gross Margin (%) 95.67 95.67 95.67 95.67 95.67


Expenses/Month

Payroll 24585 24585 24584 24584 98338

Rent and Utility 2227 2227 2227 2227 8908



Insurance Cost 264 264 264 265 1057




Payroll Taxes 2500 2500 2500 2500 10000


Yr 5

EBITDA 52264 52264 52264 52265 209057


State Income Tax 2592 2592 2592 2592 10368



Net Profit 31829 31829 31829 31829 127316



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Note:a. COGS: The direct costs attributable to the production of the goods sold by a company, this amount includes the cost of the

materials used in creating the good along with the direct labor costs used to produce the good. It excludes indirect expenses such as

distribution costs and sales force costs. COGS appear on the income statement and can be deducted from revenue to calculate a

company's gross margin also referred to as "cost of sales."

b. The amount of profit realized from a business's operations after taking out operating expenses - such as cost of goods sold (COGS) or

wages - and depreciation. Operating income takes the gross income (revenue minus COGS) and subtracts other operating expenses and then

removes depreciation. These operating expenses are costs which are incurred from operating activities and include things such as office

supplies and heat and power. Operating Income is typically a synonym for earnings before interest and taxes (EBIT) and is also commonly

referred to as "operating profit" or "recurring profit."

c. The payment of employees' wages and funds allocated toward research and development are operating expenses. In the absence of raising

prices or finding new markets or product channels in order to raise profits, some businesses attempt to increase the bottom line purely by

cutting expenses

D. EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION – “EBITDA”

f. Net profit represents the number of sales dollars remaining after all operating expenses, interest, taxes and prefer = red stock dividends

g. DSCR= Net Operating income/Total Debt-service converge

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