Section 1

Team 3
Spring 2020

Business Plan
qTemp Backpack
Our product is a mobile backpack that merges insulated packaging into one, versatile product.
The design has insulation on the bottom for items that need to stay cold or warm. This section
will be in a different level (bottom-portion) of the backpack so it will not interfere with the other
items that need to be stored in the upper-portion. By being separated by a firm divider, this will
allow the items stored in the top section to not come into contact with, or impact those in the
insulated section. There are zippers on top of the backpack, as well as right below the divider to
provide easy access to both compartments. Because this is not a fully insulated backpack, like
common competitors, this will allow consumers to be able to use this backpack for many other
uses and not solely for being a cooler, for example. By adding the option of being a strictly-
outdoors backpack, or being a daily driver, this is opening up options to the consumer and
allowing this to be a more worthwhile investment.

Team Members: Signatures Email Address

Connor Reinheimer ____________ reinhecj@dukes.jmu.edu

Erika Marroquin ____________ marroqex@dukes.jmu.edu
Jason Diloreta ____________ dilorejl@dukes.jmu.edu
Nick Jones ____________ jones2nj@dukes.jmu.edu
Bryan Rubio ____________ rubiomba@dukes.jmu.edu
James Iwatsubo ____________ iwatsujm@dukes.jmu.edu
 Executive Summary
qTemp Backpack
Robert Jackson
125 Saint Pauls Blvd. Norfolk, VA 22324
Phone: (757 )463-7492
E-mail: jacksonr01@qTemp.com

In order to provide a foundation for our business we

Management:
Our management is overseen by the President, who
oversees our Operations Manager, Accountant, Sales
Representative, and a Human Resource Manager
Industry: NAICS code: 424990- Backpacks, Textile,
Merchant, Wholesalers
Number of Employees: 18 full-time employees for
years 1-3 and 19 employees for years 4-5.
Amount of Financing Sought: $1,500,000
Investment Sources: We plan on taking out a
$1,000,000 loan (SBA 7A Loan) and receiving $500,000
from investors. A small business administration loan will
be applied for with a 2.75% interest for 5-10 years.
Fixed and tradable assets will be used as collateral for
the loan.
Use of Funds: Equipment, product development,
beginning salaries,
Product/service selling price: $85
made an organizational chart to display our employees’
expected level of participation and rankings. Our
factories will oversee the production of each of our
backpacks. We will be operating as an LLC.
Products/Services: Our backpack will have an upper
level that is designed for regular storing and the lower
level will be the insulated compartment. Separating the
compartments with a divider will allow the items stored
in the top section to not come into contact with the
insulated section.
Competitive Advantage: We found that by immersing
ourselves in this untapped market we will be able to
create a new market in the outdoor products. Our high
degree of insulation and multifunctionality creates a
unique and desirable product.

Markets: Our primary target market are the Beach/Lake

Goers, who enjoy spending their leisure time outdoors.
People over the age of 18 are within this age group. The
second target market are campers, which include people
that are in the United States and live an active lifestyle.
They age from 20-35 years old and will be targeted to
many incomes within this age
Business Description:

Distribution Channels: The channels in which our product will be mainly operating in is a selective distribution strategy.
Once our products are done being made, we will ship them to retailers in the United States.

Competition: Our direct current competitor in the backpack industry is The VF corporation which carries brands such as
The North Face and Jansport. Another market in which we will be overlapping within is the insulation industry.
Competitors in this market include Yeti, Coleman and the Arctic Zone. The indirect consumers of this product include
lunchbox companies such as Arctic Zone backpacks.

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Financial Projections (Unaudited) (Dollars in thousands)
2020 2021 2022 2023 2024
Revenue: $2210.7 $2250.6 $2975.4 $3526.9 $4414.9
EBIT: $123.2 $159.8 $205.2 $264.0 $357.9

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Elevator Pitch 

If you are an outdoors enthusiast looking for an easier way to transport your food, beverages, and belongings, we

recommend purchasing a qTemp backpack. The qTemp backpack is a versatile backpack that combines regular

backpacking and insulation packaging into one. Our product allows customers to enjoy outdoor leisure time and activities

without the nuisance of having to carry multiple bags or luggage to accommodate for both your belongings and

perishables. 

Product service description

Our product is a large everyday backpack that contains both a cooler and regular backpack interior. The interior is split

with a plastic shell divider, ensuring that the items in the two compartments never come into contact with each other, and

that all items in the cooler remain fresh. This allows for customers to use the backpack for multiple occasions and

purposes and removes the hassle of having to carry around a separate backpack and cooler. We will be distributing our

products to retailers across the country, and each backpack will cost $85.

Competitive Advantage

By offering a backpack that provides hybrid capabilities of both an insulated and non-insulated product, our business is

creating a new marketplace for backpacks/coolers. Existing competitors, like NorthFace and Jansport, have shown high

performance in the student market (Business Insider, 2020), however, ours will reach a broader outdoor markt.

Competitors have products such as an attachable box cooler, but this serves as a nuisance to the adventurist market that we

are trying to attain and creates an overpriced product. The lack of competition shows that many companies are hesitant in

expanding their processes and our company aims at achieving this niche market. 

Value Proposition

This functionality allows us to appeal to a wider target market and create a product that does not currently exist. By

combining our high degree of functionality with a high degree of insulation, we are able to provide a unique product that

caters to a niche market. The multifunctionality of our backpack allows for our target markets to lessen the hassle that

comes with bringing more than one carrying device in an outdoor trip. 

Business Strategy

Operationally, our product stands out from our competitors due to the dual function of an insulated and non insulated

compartment. Our focused business strategy allows us to reach the market of people with an active and outdoors lifestyle.
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Our market segmentations represent this by focusing largely on campers and outdoor vacationers. By providing an

inexpensive backpack that serves the needs and convenience of many campers and other outdoor enthusiasts, we will

attract many customers looking for a sleek and innovative product to enhance their hobbies and lifestyle. 

Business Location

Our company’s headquarters will be located in the heart of the city of Norfolk, with our warehousing located just a few

miles off of I-66 .  In Norfolk there is a low unemployment rate of 5.5% (Area Vibes, 2020), signifying that the area is in

a period of economic prosperity, attracting employees with various skill sets. Norfolk is located just 19 miles away from

Virginia Beach (Distance between Cities, 2020), a large tourist city where our employers enjoy spending their free time

and engaging in outdoor activities. By combining the economic prosperity and outdoor hobbies that the area provides, we

ensure that our product is being produced with success in mind and that it will have a rich pool of candidates who want to

create a great product that they will be using in the outdoors.

Outsourced Functions Justification

As an organization we will outsource our customer service department along with marketing. We decided on this to cut

costs, and these departments are not part of our core competencies. We feel confident the level of service will be adequate

and we plan to outsource to India. For our marketing activites, our employees will be in charge of them. The costs for our

in house marketing results being 7% of our gross revenue (RakaCreative, 2019).

Financial Performance

As a company, we perform very well financially early on due to making a profit in year 1. We were able to achieve this

due to our sound production process and keeping our variable cost at $18.80. Our net income continues to increase each

year as more people learn about our product and as our backpack penetrates the market. We are also able to put our money

into both short-term and long-term investments due to an abundance in on-hand cash in future years.

6
Exhibit 1: Organizational Chart

President
(1 FTE)

Human Resources
Operations Manager Accountant Sales Representatives
Manager
(1 FTE) (1 FTE) (5 FTE)
(1 FTE)

Manufacturing/Production
Team Member
(6 FTE)

Distribution Team
Member
(3 FTE)

qTemp Backpack’s Organizational Chart

 President will manage 8 full time employees

 Operations manager responsible for production process oversight
 There will be 5 full time sales representatives, focused on meeting and negotiating our sales with
retailers.
 Manufacturing team is responsible for cutting material and sewing

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  Distribution team is responsible for inspection and packaging
 Operations Manager responsible for oversight of production process
 HR Manager will handle payroll, benefits, human capital, and recruiting
Exhibit 2: Employee Costs Chart: Salaries, Benefits, Taxes and Totals

Mandatory Payroll Total Cost Total Cost all

Position Salary or Wage Range Second Year Pay Deductions Benefits Per Position Employees

Health - $6,000
FICA-$9,631 Life Insurance-$1,500 IRA-
SUTA-$200 $3,150
$150000 + $7,500 WC- $500 Paid Profit-Sharing - $3,150
President $150,000-200,000 Bonus FUTA-$42 Disability Insurance - $47,250 $228,923 $228,923

Health - $4,000
FICA-$5,122 Life Insurance-$1,000
SUTA-$200 IRA - $1,339
$65,000 + $1,950 WC- $500 Paid Proft-Sharing -$1,339
Operations Manager $65,000-$85,000 Bonus FUTA-$42 Disability Insurance - $20,085 $100,577 $100,577

Health-$3,000
FICA-$3571 Life Insurance-$750
SUTA-$200 IRA-$934
WC- $500 Paid Profit-Sharing-$934
Accountant $46,682-$56,458 $46,682 FUTA-$42 Disability Insurance - $14,005 $70,618 $70,618

Health - $3,000
FICA-$4246 Life Insurance-$750
SUTA-$200 IRA - $1,110
$30000+ $25,506 WC- $500 Paid Profit-Sharing - $1,110
Sales Representative (5 FTE) $30,000-$55,000 commission FUTA-$42 Disability Insurance - $16,652 $83,116 $415,580

Health - $3,000
FICA-$3,060 Life Insurance-$750
SUTA-$200 IRA - $800
Distribution Team Member (3 WC- $500 Paid Profit-Sharing-$800
FTE) $40,000-$60,000 $40,000 FUTA-$42 Disability Insurance - $12,000 $61,152 $183,456

Health - 3,000
FICA-$3,060 Life Insurance-$750
SUTA-$200 IRA - $800
Mfg/ Production Team WC- $500 Paid Profit-Sharing-$800
Member (6 FTE) $40,000-$60,000 $40,000 FUTA-$42 Disability Insurance - $12,000 $61,152 $366,912

Health - $3,000
FICA-$4,208 Life Insurance-$750
SUTA-$200 IRA - $1,100
WC- $500 Paid Profit-Sharing - $1,100
Human Resources Manager $55,000-$75,000 $55,000 FUTA-$42 Disability Insurance - $16,500 $82,400 $82,400
Total Cost All
Total Salary Total Payroll Total Benefits Employees
$963,662.00 $85,036.00 $400,146.00 $1,448,466.00
Explanations

Time-Off Benefits: 15 days paid annual vacation, 10 days paid personal sick days (can accumulate), Lunch Breaks for our employees
will be unpaid.
Insurance Benefits: Individual health insurance: President: $6,000, Operations Manager $4,000, Accountant, Human Resource
Manager, Sales Representative, Marketing Team Member, Distribution Team Manager, Production Team Member $3,000, Life
Insurance: President: $1,500, Operations Manager $1,000, Accountant, Human Resource Manager, Sales Representative, Marketing
Team Member, Distribution Team Manager, Production Team Member $750

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 Sales Commision: Sales associates salary is $30,000 and their commision comes from 1% of their net sales.
Other Benefits: All employees are on wellness program costing $90, President gets $300 fund for team building, parties and food for
the office.
Calculation Rates: FICA: 7.65% FUTA:%.60 SUTA:%2.50 WC: $500
Exhibit 3: Market Segmentation Analysis/Target Market Selection

Size
(# of People Priority
Growth
Target N ame or Description level for Justification for Targeting
Projection
Households targeting
in Segment)

This market consists of people that vacation at the

beach primarily, but also of families that live at the We chose this market because a large
shore. There is a higher concentration of this on the number of users who would make use of
60,000,000 Less than 1%
coast considering the ocean close. It consists of the cooler functionality of our backpack
(Mintel (mintel
people over 18 years old, because the market consists are typically found in a beach vacation
Beach/ Lake Goers outdoor outdoor 1
of people of all ages vacationing. 39% of people over setting. The market size for beach
vacation vacation
the age of 18 who went on vacation in 2017 did so at vacationers is much larger than the
activities) activities)
the beach, and 55% of all vacationers considered a market size for campers, so we will focus
beach vacation their dream vacation (based on a mostly on attracting this segment.
survey of 1,625 internet users 18+).

The market size for backpacks for

5,000,000 Just less than This market would consist of people having an active
campers is a large market. Research
people (Mintel 5% (Mintel lifestyle, all over the United States. Focused on
shows that the beach/ lake goers is larger
Campers camping and Camping and younger people in the age group of 20-35 but not 2
so we decided to prioritize that over
camping camping limited to just that. Our product will be affordable as
campers. Surveys show that the beach is
equipment) equipment) well so it can be targeted to many different incomes
the most preferred vacation spot as well.

9
Exhibit 4: Market Quantification

Tot Mkt Unit Price or

Mkt Growth Market Annual Unit Annual $
Year Potential (# Product Weighted
Projection** Share*** Sales Revenue****
Customers)* ASP
Year 1 65,000,000 0.70% 3% Backpack 26,000 $85.00 $2,210,000
Year 2 70,850,000 0.90% 3.60% Backpack 30,000 $85.00 $2,550,000
Year 3 78,643,500 1.10% 3.78% Backpack 35,000 $85.00 $2,975,000
Year 4 88,867,155 1.30% 3.97% Backpack 41,500 $85.00 $3,527,500
Year 5 103,085,900 1.60% 4.28% Backpack 51,943 $85.00 $4,415,164
*Market potential was determined by adding two of our market segmentations, beach goers and campers. Mintel reports report around 60,000,00
outdoorbeach vacation goers and around 5,000,000 campers which we are basing our market around.

**Market growth was determined by taking the industry average and projections of growth (backpack industry). According to an Ibis World report market
growth is around .7% and expected to jump to 1.6%

***We determined the market share after our sales projection by comparing competitors. We did not calculate this, it is a result of our revenue
projections. The industry leader VF Corporation is at a whopping 20% so it would not make sense to be around there, but a 4.3% market share is more
reasonable to attain in our first 5 years in business. Sales Revenue/ Total Market Potential

****Taking VF corporation's market share of 20% of the industry revenue of $172.4 which equals 33,962,800. and accounting for Northface's sales being
around 13% of VF Corporations sales. We hope to project around what The North Face is selling at a lower price. 33,962,800*.13= 4,415,164. North Face
sells their backpacks at a higher price (around $100 for almost all styles and models). Taking this into account, with our lower price we project to sell some
more units, and forecast almost the same revenue in our first year of operation.Working retroactively back from the 5th year, our revenue is forecasted
almost solely off of the market growth projections. For example, year 5 to year 4 market growth projection, decreases .3 so our market share does as well.

Forecast
by month Units Revenue ($)
May'20 0 $0
Jun 0 $0
Jul 0 $0
Aug 2450 $208,250
Sep 2550 $216,750
Oct 2750 $233,750
Nov 2850 $242,250
Dec 2950 $250,750
Jan '21 3000 $255,000
Feb 3050 $259,250
Mar 3150 $267,750
Apr 3250 $276,250

Our projections monthly are based on an average steady growth rate, seasonality would not come into play due
to our product being new on the market. Growth for our new product will be higher in August due to camping
and outdoor vacations being more popular during those months.

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Exhibit 5: Positioning/Competitive Analysis

Positioning Statement: Our product differentiates itself from our competitors by adding a degree of functionality that
they do not possess. This functionality involves storing both dry goods and temperature-sensitive goods in one storage
medium. By providing a higher degree of insulation we are able to isolate ourselves from the traditional use of backpacks.
Functionality refers to how many uses our competitors offer with their products. A Jansport backpack design is simple
with two pockets usually targeting school students and other light travelers. The North Face provides product for different
uses, such as school backpacks, outdoor backpacks, and weather backpacks, but lacks an effective hybrid. The uses that
our backpack offers includes outdoor backpacking, food storage, and insulated storage into one cohesive product. Placing
our degree of functionality above theirs. 
An Arctic Zone cooler is designed for storing goods a short amount of time such as a 3-4 hours. Coleman Coolers are
priced fairly and can keep insulated items for up to one day, depending on the conditions the cooler is being kept in. On
the higher end of the spectrum, Yeti coolers provide the longest hours of insulation ranging from 2-3 days due to its
double-wall vacuum insulation. Our backpack insulation is designed to insulate at a time range of 1-2 days, keeping the
qTemp backpack at the higher end of this spectrum as well. 
Our company will compete in a niche market because we will be focusing on the narrow needs of a specific market
segment. The quality, multifunctionality, and price is catering to the individual needs of our target markets.  When

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combining the multi-functionality of our backpack along with a higher degree of insulation, we are able to isolate
ourselves in this new market segment distinguishing ourselves from our competitors.
Exhibit 6: Marketing Mix

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Exhibit # 4: Marketing Mix
Product/ Service Branding
The name of our product is the qTemp backpack. The name is derived from quantum superpostion, which is a principle any two quantum
states can be added together. This basically means something can be in two different states at the same time. This idea relates to our
backpacks as we can store different items requiring different temperatures at once. Our backpack guarantees long lasting insulation of cold
or hot items, all while still having storage for regular items. Our brand focuses on revolutionizing the way outdoor activities are handled. Our
company introduces a revolutionized way our customers face their outdoor endeavors. The core values embedded into our culture involve
effectiveness, uniqueness, and durability. We plan to focus our brand on the functionality of our backpack, such as the insulation capabilities
and versatility of use. We will be incorporating a family branding strategy because all of our backpacks will be marketed underneath the same
brand name and logo. During the first years ofour product, we will be in the introduction phase. As our backpack gains momentum within. a
few years we will be within the growth stage where our sales peak and our market share is high.

Pricing
2019 2020 2021 2022 2023
Unit Variable Cost: $18.80 $18.80 $18.80 $18.80 $18.80
Wholesale Price: 0 0 0 0 0
Retail Price: $85 $85 $85 $85 $85
The cost of goods manufactured has to be found first which is the sum of all of the total material costs, total labor costs, and each additional
costs. When finding the wholesale price, the total cost of the goods manufactured are multiplied by two. wholesale price=(labor costs+ total
material costs) x2 . Since we are multipying our cost of goods by two this makes sure that our profit margin will be at least 50%. The retail
price is calculated by using our wholesale price divided by one minus the markup percentage. The markup percentage is found by dividing
our gross profit by the cost of each unit. The pricing technique we implemented was a competitive strategy in order to remain within the
same range as our top competitors, such as The North Face. Since our customers price their backpacks fairly high, ranging from $70-$100
per backpack, we will also be within that price range. Our customers will be willing to pay this price due to its quality and multifunctionality.

Distribution/ Location Strategy

Product Teams: We will be operating on a selective distribution strategy allowing us to decide different retailer outlets for where we will sell
our products from. We will be shipping our finished goods to retailers around the country. Our product will be delivered through a single
channel distribution, allowing us to ease our customers way of getting their hands on our product. Retailers are the largest form of sales in
the backpack industry and we intend to take advantage of this.

Promotional Strategy (in thousands of $)

2019 2020 2021 2022 2023
Total IMC Budget: 221.0 255.0 297.5 352.8 441.5

Advertising Exp: 110.5 127.5 148.75 176.375 220.758

Sales Promo Exp: 66.3 76.5 89.25 105.825 132.454
PR Exp: 44.2 51 59.5 70.55 88.3
Other Promo Exp:
The main message that will be delivered is that the qTemp backpack merges regular packaging and insulated packaging into one, which
reaches to an outdoor and vacationing market. Advertisements will involve the qTemp performing outdoors and an active lifestyle.Our
advertising expenses is comprised of the delivery and creation expense.The delivery expense of our advertising is made up of TV, social
media avertising, and online advertising. Cookies will allow us to know specifically what customers are looking for (Vici Media Inc, 2019).
For example a consumer could google "Hiking backpack" this will allow us to target our advertisements to these peoples feeds and timelines
. For our sales promotion expenses will also be comprised of the creation and delivery. The sales promotion delivery involves the use of
endorsers, on- site samplings and special discounts. Total IMC budget = 10% of total revenue, Advert exp = 5%, sales promo = 3%, PR
exp = 2% (LaunchGrowJoy,2020).

# of Salespeople: 5 5 5 6 6
Compensation Method: salary+commisson $30,000 plus 1% of sales revenue
We plan to have a smaller sales force; we are selling directly to retailers so we will only need a small effective team to meet with retailers and
negotiate getting our product into their stores. Our sales people will be trained to know the features of our product. Sales goals will be
pushed within our team an example being the 30-60-90 day plan (MapMyCustomers, 2019).

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 Exhibit 7: Process Map

Work in Process Running Press

Cutting Inv and Removing
Polyester
Cut Fabric 60
180 Unit/Hr
F1 Unit/Hr

Work in Sewing Back and

Process Inv
Bottom Support with
Raw Material
Inventory
Insulation
START 30 Unit/Hr
Yes

Cutting EVA Foam and

Inspection Sewing Body Assembly
Cool Bu bble Shield 45 Pass Inspection?
60 Unit/Hr with Divider Installment
Unit/Hr
Q1 20 Unit/Hr

Q2 B1
No

No Discard
Sewing Zippers, Straps,
and Buckles
38 Unit/Hr
F2

Packaging Final Inspection

Yes Pass Inspection?
120 Unit/Hr 48 Unit/Hr

Finished Good
Inv
END

*
Unit/Hr times were gathered through aggregating video information, along with some trial runs completed by our group. *
For each major quality step:
Quality What is measured? How often? How will you ensure quality?
Step
Q1 Tears/rips in insulation 25% of shipments Any section of roll that is unusable will be removed
and discarded, also will contact supplier with issue.
Q2 Bag appearance, 1-out-of-10 bags Quick inspection of bag for proper sizing, exterior
construction quality constructed polyester clean and no tears as result of sewing
processes, and strength of stitching.

For each critical failure point:

Failure Brief description How will you prevent How will you recover if this failure occurs?
Point this failure?
F1 Workers placing Guidelines placed for Discard unusable cuts. Put any correct cuts in Work in
templates incorrectly placement suggestion to Process Inventory. Recut any sections that had to be
resulting in poor cuts. ensure correct cuts discarded.
F2 Bag will be poorly Sewing modules and Use seam ripper to take out incorrect/unwanted
assembled due to training for new sewing threads and redo sewing. Will be marked for
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 incorrect/improper employees/hires. closer inspection during final inspection phase.
stitching and sewing.

Exhibit 8: Quality Assurance

Indicate the Dimensions
of Quality on which you
will focus.
Reliability
Why is this dimension important, given your industry & target Identify the Quality Step(s) on the
market? Process Flowchart / Service
Blueprint to which this
corresponds.
Our customers will likely be away from quick access to commodities when using Q1
our product, so reliability is vital. If our product fails in maintaining their
commodities’ environment needs, then they would face inevitable hardships in their
outdoor experience and could share their displeasure with other potential customers.

Aesthetics We are providing a product that must be functional, but also have an attractive Q2
visual appeal. Knowing this, our reputation is based on both of these factors.
Similarly, our competitors have thrived off of their unique backpack appearances,
like JanSport, that continuously bring back repeat customers year-after-year.

Durability For most customers, backpacks are not purchases that are made frequently. Q2
Knowing this, making our product durable through a long useful life will coincide
with customers’ preexisting wants and will further our brand’s preference. Also,
will make our product a worthwhile investment which is necessary when purchasing
a product that will be used repetitively and frequently, like all backpacks are.

Use the space below to describe any additional Proactive Quality Assurance Plans that are not connected to a specific
activity on your Process Flowchart / Service Blueprint.
Our goal is the consistent ability to provide our customers with a high quality product that serves its dual purpose. Knowing the ability for our
product to maintain high quality is contingent on our insulation, we will retain frequent communication with Uline, our supplier. By being able to
directly and effectively communicate our needs, whether dynamic or static, we will be able to assure that the insulation we use will be able to
consistently meet our customer needs. These communication tactics will include both phone and face-to-face interaction, with phone being the most
common form of contact and face-to-face used less frequently, but for higher concerns like observing their production process. By being proactive in
this measure we will be able to quickly adjust in terms of potentially changing suppliers if Uline’s insulation begins to be below the quality that
qTemp Backpack is aiming for.
Describe any reactive quality assurance plans. Include a recovery plan should a customer receive poor quality goods and/or
services.
In the chance of a retailer receiving a defective product, qTemp will have backup inventory readily available to be able to quickly replace any
products that are not deemed sellable. Along with replacing the defective inventory received by suppliers, we will also help further resolve this issue
by paying for the shipping costs of the new shipment. This will allow qTemp to provide proper compensation to the retailer in hopes to retain their
business and a strong, positive relationship. Following receiving the defective product(s), our inspection team will conduct an evaluation assessment
in which each individual product from the retailer will be closely tested and examined to see which component(s) of the backpack was inferior. After
locating the issue, it will be brought to the attention of whichever worker is responsible for that section of the bag. For example, if the zippers and
straps are improperly placed, the bag will be brought to that seamstress to show them the issue. After illustrating why the bag was returned, the
worker will be closely monitored for defects in their work for the few batches that follow to ensure quality work. If this problem arises again in the
future, the worker will be placed through field-training in which they will complete tasks that relate to their everyday work and will not be allowed
back into backpack assembly until the training is completed with a sufficient rating (no defects).

If you will utilize a quality/process improvement methodology, indicate which:

☐ NA ☒ TQM ☐ Six Sigma ☐ ISO ☐ Benchmarking
☐ Other (specify what):
Note: You will not use all of them; only those with highest relevance.

Provide a specific explanation of how your chosen quality methodology relates to your business and how it will be applied:

15
Through the utilization of TQM, qTemp will be able to better serve its customers to the best of their ability through superior supplier quality and
competitive benchmarking. Beginning with the supplier, qTemp has evaluated and selected the highest quality, USA-made materials that will provide
our customers with a durable, long-lasting product while also fueling American businesses in various geographical regions. In terms of competitive
benchmarking, this is applicable to qTemp because this industry has historically been dominated by few key players, so we must know where our
company stands in relation to others to maintain a profitable and efficient business. For example, this would be implemented in terms of our
customer satisfaction by releasing questionnaires with our products to compare our satisfaction level to that of our competitors. This is essential to
our company succeeding because in this industry if our products do not live up to expectations ingrained into our customers’ mindsets, then they will
make the quick shift to another backpack provider.

16
 Exhibit 9A: Inventory, Suppliers and Distribution

17
RAW MATERIAL INVENTORY & SUPPLIER SELECTION
If your organization does not have raw material inventory, please check this box: ☐NA
Item(s) Supplier Name & Location Reason for selecting this supplier Supplier lead Frequency of System of Management Mode(s) of Transportation
(City, State, Country) time (in days) replenishment (in
days)
Cool Shield Bubble Uline: Shipping Supply Leading packaging distributor of industrial and packaging materials 2 Days 30 Days
Fixed Order Interval ☒ Highway ☐ Rail
Rolls Specialists (Allentown, PA, in North America. Offer 24/7/365 customer service and ships same (106 Rolls)
USA) day of order placement. ☐ Waterway ☐ Air
Ethylene-Vinyl Acetate TNT Cosplay Supply (Irving, Offer EVA Foam with a shore hardness rating of 38, which means 10 Days 30 Days
Fixed Order Interval ☒ Highway ☐ Rail
Foam TX, USA) their material is strong, but smooth for a comfortable strap. (1, 634 Sheets)
☐ Waterway ☐ Air
1” Heavy Duty Plastic Buckleguy (Newbury, Rapid, free shipping. Has been in operation since 1945, shows 3-6 Days 30 Days
Two Bin ☒ Highway ☐ Rail
Strap Adjuster Massachusetts, USA) reliability and dependability in products. Competitive bulk prices. (6,534 Buckles)
☐ Waterway ☐ Air
Polyester Fabric Fabric Wholesale Direct Guaranteed response time of under 24 hours. Competitive prices 7 Days 30 Days
Fixed Order Interval ☒ Highway ☐ Rail
(Farmingdale, NY, USA) and full refund on shipping cost if not delivered by guaranteed date. (2,014 Yd Polyester)
☐ Waterway ☐ Air
#5 Molded Plastic Zipper Shipper Sewing Supplies Offer full refunds. Extensive customer service available via phone, 4-5 Days 30 Days
Two Bin ☒ Highway ☐ Rail
Zipper Chain (Santa Monica, California, email, and instant-chat, along with customized zipper lengths. (5, 815 Yd)
USA) ☐ Waterway ☐ Air
Polycarbonate Sheet TAP Plastics (San Leandro, CA, This company allows for custom-made sheets while still 5 Days 30 Days Fixed Order Interval ☒ Highway ☐ Rail
USA) maintaining a comparatively fast delivery time. (3,367 Sheets)
☐ Waterway ☐ Air
Nylon Strapping Houseables (Huntington Beach, Competitive prices with dependable material. Exact width needed 2 Days 30 Days Two Bin ☒ Highway ☐ Rail
CA, USA) for product. Material is UV resistant which allows for reliability. (327 Rolls)
☐ Waterway ☐ Air
FINISHED GOODS INVENTORY If your organization does not have finished goods inventory, please check this box: ☐NA
Finished goods produced Frequency of shipping finished Average level of Finished goods inventory on site (14-Day Amount of safety stock on site
(per hour) goods Weighted Average) (Units Produced – Demand per Year)
At the end of Year 1 20 Unit/Hr 14 Days 880 13,200
At the end of Year 2 20 Unit/Hr 14 Days 880 9,200
At the end of Year 3 20 Unit/Hr 14 Days 880 4,200
At the end of Year 4 30 Unit/Hr 14 Days 1320 17,300
At the end of Year 5 30 Unit/Hr 14 Days 1320 6,857
What is the lifespan of your finished goods ☒NA
inventory?
How will you manage perishability of Finished ☒NA
Goods Inventory?

DISTRIBUTION If your organization does not require distribution, please check this box: ☐NA
Name of transportation provider/carrier Reason(s) for selecting this provider/carrier Frequency of Pick Up / Drop off
United Parcel Service (UPS) We will be shipping our items in large quantities, with relatively high package weights and UPS is best suited for Bi-Monthly (~14 Days)
large, heavy package shipping. They offer guaranteed delivery which will provide both our company and customers
with a peace of mind.
 Exhibit 10: Capacity

18
Demand Capacity Utilization Hours of Bottleneck name and description How will you manage the bottleneck to ensure
(per hour) (per hour) (%) Operation you can appropriately serve or supply your
customers?
At the end of Year 1 13.27 Unit/Hr 20 Unit/Hr 66.35% 1,960 Hr Annually Sewing Body Assembler with Divider We will periodically check our sewing machines
Installment: The top and bottom through routine maintenance. By making sure that
portion of the bag are assembled here our sewing machines are in working order, we will
with the polycarbonate divider be able to ensure that our hourly demand is met to be
between them. able to supply our customers with their wanted
demand.
At the end of Year 2 15.31 Unit/Hr 20 Unit/Hr 76.55% 1,960 Hr Annually Same as End of Year 1 Same as End of Year 1

At the end of Year 3 17.86 Unit/Hr 20 Unit/Hr 89.3% 1,960 Hr Annually Same as End of Year 1 Same as End of Year 1

At the end of Year 4 21.17 Unit/Hr 30 Unit/Hr 70.57% 1,960 Hr Annually Sewing Back and Bottom Support and Same as End of Year 1
Insulation: The EVA Foam and Cool
Bubble Shield are installed.
At the end of Year 5 26.50 Unit/Hr 30 Unit/Hr 88.33% 1,960 Hr Annually Same as End of Year 4 Same as End of Year 1

Hours of operation/month Demand/month Demand/hour Capacity/month Capacity/hour Utilization

(40 Hr/Wk * 49 Work Wks)/12 13.27 Unit/Hr * 163.33 Hr/Mth = (26,000 Unit/Yr) / (49 Work 20 Unit/Hr * 163.33 Hr/Mnth = (60 Sec/Min) / (180 Sec/Unit) = .33 (13.27 Unit/Hr Demand) / (
Mnth = 1633.33 Hr/Mnth 2,167.39 Unit/Mth Wk) / (40 Hr/Wk) = 13.27 3,266.6 Unit/Mnth Unit/Min * 60 Min/Hr = 20 Unit/Hr Capacity)
Unit/Hr Unit/Hhr
Show your calculations for the following parameters at the end of Year 1.

Describe adjustments you will make as resource requirements vary with time. Be specific regarding which key resources (beyond your bottleneck) will be adjusted, when and how. If you will make
multiple adjustments, explain each.
At the end of year three, we will purchase another sewing machine and hire another worker to increase the capacity at our bottleneck, which is the station that assemblies the bag body along with the polycarbonate
divider. We must hire another worker because in year four, at a capacity of 20 Unit/Hr we would not be able to meet our hourly demand. This would increase this process step to 40 Unit/Hr which creates a new
bottleneck at our station in which workers sew on back support and install insulation, however we are still able to meet our demand at this bottleneck’s capacity of 30 Unit/Hr.

Additional resources (beyond your bottleneck) must be allocated appropriately to support operations. Identify which resources have a significant impact on capacity at start up and describe why these
are appropriate amounts of resources at start up.
Our hydraulic press is necessary because without this, our total capacity would decrease drastically because our workers would have to cut several polyester pieces by hand with decreased accuracy. Secondly,
sewing machines are needed because they allow our workers to quickly, but effectively piece together our backpacks into cohesive units. Lastly, workers are needed because due to the design of our process we need
intense levels of human-interaction to operate our equipment and check for any defects during, and after, our process.
How will you manage seasonality? Due to no drastic changes in our demand in any particular season, the surplus stock that we acquire through monthly rollover will provide for any spikes in demand in a season.
For example, at the end of year one, we are projected to have 13,200 units of safety stock, which can be used if demand fluctuates unforeseeably in year two.
Exhibit 11A: Income Statement

qTemp Backpack Key

Pro Forma Income Statement Input Field
Build Formula

Date Ending Date Ending Date Ending Date Ending Date Ending
2020 % 2021 % 2022 % 2023 % 2024 %

Sales Revenue $ 2,210,782 100.00% $ 2,550,646 100.00% $ 2,975,476 100.00% $ 3,526,922 100.00% $ 4,414,900 100.00%
COGS 501,197 22.67% 578,246 22.67% 674,558 22.67% 799,574 22.67% 1,000,884 22.67%
Gross Profit $ 1,709,585 77.33% $ 1,972,400 77.33% $ 2,300,918 77.33% $ 2,727,348 77.33% $ 3,414,016 77.33%

General and Administrative Expenses

Salaries and Wages $ 835,258 37.78% $ 963,662 37.78% $ 1,124,167 37.78% $ 1,332,510 37.78% $ 1,667,998 37.78%
Payroll Tax Expenses $ 73,705 3.33% 85,036 3.33% $ 99,199 3.33% $ 117,584 3.33% $ 147,188 3.33%
Employee Benefits and Retirement $ 346,828 15.69% 400,146 15.69% $ 466,793 15.69% $ 553,304 15.69% $ 692,611 15.69%
General Insurance Expense 1,500 0.07% 1,500 0.06% 1,500 0.05% 1,500 0.04% 1,500 0.03%
Depreciation Expense 7,711 0.35% 6,914 0.27% 6,202 0.21% 5,621 0.16% 5,040 0.11%
Amoritization Expense 425 0.02% 425 0.02% 425 0.01% 425 0.01% 425 0.01%
Rent Expense 51,000 2.31% 51,000 2.00% 51,000 1.71% 51,000 1.45% 51,000 1.16%
Travel, Meals, and Entertainment 8,000 0.36% 8,000 0.31% 8,000 0.27% 8,000 0.23% 8,000 0.18%
Website Expense 6,000 0.27% 6,000 0.24% 6,000 0.20% 6,000 0.17% 6,000 0.14%
Advertising and Promotion Expense 176,800 8.00% 204,000 8.00% 238,000 8.00% 282,000 8.00% 353,212 8.00%
Taxes & Licenses 125 0.01% 100 0.00% 100 0.00% 100 0.00% 100 0.00%
Office Expense 34,740 1.57% 34,740 1.36% 34,740 1.17% 34,740 0.98% 34,740 0.79%
Public Relations Expense 44,200 2.00% 51,000 2.00% 59,500 2.00% 70,550 2.00% 88,300 2.00%
Total General & Administrative Expenses $ 1,586,292 71.75% $ 1,812,523 71.06% $ 2,095,627 70.43% $ 2,463,334 69.84% $ 3,056,113 69.22%

Earnings Before Interest and Taxes $ 123,293 5.58% $ 159,877 6.27% $ 205,291 6.90% $ 264,014 7.49% $ 357,903 8.11%

Interest Expense 27,500 1.24% 27,500 1.08% 27,500 0.92% 27,500 0.78% 27,500 0.62%

Earnings Before Taxes $ 95,793 4.33% $ 132,377 5.19% $ 177,791 5.98% $ 236,514 6.71% $ 330,403 7.48%

Income Tax Expense 5,748 0.26% 7,943 0.31% 10,667 0.36% 14,191 0.40% 19,824 0.45%

Net Income (Loss) $ 90,045 4.07% $ 124,434 4.88% $ 167,124 5.62% $ 222,323 6.30% $ 310,579 7.03%

Operational Cash Flow $ 125,256 $ 158,848 $ 200,825 $ 255,444 $ 343,118

Free Cash Flow $ (1,714,522) $ 188,168 $ 221,606 $ 96,282 $ 336,159

Statement of Retained Earnings

Beginning Balance of Retained Earnings $ - $ 40,520 $ 96,516 $ 171,721 $ 271,767

Net Income (Loss) 90,045 124,434 167,124 222,323 310,579

Dividends to Stockholders 49,525 68,439 91,918 122,278 170,818

Ending Retained Earnings $ 40,520 $ 96,516 $ 171,721 $ 271,767 $ 411,527

19
Exhibit 12: Balance Sheet

qTemp Backpack Key

Pro Forma Balance Sheet Input Field
Build Formula

As of Inception Date Ending Date Ending Date Ending Date Ending Date Ending
Date % 2020 % 2021 % 2022 % 2023 % 2024 %
ASSETS

Current Assets

Cash and Cash Equivalents $ 500,000 100.00% $ 391,862 22.96% $445,459 26.79% $513,274 31.25% $602,239 35.77% $747,473 42.72%
Accounts Receivable - 0.00% 185,918 10.89% 214,500 12.90% 250,266 15.24% 296,648 17.62% 371,335 21.22%
Inventory - 0.00% 248,160 0.00% 172,960 10.40% 78,960 4.81% 325,240 19.32% 128,912 7.37%
Short Term Investments - 0.00% 406,062 23.79% 384,201 23.10% 372,299 22.67% 204,714 12.16% 228,464 13.06%
Total Current Assets $ 500,000 100.00% $ 1,232,002 72.19% $ 1,217,120 73.19% $ 1,214,799 73.96% $ 1,428,841 84.87% $ 1,476,184 84.37%

Fixed (Long-Term) Assets

Machinery and Equipment - 0.00% 75,805 4.44% 75,805 4.56% 75,805 4.62% 76,085 4.52% 76,085 4.35%
Buildings - 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Land - 0.00% - 0.00% - 0.00% - 0.00% - 0.00% - 0.00%
Total Gross Fixed Assets $ - 0.00% $ 75,805 4.44% $ 75,805 4.56% $ 75,805 4.62% $ 76,085 4.52% $ 76,085 4.35%
Less: Accumulated Depreciation 0.00% 7,711 0.45% 14,625 0.88% 20,827 1.27% 26,448 1.57% 31,488 1.80%
Net Fixed Assets $ - 0.00% $ 68,094 3.99% $ 61,180 3.68% $ 54,978 3.35% $ 49,637 2.95% $ 44,597 2.55%

Other Long Term Assets

Long Term Investments - 0.00% 406,062 23.79% 384,201 23.10% 372,299 22.67% 204,714 12.16% 228,464 13.06%
Intangibles, Net of Amortization - 0.00% 425 0.02% 425 0.03% 425 0.03% 425 0.03% 425 0.02%
Total Other Long Term Assets $ - 0.00% $ 406,487 23.82% $ 384,626 23.13% $ 372,724 22.69% $ 205,139 12.18% $ 228,889 13.08%

Total Assets $ 500,000 100.00% $ 1,706,583 100.00% $ 1,662,926 100.00% $ 1,642,501 100.00% $ 1,683,617 100.00% $ 1,749,670 100.00%

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities

Current Liabilities

Accounts Payable - 0.00% 61,413 3.60% 61,413 3.69% 61,413 3.74% 92,120 5.47% 92,120 5.26%
Accrued Salaries and Wages - 0.00% 69,605 4.08% 80,305 4.83% 93,681 5.70% 111,042 6.60% 139,000 7.94%
Accrued Payroll Taxes and Benefits - 0.00% 35,044 2.05% 40,432 2.43% 47,166 2.87% 55,907 3.32% 69,983 4.00%
Notes Payable - 0.00% - 0.00% - 0.00% - 0.00% - 0.00% - 0.00%
Current Maturity of LT Debt - 0.00% 115,740 6.78% 115,740 6.96% 115,740 7.05% 115,740 6.87% 115,740 6.61%
Total Current Liabilities $ - 0.00% $ 281,803 16.51% $ 297,890 17.91% $ 318,000 19.36% $ 374,810 22.26% $ 416,843 23.82%

Long-Term Liabilities

1
LT Debt Less Current Maturities 0.00% 884,260 51.81% 768,520 46.21% 652,780 39.74% 537,040 31.90% 421,300 24.08%

Total Liabilities $ - 0.00% $ 1,166,063 68.33% $ 1,066,410 64.13% $ 970,780 59.10% $ 911,850 54.16% $ 838,143 47.90%

STOCKHOLDER'S EQUITY

Common Stock 500,000 100.00% 500,000 29.30% 500,000 30.07% 500,000 30.44% 500,000 29.70% 500,000 28.58%
Retained Earnings 0 0.00% $ 40,520 2.37% $ 96,516 5.80% $ 171,721 10.45% $ 271,767 16.14% $ 411,527 23.52%
Total Stockholders' Equity $ 500,000 100.00% $ 540,520 31.67% $ 596,516 35.87% $ 671,721 40.90% $ 771,767 45.84% $ 911,527 52.10%

Total Liabilities and Stockholders' Equity $ 500,000 100.00% $ 1,706,583 100.00% $ 1,662,926 100.00% $ 1,642,501 100.00% $ 1,683,617 100.00% $ 1,749,670 100.00%

1
Must adjust if Long Term Debt is used for Financing

Exhibit 13: Cash Flow Statement

20
 qTemp Backpack Key
Pro Forma Statement of Cash Flows Input Field
Build Formula

Date Ending Date Ending Date Ending Date Ending Date Ending
2020 2021 2022 2023 2024
Cash Flows From (For) Operations
Net Income $ 90,045 $ 124,434 $ 167,124 $ 222,323 $ 310,579
Depreciation 7,711 6,914 6,202 5,621 5,040
Amoritzation (425) - - - -

Changes in Current Assets

Increase in Accounts Receivable (185,918) (28,582) (35,766) (46,382) (74,687)
Increase in Inventories (248,160) 75,200 94,000 (246,280) 196,328

Changes in Current Liabilities

Increase in Accounts Payable 61,413 - - 30,707 -
Increase in Accrued Salaries and Wages 69,605 10,700 13,375 17,362 27,957
Increase in Accrued Payroll Taxes and Benefits 35,044 5,387 6,734 8,741 14,076

Net Cash Flow From (For) Operating $ (170,684) $ 194,054 $ 251,669 $ (7,908) $ 479,293

Cash Flow (For) From Investing Activities

Fixed Asset Purchases (75,805) - - (280) -
Short Term Investments (406,062) 21,861 11,902 167,585 (23,751)
Long Term Investments (406,062) 21,861 11,902 167,585 (23,751)

Net Cash Flow (For) From Investing $ (887,929) $ 43,722 $ 23,804 $ 334,891 $ (47,501)

Cash Flow From (For) Financing Activities

Issuance of Common Stock - - - - -
Short Term Debt Borrowings - - - - -
Long Term Debt Borrowings 1,000,000
Long Term Debt Payments (115,740) (115,740) (115,740) (115,740)
Dividends Paid to Stockholders (49,525) (68,439) (91,918) (122,278) (170,818)
Net Cash Flows From (For) Financing $ 950,475 $ (184,179) $ (207,658) $ (238,018) $ (286,558)

Net Change in Cash $ (108,138) $ 53,597 $ 67,815 $ 88,965 $ 145,234

Beginning Cash Balance $ 500,000 $ 391,862 $ 445,459 $ 513,274 $ 602,239

Net Change in Cash $ (108,138) $ 53,597 $ 67,815 $ 88,965 $ 145,234

Ending Cash Balance $ 391,862 $ 445,459 $ 513,274 $ 602,239 $ 747,473

Exhibit 14: Financial Statement Notes

Income Statement

21
 Sales Revenue: (Demand per Hour * Hours of Production Hours of Operation) * Price
Cost of Goods Sold: Zippers: $4.0762 Buckles $.42 Cool Shield Bottom: $1.67 Polyester: $2.80 EVA Foam: $4.00 Divider:
$4.66 Straps: $1.17 Unit Variable Cost: $18.80 (Total COGS adjusted for estimated inflation increase of 2.5% per year)
Rent Expense: Cost for our manufacturing and warehouse lease ($10/sqft * 5100 sqft)
Travel, meals, and entertainment: We will allocate $8000 to our salespeople to cover their travel, meals, etc.
Depreciation Expense: Straight Line Method Calculation: Hydraulic Press Book Value $74,500 @ 10% depreciation rate, Slide
Cutter Book Value $465 @ 20% depreciation rate, Sewing Machines Book Value $280*3 @ 20% depreciation rate (Added new
sewing machine in yr. 4)
Website Expense: Typical annual website costs found on webfx.com
Taxes & Licenses: Price of VA LLC licensing fee ($100 annual fee + one time $25 filing fee)
Office expense: Cost for our office space lease ($18/sqft * 1930 sqft)
Interest expense: $1,000,000 * 2.75% Small Business Administration Loan (SBA 7(A) Loan)
Income tax expense: Income tax rates from Virginia (4.3%) and Norfolk (1% and 0.7%)
Dividends: We will be giving 55% of our net income in dividends to our stockholders. We felt it would make sense to give a
plentiful amount since our financials are very healthy early on.
Balance Sheet
Cash and cash equivalents: In order to make the most out of our cash, we allocated 3 months’ worth of operating expenses to
cash on-hand, with the remainder being split evenly between short-term and long-term investments.
Accounts Receivable: Calculated by multiplying the Industry Average Days Sales Outstanding (30.7 days) with our average
day’s sales of the given year. This gives us a good estimate on how long typical sales will be left on credit before paid in cash.
Inventory: Calculated by multiplying amount of safety stock on site with the Unit Cost of the product since this is the amount
that has not been sold yet.
Machinery and Equipment: Total machinery and equipment costs for the given year, with new machines bought in years 1 and
4.
Net Amortization: Total cost of a non-provisional patent for small business divided by lifetime of patent. This is necessary for
our businesses patent.
Accounts Payable: Calculated by finding the total cost of goods produced in a month for our suppliers. Assuming we pay off all
credit each month and the balance sheet is As of December 31st, the amount totals to amount of goods for the final month of the
year.
Accrued Salaries and Wages: Assuming pay is on first of the month and the balance sheet is As of December 31st, the Accrued
Wages is equal to the total wages of that month.
Accrued Payroll and Benefits: Total payroll and benefits accrued as of December 31st.

Exhibit 15: Financial Ratios

22
 qTemp Backpack Key
Financial Ratios Table Input Field
Build Formula

Date Ending Date Ending Date Ending Date Ending Date Ending Industry Average
2020 2021 2022 2023 2024 Ratios

Liquidity Ratios
Current Ratio 4.37 4.09 3.82 3.81 3.54 0.97
Quick Ratio 3.49 3.51 3.57 2.94 3.23 0.56
Operating Cycle 30.70 139.87 73.42 179.17 77.71 81.87

Leverage Ratios
Debt/Equity 2.16 1.79 1.45 1.18 0.92 2.25
Times Interest Earned 4.48 x 5.81 x 7.47 x 9.60 x 13.01 x -3.50

Asset Management Ratios Return on Equity, 2020-2024

Inventory Turnover 2.02 x 3.34 x 8.54 x 2.46 x 7.76 x 7.13 x
40%Turnover
Receivables 11.89 x 11.89 x 11.89 x 11.89 x 11.89 x 11.89 x
Fixed Asset Turnover 32.47 x 41.69 x 54.12 x
34.07%
71.05 x 99.00 x 13.54 x
28.81%
30%Ratios
Profitability 24.88%
Gross Profit Margin 77.33%
20.86% 77.33% 77.33% 77.33% 77.33% 35.30%
Operating Profit Margin 5.58% 6.27% 6.90% 7.49% 8.11% -2.02%
16.66%
20%
Return on Assets 5.28% 7.48% 10.17% 13.21% 17.75% -5.60%

DuPont10%
Analysis
Net Profit Margin 4.07% 4.88% 5.62% 6.30% 7.03%
qTemp -2.17%
ROE

Total Asset Turnover 1.30 x 1.53 x 1.81 x 2.09 x 2.52 x 2.58 x

Industry Avg (-18.21%)
0%
Equity Multiplier 3.16 2.79 2.45 2.18 1.92 3.25
Return on Equity 16.66% 20.86% 24.88% 28.81% 34.07% -18.21%

-10%

-20%

-30%
2020 2021 2022 2023 2024

Year

Exhibit 16: Financial Analysis

Industry Averages: The industry averages were sourced through Bizminer Industry Financial Reports for
small-class businesses in the Textile Bag and Canvas Mills industry. For all the ratios, we took the figures
included in the industry average income statements and balance sheets and calculated their respective ratios.

23
Current Ratio: Our current ratio is higher than the industry average due to our business producing high
revenues, which allows us to keep large amounts of current assets on hand, such as cash and short-term
investments. We also do not hold a lot of short-term debt due to us not taking out any notes and paying off our
accounts payable every month.
Times Interest Earned: Our times interest earned remains positive above the industry average due to our
business making enough earnings to not have to require extra loans to be taken out. We are only taking out one
loan at the inception date with that being our only tax expense for the following years.
Receivables Turnover: Our receivables turnover is equal to the industry average because we used the industry
average days sales outstanding to calculate our estimated accounts receivables. We used this calculation
consistently across all the years, which makes the turnover ratio across the years consistent as well.
Gross Profit Margin: Our gross profit margin is much higher than the industry average because our sales
revenues are much higher than our costs. We were able to keep our variable costs low, allowing us to profit at a
much higher margin which will help aid us in future growth. 
Return on Equity: Our return on equity throughout our first five years is above the industry average due to our
company having consistently increasing net profit margins. The ROE increases at a stable rate showing that our
growth potential will be even better in future years.

24
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 Meet the Team - Section 1, Team 3

My name is Jason DiLoreta. I am from Ashburn, Virginia. I am a

junior Computer Information Systems major at James Madison
University. In my free time I enjoy spending time with my family,
playing basketball, and reading non-fiction novels.

My name is Connor Reinheimer. I am from Reston, Virginia. I am a

junior management major at James Madison University. I enjoy
hanging out with friends/family, playing basketball, and playing video
games.

My name is James Iwatsubo and I am from Richmond, Virginia. I am

currently a junior and am a finance major. In my free time I enjoy
hanging out with friends, watching TV,, and playing sports. 

My name is Nicholas Jones and I am from Landenberg, Pennsylvania.

I am currently a junior studying management at James Madison
University. I enjoy playing and watching sports, working out, spending
time with friends and family, going out to dinner, and playing video
games. 

My name is Erika Marroquin and I’m from Bridgewater, Virginia. I

am currently a junior at James Madison University pursuing a degree
in Marketing. During my free time I enjoy spending time with my
younger sister and visiting Mexico. 

30
My name is Bryan Rubio and I’m from Ashburn, VA. I am currently a
junior finance major at James Madison University. I graduated with an
Associate of Science in Business Administration from Northern
Virginia Community College.  I enjoy hiking and spending time with
family and friends in my free time.

31