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FINANCIAL PLAN
The financial plan acts as a point where all financial information in the
administrative, marketing and operations plans are collected and
summarized to give a picture of the how much the business will cost to run.
The information in the financial plan is essential in analyzing the viability of
the project and will have an impact on whether the business venture will
continued as planned, be adapted or abandoned. When the business is
carried out as planned, the financial information can be used to control the
business expenses.
9.1
The project implementation cost will show how mush investment in term of
fixed assets cost, monthly expenses and other cost are needed to start the
business.
Table 9.1: Project implementation cost schedule
A. Capital expenditure
Land & building (contributed by owner)
Machinery and equipment
Furniture and fixtures
Vehicle Van (hire purchase)
Renovation cost
Sub-Total
B. Working capital (2 months)
Marketing
Production/Operation
Administrative
C. Other expenditure
Pre-operating
Business registration
Insurance
Road tax
Sundries
RM
45,000
23,000
7,000
25,000
RM
RM
Deposits
Utilities (Tel/water/electricity)
Sub-Total
Grand Total
D. Add: Contingency cost (10%)
TOTAL PROJECT IMPLEMENTATION
COST
137,500
(sama
dengan
total
source of
fund)
9.2
RM
RM
137,500 (sama
dengan total
implementation
cost)
9.3
Van
RM25,000
5 years
RM0
Straight line
Year
Accumulated depreciation
(RM)
0
5,000
10,000
15,000
20,000
25,000
0
1
2
3
4
5
Annual depreciation
(RM)
0
5,000
5,000
5,000
5,000
5,000
Book value
(RM)
25,000
20,000
15,000
10,000
5,000
0
9.4
Hire purchase
Loan amount:
Loan period:
Interest rate:
Method:
RM45,000
5 years
10%
Annual rest
RM20,000
5 years
8%
Flat rate
Term loan
Annual payment of principal
RM45,000/5 years = RM9,000
Hire purchase
Annual payment of principal
RM45,000/5 years = RM9,000
Interest payment:
Year 1: RM45,000
RM4,500
Year 2: RM36,000
RM3,600
Year 3: RM27,000
RM2,700
Year 4: RM18,000
RM1,800
Year 5: RM9,000
x 10% =
Interest payment:
Year 1: RM20,000 x 8% = RM1,600
x 10% =
x 10% =
x 10% =
x 10% = RM900
3,600 (10% x
36000)
2,700
1,800
900
Balance
(RM)
45,000
36,000 (45000
9000)
9,000
9,000
9,000
18,000
9,000
0
11,700
10,800
9,900
27,000
9.5
5,600
5,600
5,600
5,600
Balance
(RM)
20,000
16,000 (20000
4000)
12,000
8,000
4,000
0
9.6
Proforma cash flow will indicate the business cash situation of the company.
Table 9.5: A pro forma cash flow statement (Monthly)
Month
A
Cash flow
Equity
cash
Term loan
Cash sales
Total cash
flow
Cash
outflow
Operation
al
expendit
ure
operation
al plan
Raw
materials
Preoperat
ion
Jan
Feb
Mac
Apr
May
Jun
Jul
Aug
Sept
Oct
Nov
Dec
Year 1
20000
sales
forecas
tmarketi
ng plan
20000
240000
(20000
x 12)
3000
36000
(3000 x
312500
(27500
+
45000
+
240000
)
Direct
labor
3000
Operationa
l
overheads
Marketin
g
expendit
ure
marketin
g plan
Sales
commissio
n
Entertainm
ent
allowance
Administr
ative
expendit
ure
adminitra
tive plan
Salaries &
wages
EPF &
SOCSO
Other
administra
tive
overheads
Loan
repayment
: (refer
loan
schedule)
Principal
2000
1000
500
12)
36000
(3000 x
12)
24000
(2000 x
12)
12000
(1000 x
12)
6000
(500
x12)
5000
60000
1000
12000
2000
24000
750
9000
Interest
Hire
purchase
repayment
Down
payment
Principal
(refer hire
purchase
schedule)
Interest
(refer hire
purchase
schedule)
Capital
expendit
ure
operation
al &
administr
ative
plans
Machinery
&
equipment
Furniture &
fixtures
Renovation
Preoperationa
l
expenditur
e
Deposits
D Total cash
outflows
E Cash
surplus
(Deficit)
375
5000
4500
5000
333
4000
133
1600
23000
23000
7000
7000
4000
2700
4000
2700
800
4250
0
3000
0
(7250
19091
800
271600
909
(20000
909
(Dicem
ber
B-D
F
Beginnin
g cash
balance
G Ending
cash
balance
0
42500
)
0
30000
19091)
amount
)
30000
(preoperati
on)
30909
(30000
+ 909)
40900
(Dec
amount
)
Cash flow
Equity cash
Term loan
Cash sales
Cash outflow
Operational expenditure
Raw materials
Direct labor
Operational overheads
Marketing expenditure
Sales commission
Entertainment allowance
Administrative expenditure
Salaries & wages
EPF & SOCSO
Other administrative overheads
Loan repayment:
Principal
Interest
Hire purchase repayment
Down payment
Principal
Interest
Capital expenditure
Year 2
Year 3
27500
45000
240000 (from
monthly schedule)
312500
(27500 +45000 +
240000)
0
0
276000
(Estimation)
0
0
317400
(Estimation)
40900 (312500
271600)
0
40900 (from E)
271600
239900
249710
36100
67690
40900 (from
year 1)
77000 (36100
+ 40900)
77000 (from
year 2)
144690
9.7
Pro forma profit and loss statement will show the business profit/loss estimation at the end of the
accounting period.
You must get cost of goods manufactured and gross profit
Calculation of cost of goods manufactured
RM
Raw material used
Opening stock (1/1) jika masih
ada
Add: Purchase of raw materials
Raw material available
Less: Closing stock (31/12) guna
untuk finished products
Direct materials
0
36000 (from cash
flow schedule)
36000
3000
33000 (36000
3000)
36000 (from cash
flow schedule
annually)
69000 (33000 +
36000)
28600
(24000 + ??? dummy
Direct labor
Prime cost
Manufacturing overheads*
(operational OH + Depreciation
charges)
Work-in-process
Add: Work-in-process (1/1)
Less: Work-in-process (31/12)
RM
0
0
0
97600 (69000 +
28600)
* The amount of manufacturing overheads is not the same as the amount of the operations overhead
(RM24000) in the cash flow statement because depreciation charges for the plant, machinery and
equipment have been added on to the operational overheads. The depreciation charge does not appear in
the cash flow because it is a non-cash expenditure.
RM
240000 (Year 1
data)
0
97600 (data cost)
97600
3000
94600 (97600
3000)
145400 (240000
94600)
GROSS PROFIT
0
36000
36000
3000
RM
240000
GROSS PROFIT
33000
207000
RM
240000 (cash
flow schedule)
0
97600
97600
3000
94600
145400
96000
18000
4500
1600
7200
2700
130000
15400 (145400 130000)
RM
240000
0
36000
36000
3000
33000
207000
96000
18000
60000
4500
1600
11800
2700
194600
12400
9.8
Proforma balance sheet will highlight the overall financial standing of the business at the end of the
accounting period.
Table 9.7: A pro forma balance sheet for a manufacturing company
RM
FIXED ASSETS
Land & Building
Machinery & equipment
Furniture and fixtures
Renovation
Van
RM
45000
18400
5600
3200
20000
92200
CURRENT ASSETS
Cash
Closing stock for raw materials
Closing stock for finished goods
40900
3000
3000
46900
OTHER ASSETS
Deposits
800
TOTAL ASSETS
139900
EQUITY
Capital
Accumulated profit
CURRENT LIABILITIES
72500
15400
87900
0
LONG-TERM LIABILITIES
Term loan
Hire purchase
TOTAL EQUITY AND LIABILITIES
36000
16000
52000
139900
RM
FIXED ASSETS
Land & Building
Machinery & equipment
Furniture and fixtures
Renovation
Van
45000
18400
5600
3200
20000
92200
CURRENT ASSETS
Cash
Closing stock for finished goods
40900
3000
43900
OTHER ASSETS
Deposits
800
TOTAL ASSETS
136900
EQUITY
Capital
Accumulated profit
72500
12400
CURRENT LIABILITIES
LONG-TERM LIABILITIES
Term loan
Hire purchase
84900
0
36000
16000
52200
136900