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5.

0 INTRODUCTION TO FINANCIAL PLAN

The financial is the last step in the preparation of the business plan. It is the most crucial aspect of
the business plan and involve the calculation of the total project cost, the choices of financial
source and the preparation of financial projection in term of pro forma statement which include
the cash flow, income statement and balance sheet.

In addition, the financial statement should be supported by depreciation schedule for every fixed
asset owned as well as amortization schedule loan for repayment. The financial plan is prepared
after all budgets pertaining to marketing, operation and administrative aspects are completed.

THE IMPORTANT OF FINANCIAL PLAN


 To determine the size of investment
 To ensure the initial capital is sufficient
 To identify the relevant cost of finance
 To be used as a guideline in running the business

PURPOSE OF FINANCIAL PLAN


 To control and ensure the flow of money is in the right position
 To make a budget for the next accounting period
 To provide a bonus if generate income higher than previous

THE SOURCES OF DATA USED IN FINANCIAL BUDGET


 Administration expenses
 Operation expenses
 Marketing expenses
5.1 PROJECT IMPLEMENTATION COST

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PROJECT IMPLEMENTATION COST & SOURCES OF FINANCE

Project Implementation Cost Sources of Finance

Hire-
Requirements Cost Loan Own Contribution
Purchase
Existing F.
Fixed Assets Cash Assets
Land & Building
Office Equipment 10,040 10,040

Signboard 300 300

machine and equipment 15,366 5,700 9,666

Working Capital 1 months


Administrative 7,685 7,685
Marketing
Operations 11,309 11,309
Pre-Operations & Other
Expenditure 21,550 21,550
Contingencies

TOTAL 66,250 27,250 39,000


5.2 SOURCES OF FINANCING

Shareholder contribution:

SHAREHOLDER CONTRIBUTION(RM)

General Manager 50,000.00

Administration Manager 50,000.00

Marketing Manager 50,000.00

Operation Manager 50,000.00

Financial Manager 50,000.00

TOTAL 200,000.00
5.3 TABLE ON LOAN AMORTIZATION

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LOAN & HIRE-PURCHASE AMMORTISATION
SCHEDULES
LOAN REPAYMENT SCHEDULE
Amount 27,250
Interest Rate 5%
Duration (yrs) 5
Method Baki Tahunan
Total Principal
Year Principal Interest Payment Balance

- - 27,250

1 5,450 1,363 6,813 21,800

2 5,450 1,090 6,540 16,350

3 5,450 818 6,268 10,900

4 5,450 545 5,995 5,450

5 5,450 273 5,723 -

6 0 0 - -

7 0 0 - -

8 0 0 - -

9 0 0 - -

10 0 0 -
5.4 TABLE ON DEPRECIATION

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DEPRECIATION SCHEDULES
Fixed Asset Office Equipment Fixed Asset Signboard
Cost (RM) 10,040 Cost (RM) 300
Straight Straight
Method Line Method Line
Economic Life (yrs) 5 Economic Life (yrs) 5
Annual Accumulated Annual Accumulated
Year Depreciation Depreciation Book Value Year Depreciation Depreciation Book Value

- - 10,040 - - 300

1 2,008 2,008 8,032 1 60 60 240

2 2,008 4,016 6,024 2 60 120 180

3 2,008 6,024 4,016 3 60 180 120

4 2,008 8,032 2,008 4 60 240 60

5 2,008 10,040 - 5 60 300 -

6 0 0 - 6 0 0 -

7 0 0 - 7 0 0 -

8 0 0 - 8 0 0 -

9 0 0 - 9 0 0 -

10 0 0 - 10 0 0 -
Fixed Asset machine and equipment
Cost (RM) 15,366
Straight
Method Line
Economic Life (yrs) 5
Annual Accumulated
Year Depreciation Depreciation Book Value

- - 15,366

1 3,073 3,073 12,293

2 3,073 6,146 9,220

3 3,073 9,220 6,146

4 3,073 12,293 3,073

5 3,073 15,366 -

6 0 0 -

7 0 0 -

8 0 0 -

9 0 0 -

10 0 0 -

5.5 PREFOMA INCOME STATEMENT


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PRO-FORMA INCOME STATEMENT

Year 1 Year 2 Year 3


Sales 414,000 488,520 610,650
Less: Cost of Sales
Opening stock
Purchases 76,248 89,972 112,465
Less: Ending Stock
Carriage Inward & Duty

Gross Profit

Less: Enpenditure
Administrative
92,220 92,220 92,220
Expenditure
Marketing Expenditure
Other Expenditure 6,350 6,350 6,350
Business Registration &
200
Licences
Insurance & Road Tax for
Motor Vehicle
Other Pre-Operations
15,000
Expenditure
Interest on Hire-Purchase
Interest on Loan 1,363 1,090 818
Depreciation of Fixed
5,141 5,141 5,141
Assets
Operations Expenditure 59,460 59,460 59,460
Total Expenditure 255,982 254,233 276,454
Net Profit Before Tax 158,018 234,287 334,196
Tax 0 0 0
Net Profit After Tax 158,018 234,287 334,196
Accumulated Net Profit 158,018 392,305 726,501
5.6 PREFOMA BALANCE SHEET

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PRO-FORMA BALANCE SHEET

Year 1 Year 2 Year 3


ASSETS

Non-Current Assets (Book


Value)
Land & Building
Office Equipment 8,032 6,024 4,016

Signboard 240 180 120

machine and equipment 12,293 9,220 6,146

Other Assets
Deposit

20,565 15,424 10,282


Current Assets
Stock of Raw Materials 0 0 0
Stock of Finished Goods 0 0 0
Accounts Receivable
Cash Balance 198,254 432,232 766,119
198,254 432,232 766,119

TOTAL ASSETS 218,818 447,655 776,401

Owners' Equity
Capital 39,000 39,000 39,000
Accumulated Profit 158,018 392,305 726,501
197,018 431,305 765,501
Long-Term Liabilities
Loan Balance 21,800 16,350 10,900
Hire-Purchase Balance
21,800 16,350 10,900
Current Liabilities
Accounts Payable

TOTAL EQUITY &


218,818 447,655 776,401
LIABILITIES

5.7 FINANCIAL ANALYSIS

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FINANCIAL RATIO ANALYSIS

Year 1 Year 2 Year 3

LIQUIDITY
Current Ratio #DIV/0! #DIV/0! #DIV/0!
Quick Ratio (Acid Test) #DIV/0! #DIV/0! #DIV/0!

EFFICIENCY
Inventory Turnover

PROFITABILITY
Gross Profit Margin
Net Profit Margin 38.17% 47.96% 54.73%
Return on Assets 72.21% 52.34% 43.04%
Return on Equity 80.20% 54.32% 43.66%

SOLVENCY
Debt to Equity 11.06% 3.79% 1.42%
Debt to Assets 9.96% 3.65% 1.40%
Time Interest Earned 115 214 408

BREAK-EVEN ANALYSIS
5.8 OTHER RELATE INFORMATION FROM
FINANCIAL SPREETSHEET

MARKETING ADMINISTRATIVE OPERATIONS


EXPENDITURE EXPENDITURE EXPENDITURE
Fixed Assets RM
Fixed Assets RM Fixed Assets RM
Land & Building
machine and
Signboard 300 Office Equipment 10,040 equipment 15,366

Working
Working Capital Working Capital
Capital

salary 7,215 Raw Materials 6,354


Carriage Inward
utilities 350 & Duty
Salaries, EPF &
stationery 120 SOCSO 4,605

utilities 350

Other Other Other


Expenditure Expenditure Expenditure
Other Other Other
Expenditure 4350 Expenditure 2000 Expenditure
Pre-
Operations Pre-Operations Pre-Operations
Deposit (rent, Deposit (rent, Deposit (rent,
utilities, etc.) utilities, etc.) utilities, etc.)
Business Business Business
Registration & Registration & Registration &
Licences Licences 200 Licences
Insurance & Insurance & Road Insurance & Road
Road Tax for Tax for Motor Tax for Motor
Motor Vehicle Vehicle Vehicle
Other Other Other
Expenditure Expenditure Expenditure 15,000

TOTAL 4,650 TOTAL 19,925 TOTAL 41,675

5.8 SALE PROJECTION

SALES PROJECTION

Month 1 35,000
Month 2 36,000
Month 3 37,000
Month 4 36,000
Month 5 38,000
Month 6 39,000
Month 7 35,000
Month 8 23,000
Month 9 24,000
Month 10 38,000
Month 11 36,000
Month 12 37,000
Total Year 1 414,000
ToTal Year 2 488,520
Total Year 3 610,650
5.9 PURCHASE PROJECTION
PURCHASE PROJECTION
Month 1 6,354
Month 2 6,354
Month 3 6,354
Month 4 6,354
Month 5 6,354
Month 6 6,354
Month 7 6,354
Month 8 6,354
Month 9 6,354
Month 10 6,354
Month 11 6,354
Month 12 6,354
Total Year 1 76,248
ToTal Year 2 89,972
Total Year 3 112,465