Financial Plan Book Masters

FINANCIAL PLAN
5.1 Financial Assumptions

The following will be the financial assumptions of the business in its first years of operation.
Sales will increase by 10 % in the second and third year.
Debtors will increase by 10% in the second and third year.
Salaries will remain constant for the first three years.
Furniture & fittings will depreciate by 6 % each year.
Rent will remain constant for the first three years.
There will be no creditors for the first one months of business start.
Closing Stock will increase by 10% in year 2 and 30% in year 3.
Electricity cost will remain constant for 3 years.
Salaries will increase at 12% after 3 years.
All fixed assets will depreciate by 6 % per annum.
5.2 Pre-Operational Costs

These are the costs that the business has to incur before it starts its operations, and these costs
occur only once.
Item
Registration, Permits and Licenses
Stationery
Water connection fee
Computers
Advertising and promotion
Salaries to pay person sticking posters
Prepaid insurance premiums
Furniture and fittings
Bank charges
Postal services
Legal services
Staff training costs
Total pre-operational cost
Cost (Kshs.)
40, 500
153,000
1,000
40,000
13,000
1,500
30,000
44,500
500
1,500
3,000
14,000
302,000
Working Capital
ITEM
BOOK MASTERS
2013
2014
2015
Kshs.
Kshs.
4,742,605.00
4,942,605
2,510,745.00
2,710,745
1,715,890.00
2,710,745
6,568,385.00
8,969,240.00
10,364,095.00
1,441,695.00
Bank overdraft
1,135,450.00
-
Total Current Liabilities
1,135,450.00
Kshs.
Current Assets
Stock
3,805,390.00
Debtors
1,767,105.00
Cash at bank
Total Current Assets
995,890.00
Current Liabilities
Creditors
Working Capital
5,432,935.00
1,197,265.50
1,441,695.00
1,197,265.50
7,527,545.00
9,166,829.50
5.4 Projected Cash Flow

A cash flow shows the movement of money in and out of the business.
BOOK MASTERS
Projected Cash Flow Statement
For the year ending 31st December, 2013
YEAR
2013
2013
2013
2013
2013
2013
2013
Jan
Feb
Mar
Apr
May
Jun
Beginning
Cash/equity
8,000,00
0
2,465,66
7
1,267,39
7
2,456,67
7
1,987,29
0
1,761,90
3
777,383
717,596
660,509
8,000,00
0
2,465,66
7
2,500,00
0
3,767,39
7
833,333
3,290,01
0
833,333
2,820,62
3
833,33
1,761,90
3
833,333
1,610,71
6
833,333
1,550,92
9
5,000,00
0
747,250
860,000
858,000
609,000
539,000
445,000
11,287
11,287
11,287
11,287
11,287
20,000
20,000
20,000
20,000
20,000
20,000
Rent
Licenses and
permits
Insurance
deposit
Stationery
Salaries
40, 500
Aug
2013
MONTH
Cash
Inflow
Collection
from debtors
Total
Inflows
Cash
Outflow
Cash
purchases
Payments to
creditors
Jul
2013
2013
Totals
(Kshs.)
Dec
201,462
281,47
5
379,96
2
833,333
1,493,84
2
833,333
1,034,79
5
833,33
3
551,85
8
833,33
3
453,37
1
10,000,00
0
439,200
841,160
865,400
481,60
0
96,387
668,110
11,287
11,287
11,287
11,287
11,287
11,287
135,450
20,000
20,000
20,000
20,000
20,000
20,000
240,000
Oct
2013
Nov
Sept
2013
-95,486
9,904,514
40,500
22,775
22,775
22,775
22,775
22,775
22,775
22,775
22,775
22,775
22,775
22,775
22,775
273,300
3,500
2,000
2,000
1,500
4,500
1,500
2,000
2,000
3,500
3,500
368,000
368,000
368,000
368,000
368,000
368,000
368,000
368,000
368,000
2,000
368,00
0
30,000
368,000
2,000
368,00
0
4,416,000
4400
4400
4400
4400
4400
22,000
Maintenance
Costs
(repairs and
furnishing)
Telephone
& Fax
expenses
Marketing
expenses
5,000
6,500
7,500
4,000
4,500
3,000
4,500
4,800
3,500
3,300
2,700
4,200
60,000
5,208
5,208
5,208
5,208
5,208
5,208
5,208
5,208
5,208
5,208
5,208
5,208
62,500
transport
3,000
8,000
7,000
5,100
5,600
6,700
7,600
5,200
5,300
5,400
6,200
6,900
72,000
Water
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
12,000
Training
Electricity
Computer
Furniture
and Fixtures
Bank
Charges
miscellaneo
us
Total
Outflows
Net Cash
Inflow (AB)
14,000
2,500
14,000
1,400
1,100
1,000
2,000
1,200
900
1,700
1,400
1,150
1,800
1,850
18,000
40,000
40,000
44,500
44,500
2,350
2,350
2,350
2,350
2,350
2,350
2,350
2,350
2,350
2,350
2,350
2,350
28,200
2,500
5,534,33
3
2,500
1,198,27
0
2,500
1,310,72
0
2,500
1,302,72
0
2,500
1,058,72
0
2,500
2,500
2,500
893,120
890,420
2,500
1,316,27
0
2,500
548,85
7
6,206,560
2,465,66
7
1,267,39
7
2,456,67
7
1,987,29
0
1,761,90
3
777,383
717,596
660,509
201,462
-281,475
2,500
931,82
0
379,96
2
30,000
984,520
2,500
1,292,38
0
95,486
3,697,954
Proforma Income Statement
A)
BOOK MASTERS
BOOK MASTERS
INCOME STATEMENT FOR THE YEAR ENDING 31TH DECEMBER 2013
KHS
KSHS
Sales revenue
10,000,000
Cost of sales
2,745,000.00
Gross profit
7,392,850.00
Less Operating Expenses
Licenses and permits
40, 500
Salaries
273,300.00
Insurance deposits
30,000.00
Stationary and books
4,416,000.00
Rent
240,000.00
Maintenance Costs (repairs and furnishing)
22,000.00
Transport
72,000
Telephone & Fax expenses
60,000.00
Marketing expenses
62,500.00
Depreciation
19,650
Water
12,000
Training
14,000
Electricity
18,000
Computer
40,000.00
Furniture and Fixtures
44,500.00
Bank Charges
28,200.00
TOTAL EXPENSES
5,352,150.00 5,352,150.00
Net Operating Income
1,902,850.00
Less 16% Tax
304,456.00
Net Income/Loss
1,598,394.00
B)

Projected Income Statements -2014
BOOK MASTERS
K SHS
KSHS
Sales revenue
11,500,000.00
Cost of sales
3,568,500.00
Gross profit
7,931,500.00
40, 500.00
Salaries
273,300.00
Insurance deposits
30,000.00
Stationary
4,416,000.00
Rent
240,000.00
22,000.00
Transport
102,000
72,000.00
Marketing expenses
82,500.00
Depreciation
12,000
Water
12,000
Training
14,000
Electricity
28,000
Computer
80,000.00
84,500.00
Bank Charges
18,200.00
TOTAL EXPENSES
5,486,500.00
5,486,500.00
2,445,000.00
Less 16% Tax
391200
Net Income/Loss
2,053,800.00
C)

BOOK MASTERS
KHS
KSHS
Sales revenue
12,535,000.00
Cost of sales
3,889,665.00
Gross profit
8,645,335.00
40, 500.00
Salaries
273,300.00
Insurance deposits
30,000.00
Stationary
4,416,000.00
Rent
240,000.00
22,000.00
Transport
102,000
72,000.00
Marketing expenses
82,500.00
Depreciation
12,000
Water
12,000
Training
14,000
Electricity
18,000
Computer
40,000.00
54,500.00
Bank Charges
18,200.00
TOTAL EXPENSES
5,406,500.00
5,406,500.00
3,238,835.00
Less 16% Tax
518,213.60
Net Income/Loss
2,720,621.40
Proforma Balance Sheet

A)

For The Year Ending 31st December, 2013
BOOK MASTERS
BALANCE SHEET FOR THE YEAR ENDED 30TH
ASSETS:
NON-CURRENT ASSETS
Machinery and Equipment
405,000.00
Depreciation
19,650.00
Computer
40,000.00
Depreciation
3,640.00
85,000.00
Depreciation
7,650.00
TOTAL NON-CURRENT ASSETS
CURRENT ASSETS
Accounts Receivable
1,767,105.00
Inventory
3,805,390.00
Bank A/C
995,890.00
TOTAL CURRENT ASSETS
TOTAL ASSETS
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts Payable
1,135,450.00
TOTAL CURRENT LIABILITIES
TOTAL LIABILITIES
Financed By:
Owners Equity
8,000,000.00
Net profit
1,598,394.00
TOTAL EQUITY
TOTAL LIABILITIES AND EQUITY
JUNE2013
385,350.00
36,360.00
77,350.00
499,060.00
6,576,035.00
7,075,095.00
1,135,450.00
9,598,394.00
9,598,394.00
9,598,394.00
B)

BOOK MASTERS
BALANCE SHEET FOR THE YEAR ENDED 30TH JUNE2014
ASSETS:
NON-CURRENT ASSETS
Depreciation
Computer
Depreciation
Depreciation
CURRENT ASSETS
Accounts Receivable
Inventory
Bank A/C
TOTAL ASSETS
CURRENT LIABILITIES
Accounts Payable
TOTAL LIABILITIES
Financed By:
Owners Equity
Retained Earnings
Net profit
TOTAL EQUITY
605,000.00
12,000.00
80,000.00
3,640.00
185,000.00
7,650.00
593,000.00
76,360.00
177,350.00
846,710.00
2,510,745.00
4,742,605.00
1,715,890.00
8,976,890.00
9,823,600.00
1,441,695.00
1,441,695.00
11,309,894.00
8,000,000.00
1,598,394.00
1,711,500.00
11,309,894.00
11,309,894.00
C)

BOOK MASTERS
BALANCE SHEET FOR THE YEAR ENDED 30TH JUNE2015
ASSETS:
NON-CURRENT ASSETS
Depreciation
Computer
Depreciation
Depreciation
CURRENT ASSETS
Accounts Receivable
Inventory
Bank A/C
TOTAL ASSETS
CURRENT LIABILITIES
Accounts Payable
TOTAL LIABILITIES
Financed By:
Owners Equity
Retained Earnings
Net profit
TOTAL EQUITY
1,225,000.00
12,000.00
120,000.00
3,640.00
185,000.00
7,650.00
1,213,000.00
116,360.00
177,350.00
1,506,710.00
2,710,745.00
4,942,605.0
0
1,715,890.00
9,369,240.00
10,875,950.0
0
1,197,265.50
1,197,265.50
11,978,684.5
0
8,000,000.00
1,711,500.0
0
2,267,184.5
0
11,978,684.5
0
11,978,684.5
0
Calculation of Break-even Point

The break-even point is the level of operation at which a business neither makes a profit nor
sustains a loss; the business has exactly enough income to cover expenses with nothing left over
for profit.
A) Break-Even Point for the year 2013
Gross Profit Margin
Gross Profit=Sales-Total Direct Cost
(Gross Profit Sales) 100 = Gross Profit Margin
(7,255,000 10,000,000) 100 =72.55%
Overhead Expenses
Item
Rent
Electricity
Water
Transport
Salary and incentives
Business license & permit cost
Banking services
Depreciation on fixed assets
Total Overhead Expenses
Break-Even Point
(Overhead Expenses Gross Profit Margin) x 100
= 5,098,500
(5,098,500 73) 100
= Kshs. 6,984,247
Annually
240,000
18,000
24,000
96,000
4,416,000
40,500
28,200
235,800
5,098,500

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FINANCIAL PLAN

5.1 Financial Assumptions

Sales will increase by 10 % in the second and third year.

Debtors will increase by 10% in the second and third year.

Salaries will remain constant for the first three years.

Furniture & fittings will depreciate by 6 % each year.

Rent will remain constant for the first three years.

Closing Stock will increase by 10% in year 2 and 30% in year 3.

Electricity cost will remain constant for 3 years.

Salaries will increase at 12% after 3 years.

All fixed assets will depreciate by 6 % per annum.

5.2 Pre-Operational Costs

Total Current Liabilities

5.4 Projected Cash Flow

Proforma Income Statement

Proforma Income Statement

Proforma Income Statement

Proforma Balance Sheet

Proforma Balance Sheet

Proforma Balance Sheet

Proforma Balance Sheet

Calculation of Break-even Point

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