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Financial Plan

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7 views

Financial Plan

Uploaded by

silverwincyber2
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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FINANCIAL PLAN

A financial plan is a comprehensive strategy designed to help you manage your finances to
achieve short-term and long-term financial goals.

1. Pre-operational cost

Pre-operational cost is also known as startup cost, they are expenses incurred before a business
starts operating.

ITEM AMOUNT (Ksh)


Professional fees 500
Rent deposit 100,000
Licences & permits 10,000
Market research 1000
Water deposit 4000
TOTAL 115,000

Assumptions starting capital 500,000

Personal savings 300,000

Family and Friends 200,000

2. Working Capital requirements

Working capital is the money needed to do our daily activity of the business.

ITEM AS at start up march 2025 December 31 2025


Current Assets
Stock/Materials 100,000 110,000
Cash/bank 47,500 52,250
T.C.A 147,500 162,250
Current Liabilities
Creditors _ |_
Working capital 147,500 162,250
Assumptions

Current assets will increase at 10% per annum

Credit sales and purchases will be considered after 2 years

3. Projected Cash flow

It is a financial statement which shows cash inflows (receipts) and outflow (payment) into a
business.

Receipts/inflows January February March Total


Cash balance 340,000 350,000 360,000
Add cash sales 30,000 40,000 50,000 120,000
Total cash 370,000 390,000 410,000
available
Payments/
outflows
Material/stock 40,000 41,000 45,000 126,000
Rent 100,000 110,000 115,000 325,000
Water 4000 4000 4000 12000
Advertising 1000 1000 1000 3000
Insurance 10,000 10,000 10,00 30,000
Salary &wages 15,000 15,000 15,000 45,000
Total payments 170,000 181,000 190,000 541,000
Inflows-outflows 200,000 209,000 220,0000

4. Proforma income statement

Item December 31 2025 December 31 2026


Sales 520,000 624,000
Less cost of goods sold 325,000 357,500
Gross profit 195,000 266,500
Expenses
Rent 100,000
Water 4000
Advertisement 1000
Insurance 10,000
Salary 15,000
Total expenses 130,000 126,600
Net profit before tax 73,000 139,900
Tax profit 60,000 22,384
Net profit after tax 61,320 117,516
Assumptions

Sales will increase by 20% per annum

All cost will increase by10% per annum

Rent and salary will remain constant for two years

5. Break even analysis

Total direct cost will be:

Gross profit = sales- purchases

520,000-325,000=195,000

Gross profit margin = Gross profit /sales *100

195,000÷ 520,000 *100 = 37.5%

Total head expenses for year 1

Break even level of sales= Expenses \gpm *100

122,000 ÷37.5 *100 = 325,33,333

6. Financial requirement

Item Amount
Pre-operational cost 40,000
Working capital estimation 460,000
Total financial requirement 500,000

7. Proposed capitalization

The total investment will be 500,000 . I will contribute 300,000 family and friends will
contribute 200,000.Iwill give fixed deposit balance as security

8. Expected profitability ratios

The gross profit for one year will be and the return on equity of the business as the first
year will be:

R.O.E= Net profit/Owners’ equity*100

61320÷300,000*100= 20.44%

The return on investment as at the first year will be :

R.O.I = Net profit/total investment *100

61320÷500,000 *100=12.264%

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