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Financial Plan 07-Nov-2020 (1)

financial plan

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mirfan
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16 views22 pages

Financial Plan 07-Nov-2020 (1)

financial plan

Uploaded by

mirfan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Financial Plan

Superior University
Shabbir Hussain
Aviation Faculty Member
PHD Scholar (Business Adm.)
2

“If you fail to plan, you are


planning to fail ”

Benjamin Franklin
3

Finance is the lifeblood of


a business enterprise.
4

Why
Financial
Planning?
“One cannot raise necessary funds to run a
start-up just by presenting his/her idea. There
needs to be a sloid financial plan for convincing
someone to invest/lend money”
5

COMPONENTS OF
FINANCIAL PLAN

Start-up
Sources of
Capital
Finance
Requirement

Prospected
Financial
Financial
Attractiveness
Statements
6

START-UP CAPITAL
REQUIREMENT

⊸ Facilities & Equipment Requirement

⊸ Working Capital requirement


7

Facilities & Equipment


Requirement
Sr. Cost per Unit
Description No. Of Units Amount (Rs.)
No (Rs.)
1 Laptop/PC 05 35,000 175,000
2 Internet Connection 01 4,000 4,000
3 Electricity Connection 01 10,000 10,000
4 UPS/Electricity Generator 01 24,000 24,000
5 Air Conditioner 01 50,000 50,000
6 Furniture and Fixtures -- 40,000 40,000
7 Security Deposit (Office) -- 60,000 60,000
8 Printer 01 20,000 20,000
9 Digital Marketing -- 50,000 50,000
10 Legal Fee -- 10,000 10,000
Total 443,000
8

Working Capital Requirement


“Working Capital is used to run day-to-day operations”
Computation for a start-up
“operating expenses of first

Sr. No. Description Per Month Cost (Rs.)


1 Office Staff Salaries 60,000
(Peon, Cleaner, others etc.)
2 Rent Expense 50,000
3 to 6 months”

3 Electricity Bill 15,000


4 Other Utilities expense 6,000
5 Marketing Expense 10,000
Total 141,000
Required Working Capital 423,000
(141,000 × 3)
9

START-UP CAPITAL REQUIREMENT

Computation

Sr. No. Description Amount (Rs,)

1 Facilities & Equipment 443,000

2 Working Capital 423,000

Total Start-up Capital Required 866,000


11

Sources of Finance
Equity Debt
Owners’ share Owed by the
in a business business to a party
different from
Sources: Venture
owner of business.
Capital, Business Sources: Commercial
Angels, Banks, Peer to Peer
Crowdfunding, Lending
Bootstrapping
12

Prospected Financial
Statements

⊸ Pro forma Income Statement (Cash basis)

⊸ Pro forma Balance Sheet


13

Pro forma Income Statement


⊸ Identify revenue streams
⊸ Prepare Sales budget for year-1 (through market research)
⊸ Estimate production cost/unit (in case of tangible product)
⊸ Estimate annual operating cost (already computed)
⊸ Apply taxation according to your sector

⊸ Use Growth and inflation rates for future projections


15

Pro forma Income Statement


For Trading/Manufacturing For Service Business
Business

Rs. Rs.
Revenue XXX
Revenue XXX
Less: CGS* (XXX)
Operating Expenses (XXX)
Gross Profit XXX
Operating Profit / (Loss) XXX
Operating Expenses (XXX)
Operating Profit / (Loss) XXX Less: Tax (XXX)
Less: Tax (XXX) Net Income after tax XXX
Net Income after tax XXX
16

Pro forma Balance Sheet


Assets Rs. Liabilities & Equity Rs.
Laptop/PC 175,000 Debt 166,000
UPS/Electricity Generator 24,000 Equity 700,000
Air Conditioner 50,000
Furniture and Fixtures 40,000
Security Deposit (Office) 60,000
Printer 20,000
Preliminary Expenses 74,000
(Marketing etc.)
Cash 423,000
(Working Capital)

Total 866,000 Total 866,000


17

Financial
Attractiveness

⊸ Profitability Ratios

⊸ Break-even Analysis

⊸ Payback period for investor


18

Profitability Ratios

Gross Profit
Gross Profit Margin = Revenue × 100

Net Profit after tax


Net Profit Margin = Revenue × 100

Net Profit after tax


Return on Equity = Equity at start of year
× 100
19

Break-even Analysis
“Break-even analysis predicts the sales volume (No. of Units)
at a given price, required to recover total costs”

Annual Operating Expenses


Break Even =
Per Unit Contribution

Note: Contribution = Selling Price – Variable Cost


20

Payback Period
“The time period in which investor will recover Principle amount of
his/her investment”

Operating Profit
Payback period = Years before full recovery + Revenue

Note: Based on the cash flow investor is getting every year


22

Thanks!
Any questions?
You can find me at: [email protected]

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