Finance can be defined as the art and science of managing money.

Virtually all individuals and organization earn, raise, spend, and invest money. All this activities involve in finance which is concerned with the process, institutions, markets, and instrument involved in the transfer of money among and between individuals and government. Financial plan is one of the most important models in preparing the business plan. Before start our business, the business must be able to identify their financial expectation. Financial planning helps them to prepare and revalue their affordable and capacity on their financial resources in order to running their business. The financial plan is involves determining the total project cost, sources of financing and preparation of financial projections in terms of pro forma statements, which include cash flows, income statement and balance sheet. From financial plan, we can evaluate the profit and losses in our business. Good financial stranding is the main purpose, which want to be achieving by our business. We also concern about our financial stability where we can ensure that our business are in good condition and will give profit to us. We can find put the source if our business is facing losses. From that we can control our cash flow. In addition, the financial plan should be supported by depreciation schedules for every fixed asset owned as well as amortization schedules for loan and high purchase repayments. The financial plan is prepare after all budgets pertaining to marketing, operation and administration aspects (known as operating budgets) are completed. In , we collect and summarized all the financial information in the Administrative, Marketing, and Operating plans in order to get the picture how much the business will cost run. Our financial plan also shows the short and long-term requirements in order to start a business. It shows the ways the requirements are going to be financed whether by using the external or internal sources.

The Relationship between Operating and Financial Budgets:

Marketing budget - sales forecast - cost of distribution - promotional costs

Production/Operations budget - plant, machinery and equipment cost - Direct labour

Financial budget - project implementation costs - source of financing - cash flow statement

Administrative budget - furniture, fixtures and fittings - office equipment

OBJECTIVE OF FINANCIAL PLAN I. II. III. IV. V. To determine the cash flow and profit and loss of our business To determine the amount of capital needed in conducting the business To identify and propose the relevant sources of finance To appraise the viability of the project before actual investment is committed. To ensure that the initial capital is enough for each department expenses

FINANCIAL STRATEGIES To increase of annual profit rate always in convincing stage To make sure cash flow is always to cover the expenses To ensure rate of profit increase every year at the certain target place To ensure cash in hand used sufficiently on business expenses. To ensure all expenses and activities of marketing or administration with the business objective. Advice, critics, and discussion must be done among the manager

FINANCIAL PURPOSES I. To record and control of the business inflow and outflow transaction The financial has been traditionally considered as the financial plat form of the business which purpose is to ensure the safety and the stability of the financial standing and the business asset. In order to control the financial transactions in the business, the financial manager must ensure the amount of their expenses and the income adequate, ensure the party who is entitle to pay for the business service must be completely paid at the fixed (date before the date), collect the business debt in order to avoid bad debt occur which may lead to losses provide safe guard fraud and disappeared of asset in term of product, service or cash. Apart of that, financial on order to ensure the financial allocation can be fully utilized without wastage and violation of misconduct. II. To maintain accuracy in recording Double entry bookkeeping considered in the most precise and accurate method of permanents and primary bookkeeping, where the business transactions are edit twice in the bookkeeping. The purpose of this method is to detect error in the internal check process can be done more easily. III. To present the financial report and analyses These include the use of ratio to evaluate the following matter The profitability of the business The level of the activity and productivity The efficiency of the credit control The efficiency of stock control

IV.

To facilitate the efficiency of allocation of

resources The function of financial plant to conform the efficiency and accurate of the financial resources allocation where the financial provided fulfills the financial requirement to establish and implement the business affairs. Allocation of resources is generally given microeconomic interpretation by providing information to the potential local and foreign investor about the business financial standing. Besides that, it helps the organization to make continuous improvement regarding the allocation of financial resources towards more efficient organization.

THE PROCESS OF DEVELOPING A FINANCIAL PLAN To develop a workable and meaningful financial plan, the entrepreneur has to follow these steps:

FINANCIAL ANALYSIS Financial Ratio Analysis Financial analysis can be defined as an assessment of the financial position of a present, past, and future. The purpose of the financial analysis is to find out the strength and the weaknesses of our company (Titan Tiles) In the financial statement does not expose much useful information for the decision-making purpose such as: Is the profit is adequate? How efficient the asset in the company is being used in order to generate sale? What is problem in short term faced by the business in term of financial It is the necessary for our business to have ways which the progress and profitability can be measured. Ratio analysis is concerned with quantifying accounts, in other word we use the ratio is to find how our business is performing. Without the some king of control system to analysis financial result management, therefore our company will not have a clear idea about how our company is doing. The purposes of financial ratio analysis are: To make a proper financial analysis A ratio is a relationship of one number of two other numbers; therefore financial ratio can make a comparison. It is an item to standardize financial data in order to facilitate meaningful comparison. Financial ratio provides a ways for making comparison of a firm financial data over time and it also can be used to make comparison with other firm.

RATIO GROUP There are six (6) group of ratio used to evaluate a companys financial performances which are: 1. Liquidity Ratios The purpose is to assess how well placed this company is to meet its short term financial obligation, such as the current ratio, interval measure. Thus the liquidity ratio is used to measure the ability of the business to pay its monthly bills. 2. Profitability Ratios Ratio such as return on sales and return on investment will show how well the company is being managed and how well it is achieving if objectives of maximizing shareholder wealth. Commonly used for gross profit margin, net profit margin, return on investment and return equity. 3. Gearing Ratios Which use to measure the level of medium to long term debt to the level of equity capital. Gearing can be good or bad thing to the company but it is depend on its liquidity and profitability, the level of interest rates and general states of the company. Therefore it is important for the company to evaluate its gearing level in comparison to the similar companies in the same industry.

4.

Efficiency Ratios Ratios such as sales or average total assets or the average collection period to show how well the company uses its assets to produce its good. The most widely used efficiency ratio for planning, purpose for stock turnover, receivable turnover and total assets turnover.

5.

Solvency Ratios This ratio is designed to help the entrepreneur the degree of financial risk that the business faced, therefore the entrepreneur can assess his level of debts and decides everything good for use the business. Which are commonly used for total debts, debts to total assets and time interest earn.

6.

Breakeven Analysis It is the useful technique for determine how many units of goods or how much sale volume must be achieved in order to breakeven. The point show the volume of sales needed to cover total cost.

SOURCES OF FINANCE SCHEDULE

SOURCES RM RM

Equity Contributions CASH :

40% 60,000 30,000 30,000 30,000 150,000 EXTERNAL SOURCES

AIN
20%

ALELL
20%

BOB
20%

ADLAN

Term Loan ( MAJLIS AMANAH RAKYAT ) Hire - Purchase Total Sources of Finance

83,689 47,655

281,344

EDIT PRINT SCREEN BY AIN!!!!!!!!!

RATE OF RETURN = TOTAL END BALANCE TOTAL COST X 100% TOTAL COST = 689,359 281,344 X 100% 281,344 = 145.023% CONCLUSION

SEARCH TILES ENTERPRISE is a new company that is focusing in supply tiles and install to clients. This business is formed under sole proprietorship companies with 4 shareholders that is called The Board of Directors. The Administration Department efficiency reflects that the company has a well organized management team running the business. Consisting of 4 directors in the company whom are the Managing Director, Marketing Director, Operation Director and Financial Director. All of the managers will give full commitment and cooperation to fulfill the needs of customers. Meanwhile, the Marketing Department shows good marketing strategies which will give benefits the company in advertising and promote our company to the customers. The marketing department also must know the best method in order to be better than our competitors. Besides that, the Operation Department shows that we have a good team of workers that can support the companys handling and transporting our tiles to client. Finally, the Financial Department has analyzed the companys cash flows for the next 3 years and it shows that the company will be in a stable condition even though within the period of time, our company will face some loss.