Investment Office ANRS

Project Profile on Fodder
Production and Distribution
Business

Development Studies
Associates (DSA)

October 2008
Addis Ababa

Table of Contents
1.Executive Summary..............................................................................................3
2.Product Description and Application.................................................................3
3.Market Study, Plant Capacity and Production Program.................................3
3.1Market Study...........................................................................................................................3
3.1.1Present Demand and Supply............................................................................................3
3.1.2Projected Demand............................................................................................................4
3.1.3Pricing and Distribution...................................................................................................5
3.2Plant Capacity.........................................................................................................................5
3.3Production Program................................................................................................................5

4.Raw Materials and Utilities.................................................................................5
4.1Availability and Source of Raw Materials..............................................................................5
4.2Annual Requirement and Cost of Raw Materials and Utilities...............................................5

5.Location and Site..................................................................................................6
6.Technology and Engineering ..............................................................................6
6.1Production Process..................................................................................................................6
6.2Machinery and Equipment......................................................................................................6
6.3Civil Engineering cost.............................................................................................................6

7.Human Resource and Training Requirement....................................................6
7.1Human Resource.....................................................................................................................6
7.2Training Requirement.............................................................................................................7

8.Financial Analysis.................................................................................................7
8.1Underlying Assumption .........................................................................................................7
8.2Investment...............................................................................................................................8
8.3Production Costs.....................................................................................................................8
8.4Financial Evaluation...............................................................................................................9

9.Economic and Social Benefit and Justification................................................10
ANNEXES..............................................................................................................12

1. Executive Summary
This project envisages production of 150 tons fodder per annum. The total investment
requirement of the project is estimated at Birr 30 thousand; of which Birr 25 thousand is the cost
of land preparation while Birr 4 thousand is for working capital. Based on the cash flow
statement, the calculated internal rate of return (IRR) and simple rate of return of the project are
62.7 % and 51.1, respectively. And the net present value (NPV) at 18 % discounting rate is Birr
54 thousand. The plant is expected to create employment opportunities for about 52 persons.

2. Product Description and Application
Fodder is animal feed to be given to domestic animals especially to cattle. It is usually prepared
from grass, straws, lucks and seeds. This project idea is to produce fodder from grass in the form
of hay or from leaves in the form of alpha.

3. Market Study, Plant Capacity and Production Program
3.1

Market Study
3.1.1 Present Demand and Supply

Throughout the ANRS, the size of grazing land has been diminishing every year. This is due to
the fact that most of the grazing land is being converted to farms. In almost all parts of the
region, there is an extreme shortage of grazing land. About twenty years ago, it was common to
see domestic animals grazing in open areas in all parts of the Amhara region both in the dry and
rainy seasons. Now, in many localities of the region people are forced to keep their animals at
home during the day because there are no open places (grazing areas) where they can send their
animals.
Feed resources for livestock in rural and urban holdings in ANRS are given in Table 3.1.

3

TABLE 3.1
FEED RESOURCES FOR LIVESTOCK IN RURAL AND URBAN HOLDINGS IN ANRS

Green fodder/grazing……………
Crop residues ……………………
Improved feed (alfalfa)…………
Hay (grass, clover, etc)……….....
By – products/others
By – products: rapeseed cake,
Noug cake, safflower cake,
brewing residue and bran.. ……..

Number of
households
2,670,653…
2,545,602…

%

Rural

Urban

46.58….. 51.36… 35.08
35.31….. 32.99… 17.05

22,475……… 0.18…… 0.16….. 0.38
.
1,433,118…
13.08….. 11.43… 16.05
277,131……

1.31……

1.02…..

8.96

617,411……

3.54……

3.04…..

22.47

Source: CSA, 2002 G.C

As it is seen in the above table, around 95 % of rural and urban households in the ANRS depend
on either grazing land or fodder or crop residues to feed their cattle. This clearly shows the
existing demand for the fodder.
The estimated and reported animal feed deficit for the ANRS in 1984 is 28-40 percent. The data
is outdated by nearly two decades, but it is doubtful whether development activities implemented
have had any significant say in changing the situation. Since animals do not get sufficient food
from open areas, they are starved; and this happens mainly during the months of February,
March, April, May and June. As a result many animals such as horses, cows, and oxen die during
these months.
To increase the supply of animals feed in the Amhara region, a new system of producing such
feed should be introduced and developed through out the region. And this system is the
commercialization of hay/ fodder production in the region. It will be similar to a business entity
that produces and distributes grains.

3.1.2 Projected Demand
For the time being, it is possible to project the demand for fodder in the ANRS. However, it does
not have any relevance in relation to the envisaged type small scale venture that can be
undertaken by many individuals in many localities of the region. Given the shortage of animal
feed in almost all localities of the region, a business venture which can supply hay/ fodder for
urban and rural communities will have sufficient demand if the venture is financially viable
4

3.1.3 Pricing and Distribution
Market price of animal hay/ fodder fluctuates significantly depends on the season. During rainy
season its price declines significantly while the price surges very much during dry seasons. Since
this project envisages a commercial venture all the fodder produced is assumed to be sold during
peak season when there is serious shortage of grazing. During peak time, a quintal of hay (10
ties) is sold for Birr 70 at a farm gate.

3.2

Plant Capacity

In this study, a 10 hectare grass farm with a fodder producing capacity of 150 tons per annum is
envisaged. Hay is harvested at least three times a year from one field

3.3

Production Program

The envisage grass farm is assumed to produce the 150 ton fodder per annum starting from the
first year.

4. Raw Materials and Utilities
4.1

Availability and Source of Raw Materials

The one time raw material that is required to get harvest of grass for the preparation of fodder is
grass seed. And this can be acquired from the Ethiopian Agricultural Research Organization or
Ministry of Agriculture and Rural development.

4.2

Annual Requirement and Cost of Raw Materials and Utilities

For the production of hay or fodder, except rent of land, no raw material and utilities cost is
involved on the yearly basis. The total land area that is required to produce 150 ton of animal
fodder per annum is 10 hectare. And this can be rented from the local government of Dibark
woreda in the North Gonder zone at an average rural land rent rate of the zone which is equal to
Birr 44 per hectare. Thus, the total cost of land rent would be Birr 440 per annum.

5

5. Location and Site
Many rural woredas are appropriate to have a grass farm in the ANRS, for this study purpose;
however, Debark is chosen to produce grass for fodder in the region.

6. Technology and Engineering
6.1

Production Process

Production of fodder will take place in fields which the investor will acquire through lease.
Using quality or sprinkler irrigation system, hay could be harvested at least three times a year
from one field. The source of water could be a reservoir (pond) well or a nearly stream.
Distribution of the feed could be done by compacting and tie the hay. In some cases, the hay
could be cut to smaller pieces and bagged for delivery. Hay may not be the only feed to be
produced by such farms. Other plants fit for animal feed could also be produced.

6.2

Machinery and Equipment

The only tool that is required to harvest the grass and to produce fodder is sickle; but the grass
farm is not required to have it. Rather those daily laborers that are hired to harvest the grass
during the harvest season use their own sickle.

6.3

Civil Engineering cost

In this business venture, except the cost involved to excavate the land, no engineering cost is
involved. The one time land preparation cost is estimated to reach Birr 25,000.

7. Human Resource and Training Requirement
7.1

Human Resource

As it is said earlier, the grass is harvested three times in a year. During each harvest period Birr
4833 is required to hire 50 laborers for five days. Thus, the total annual cost of labor is calculated
to reach at Birr 14,250. Besides, two guards should be hired to look over the grass throughout of
the year. The cost of hiring the guards would reach Birr 7,200 per annum.

6

7.2

Training Requirement

No training is required.

8. Financial Analysis
8.1

Underlying Assumption

The financial analysis of Fodder production farm is based on the data provided in the preceding
chapters and the following assumptions.
A. Construction and Finance
Construction period

2 year

Source of finance

40% equity and 60% loan

Tax holidays

2 years

Bank interest rate

12%

Discount for cash flow

18%

Value of land

Based on lease rate of ANRS

Spare Parts, Repair & Maintenance

3% of fixed investment

B. Depreciation
Building

5%

Machinery and equipment

10%

Office furniture

10%

Vehicles

20%

Pre-production (amortization)

20%

C. Working Capital (Minimum Days of Coverage)
Raw Material-Local

30 days

Raw Material-Foreign

120 days

Factory Supplies in Stock

30 days

Spare Parts in Stock and Maintenance

30 days

Work in Progress
Finished Products
Accounts Receivable
Cash in Hand
Accounts Payable

10 days
15 days
30 days
30 days
30 days

7

8.2

Investment

The total investment cost of the project including working capital is estimated at Birr 30
thousand as shown in Table 8.1 below. The Owner shall contribute 40 % of the finance in the
form of equity while the remaining 60 % is to be financed by bank loan.
TABLE 8.1
TOTAL INITIAL INVESTMENT
Items
Land

L.C

Building and Civil Works
Office Equipment
Vehicles
Plant Machinery & Equipment
Total Fixed Investment Cost
Pre production capital
expenditure*
Total Initial Investment
Working Capital at Full Capacity
Total

F.C

Total

0

0

25,000

25,000

0

0

0

0

0

0

25,000

0

25,000

1,250

0

1,250

26,250

0

26,250

4,039
30,289

0
0

4,039
30,289

*Pre-production capital expenditure includes - all expenses for pre-investment studies, consultancy fee during
construction and expenses for company‘s establishment, project administration expenses, commission expenses,
preproduction marketing and interest expenses during construction.

The major component of the investment is the cost of land preparation which is Birr 25 thousand.

8.3

Production Costs

The total production cost at full capacity operation is estimated at Birr 24 thousand (See Table
8.2). Salary and wage amounts Birr 21, of the total production cost.

TABLE 8.2
8

PRODUCTION COST AT FULL CAPACITY

Raw Material
Requirement

Cost

1. Local Raw Materials
2. Foreign Raw Materials

0
0

Total Production Cost at full Capacity
Items
Cost
1. Raw Materials

0

2. Utilities

440

3. Wages and Salaries

21,450

4. Spares and Maintenance
Factory Costs

21,890

5. Depreciation
6. Financial Costs

2,181

Total Production Cost

8.4

24,071

Financial Evaluation
I.

Profitability

According to the projected income statement (See Annex 4) the project will generate profit
beginning from the first year of operation and increases on wards. The income statement and
other profitability indicators also show that the project is viable.
II.

Breakeven Analysis

The breakeven point of the projects is given by the formula:
BEP =

Fixed Cost
Sale –Variable Cost

at full capacity.

The project will break even at 28.7 % of capacity utilization

9

III.

Payback Period

Investment cost and income statement projection are used in estimating the project payback
period. The project will payback fully the initial investment less working capital in one years.
IV.

Simple Rate of Return

The project’s simple rate of return is given by the formula:
SRR= (Net Profit + Interest)/ (Total Investment Outlay) at full capacity utilization.
The SRR would be 51.1 % at full capacity utilization.
V.

Internal Rate of Return and Net Present Value

Based on cash flow statement (See Annex 2) the calculated internal rate of return (IRR) of the
project is 62.7 % and the net present value (NPV) at 18 % discount is Birr 54 thousand.
VI.

Sensitivity Analysis

The sensitivity test result which undertaken by increasing the cost of production by 5 % still
indicates that the project would be viable.

9. Economic and Social Benefit and Justification
Based on the foregoing presentation and analysis, we can learn that the proposed project
possesses wide range of benefits that complement the financial feasibility obtained earlier. In
general, the envisaged project promotes the socio-economic goals and objectives stated in the
strategic plan of the Amhara National Regional State. These benefits are listed as follows
A. Profit Generation
The project is found to be financially viable and earns on average a profit of Birr 17 thousands
per year and Birr 168 thousand within the project life. Such result induces the project promoters
to reinvest the profit which, therefore, increases the investment magnitude in the region.
B. Tax Revenue
In the project life under consideration, the region will collect about Birr 55 thousand from
corporate tax payment alone (i.e. excluding income tax and sales tax). Such result create
10

additional fund for the regional government that will be used in expanding social and other basic
services in the region

C. Employment and Income Generation
The proposed project is expected to create employment opportunity to several citizens of the
country. That is, it will provide temporary employment 50 individuals and permanent
employment to 2 individuals. Consequently, the project creates income of Birr 21 thousands per
year. This would be one of the commendable accomplishments of the project.
D. Pro Environment Project
The proposed production process is environmentally friendly.

11

ANNEXES

12

Annex 1: Total Net Working Capital Requirements (in Birr)
CONSTRUCTION

PRODUCTION

Year 1

Year 2

1

2

3

4

0

0

100%

100%

100%

100%

0.00

0.00

1896.70

1896.70

1896.70

1896.70

0.00

0.00

0.00

0.00

0.00

0.00

Raw Material-Local

0.00

0.00

0.00

0.00

0.00

0.00

Raw Material-Foreign

0.00

0.00

0.00

0.00

0.00

0.00

Factory Supplies in Stock

0.00

0.00

23.88

23.88

23.88

23.88

Spare Parts in Stock and Maintenance

0.00

0.00

81.82

81.82

81.82

81.82

Work in Progress

0.00

0.00

597.00

597.00

597.00

597.00

Finished Products

0.00

0.00

1194.00

1194.00

1194.00

1194.00

2. Accounts Receivable

0.00

0.00

4909.09

4909.09

4909.09

4909.09

3. Cash in Hand

0.00

0.00

2142.55

2142.55

2142.55

2142.55

0.00

0.00

8948.33

8948.33

8948.33

8948.33

4. Current Liabilities

0.00

0.00

4909.09

4909.09

4909.09

4909.09

Accounts Payable

0.00

0.00

4909.09

4909.09

4909.09

4909.09

TOTAL NET WORKING CAPITAL REQUIRMENTS

0.00

0.00

4039.24

4039.24

4039.24

4039.24

INCREASE IN NET WORKING CAPITAL

0.00

0.00

4039.24

0.00

0.00

0.00

Capacity Utilization (%)
1. Total Inventory
Raw Materials in Stock- Total

CURRENT ASSETS

1

Annex 1: Total Net Working Capital Requirements (in Birr)

(continued)

PRODUCTION
5

6

7

8

9

10

100%

100%

100%

100%

100%

100%

1896.70

1896.70

1896.70

1896.70

1896.70

1896.70

0.00

0.00

0.00

0.00

0.00

0.00

Raw Material-Local

0.00

0.00

0.00

0.00

0.00

0.00

Raw Material-Foreign

0.00

0.00

0.00

0.00

0.00

0.00

Factory Supplies in Stock

23.88

23.88

23.88

23.88

23.88

23.88

Spare Parts in Stock and Maintenance

81.82

81.82

81.82

81.82

81.82

81.82

Work in Progress

597.00

597.00

597.00

597.00

597.00

597.00

Finished Products

1194.00

1194.00

1194.00

1194.00

1194.00

1194.00

2. Accounts Receivable

4909.09

4909.09

4909.09

4909.09

4909.09

4909.09

3. Cash in Hand

2142.55

2142.55

2142.55

2142.55

2142.55

2142.55

8948.33

8948.33

8948.33

8948.33

8948.33

8948.33

4. Current Liabilities

4909.09

4909.09

4909.09

4909.09

4909.09

4909.09

Accounts Payable

4909.09

4909.09

4909.09

4909.09

4909.09

4909.09

TOTAL NET WORKING CAPITAL REQUIRMENTS

4039.24

4039.24

4039.24

4039.24

4039.24

4039.24

0.00

0.00

0.00

0.00

0.00

0.00

Capacity Utilization (%)
1. Total Inventory
Raw Materials in Stock-Total

CURRENT ASSETS

INCREASE IN NET WORKING CAPITAL

2

Annex 2: Cash Flow Statement (in Birr)
CONSTRUCTION

PRODUCTION

Year 1

Year 2

1

2

3

4

13125.00

17164.24

49909.09

45000.00

45000.00

45000.00

13125.00

17164.24

4909.09

0.00

0.00

0.00

Total Equity

5250.00

6865.70

0.00

0.00

0.00

0.00

Total Long Term Loan

7875.00

10298.55

0.00

0.00

0.00

0.00

0.00

0.00

4909.09

0.00

0.00

0.00

2. Inflow Operation

0.00

0.00

45000.00

45000.00

45000.00

45000.00

Sales Revenue

0.00

0.00

45000.00

45000.00

45000.00

45000.00

Interest on Securities

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

TOTAL CASH OUTFLOW

13125.00

13125.00

33888.99

25318.65

31427.30

31172.87

4. Increase In Fixed Assets

13125.00

13125.00

0.00

0.00

0.00

0.00

12500.00

12500.00

0.00

0.00

0.00

0.00

625.00

625.00

0.00

0.00

0.00

0.00

5. Increase in Current Assets

0.00

0.00

8948.33

0.00

0.00

0.00

6. Operating Costs

0.00

0.00

20108.90

20108.90

20108.90

20108.90

7. Corporate Tax Paid

0.00

0.00

0.00

0.00

6472.12

6581.16

8. Interest Paid

0.00

0.00

4831.76

2180.83

1817.35

1453.88

9.Loan Repayments

0.00

0.00

0.00

3028.92

3028.92

3028.92

10.Dividends Paid

0.00

0.00

0.00

0.00

0.00

0.00

Surplus(Deficit)

0.00

4039.24

16020.10

19681.35

13572.70

13827.13

Cumulative Cash Balance

0.00

4039.24

20059.34

39740.69

53313.39

67140.51

TOTAL CASH INFLOW
1. Inflow Funds

Total Short Term Finances

3. Other Income

Fixed Investments
Pre-production Expenditures

3

Annex 2: Cash Flow Statement (in Birr): Continued
PRODUCTION
5
45000.00

6
45000.00

7
45000.00

8
45000.00

9
45000.00

10
45000.00

0.00

0.00

0.00

0.00

0.00

0.00

Total Equity

0.00

0.00

0.00

0.00

0.00

0.00

Total Long Term Loan

0.00

0.00

0.00

0.00

0.00

0.00

Total Short Term Finances

0.00

0.00

0.00

0.00

0.00

0.00

2. Inflow Operation

45000.00

45000.00

45000.00

45000.00

45000.00

45000.00

Sales Revenue

45000.00

45000.00

45000.00

45000.00

45000.00

45000.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

30918.44

30739.01

30484.58

27201.23

27201.23

27201.23

0.00

0.00

0.00

0.00

0.00

0.00

Fixed Investments

0.00

0.00

0.00

0.00

0.00

0.00

Pre-production Expenditures

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

6. Operating Costs

20108.90

20108.90

20108.90

20108.90

20108.90

20108.90

7. Corporate Tax Paid

6690.21

6874.25

6983.29

7092.33

7092.33

7092.33

8. Interest Paid

1090.41

726.94

363.47

0.00

0.00

0.00

9. Loan Repayments

3028.92

3028.92

3028.92

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

Surplus(Deficit)

14081.56

14260.99

14515.42

17798.77

17798.77

17798.77

Cumulative Cash Balance

81222.07

95483.06

109998.47

127797.24

145596.01

163394.78

TOTAL CASH INFLOW
1. Inflow Funds

Interest on Securities
3. Other Income
TOTAL CASH OUTFLOW
4. Increase In Fixed Assets

5. Increase in Current Assets

10.Dividends Paid

4

Annex 3: DISCOUNTED CASH FLOW-TOTAL CAPITAL INVESTED
CONSTRUCTION

PRODUCTION

Year 1

Year 2

1

2

3

4

TOTAL CASH INFLOW

0.00

0.00

45000.00

45000.00

45000.00

45000.00

1. Inflow Operation

0.00

0.00

45000.00

45000.00

45000.00

45000.00

Sales Revenue

0.00

0.00

45000.00

45000.00

45000.00

45000.00

Interest on Securities

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

TOTAL CASH OUTFLOW

13125.00

13125.00

24148.14

20108.90

20108.90

26690.06

3. Increase in Fixed Assets

13125.00

13125.00

0.00

0.00

0.00

0.00

Fixed Investments

12500.00

12500.00

0.00

0.00

0.00

0.00

625.00

625.00

0.00

0.00

0.00

0.00

4. Increase in Net Working Capital

0.00

0.00

4039.24

0.00

0.00

0.00

5. Operating Costs

0.00

0.00

20108.90

20108.90

20108.90

20108.90

6. Corporate Tax Paid

0.00

0.00

0.00

0.00

0.00

6581.16

NET CASH FLOW

-13125.00

-13125.00

20851.86

24891.10

24891.10

18309.94

CUMMULATIVE NET CASH FLOW

-13125.00

-26250.00

-5398.14

19492.96

44384.06

62693.99

Net Present Value (at 18%)

-13125.00

-11122.88

14975.48

15149.49

12838.55

8003.44

Cumulative Net present Value

-13125.00

-24247.88

-9272.40

5877.09

18715.64

26719.08

2. Other Income

Pre-production Expenditures

5

Annex 3: DISCOUNTED CASH FLOW-TOTAL CAPITAL INVESTED

(Continued)

PRODUCTION
5

6

7

8

9

10

TOTAL CASH INFLOW

45000.00

45000.00

45000.00

45000.00

45000.00

45000.00

1. Inflow Operation

45000.00

45000.00

45000.00

45000.00

45000.00

45000.00

Sales Revenue

45000.00

45000.00

45000.00

45000.00

45000.00

45000.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

26799.11

26983.15

27092.19

27201.23

27201.23

27201.23

3. Increase in Fixed Assets

0.00

0.00

0.00

0.00

0.00

0.00

Fixed Investments

0.00

0.00

0.00

0.00

0.00

0.00

Pre-production Expenditures

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

5. Operating Costs

20108.90

20108.90

20108.90

20108.90

20108.90

20108.90

6. Corporate Tax Paid

6690.21

6874.25

6983.29

7092.33

7092.33

7092.33

NET CASH FLOW

18200.89

18016.85

17907.81

17798.77

17798.77

17798.77

CUMMULATIVE NET CASH FLOW

80894.89

98911.74

116819.55

134618.32

152417.09

170215.86

Net Present Value (at 18%)

6742.19

5655.94

4764.16

4012.84

3400.71

2881.96

Cumulative Net present Value

33461.27

39117.21

43881.37

47894.21

51294.92

54176.88

Interest on Securities
2. Other Income
TOTAL CASH OUTFLOW

4. Increase in Net Working Capital

Net Present Value (at 18%)
Internal Rate of Return

54,176.88

62.7%

6

Annex 4: NET INCOME STATEMENT ( in Birr)
PRODUCTION
1

2

3

4

5

100%

100%

100%

100%

100%

45000.00

45000.00

45000.00

45000.00

45000.00

45000.00

45000.00

45000.00

45000.00

45000.00

Other Income

0.00

0.00

0.00

0.00

0.00

2. Less Variable Cost

12178.90

12178.90

12178.90

12178.90

12178.90

32821.10

32821.10

32821.10

32821.10

32821.10

72.94

72.94

72.94

72.94

72.94

9430.00

9430.00

9430.00

9430.00

9430.00

23391.10

23391.10

23391.10

23391.10

23391.10

51.98

51.98

51.98

51.98

51.98

4. Less Cost of Finance

4831.76

2180.83

1817.35

1453.88

1090.41

5. GROSS PROFIT

18559.34

21210.27

21573.75

21937.22

22300.69

0.00

0.00

6472.12

6581.16

6690.21

18559.34

21210.27

15101.62

15356.05

15610.48

Gross Profit/Sales

41.24%

47.13%

47.94%

48.75%

49.56%

Net Profit After Tax/Sales

41.24%

47.13%

33.56%

34.12%

34.69%

Return on Investment

77.23%

77.23%

55.86%

55.50%

55.14%

Return on Equity

153.18%

175.06%

124.65%

126.75%

128.85%

Capacity Utilization (%)
1. Total Income
Sales Revenue

VARIABLE MARGIN
(In % of Total Income)
3. Less Fixed Costs
OPERATIONAL MARGIN
(In % of Total Income)

6. Income (Corporate) Tax
7. NET PROFIT
RATIOS (%)

7

Annex 4: NET INCOME STATEMENT (in Birr): Continued
PRODUCTION
6

7

8

9

10

100%

100%

100%

100%

100%

45000.00

45000.00

45000.00

45000.00

45000.00

45000.00

45000.00

45000.00

45000.00

45000.00

Other Income

0.00

0.00

0.00

0.00

0.00

2. Less Variable Cost

12178.90

12178.90

12178.90

12178.90

12178.90

32821.10

32821.10

32821.10

32821.10

32821.10

72.94

72.94

72.94

72.94

72.94

9180.00

9180.00

9180.00

9180.00

9180.00

23641.10

23641.10

23641.10

23641.10

23641.10

52.54

52.54

52.54

52.54

52.54

726.94

363.47

0.00

0.00

0.00

5. GROSS PROFIT

22914.16

23277.63

23641.10

23641.10

23641.10

6. Income (Corporate) Tax

6874.25

6983.29

7092.33

7092.33

7092.33

7. NET PROFIT

16039.91

16294.34

16548.77

16548.77

16548.77

Gross Profit/Sales

50.92%

51.73%

52.54%

52.54%

52.54%

Net Profit After Tax/Sales

35.64%

36.21%

36.78%

36.78%

36.78%

Return on Investment

55.36%

55.00%

54.64%

54.64%

54.64%

Return on Equity

132.39%

134.49%

136.59%

136.59%

136.59%

Capacity Utilization (%)
1. Total Income
Sales Revenue

VARIABLE MARGIN
(In % of Total Income)
3. Less Fixed Costs
OPERATIONAL MARGIN
(In % of Total Income)
4. Less Cost of Finance

RATIOS (%)

8

Annex 5: Projected Balance Sheet (in Birr)
CONSTRUCTION
TOTAL ASSETS

Year 1
13125.00

Year 2
30289.24

PRODUCTION
1
53757.67

2
71939.02

3
84011.72

4
96338.85

9

1. Total Current Assets
Inventory on Materials and Supplies
Work in Progress
Finished Products in Stock
Accounts Receivable
Cash in Hand
Cash Surplus, Finance Available
Securities
2. Total Fixed Assets, Net of Depreciation
Fixed Investment
Construction in Progress
Pre-Production Expenditure
Less Accumulated Depreciation
3. Accumulated Losses Brought Forward
4. Loss in Current Year
TOTAL LIABILITIES
5. Total Current Liabilities
Accounts Payable
Bank Overdraft
6. Total Long-term Debt
Loan A
Loan B
7. Total Equity Capital
Ordinary Capital
Preference Capital
Subsidies
8. Reserves, Retained Profits Brought Forward
9.Net Profit After Tax
Dividends Payable
Retained Profits

0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
13125.00
0.00
12500.00
625.00
0.00
0.00
0.00
13125.00
0.00
0.00
0.00
7875.00
7875.00
0.00
5250.00
5250.00
0.00
0.00
0.00
0.00
0.00
0.00

4039.24
0.00
0.00
0.00
0.00
0.00
4039.24
0.00
26250.00
12500.00
12500.00
1250.00
0.00
0.00
0.00
30289.24
0.00
0.00
0.00
18173.55
18173.55
0.00
12115.70
12115.70
0.00
0.00
0.00
0.00
0.00
0.00

29007.67
105.70
597.00
1194.00
4909.09
2142.55
20059.34
0.00
24750.00
25000.00
0.00
1250.00
1500.00
0.00
0.00
53757.67
4909.09
4909.09
0.00
18173.55
18173.55
0.00
12115.70
12115.70
0.00
0.00
0.00
18559.34
0.00
18559.34

Annex 5: Projected Balance Sheet (in Birr):

48689.02
105.70
597.00
1194.00
4909.09
2142.55
39740.69
0.00
23250.00
25000.00
0.00
1250.00
3000.00
0.00
0.00
71939.02
4909.09
4909.09
0.00
15144.62
15144.62
0.00
12115.70
12115.70
0.00
0.00
18559.34
21210.27
0.00
21210.27

62261.72
105.70
597.00
1194.00
4909.09
2142.55
53313.39
0.00
21750.00
25000.00
0.00
1250.00
4500.00
0.00
0.00
84011.72
4909.09
4909.09
0.00
12115.70
12115.70
0.00
12115.70
12115.70
0.00
0.00
39769.61
15101.62
0.00
15101.62

76088.85
105.70
597.00
1194.00
4909.09
2142.55
67140.51
0.00
20250.00
25000.00
0.00
1250.00
6000.00
0.00
0.00
96338.85
4909.09
4909.09
0.00
9086.77
9086.77
0.00
12115.70
12115.70
0.00
0.00
54871.24
15356.05
0.00
15356.05

Continued

PRODUCTION
TOTAL ASSETS
1. Total Current Assets
Inventory on Materials and Supplies

5
108920.41
90170.41
105.70

6
121931.39
104431.39
105.70

7
135196.81
118946.81
105.70

8
151745.58
136745.58
105.70

9
168294.35
154544.35
105.70

10
184843.12
172343.12
105.70

10

Work in Progress
Finished Products in Stock
Accounts Receivable
Cash in Hand
Cash Surplus, Finance Available
Securities
2. Total Fixed Assets, Net of Depreciation
Fixed Investment
Construction in Progress
Pre-Production Expenditure
Less Accumulated Depreciation
3. Accumulated Losses Brought Forward
4. Loss in Current Year
TOTAL LIABILITIES
5. Total Current Liabilities
Accounts Payable
Bank Overdraft
6. Total Long-term Debt
Loan A
Loan B
7. Total Equity Capital
Ordinary Capital
Preference Capital
Subsidies
8. Reserves, Retained Profits Brought Forward
9. Net Profit After Tax
Dividends Payable
Retained Profits

597.00
1194.00
4909.09
2142.55
81222.07
0.00
18750.00
25000.00
0.00
1250.00
7500.00
0.00
0.00
108920.41
4909.09
4909.09
0.00
6057.85
6057.85
0.00
12115.70
12115.70
0.00
0.00
70227.29
15610.48
0.00
15610.48

597.00
1194.00
4909.09
2142.55
95483.06
0.00
17500.00
25000.00
0.00
1250.00
8750.00
0.00
0.00
121931.39
4909.09
4909.09
0.00
3028.92
3028.92
0.00
12115.70
12115.70
0.00
0.00
85837.77
16039.91
0.00
16039.91

597.00
1194.00
4909.09
2142.55
109998.47
0.00
16250.00
25000.00
0.00
1250.00
10000.00
0.00
0.00
135196.81
4909.09
4909.09
0.00
0.00
0.00
0.00
12115.70
12115.70
0.00
0.00
101877.68
16294.34
0.00
16294.34

597.00
1194.00
4909.09
2142.55
127797.24
0.00
15000.00
25000.00
0.00
1250.00
11250.00
0.00
0.00
151745.58
4909.09
4909.09
0.00
0.00
0.00
0.00
12115.70
12115.70
0.00
0.00
118172.02
16548.77
0.00
16548.77

597.00
1194.00
4909.09
2142.55
145596.01
0.00
13750.00
25000.00
0.00
1250.00
12500.00
0.00
0.00
168294.35
4909.09
4909.09
0.00
0.00
0.00
0.00
12115.70
12115.70
0.00
0.00
134720.79
16548.77
0.00
16548.77

597.00
1194.00
4909.09
2142.55
163394.78
0.00
12500.00
25000.00
0.00
1250.00
13750.00
0.00
0.00
184843.12
4909.09
4909.09
0.00
0.00
0.00
0.00
12115.70
12115.70
0.00
0.00
151269.56
16548.77
0.00
16548.77

11

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