You are on page 1of 56

FUNDAMENTALS OF ENTREPRENEURSHIP

(ETR300/ENT300)

MODULE 11 :
FINANCIAL PLAN

Entrepreneurship Dept, FBM ETR/ENT300 MODULE 11 : Financial Plan 1


(2009)
LEARNING OUTCOMES

At the end of the session, students should be able to:

• Understand the importance of preparing a financial plan


• Understand the process of developing a financial plan
• Identify the components of a financial plan
• Analyse the financial position of the proposed business
• Prepare a financial plan for a small business

Entrepreneurship Dept, FBM ETR/ENT300 MODULE 11 : Financial Plan 2


(2009)
INTRODUCTION

A financial plan incorporates all financial data derived from


the operating budgets i.e. the marketing, production (or
operations) and administration budgets. Financial
information from the operating budgets is then translated or
transformed into a financial budget.

Based on the financial data, projections are prepared via the


following pro forma statements:
 Cash flow
 Income (or profit and loss) statement
 Balance sheet.
Entrepreneurship Dept, FBM ETR/ENT300 MODULE 11 : Financial Plan 3
(2009)
THE IMPORTANCE OF A FINANCIAL PLAN

A financial plan is crucial to the overall business plan that is


developed for a particular business or project. Its importance
can be summarised as follows:

 To determine the size of investment


 To identify and propose the relevant sources of finance
 To ensure that the initial capital is sufficient
 To analyse the viability of the project before actual investment is
committed
 To be used as a guideline for project implementation

Entrepreneurship Dept, FBM ETR/ENT300 MODULE 11 : Financial Plan 4


(2009)
THE PROCESS OF DEVELOPING A FINANCIAL PLAN

To develop a workable and meaningful financial plan, the


entrepreneur has to follow these steps:

 Step 1: Gather all financial inputs


 Step 2: Determine the project implementation cost
 Step 3: Determine the sources of finance
 Step 4: Prepare the pro forma cash flow statement
 Step 5: Prepare the pro forma income statement
 Step 6: Prepare the pro forma balance sheets
 Step 7: Perform basic financial analysis
Entrepreneurship Dept, FBM ETR/ENT300 MODULE 11 : Financial Plan 5
(2009)
Step 1: Gather the Financial Input (contd.)

• The process of developing a financial plan for a


specific project begins with the accumulation of
financial information from the marketing,
operations and organizational plans.

• The financial requirements for each plan are


presented in the form of budgets known as
operating budgets (i.e. marketing, operations and
organisation budgets)

Entrepreneurship Dept, FBM ETR/ENT300 MODULE 11 : Financial Plan 6


(2009)
Step 1: Gather the Financial Input (contd.)

• In addition, the monthly or annual sales


forecast derived earlier in the marketing plan is
a very important input for the financial plan.

• After gathering all information the financial


plan is prepared in terms of financial budget.

Entrepreneurship Dept, FBM ETR/ENT300 MODULE 11 : Financial Plan 7


(2009)
Marketing Plan Organizational Plan
Sales Forecast Administrative Budget
Marketing Budget Financial Plan
Project implementation cost
Sources of financing
Pro forma cash flow statement
Pro forma income statement
Pro forma balance sheet
Financial Analysis

Operations Plan
Operations Budget

Entrepreneurship Dept, FBM ETR/ENT300 MODULE 11 : Financial Plan 8


(2009)
Step 2: Determine the Project Implementation
Cost

• A project implementation cost incorporates both long-


term and short-term expenditure needed to start a
project.

• Long-term expenditure refers to such expenditure as the


procurement of plant, machinery, equipment, vehicles
and other fixed assets needed by the new business.

Entrepreneurship Dept, FBM ETR/ENT300 MODULE 11 : Financial Plan 9


(2009)
Step 2: Determine the Project Implementation Cost
(contd.)

• Short-term expenditure, such as payments of utilities,


salaries and wages, factory overheads, purchase of raw
materials or inventories, represent the amount of initial
working capital required to finance the daily operation until
the business gets its first sale.

• Components of project implementation cost:


 Capital expenditure
 Working capital
 Other expenditure
 Contingency cost
Entrepreneurship Dept, FBM ETR/ENT300 MODULE 11 : Financial Plan 10
(2009)
Entrepreneurship Dept, FBM ETR/ENT300 MODULE 11 : Financial Plan 11
(2009)
Step 3: Determine the Sources of Finance

• Sources of finance refers to the sources where funds


to finance a particular project’s implementation costs
can be secured.

• These can be categorised into internal and external


sources. The internal sources mainly come in the
form of equity contributions from the entrepreneurs.
These contributions can either be in the form of cash
or other assets.

Entrepreneurship Dept, FBM ETR/ENT300 MODULE 11 : Financial Plan 12


(2009)
Step 3: Determine the Sources of Finance
(contd.)

• External sources of finance are mainly derived from


commercial banks, finance companies and
government agencies. It may come in the form of
term loans, hire purchase or grants.

• The total amount of funds that has to be sourced


should equal the total project implementation cost
calculated earlier. This is to ensure that the project is
fully funded and to avoid the risks of under-financing.

Entrepreneurship Dept, FBM ETR/ENT300 MODULE 11 : Financial Plan 13


(2009)
Step 3: Determine the Sources of Finance
(contd.)

Components of sources of finance:


 Contingency cost
 Internal sources
 Equity contributions (cash and/or assets)
 External sources
 Term loan
 Hire purchase
 Others

Entrepreneurship Dept, FBM ETR/ENT300 MODULE 11 : Financial Plan 14


(2009)
Entrepreneurship Dept, FBM ETR/ENT300 MODULE 11 : Financial Plan 15
(2009)
Step 4: Prepare Pro Forma Cash Flow Statement

• Pro forma cash flow statement refers to the projected


statement of cash inflow and outflow throughout the
planned period.

• Under normal circumstances, the pro forma cash flow


statement is prepared for three consecutive years,
detailed by month for the first year and by year for the
second and third years. However, longer periods are
sometimes needed depending upon the projects
undertaken.

Entrepreneurship Dept, FBM ETR/ENT300 MODULE 11 : Financial Plan 16


(2009)
Step 4: Prepare Pro Forma Cash Flow Statement
(contd.)

• The total amount of funds that has to be


sourced should equal the total project
implementation cost calculated earlier. This is to
ensure that the project is fully funded as well as
to avoid the risks of under-financing.

Entrepreneurship Dept, FBM ETR/ENT300 MODULE 11 : Financial Plan 17


(2009)
Step 4: Prepare Pro Forma Cash Flow Statement
(contd.)

The pro forma cash flow statement must be able to show


the following information:
 Cash inflows – the projected amount of cash flowing
into the business
 Cash outflows – the projected amount of cash
flowing out of the business.
 Cash deficit or surplus – the difference between cash
inflows and outflows
 Cash position – the beginning and ending cash
balances for a particular period
Entrepreneurship Dept, FBM ETR/ENT300 MODULE 11 : Financial Plan 18
(2009)
Step 4: Prepare Pro Forma Cash Flow Statement
(contd.)

Elements of cash inflows:


 Equity contribution (cash)
 Term loan
 Cash sales
 Collection of receivables
 Others

Entrepreneurship Dept, FBM ETR/ENT300 MODULE 11 : Financial Plan 19


(2009)
Step 4: Prepare Pro Forma Cash Flow Statement
(contd.)
Elements of cash outflows:
 Marketing expenditure
 Operations expenditure
 Administrative expenditure
 Term loan repayment
 Hire purchase repayment
 Purchase of fixed assets
 Pre-operating expenditure
 Payments for deposits
 MiscellaneousETR/ENT300
Entrepreneurship Dept, FBM
(2009)
expenditure
MODULE 11 : Financial Plan 20
Example: Pro Forma Cash Flow Statement

Entrepreneurship Dept, FBM ETR/ENT300 MODULE 11 : Financial Plan 21


(2009)
Example: Pro Forma Cash Flow Statement (contd.)

Entrepreneurship Dept, FBM ETR/ENT300 MODULE 11 : Financial Plan 22


(2009)
Step 5: Prepare Pro Forma Income Statement

• The next step in developing a financial plan is to


prepare the pro forma income statement which shows
the expected profit or loss for the planned period,
usually for three consecutive years.

• The pro forma income statement consists of the


following elements:
• Sales
• Gross Income
• Net Income Before Tax

Entrepreneurship Dept, FBM ETR/ENT300 MODULE 11 : Financial Plan 23


(2009)
Step 5: Prepare Pro Forma Income Statement
(contd.)

• Net income before tax is derived as follows:

Sales - Cost of Sales = Gross Profit


Gross Profit - Operating Expenses = Net Income before tax

Entrepreneurship Dept, FBM ETR/ENT300 MODULE 11 : Financial Plan 24


(2009)
Example: Pro Forma Income Statement

Year 1Year 2Year 3


Sales240,000276,000317,400
Cost of sales94,600103,900108,940
Gross profit145,400172,100208,460

Less: Operating Expenses


Marketing expenses18,00018,90019,845
Administrative expenses96,000100,800105,840
Depreciation charges7,2007,2007,200
Miscellaneous 2,700 600600
123,900127,500133,485
Operating income21,50044,60074,975
Less: Financing expenses:
Interest on term loan4,5003,6002,700
Interest on hire-purchase1,6001,6001,600
6,100 5,200 4,300
Net profit before tax15,40039,40070,675
Entrepreneurship Dept, FBM ETR/ENT300 MODULE 11 : Financial Plan 25
(2009)
Step 6: Prepare Pro Forma Balance Sheet

• While the pro forma income statement shows the


financial performance of the business for the planned
period, the pro forma balance sheet shows the financial
position of the business at a specific point in time in
terms of assets owned and how those assets are
financed.

• The pro forma balance sheet is normally prepared for a


period of three years.

Entrepreneurship Dept, FBM ETR/ENT300 MODULE 11 : Financial Plan 26


(2009)
Step 6: Prepare Pro Forma Balance Sheet (contd.)

• The pro forma balance sheet consists of the following


elements:
 Assets
 Owners’ equity
 Liabilities

• The balance sheet shows the following equation:

Assets = Owners’ equity + Liabilities

Entrepreneurship Dept, FBM ETR/ENT300 MODULE 11 : Financial Plan 27


(2009)
Step 6: Prepare Pro Forma Balance Sheet (contd.)

• Assets are the economic resources of a business that are


expected to be of benefit in the future. Assets reported in the
balance sheet are generally categorised into two categories:
non-current and current assets.

• Non-current assets include fixed assets and other assets that


are owned and usually held to produce products or services.
These assets are not intended for sale in the short term.
Examples: property, plant, machinery, equipment, vehicles,
major renovations and long-term investments. For fixed assets,
the values shown in the balance sheet are the book value i.e.
the original cost less the accumulated depreciation.

Entrepreneurship Dept, FBM ETR/ENT300 MODULE 11 : Financial Plan 28


(2009)
Step 6: Prepare Pro Forma Balance Sheet (contd.)

• Current assets are short-term assets that can be


converted into cash within a year. Examples: cash,
inventories (raw materials, work-in-process and/or
finished goods), receivables and other short-term
investments.

• Owners’ equity refers to capital contributions from the


owners or shareholders in terms of cash or assets plus
the accumulated amount of net income. However, if the
business suffers a loss, the amount of loss will be
deducted from the capital contributions.

Entrepreneurship Dept, FBM ETR/ENT300 MODULE 11 : Financial Plan 29


(2009)
Step 6: Prepare Pro Forma Balance Sheet (contd.)

• Liabilities are the amounts owed by the business to outsiders.


They are categorised as non-current (long-term) and current
liabilities.

• Non-current or long-term liabilities refer to the long-term


obligations of the business that mature in a period of more
than one year. They usually include long-term loans as well as
hire purchase.

• Current liabilities refer to the short-term obligations of the


business that mature within a period of less than a year. The
most common forms of current liabilities are accounts
payable and accrued payments
Entrepreneurship Dept, FBM ETR/ENT300 MODULE 11 : Financial Plan 30
(2009)
Step 6: Prepare Pro Forma Balance Sheet (contd.)

• Liabilities are the amounts owed by the business to


outsiders. They are categorised as non-current (long-
term) and current liabilities.

• Non-current or long-term liabilities refer to the long-term


obligations of the business that mature in a period of
more than one year. They usually include long-term
loans as well as hire purchase.

Entrepreneurship Dept, FBM ETR/ENT300 MODULE 11 : Financial Plan 31


(2009)
Example: Pro Forma Balance Sheet

Year 1Year 2Year3


Non-Current Assets (book value)
Land & building45,00045,00045,000
Machinery & equipment18,40013,8009,200
Furniture & fixtures5,6004,2002,800
Renovation3,2002,4001,600
Vehicles20,00015,00010,000
Deposit 800 - -
93,00081,20069,400
Current Assets
Inventory of raw materials3,0003,5004,000
Inventory of finished goods3,0004,000 5,000
Cash40,90077,600145,575
46,90085,100154,575
Total Assets139,900166,300223,975

Owners’ Equity
Capital72,50072,50072,500
Accumulated profit15,400 54,800125,475
87,900127,300197,975
Long-term Liabilities
Term loan36,00027,00018,000
Hire-purchase 16,00012,000 8,000
52,000 39,000 26,000
Total Owners’ Equity & Liabilities139.900166,300223,975
Entrepreneurship Dept, FBM ETR/ENT300 MODULE 11 : Financial Plan 32
(2009)
Step 7: Perform Basic Financial Analysis

• Financial analysis is a technique of examining financial


statements to help the entrepreneur analyse the
financial position and performance of the business.

• Financial analysis involves two basic steps: generating


the information from the financial statements and
interpreting the results.

• The most common form of financial analysis is “ratio


analysis”.
Entrepreneurship Dept, FBM ETR/ENT300 MODULE 11 : Financial Plan 33
(2009)
Step 7: Perform Basic Financial Analysis (contd.)

• Financial ratios are normally used to compare figures


from the financial statement with other figures, so that the
true meaning of financial pictures can be obtained.

• There are various financial ratios that the entrepreneur


can look at. However, the most commonly considered
ratios in small business decision-making fall into four
categories: liquidity, efficiency, profitability and solvency.

• For illustrative purposes, financial data presented in pro


forma financial statements in the next slides will be used.

Entrepreneurship Dept, FBM ETR/ENT300 MODULE 11 : Financial Plan 34


(2009)
Pro Forma Income Statement

Year 1Year 2Year 3


Sales576,000662,400794,880
Cost of sales 227,000254,600278,460
Gross profit349,000407,800516,420

Less: Operating Expenses


Marketing expenses56,50062,15068,365
Administrative expenses226,000248,600273,460
Depreciation charges21,00021,00021,000
Other operating expenses 5,000 4,000 4,000
308,500335,750366,825
Operating income 40,500 72,050149,595
Less: Financing expenses:
Interest on term loan16,50013,200 9,900
Net income before tax24,00058,850139,695

Entrepreneurship Dept, FBM ETR/ENT300 MODULE 11 : Financial Plan 35


(2009)
Pro Forma Balance Sheet

Year 1Year 2Year3


Non-Current Assets (book value)
Land & building100,000100,000100,000
Motor vehicles64,00048,00032,000
Office equipment5,6003,0002,000
Renovation16,00012,0008,000
Machinery32,00024,00016,000
Other assets (deposits) 1,000 1,000 1,000
217,000188,000159,000
Current Assets
Inventory of raw materials2,0003,0004,000
Inventory of finished goods5,0006,000 8,000
Cash 46,500105,350244,645
53,500114,350256,645
Total Assets270,500302,350415,645

Owners’ Equity
Capital105,500105,500105,500
Accumulated profit24,000 82,850222,545
129,500188,350328,045
Long-term Liabilities
Term loan132,00099,00066,000

Current Liabilities
Accounts payable 9,000 15,000 21,600

Entrepreneurship Dept, FBM ETR/ENT300 MODULE 11 : Financial Plan 36


Total Owners’ Equity & Liabilities270.500302,350425,645
(2009)
Step 7: Perform Basic Financial Analysis (contd.)

• Liquidity Ratios

 The term liquidity refers to the availability of liquid


assets to meet short-term obligations. Thus,
liquidity ratios measure the ability of the business
to pay its monthly bills.

 The most widely used liquidity ratios are current


ratio and quick ratio.

Entrepreneurship Dept, FBM ETR/ENT300 MODULE 11 : Financial Plan 37


(2009)
Step 7: Perform Basic Financial Analysis (contd.)

 Current ratio can be determined by dividing total


current assets by total current liabilities. Generally,
this ratio shows the business’ ability to generate cash
to meet its short-term obligations.
Current ratio = Total current assets Total current
liabilities
Year 1 Year 2 Year 3

Current assets RM53,500 RM114,350 RM256,645

Curent liabilities RM 9,000 RM15,000 RM 21,600

Current Ratio 5.94 7.62 11.88

Entrepreneurship Dept, FBM ETR/ENT300 MODULE 11 : Financial Plan 38


(2009)
Step 7: Perform Basic Financial Analysis (contd.)

 If the business’ current ratio falls below 1, it means


that the business is in a serious liquidity situation. In
most cases, the comfortable current ratio for most
businesses is ‘2’.

 Quick ratio, also known as the acid test ratio,


measures the extent to which current liabilities are
covered by liquid assets.

 To determine quick ratio, the calculation of liquid


assets does not take into account inventrories since
it is sometimes difficult to convert them into cash
quickly.
Entrepreneurship Dept, FBM ETR/ENT300 MODULE 11 : Financial Plan 39
(2009)
Step 7: Perform Basic Financial Analysis (contd.)

Quick ratio=Total current assets-inventories


Total current liabilities

Year 1 Year 2 Year 3


Current assets RM53,500 RM114,350 RM256,645
Inventories RM 7,000 RM 9,000 RM 12,000
Current liabilities RM 9,000 RM15,000 RM 21,600
Quick Ratio 5.17 7.02 11.33

In most cases, the comfortable quick ratio is ‘1’.

Entrepreneurship Dept, FBM ETR/ENT300 MODULE 11 : Financial Plan 40


(2009)
Step 7: Perform Basic Financial Analysis (contd.)

• Efficiency Ratios

 The efficiency ratios measure how efficient the


business uses its assets to generate sales.

 The most widely used efficiency ratio for planning


purposes is inventory turnover ratio.

Entrepreneurship Dept, FBM ETR/ENT300 MODULE 11 : Financial Plan 41


(2009)
Step 7: Perform Basic Financial Analysis (contd.)

 Inventory turnover (or stock turnover) measures the


number of times inventories have been converted into
sales and indicates how liquid the inventory is. All
other things being equal, the higher the turnover
figure, the more liquid the business is.

 This ratio divides the cost of sales (or cost of goods


sold) by the average value of inventory. The average
value of inventory is derived by adding the opening
and closing balance of and dividing the total by two.
Inventory turnover =Cost of sales Average inventory
Entrepreneurship Dept, FBM ETR/ENT300 MODULE 11 : Financial Plan 42
(2009)
Step 7: Perform Basic Financial Analysis (contd.)

Year 1 Year 2 Year 3


Cost of sales RM227,000 RM254,600 RM278,460
Average inventory RM 7,000 RM8,000 RM 10,500
Inventory turnover 32.42 times 31.83 times 26.5 times

Entrepreneurship Dept, FBM ETR/ENT300 MODULE 11 : Financial Plan 43


(2009)
Step 7: Perform Basic Financial Analysis (contd.)
• Profitability Ratios

 Profitability ratios are important indicators of the


business’ financial performance. Investors will
particularly be interested in these ratios since they
measure the performance and growth potential of
the business.

 Some of the commonly used profitability ratios are


gross profit margin, net profit margin, return on
assets and return on equity.

Entrepreneurship Dept, FBM ETR/ENT300 MODULE 11 : Financial Plan 44


(2009)
Step 7: Perform Basic Financial Analysis (contd.)

 Gross profit margin give a good indication of financial


health of the business. Without an adequate gross
margin, the business will be unable to pay its
operating and other expenses.

 Gross profit margin is calculated by dividing the


business gross income by sales.

Gross profit margin =Gross profit Sales

Entrepreneurship Dept, FBM ETR/ENT300 MODULE 11 : Financial Plan 45


(2009)
Step 7: Perform Basic Financial Analysis (contd.)

Year 1 Year 2 Year 3


Gross profit RM349,000 RM407,800 RM516,420
Sales RM576,000 RM662,400 RM794,880
Gross profit margin 60.59% 61.56% 64.97%

 Net profit margin is an indication of how effective


the business is at cost control. The higher the net
profit margin, the more effective the business is at
converting sales into actual profit.

Entrepreneurship Dept, FBM ETR/ENT300 MODULE 11 : Financial Plan 46


(2009)
Step 7: Perform Basic Financial Analysis (contd.)

 Net profit margin is calculated by dividing the business


net income by sales.

Net profit margin =Net profit Sales

Year 1 Year 2 Year 3


Net profit RM 24,000 RM 58,850 RM139,695
Sales RM576,000 RM662,400 RM794,880
Net profit margin 4.16% 8.88% 17.57%

Entrepreneurship Dept, FBM ETR/ENT300 MODULE 11 : Financial Plan 47


(2009)
Step 7: Perform Basic Financial Analysis (contd.)

 Return of assets measures the overall return that the


business is able to make on its assets.

 This ratio is derived by dividing the business net profit


by total assets.
Return on assets =Net profit Total assets

Year 1 Year 2 Year 3


Net profit RM 24,000 RM 58,850 RM139,695
Total assets RM270,000 RM302,350 RM415,645
Return on assets 8.89% 19.46% 33.61%

Entrepreneurship Dept, FBM ETR/ENT300 MODULE 11 : Financial Plan 48


(2009)
Step 7: Perform Basic Financial Analysis (contd.)

 Return of equity shows what the business has earned


on its owners’ investment in the business.

 This ratio is derived by dividing the business net profit


by total equity.
Return on equity =Net profit Total equity

Year 1 Year 2 Year 3


Net profit RM 24,000 RM 58,850 RM139,695
Total equity RM129,500 RM188,350 RM328,045
Return on equity 18.53% 31.25% 42.58%

Entrepreneurship Dept, FBM ETR/ENT300 MODULE 11 : Financial Plan 49


(2009)
Step 7: Perform Basic Financial Analysis (contd.)

• Solvency Ratios

 This final category of ratios is designed to help the


entrepreneur measure the degree of financial risk that
his business faces. By referring to this ratio, the
entrepreneur can assess his level of debt and decide
whether it is appropriate for the business.
 The most commonly used solvency ratios are total
debt (liabilities) to equity (also known as leverage or
gearing), total debt to total assets, and times interest
earned (also known as interest coverage).

Entrepreneurship Dept, FBM ETR/ENT300 MODULE 11 : Financial Plan 50


(2009)
Step 7: Perform Basic Financial Analysis (contd.)

 The total debt to equity ratio indicates what


proportion of equity and debt that the company is
using to finance its assets.

 This ratio is calculated by dividing the the total debt by


total equity.
Debt to equity ratio =Total debt Total equity
Year 1 Year 2 Year 3
Total debt RM141,000 RM114,000 RM 87,600
Total equity RM129,500 RM188,350 RM328,045
Debt to equity ratio 1.09 : 1 0.61 : 1 0.27 : 1

Entrepreneurship Dept, FBM ETR/ENT300 MODULE 11 : Financial Plan 51


(2009)
Step 7: Perform Basic Financial Analysis (contd.)

 The debt to asset ratio measures the percentage of


the business’ assets financed by creditors relative to
the percentage financed by the entrepreneur.

 This ratio is calculated by dividing the total debts by


total assets.
Debt to equity ratio =Total debts Total assets
Year 1 Year 2 Year 3
Total debts RM141,000 RM114,000 RM87,600
Total assets RM270,500 RM302,350 RM415,645
Debt to total assets ratio 52.13% 37.70% 21.08%
Entrepreneurship Dept, FBM ETR/ENT300 MODULE 11 : Financial Plan 52
(2009)
Step 7: Perform Basic Financial Analysis (contd.)

 Times interest earned ratio measures the number of


times interest expense can be covered by profit
before interest and tax.

 This ratio is calculated by dividing total interest


expense by profit before interest and tax.
Time interest earned = Profit before interest & tax
Interest expense Year 1 Year 2 Year 3
Profit before interest RM40,500 RM72,050 RM149,595
Interest expense RM16,500 RM13,200 RM 9,900
Time interest earned 2.45 times 5.46 times 15.11 times

Entrepreneurship Dept, FBM ETR/ENT300 MODULE 11 : Financial Plan 53


(2009)
SUMMARY

• The financial plan is an important part of the business


plan. It incorporates all financial data derived from the
operating budgets, i.e. marketing, operations and
administrative budgets.

• Based on this financial data, several financial


projection tools are prepared to provide the
entrepreneur with a clear picture of the amount of
money needed to start a business, sources of finance,
the amount of cash available and the financial
performance and position of the business.
Entrepreneurship Dept, FBM ETR/ENT300 MODULE 11 : Financial Plan 54
(2009)
SUMMARY (contd.)

• The output of a financial plan covers project


implementation cost schedule, sources of financing
schedule, pro forma cash flow statement, pro forma
income statement , and pro forma balance sheet.

• The business financial data gathered in the financial


statements are analysed in order to obtain an overall
financial picture of the business. The financial ratios are
used to analyse the financial performance of the
business.

Entrepreneurship Dept, FBM ETR/ENT300 MODULE 11 : Financial Plan 55


(2009)
END OF MODULE 11