FINANCIAL PLAN

4.1 Project Cost

The total project cost of Printing Urbane is P80,000. This is also known as total

project cost or total investment requirement, which is composed of the fixed assets, pre-operating

expenses and working capital.

 Fixed Asset is the sum total of all costs of building, equipment, furniture and fixtures,

etc., i e., P29,203.

 Pre- Operating Expenses are those necessary expenses, which are incurred before the

business starts to operate. These includes registration fees and licenses, training costs,

cost or preparing business plan, trips to purchases of materials, equipment suppliers, etc.,

i.e., P5, 800.

 Working Capital is the amount of money permanently needed in cash or in kind to keep

the business operating while it is awaiting full payment for good sold to the customer,

i.e., P33,420.
1. The cost of maximum raw materials that will have to be stored to ensure continuous

production. Since A.F.B has raw materials readily available to us, only a week stocking is

needed, i.e., a total of P5,800.

2. The cost of finished goods, which will be kept in stock awaiting distribution to the

customers, i.e., is P5,800/ operation.

3. The cost of work in process which are on the factory floor but have not yet been

converted into a final product or finished goods, i.e., P25,600.

4. The amount ready cash needed to pay workers and overheads, i.e., P8,000.

To calculate the total capital requirement, add the following:

Fixed Assets P24,925.00

Pre- Operating Expenses 5,800.00

 Working Capital 33,420.00

TOTAL CAPITAL REQUIREMENT (PROJECT COST) P 64,145

Table 4.1 Project Cost

Particulars Cost
Fixed Investments
Computer 14,000
Printer 3,500
Screen Print 800
Squeegee 500
Table 1,000
Chairs 1,000
Cabinet 1,000
Calculator 150
Iron 1,000
Scissors 25
Pillowcase 50
Labor Cost/ Materials in Installation 1,900
Total Fixed Investments P24,925
Pre- Operating Cost
Permits & License 300
Work Site 1,000
Opening and Inauguration 1,000
Promotional Tools 1,200
Training & Seminars 1,500
Survey Questionnaires 800
Total Pre- Operating Cost P5,800
Working Capital
 Administrative Expenses 4,820
Work in Process 25,600
Pay workers & Overheads 3,000
Total Working Capital P33,420
GRAND TOTAL P64,145

4.2 Financing Plan and Requirement

How the total capital requirement is going to be sourced is called the Financial Plan.

Financial institutions want to know these sources and what different project cost

components are being funded by these various financial sources. After determining the total

capital requirement, the next step is to see whether the amount required is too much for you to be

financed on your own or beyond your capability to finance. If this is the case, then a loan will be

needed. The entrepreneur is almost is almost always expected to make an equity (owner`s

capital) contribution to the project.

4.3 Security for Loan

For Ace Printing Shop we don’t need to apply of any institutions that produce sources

of finance like commercial banks, credits unions, and etc.

4.4 Profit and Loss Statement

A summary of a management’s performance as reflected in the profitability of an

organization over a certain period. It itemizes the revenues and an expense of past that led to the

current profit or loss, and indicates what maybe than to improve the results.

A. Sales
 Sales are derived from multiplying the (unit) selling price by the volume of

expected sales during the year.

From the annual Sales revenue figure, step by step, subtract all the yearly expenses.

B. Cost of Goods Sold

1. Raw Materials Cost – This is the sum of all Raw Materials used to produce the

products that were sold.

2. Labor Cost – This is the sum of all Direct Labor Cost for the whole operations.

3. Factory Overhead – This is the sum of all miscellaneous costs such as minor raw

materials, indirect labor, maintenance and repair cost, depreciation of production, machinery,

electricity, water, supplies, etc. associated in producing the product for the whole year.

The three items above are known as Cost of Goods Sold. Sales minus these three items

results in Gross Income or Profit.

C. Operating Cost

4. Marketing Cost – This is the sum of all selling and promotional cost which

includes salaries and wages for marketing officer and sales clerks, commissions,

discounts, samples and distribution/ delivery cost to retail shops or customers, if any.

5. Administrative Cost – This is the sum of all administrative costs which includes

salaries and wages of the general manager, staff, office supplies, representation and

depreciation of equipment and furniture and fixtures, etc.

Gross Income Less Marketing and Administrative Costs result in Operating

profit for enterprises other than cooperatives.

 D. Financial Cost

6. Financial Cost – This is the sum of interest paid to banks on the amount of

borrowing.

Table 4.2 INCOME STATEMENT

(ACE Printing Shop)

INCOME STATEMENT
Five Months Projection
August September October November December
Total Sales 84,400 127,000 84,400 84,400 84,400
Less: Cost of Good 51,200 76,800 51,200 51,200 51,200
Sold
Gross Profit from 33,200 50,200 33,200 33,200 33,200
Sales
Less: Administrative - - - - -
Expenses
Salaries & Wages
1,150 1,150 1,150 1,150 1,150
Light & Water
500 500 500 500 500

Communication 20 20 20 20 20
Rental
1,000 1,000 1,000 1,000 1,000
Transportation (weekly)
1,200 (2 1,200 (2 1,200 (2 1,200 (2 1,200 (2
persons) persons) persons) persons)
persons)

Maintenance & Repairs 550 550 550 550 550

Office Supplies
400 500 500 500 500

Total Administrative 4,820 4,820 4,820 4,820 4,820

Expenses
Net Income 28,380 45,380 28,380 28,380 28,380
Less: Expenses
Pre-Operating Expenses 5,800 0 0 0 0
Fixed Asset 24,925 0 0 0 0
Total Expenses 30,725 0 0 0 0
Net Profit (-2,345) 45,380 28,380 28,380 28,380
(See Attachment E for the computation of the Total Sales for the 5 months)

4.5 Cash Flow Statement

Cash is an enterprise that can be compared to water that flows in a river stream.

 Cash Flows In from Owners Equity. This puts the enterprise highly dependent on its

customers, financiers and stakeholders.

 Cash Flows Out is the process of purchases of raw materials, pre-operating,

administrative and fixed investment.

 Net Cash Flow is the balance of Cash in Flow after deducting Cash out Flow.

Pre- August September October November December

Operating

Cash Inflows
Owner’s Equity 64,145.00
Cash Sales 84,400 127,000 84,400 84,400 84,400

Total Cash 64,145.00 84,400 127,000 84,400 84,400 84,400

Inflows
Cash Outflows
Pre-Operating 5,800
Expense
Fixed Investment 24,925
Materials 51,200 76,800 51,200 51,200 51,200
Purchases
Administrative 4,820 4,820 4,820 4,820 4,820
Expenses
Total cash 30,725 56,020 81,620 56,020 56,020 56,020
Outflow
Cash Balance 33,420 28,380 45,380 28,380 28,380 28,380
End
Table 4.3 CASH FLOW STATEMENT
4.6 Balance Sheet
Following the equation: Assets = Liabilities + Capital (Equity or Worth) -- Statement of

Balance Sheet shows:

 The Assets of the enterprise are what it needs.

 The Liabilities and Capital (Equity or Worth) are its Sources.

Thus: Needs (Assets) = Sources (Liabilities +Capital).

 The Needs of the enterprise are what it owns

 The Liabilities and Capital (Equity or Worth) are what it owes.

Thus: Owns (Needs) = Owes (Sources)

Table 4.4 Balance Sheet Statement

(ACE Printing Shop)

Statement of Balance Sheet
Five Months Projection
 Pre- August September October November December
Operating
ASSETS
Cash 33,420 28,380 45,380 28,380 28,380 28,380

Total Current 33,420 28,380 45,380 28,380 28,380 28,380

Assets
Property & 24,925 24,925 24,925 24,925 24,925 24,925
Equipment
Net Property & 24,925 24,925 24,925 24,925 24,925 24,925
Equipment
Pre- Operating 5,800 5,800 5,800 5,800 5,800 5,800
Expenses
Net Pre- 5,800 5,800 5,800 5,800 5,800 5,800
Operating
Expenses
TOTAL 64,145 59,105 76,105 59,105 59,105 59,105
ASSETS
LIABILITIES & OWNER’S EQUITY
Owner’s equity 64,145 64,145 64,145 64,145 64,145 64,145
Retained -5,040 11,960 -5,040 -5,040 -5,040
Earnings

TOTAL 64,145 59,105 76,105 59,105 59,105 59,105

LIABILITIES
& OWNER’S
EQUITY

4.7 Loan Repayment Schedule

The Ace Printing Shop have no loans.

4.8 Break-even Point (BEP)

To determine the Break-Even Point, there are three (3) figures need to be found:

 Sales- Annual Sales as given in the income (profit and loss) statement
  Cost of Goods Sold – (Variable cost in Manufacturing enterprise) costs which

change significantly according to the levels of production and usually consists of

purchases, inventories, freight and direct labor that is hired and terminated

according to how much cost of goods sold a trading enterprise is making.

 Operating Expenses – Fixed cost in manufacturing enterprise) costs that do not

significantly if the enterprise has more or less Sales or Cost of Goods Sold.

Break-even Sales Unit = Total fixed cost

Contribution margin per unit

Fun T-Shirt Printing

P6, 400 = 32 units

P200

128 variable cost + 72 Profit per unit = P200 Selling price

Break-Even Point Sales

BEP Sales = Net sales x cost of goods sold

Net sales – cost of goods sold

Table 4.5 Break Even Point Sales

August September October November December
 84,400 x 51,200 127,000 x 76,800 84,400 x 51,200 84,400 x 51,200 84,400 x 51, 200
84,400 – 51,200 127,000– 76,800 84,400 – 51,200 84,400 – 51,200 84,400 – 51,200

Total BEP 130, 159.04 194,294.82 130, 159.04 130, 159.04 130, 159.04
Sales

Profit Margin

Profit Margin = Net Profit

Net Sales

Table 4.6 Profit Margin Computation

August September October November December

-2,345 45, 380 28,380 28,380 28,380

84,400 127,000 84,400 84,400 84,400

Profit Margin -2.78% 35.73% 33.63% 33.63% 33.63%

(See Table 4.2 Income Statement for the computation of Net Profit)

4.9 Return on Investment

ROI = Net Profit x 100%

Long-term Liabilities + Owner’s equity

Table 4.7 Return on Investment Computation

August September October November December

 -2,345 45,380 28,380 28,380 28,380
0 + 64,145 0 + 64,145 0 + 64,145 0 + 64,145 0 + 64,145

ROI (3.66%) 70.75% 44.24% 44.24% 44.24%

4.10 Payback Period

We invest P64,145 in a business

The free cash flow (FCF or OCF) is as follows:

Net Profit Collected Payback

August (2,345) (2,345)

September 45,380 43,035

October 28,380 71,415

November 28,380 99,795

December 28,380 128,175