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Chapter 1 : About Industry 1.1 Industry-Overview 1.2 Industry Analysis 1.3 Assumptions Chapter 2 : Background 2.1 Businees Concept 2.2 Business Overview 2.2.1 Registered name of Organization 2.2.2 Mission Statement 2.2.3 Vision Statement 2.2.4 Organizational Objectives 2.2.5 Organizational Values Chapter 3 : Organizational Plan 3.1 Partners and Principal Shareholders 3.2 Projected Roles and Responsibilities Chapter 4 : Marketing Plan 4.1 Marketing objectives 4.2 Marketing Strategy 4.2.1 Segmentation 4.2.2 Targeting 4.2.3 Positioning 4.5.3 Marketing Strategies 4.3.1 Products &/ or service 4.3.2 Price 4.3.3 Promotion 4.3.4 Distribution Chapter 5 : Financial Plan 5.1 Statement Showing Projected Income Statement 5.2 Statement Showing Projected Cash Flow 5.3 Statement Showing Pro Forma Balance Sheet 5.4 Statement Showing Projected Capitalization Requirements 5.5 Statement Showing Projected Working Capital Requirement 5.6 Statement Showing Projected Break Even Point 5.7 Statement Showing Projected Ratios
A Project Report
Of New entrepreneurship & Innovation Management On
“Franchisee of Pizza Hut”
Submitted to, Prof. Ritesh Patel
S.V institute of Management, Kadi ( 2009-11)
Submitted by, Nitesh Radadiya (F 04) Juhi Dhawan (F 28) Shefali G (H 11) Richa Mistry (F 42) Nimmi Saxena (H 01)
1.1 Industry Overview
Given the current straitened economic conditions the restaurant industry is proving resilient. Eating out in restaurants and the purchasing of take-out and delivery meals is an essential part of the American lifestyle. The convenience and value offered by the restaurant industry makes management of consumers day to day living easier. Research by the National Restaurant Association indicates that consumers, although worried about the economy, intend to continue their patronage of restaurants. It is expected that quick service, take out and delivery style restaurants will benefit at the expense of upscale and casual dining. It is predicted also that moderating gas prices and other commodities will mean that consumers may have more disposable income in 2009. The US pizza market is a mature, developed market and highly competitive. Franchised pizza chains account for around 60% of the market. It is estimated that there are around150 well known pizza franchises in operation and an unknown number of local and regional pizza franchises. While the pizza market experienced growth until 2007 when it reached a value of $34 billion, the financial downturn resulted in flat sales in 2008, a trend which is expected to continue for 2009. As well as moderating sales, franchise operators are facing a minimum wage increase from $6.55 to $7.25 per hour effective July 24, 2009. On a more positive note, commodity prices are falling. The price of cheese, wheat and most pizza toppings has fallen in 2009. Also, the trading down by cash strapped consumers from casual and upscale dining to less expensive alternatives is expected to benefit pizza franchise operators.
Top 10 Pizza Franchise Chains
Company Name 1. Pizza Hut 2. Domino’s Pizza 3. Papa John’s Pizza 4. Little Caesars 5. Noble Roman’s Pizza 6. Papa Murphy’s Take ‘N’ Bake Pizza 7. Sbarro’s Italian Eatery 8. Godfather’s Pizza 9. CiCi’s Pizza 10. Hungry Howie's Pizza Founded 1958 1960 1985 1959 1972 1981 1956 1973 1985 1973 Units 14,759 8,641 3,238 2,000 1,400 1,073 1,040 656 631 575 Service Type Family Style Take-out/Delivery Take-out/Delivery Take-out/Delivery Take-out/Delivery Take-out only Quick Serve Quick Serve Buffet Take-out/Delivery
• Healthier Options
There is increasing demand among consumers for healthy meals and healthy kids meals. Consumers are also more interested in where their food comes from and how it is produced, with a growing demand for locally produced and organic ingredients. Pizzeria operators are responding by producing dough with healthier fats, offering whole wheat pizza crusts, healthier vegetable based toppings and salads. • Value
As consumers increasingly look for value, pizzeria operators are expected to respond with lower prices and promotions. Falling commodity prices will enable more aggressive pricing. Consumers have less to spend, but they still want to dine out for convenience and enjoyment. By responding with value pricing, specials and combo-deals, pizza franchises will meet this ongoing consumer need. • Technology Trends
The major pizza players are offering online ordering and some are now offering text ordering from mobile phones, PDAs and other web enabled mobile devices. Major pizza chains are using social networking sites like Facebook and MySpace as platforms to build a loyal customer base and to facilitate ordering directly from the sites.With an increased focus on green initiatives in the restaurant industry as a whole, pizza operators are introducing energy efficient equipment such as high speed ovens.
Pizza Franchise Fees and Costs
Given the current economic conditions, the franchise option as a route to market is considered to be more attractive than entering the market with a stand-alone restaurant. The support offered by the franchise system and its proven business model reduces the risk involved.
1.2 Industry Analysis
Pizza is very much part of the American way of life, with Americans eating approximately 100 acres of pizza each day, or 350 slices per second. Although the pizza industry experienced a decrease in sales during the recession, the beginning of 2010 has seen an increase in sales. The development and implementation of new technology and marketing strategies has enabled the pizza industry to adapt to growing consumer demands for cheap, fast, and convenient products.
History of the Pizza Industry in the US
The Queen of Pizza Around 1889, Italy’s Queen Margherita and her husband, Umberto I were touring the country, when she saw peasants eating large, flat bread. The queen was curious and asked to try the pizza. She loved it so much, she brought chef Rafaelle Esposito to the royal palace and ordered him to bake pizzas for her. To honor the queen who was so beloved by her subjects, Rafaelle baked a pizza topped with tomatoes, mozzarella cheese, and basil to represent the colors of the Italian flag. This became Queen Margherita's favorite pizza and it was named in her honor, the Pizza Margherita. Pizza arrived to the inner cities of the United States, New York and Chicago most notably, in the early 1900s, thanks to the large population of Italian immigrants. The popularity of pizza then grew with the returning of GI’s to the US after being stationed in Italy during World War II. They brought home a demand for the pizza they had enjoyed in Italy and thus began the mainstreaming of pizza into American society. Between 1945 and 1960, pizzerias began opening all over the country.
At that time, pizza restaurants were individually-owned stores, but the proliferation of chains
changed this. Pizza Hut started in Wichita, Kansas, in 1958 and now has over 7,500 units in the US; Little Caesars emerged in 1959 in Michigan and now has over 2,500 units. Domino's started in 1960, also in Michigan, and now has over 5,000 units in the US; Papa John's opened in 1989 in Indiana. It now has nearly 3,000 units in the US.
• Pizza Market
Size and Value The pizza segment of the food industry represents 11.7% of all restaurants and accounts for more than 10% of all foodservice sales. Between June 2008 and June 2009 the US pizza industry recorded nearly $37 billion in sales. According to “Pizza Power”, PMQ magazine’s (Pizza Marketing Quarterly) Annual Industry Analysis, of the 67,554 pizza stores in the US, 59% are independently-owned and control 51% of total pizza sales. Franchises and chains account for 41% of the market and for nearly half the sales. The following pie charts were sourced from PMQ’s 2009 annual industry analysis and depict the breakdown of pizza stores in the US and a breakdown of US pizza sales.
Graph 1: Breakdown of Pizza Stores
Graph 2: Breakdown of U.S. Pizza Sales
The pizza industry experienced a loss of market share and sales during the recession as skyrocketing cheese prices and an increase in the cost of wheat and other pizza essentials drove up the cost of pizza. McDonald's and other hamburger purveyors gained market share by attracting pennypinching consumers with value meals, some with entrees priced as low as $1 or less. In an effort to revive sales, pizza businesses began to offer promotions to customers through varied marketing channels such as social media sites, the internet and direct mail. For example, Pizza Hut launched a $10 promotion at the end of 2009 in Dallas which went nationwide earlier this year and helped the country's largest pizza seller regain some of the sales it had lost to lower-priced chains. The promotion offered consumers any pizza, any crust and any toppings for $10. This trend towards offering targeted discounts has proved a successful strategy as most pizza businesses have reported an increase in sales for the start of 2010. Due to the recession-driven “eating in” trend, pizza businesses have experienced an increase in takeout and delivery sales. Take-out and delivery has risen in popularity due to the fact that it is cheaper than eating out, as there are no additional expenses like tips, drinks and gas. The increase of at-home
leisure activities has also been a key growth driver. With new technology that allows for easier and faster ordering, the number of consumers ordering online or via text is forecasted to rise. In the beginning, there was pizza While debated, the word "pizza" is thought to have come from the Latin word pinsa, meaning flatbread. Legend suggests Roman soldiers gained a taste for Jewish Matzoth while in Palestine and brought the recipe home. However, a recent archeological discovery found a preserved Bronze Age pizza in the Veneto region. Tomatoes were introduced to Italian cuisine by Neapolitan peasants in the 18th and early 19th centuries, which led to the true modern Italian pizza. Once seen as poisonous, the tomato was used on many foods, including early pizza. Despite initial reluctance, once members of the local aristocracy tried pizza, they were hooked. Demographics Pizza is enjoyed by people from all walks of life and eating out at restaurants is an essential part of the American lifestyle. According to the National Restaurant Association, 45% of adults say that restaurants are still a major part of their lifestyle and that they will continue to frequent their favourite restaurants7. According to a survey completed by Mintel8, 93% of Americans eat at least one pizza per month and 21% of 18 – 24 year olds purchase pizza more than three times per month. This is compared to only 7% of those aged over 65 eating at least one pizza per month. Pizza also proved popular with parents. About 20% of the parents surveyed said that they purchase pizza more than three times per month, compared to 12% of adults with no children.
Just hearing the word Pizza brings a smile to the face of just about every American. Whatever style or variety -- from thick, Chicago-style deep-dish Pizza stuffed with gobs of cheese, sausage, and pepperoni to a thin-as-a-cracker crust topped with veggies -- Pizza invariably makes it to the top of "favorite food" lists. Here, we've compiled a list of fun and interesting facts about this American food icon. See how many you knew! 1. Since 1987, October has been officially designated National Pizza Month in the United States. 2. Approximately three billion Pizza are sold in the United States every year, plus an additional one billion frozen Pizza. 3. Pizza is a $30 billion industry in the United States. 4. Pizzerias represent 17 percent of all U.S. restaurants. 5. Ninety-three percent of Americans eat Pizza at least once a month. 6. Women are twice as likely as men to order vegetarian toppings on their Pizza. 7. About 36 percent of all Pizza contain pepperoni, making it the most popular topping in the United States. 8. The first known Pizzeria, Antica Pizzeria, opened in Naples, Italy, in 1738. 9. More Pizza is consumed during the week of the Super Bowl than any other time of the year. 10. On average, each person in the United States eats around 23 pounds of Pizza every year. 11. The first Pizzeria in the United States was opened by Gennaro Lombardi in 1895 in New York City. 12. The record for the world's largest Pizza depends on how you slice it. According to Guinness World Records, the record for the world's largest circular Pizza was set at Norwood Hypermarket in South Africa in 1990. The gigantic pie measured 122 feet 8 inches across, weighed 26,883 pounds, and contained 9,920 pounds of flour, 3,968 pounds of cheese, and 1,984 pounds of sauce. In 2005, the record for the world's largest rectangular Pizza was set in Iowa Falls, Iowa. Pizza restaurant owner Bill Bahr and a team of 200 helpers created the 129 X 98.6-foot Pizza from 4,000 pounds of cheese, 700 pounds of sauce, and 9,500 sections of crust. The enormous pie was enough to feed the town's 5,200 residents ten slices of Pizza each.
No .of pizza piece sold on daily basis :- 270 pieces Variety of pizzas sold: - Vegetarian Pizzas Investment: - Rs.3700000 Owners capital:-Rs. 2500000 (Rs. 500000 per partner) Loan from ICICI: - Rs. 1200000 Cost of Capital :- 8.5%
CH - 2 Background
2.1 Business concept
What is franchisee ? Almost all of us have heard of booming franchise business. Every other day we witness increasing number of franchise food chains or retail chains in malls or popular marketing hubs. So what is a franchise business? The definition says, “A franchise is a right granted to an individual or group to market a company's goods or services within a certain territory or location”. In other words, when a company decides to distribute its products or services to independent third party operators on a contract basis, it is known as franchise business. One of the basic conditions of this contract is franchise using business methods, trademarks, name recognition and goodwill of the franchiser and in return he has to pay certain sum in form of initial payment and royalties. Franchisee is the independent third party operator using registered products and services whereas the company that grants the rights to the franchisee to use its products and techniques is called as franchiser. Worldwide, there are plenty of popular franchises. Most of them belong to fast food chains. The history of franchise business go a long way back to 1850s. Isaac Singer had first thought of selling licenses of his sewing machine business to other entrepreneurs in order to enhance his business to different territories. The best contribution of franchises is in developing independent entrepreneurs who want to be their own boss. There are plenty of franchise businesses available worldwide which are being operated by self-driven individuals. However, before one decides to buy a franchise business, he must be aware of all the pros and cons involved with it. He must have proper understanding of franchise business. Franchise business is no doubt lucrative, but its success is very much dependent upon the strength of the brand and how it is being operated. There is no dearth of franchise opportunities in industries like health and fitness, pet related business, automotive, financial services, maintenance and fast food chains etc. A franchisee needs to understand how business works and should also be aware of fees involved. Rules and guidelines are established by the franchiser and that need to be followed. Franchising is unquestionably one of the most popular ways of operating business in today’s time. It is a mutually beneficial arrangement between franchiser and franchise. When an entrepreneur purchases franchise for sale, he is creating a huge potential of business for himself. The fact that, franchiser has presence as an established name really helps in the success of a franchise. It is far better to obtain a license of a franchise than opening a mom and pop business. The business formula is proven and one does not need to establish the brand name from the scratch. Everything about the venture from name, services, products and quality has already been established so the job of franchisee becomes much easier.
Pizza Hut is one of the flagship brands of Yum! Brands, Inc., which also has KFC, Taco Bell, A&W and Long John Silver’s under its umbrella. Pizza Hut is the world’s largest pizza chain with over 12,500 restaurants across 91 countries In India, Pizza Hut has 137 restaurants across 36 cities, including Delhi, Mumbai, Bangalore, Chennai, Kolkata, Hyderabad, Pune, and Chandigarh amongst others. Yum! is in the process of opening Pizza Hut restaurants at many more locations to service a larger customer base across the country
PIZZA HUT STORY
1958: The legacy of Pizza Hut began, when two college-aged brothers from Whichita, Kansas, Frank and Dan Carney opens first Pizza Hut restaurant after borrowing $600 from their mother. 1959: Pizza Hut is incorporated in Kansas and the first franchise unit opens in Topeka, Kansas. 1968: International market entered with opening of Pizza Hut restaurant in Canada. 1969:Red roof adopted for restaurants. 1972:Pizza Hut, Inc. listed on New York Stock Exchange under the symbol PIZ. 1977:Pizza Hut, Inc. stockholders overwhelmingly approve merger with PepsiCo, Inc. for an undisclosed sum. 1986:Delivery service, as a new concept, is initiated 1996:Pizza hut comes to India with a dine in restaurant Banglore that has special vegetarian pizzas. 1997:Pizza hut opens a dine-in restaurant in Delhi. 2007 Pizza hut brought out our Thick n Thin Pizza and began to re-franchise our dine-in restaurants.
2.2 Business Overview
2.2.1. Registered name of Organization
2.2.2 Mission statement We take pride in making a perect pizza and providing couryeous and helpful service on time all the time. Every customer says, ”I’ll be back ! ”
We are trying to provide value growth to our shareholders.
2.2.3 Vision statement To improve well being of our customers, community and people connected to our enterprise. Run great restaurants.
2.2.4 Organizational objectives To provide world-class facility and taste to its Indian customers in a cost effective way. To maintain uniform taste across all its outlets. To present its products when and where the customer wants within committed half an hour time. To delight the customer, ie more beyond satisfaction. 2.2.5 Organizational values
Have a PASSION for excellence in everything we do. EXECUTE with positive energy and urgency. Be individually and collectively ACCOUNTABLE for growth in people, customer satisfaction and profitability. Find reasons to RECOGNIZE the achievement of others and have fun doing it. LISTEN and more importantly, respond to the voice of the customer. Think SAFETY first. 17
CH.3 Organizational Plan
1) Juhi Dhawan 2) Shefali Banodiya 3) Nitesh Radadiya 4) Richa Mistry 5) Nimmi Saxena
3.2. Projected Roles & Responsibilities
Position: Team Member (Nitesh) Responsibility : Team Member plays a key role in the operation of our restaurants. Position : Shift Manager (Richa) Responsibility : This is an entry level, hourly and management position.Shift Managers help to manage the daily operations of the restaurants including customer service, employee development and food production. Position : Area Manager (Juhi) Responsibility : Area Managers are responsible for 5-7 units within a specified region. Among other things, they coach the restaurant management team, ensure unit annual operating plans are established and met or exceeded, build sales, achieve margin targets, ensure customer satisfaction. Position : Restaurant General Manager/Asst. Restaurant General Manager (Nimmi) Responsibility : Restaurant General Managers are responsible for all functions of the restaurants. Among other things, they recruit, screen, hire, train, and develop employees; do sales forecasting and manpower planning; conduct risk/safety inspections; manage inventory and facility; order products; conduct P&L analysis; schedule crew members; and manage revenue periods. Position : Human Resource management (Shefali) Responsibility: Recruiting Training & motivation
CH - 4 Marketing Plan
4.1 Marketing Objectives
The perceived quality and service of the company will help to ensure a better than average chance at a successful introduction of a new product Diversification of the products offered. To add something new to the menu. Diversification of pizzas. Always try to come up with some innovative way to make a pizza into something slightly different - different enough that customers will think it’s a whole new product. To Value customer service and satisfaction.
4.2 Marketing Strategy
•Segmentation is: Identifying portions in market different from one another. The Segments Pizza Hut is working on • • • Higher Income Dual Career Families Age 12-30 Years
•Target market: –Target market is X and Y generation –Generation with a "spend now, pay later" attitude 21
•College graduates: Spending habits of college freshmen also indicates a high percentage of money being spent on non-essential items.
•Pizza hut has done positioning in the target market by keeping in view two basic factors: –Quality –Frequency •Worldwide Pizza Hut has come to become synonymous with the ‘Best pizzas under one roof‘ •Crew members 'customer mania‘which makes Customers Unique dining experience. e.g. Service
4.3 Marketing Mix
Worldwide and in India, Pizza Hut has come to become synonymous with the ‘best pizzas under one roof’. This is because at Pizza Hut the belief is that every pizza has its own magic, thus making it a destination product – which everyone seeks. It is this belief that has ignited the passion to create, innovate and serve the finest product the industry has to offer, while setting standards for others to strive to replicate. Pizza Hut is committed to providing uncompromising product quality, offering customers the highest value for money and giving service that is warm, friendly and personal. A critical factor in Pizza Hut’s success has been its unique dining experience. Crewmembers at Pizza Hut strive each day to provide ‘customer mania’ - the kind of service that ensures that every visit of the customer is a memorable one. In fact, to ensure stringent international bench-marks in the quality of products and services at all its restaurants across the world, Pizza Hut has a mystery shopper program in which an unknown official visits a restaurant and evaluates it on certain defined parameters called C.H.A.M.P.S. that stand for Cleanliness, Hospitality, Accuracy, Maintenance, Product quality and Speed. Based on the report submitted by the official, the restaurants are rated and in the rare case of finding under performers, they are kept under strict vigil A critical factor in Pizza Hut’s success has been a menu that has constantly evolved and expanded to cater to the changing needs and specific preferences of customers in different parts of the world. In having understood the pulse of the customers in India, Pizza Hut has clearly established itself as a brand with an Indian heart. Besides offering an extensive range 22
of vegetarian pizzas, it was the first pizza chain to open a 100% vegetarian restaurant in India in Surat and later in Ahmedabad and Chowpatty, where it offers a Jain menu sans all root-based ingredients. Over the years Pizza Hut has also developed and successfully introduced a range of products especially suited to the Indian palate. These products like Chicken Tikka, Spicy Korma, Spicy Paneer and the Masala and Tandoori pizzas have been a tremendous success. What has also given Pizza Hut a competitive edge is that in addition to an extensive range of internationally renowned pizzas like The Italian, the proprietary Pan Pizza and Stuffed Crust, in India the menu offers the option of a complete meal. It includes appetizers, a Salad Bar where the customers can make their own fresh salads, a range of soups, pastas and desserts
Pizza Hut will successfully use the high/low pricing strategy when setting the retail price of its products. The high/low retail pricing strategy allows Pizza Hut to charge a price that is above the competition, but also promote frequent sales to lower the price below them. The high/low pricing strategy has several advantages. First, this pricing strategy will help segment the market. Different groups of customers are willing to pay different prices for the same product. Pizza Hut can sell "The Extreme" to the customers who will pay the higher price to be the first to buy and also to the bargain hunters. The high/low pricing strategy will also create excitement. Customers will be able to try something new when they purchase "The Extreme" and this exciting experience may bring those customers back to purchase other products. Finally, this strategy will emphasize product and service quality. Pizza Hut sets a high initial price for its products to send a signal to customers that its products are quality and the service is excellent. Coupons worldwide and gift and cards in are also made available.
In India, eating out is perceived as a form of entertainment. Which is why Pizza Hut servers not only serve our customers great food, they also sing and dance for them. And many of Pizza Hut’s customers would, we are certain, love to participate in this process. Giving them an opportunity to showcase their talent – they conceived the Jig n Jeeto contest. Organized in Delhi 23
for the first time, it received a phenomenal response with super star Fardeen Khan judging the show. Pizza Hut hopes to continue this contest as a tradition for the years to follow. Pizza Hut’s communication has also always struck a chord with the Indian customer. Its very first television commercial in India featured a boy and girl, who meet at a Pizza Hut restaurant in a traditional arranged marriage setting. They lose their inhibitions when the pizza arrives. When the sequel went on air featuring the same couple, now married, with the girl’s father consoling her over a pizza as her bridegroom waits outside the restaurant to escort her after their wedding the customer’s involvement was so complete that several wrote in to inquire whether the couple had children The more recent campaign that was launched with the introduction of the Tandoori pizzas featured a typical Indian wedding procession abandoning the bridegroom when enticed by delicious aromas from a Pizza Hut restaurant. While the famous ‘Good times start with great pizzas’ slogan has been prominent in the communication ,the focus has remained on the best and most distinct pizzas. Pizza Hut laid more emphasis on its “restaurant dining experience”. Pizza Hut localizes it menu to capture local Indian Market. In 2000 Pizza Hut launched its innovative Pizza Pooch menu and Pizza Pooch Birthday Party package exclusively for kids in the 6-10 age groups. It positioned itself as family restaurant and also concentrated on wooing kids
Online promotional strategies
Pizza hut provide many services online such as Birthday reminder service- here people can save the birthday date of their friends, relatives , and pizza hut will remind you the birthday date and birthday parties discount and u can book online E-coupon and discount offer available to online customers Hot line number – pizza hut hot line number also provide at online which is 39883988 Even customer can do online order of pizzas
VIP CLUB ⇒ a VIP (very into pizza) club made where people can register their email, mobile number where pizza hut provide them latest pizza news, discounts and offers at email ,mobile phones. 24
The type of distribution channel used will be direct channel. The direct channel is successful when there is an extremely large market that is geographically dispersed. The direct channel is also useful when there are a large number of buyers, but a small amount purchased by each. It will use three different methods of selling its products directly to the market. The first method of distribution used is delivery. Customers can call Pizza Hut ahead of time, place an order, and the order is delivered to the customer's home. Another method of distribution is for customers to dine-in. Customers can go to the nearest Pizza Hut, place an order and either leave with the order or eat at the restaurant. One of Pizza Hut's largest competitive advantages is its restaurant style facility. Pizza Hut offers a clean place to sit down and enjoy the variety of pizzas, salads, and sandwiches in a fun, family atmosphere. The third method of distribution is! online ordering. Customers can now go on the Internet and place an order. This method is useful because it allows customers to view the entire menu, download any special coupons, and order without having to disclose any credit card numbers.
CH- 5 Financial Plans
5.1 Statement Showing Projected Income Statement Pro Forma Income statement
Particular Sales Less: COGS Gross Profit Operating Expense: Selling Expenses Advertising Expenses Salary, wages Office Supplies 8.75% Interest of Loan Depreciation Rent Electricity Expenses Utility Expenses Other Expenses Total Operating Expenses Profit/loss before Tax Taxes Net Profit(Loss) 10% 17% 22% 1.50% 8.86% 5.75% 2% 5.75% 73% 27% 12.36% 14.78% 1626075 2764328 3577365 243911 105000 63000 1440000 934993 325215 934993 1991942 3386301 4382272 298791 105000 63000 1440000 1145367 398388 1145367 2440129 4148219 5368283 366019 105000 63000 1440000 1403074 488026 1403074 2989158 5081568 6576147 448374 63000 1440000 1718766 597832 1718766 3661718 6224921 8055780 549258 63000 1440000 2105488 732344 2105488 24937997 11679186 1443547 10235638 100% 52.75% 47.25% Year 1 Year 2 Year 3 Year 4 Year 5 36617183 19315564 17301619
16260750 19919419 8577546 10507493 7683204 9411925
24401288 29891578 12871679 15767807 11529609 14123770
12014880 14356428 4245870 524790 3721080 5562991 687585.7 4875405
17224824 20633610 7176464 887011 6289453 9257968 1144285 8113683
5.2 Statement Showing Projected Cash Flow
Particular Net Income (P&L A/C) Income from Operating Income Depreciation Inc. Bank borrowing Total of Operating Act. Cash flow from Operation(A) Investing Activity Decrease a loan Total Financing activity Interest of Loan Taxation Total Cash flow from I.&F.Act.(B) cash BOP Net surplus/deficit Cash EOP 3154290 3154290 105000 524790 629790 1154580 105000 687545 792545 1480090 3154290 4145901 7300191 105000 887011 992011 1879022 7300191 5360442 12660633 1144285 1144285 2344285 12660633 6976683 19637316 1443547 1443547 1443547 19637316 10298639 29935955 1200000 1200000 1 4245870 2 5562991 3 7176464 4 9257968 5 11679186
63000 63000 4308870
63000 63000 5625991
63000 63000 7239464
63000 63000 9320968
63000 63000 11742186
5.3 Statement Showing Pro Forma Balance Sheet
1 Liability Owners capital Retail earning Reserve & surplus 8.5% bank loan Interest Current Liability Total Liability Assets Furniture Less: Accumulated Depredation Net assets current Assets Cash Total Assets 1500000 63000 1437000 3500000 3154290 8091290 2500000 3721080 372108 1200000 105000 193102 8091290
2 2500000 4875405 487540 1200000 105000 3006246 12174191 1500000 126000 1374000 3500000 7300191 12174191
3 2500000 6289453 628945 1200000 105000 6748235 17471633 1500000 189000 1311000 3500000 12660633 17471633
4 2500000 8113683 811368 12960265 24385316 1500000 252000 1248000 3500000 19637316 24385316
5 2500000 10235638 1023563 20861754 34620955 1500000 315000 1185000 3500000 29935955 34620955
5.4 Statement Showing Projected Capitalization Requirements
1 629790 2 792545 3 992011 4 1144285 5 1443547
5.5 Statement Showing Projected Working Capital Requirement
1 Raw material consumed Book Debt Current Assets Less:margine 25% Less:Trade credit for RM Bank finance For WC 2807000 693000 3500000 875000 332500 3155000 2 2900000 510000 3410000 852500 323950 3065000 3 2500100 999900 3500000 875000 332500 3155000 4 3200300 299700 3500000 875000 332500 3155000 5 2880000 620000 3500000 875000 332500 3155000
5.7 Statement Showing Projected Break Even Point
1 165 120.92 44.08 1608000 =FC/S-V =1608000/165-120.92 36479.13 BEP = SP*Piece = 6019056
Selling price Variable Cost Contribution FC BEP
5.7 Statement Showing Projected Rati0
Profitability Ratio Gross profit margin= Gross Margin *100 Total sales Net profit margin = Net Income * 1000 Total sales ROI = Net Income Total Assets 1 Gross Profit Net Income Total Assets Total Sales GP NP% ROI 16260750 3721080 4937000 7683204 2.12 48.43% 0.753713 2 19919419 4875405 4874000 9411925 2.12 51.80% 1.000288 3 24401288 6289453 4811000 11529609 2.12 54.55% 1.307307 4 29891578 8113683 4748000 14123770 2.12 57.45% 1.708863 5 36617183 10235638 4685000 17301619 2.12 59.16% 2.184768
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