Financial

Accounting
Financial Planning of the Fish Farm
NABEEL AHMAD
1803004
Submitted to: Dr. Yasir Riaz
Financial planning is the task of determining how a business will afford to achieve its strategic
goals and objectives. Usually, a company creates a Financial Plan immediately after
the vision and objectives have been set. The Financial Plan describes each of the activities,
resources, equipment, and materials that are needed to achieve these objectives, as well as the
timeframes involved.
The financial estimation of the company will be done by following these steps.
 1. Identify the types of resources needed to achieve the missions and objectives.
2. Quantify the number of resources (labor, equipment, materials).
3. Calculate the total cost of each type of resource.
4. Summarize the costs to create a budget.
5. Identify any risks and issues with the budget set.

1). Fallowing types of resources are needed to establish our business. These are resources that are
needed to achieve our missions and objectives. These resources include

1. Land
2. Labor ( workforce)
3. Machinery
4. Food for fishes
5. Transportation facility
6. Water
7. Management staff
8. Capital ( money)
9. Office Building
10. Furniture and carpet for office
11. Construction of pond

2). The second step of financial planning is quantifying the resources which are the initial requirement
of our business. Quantified resources can be varied as strategy varied. Quantity of resources required is
given.

1. The land required for business is 392040 square feet. We will build at least 8
pounds on it.
2. Labor required for our business is 3 helpers and 1 guard.
3. The detail of machinery is given.

Description Quantity
Tube well 1
Transformer 1
Air Pump/ water pump 4
Net ( for fish catching) 1
Telephone set 1
Filters 4
 4. Food for fishes is the daily resource needed to feed the fishes on a daily bases. The
fishes are feed once in a day. We will estimate the budget of the food and we
hope that our estimation will be close to the real value.
5. Transportation facility also depends upon the production of fishes from the pool
and for this purpose we initially needed at least two A.C trucks to transport the
fishes to customers and retailers shops.
6. Water is a resource that is excessing available in an area where we are going to
start a business. So water resource is excessively available to us. Water is
provided to the pool by the tube well. There are some chances that some tax is
imposed on water use by the government of Pakistan.
7. For management, one manager is required for the whole business.
8. Capital money is required to manage the daily operations of the business. We will
calculate in the end the daily operational expense for the business.
9. 250 sq. ft of office building cum store. This building is used for the office of the
business.
10. Some furniture and carpet are needed for the office and another management
purpose. Its estimated cost is almost Rs 40,000.
11. Construction of 8 ponds required construction on the 3, 20,000 square feet area.
And each square feet cost Rs 5 per square feet.

3). the total cost of each type of resource is described as.

First of all the detail of equipment is

Equipment No Total Price (PKR)

Tube well 1 1,200,000
transformer 1 5,00,000
Air pump/ Water Pump 4 80,000
Net 1 20,000
Telephone set 1 15,000
Filters 4 80,0000
Total 12 1,895,000

Detail of human resource requirement is given as

Description - HR No of employees Salary per month, Annual salary

Requirement per employee (RS)
Farm Manager 01 30,000 3,60,000
 helpers 03 10,000 3,60,000
Guards 01 10,000 1,20,000
Total 05 50,000 8,40,000

Detail of land and building requirement.

Description Cost/ square feet Total area in square Total Cost (PKR)
feet
Land 7 392040 27,44,280
office building store 200 250 1,25,000
Construction of 8 5 3,20,000 1,600,000
ponds
Total 212 7,12,290 44,69,280

Detail of furniture and Fixture Requirement.

Description Total cost (PKR)

Furniture and Carpeting Requirement 40,000

4). Summarize the costs to create a budget

The summarized cost of the whole project is following. This summarized cost includes all the
expenses and cost which have done on starting our venture.

Capital Investment Rs, in actual

 Land 27,44,280
Building/ Infrastructure 17,25,000
Equipment / machinery 1,895,000
Furniture and fixture 40,000
Office equipment 15,000
Pre-operating cost 55,000
Total Capital Cost 64,15,500

Working capital Rs, In actual

Equipment spare part inventory 1,50,000
Raw material Inventory 2,55,000
Cash 3,50,000
Total Working Capital 7,55,000

Total Investment 71,62,167

Project financing:

The detail of the initial financing of the project is given. The 40% of total
investment is debt financing and 60% of financing is by equity financing.

Initial financing The actual amount in (PKR) Percentage of total

Investment
Debt 28,64,867 40%
Equity 42,97,300 60%
Total Investment 71,62,167 100%

5). Identify any risk and issue related to the Budget:

The budget of Business is on estimation base, so could be mistake in estimation of the

budget. There are more chances that the Budget can exceed because the economic condition of
our country is too bad. The government is imposing taxes on the business and import duties are
increasing.
Fallowing can be the risk and issues with the budget.
  Taxation by government.
 The land policy of the government.
 Import of machinery.
 The training cost of the employee and management team could be
exceeded then budget.
 Fluctuation in prices of fish eggs and fish nursery.
 The budget can be exceeded if we waste time in starting a business.
 Construction costs can be increased due to any natural disasters.
 Changing in economic policy can put a strong impact on the business of the
fisheries industry.

All the above are the risk and issues that are related to our business budget. Our budget can
be changed because of the above reasons and their effects.

Key Assumption in our Business:

We have not yet started our business, so all the cost and revenue are on assumptions.
The following are the key assumptions of our business. We have assumed all the things before
entering into the practical business of fishes.

Cost of goods sold per unit of production:

  The assumption of the cost of goods sold is given.

Cost of goods sold per unit of production (COGS)

The per-unit cost COGS for one production cycle calculated as about Rs 369,
the amount of Rs 30 of fishes on average bases, whereas Katti, Urea, calcium
Bicarbonate ( limestone) and cow dung used per fish for the whole period are
Rs 170, Rs 12 and Rs 2 respectively.

Cost of goods sold ( raw Per fish/ day Per Fish/ year
material per unit)
Seed (fingerlings) Rs 30 Rs 30
Katti (daily requirement 35 Rs 1 Rs 170
kg/farm) ( average price of 1
kg Rs 40)
Cow dung ( average weekly Rs 0.50 Rs 155
requirement is Rs 2500)
urea Rs 12
Calcium Bicarbonate ( lime Rs 2
Stone)
COGS Rs 369
( Raw Material per unit)

 Production related assumptions are fallowing.

Production capacity per year( fish) Rs 20,000

Sale price per unit in year 1 Rs 700
Sale price growth per annum 10%
Production capacity utilization in the 85%
first year
Production capacity Utilization 10%
growth rate
Maximum production capacity 95%
utilization

 Economics Related Assumptions:

Inflation Rate 10%
Wage Growth Rate 10%
Electricity Growth Rate 10%

 Cash Flow Assumptions

Initial cash on hand Rs 3,50,000

Pre- Operating Cost Rs 55,000

 Depreciation rate assumptions

Building and Infrastructure 5%

Furniture and fixtures 5%
Machinery 10%
Office equipment 10%

 Financial Assumptions

Interest Rate on long term debt 18%

The required rate of return on equity 25%
WACC (Weighted Average cost of 19%
capital)

INCOME STATEMENT
Of King fishers

year 1 year 2 year 3

Reven 1,40,00,0 1,54,00,0 1,70,00,0
ue 00 00 00
cost of goods 73,80,00 81,18,00 89,29,80
sold 0 0 0
General administration and selling expense  

Administration Expense 4,00,000 4,50,000 5,00,000

Rental expense
Utilities expense 50,000 55,000 65,000
Traveling Expense 80,000 1,00,000 1,20,000
promotional expense 80,000 120,000 1,40,000
insurance expense
Professional fees 1,00,000
Depreciation Expense 2,00,000 2,00,000 2,00,000
Amortization Expanse 33,000 33,000 33,000
Property Tax Expense
Miscellaneous Expense 50,000 55,000 60,000

Total 10,13,00 11,18,00

993,000 0 0
Operating 56,27,00 62,69,00 69,52,20
Income 0 0 0

56,27,00 62,69,00 69,52,20

EBIT 0 0 0
Interest
expense 4,40,000 4,20,000 4,00,000
51,87,00 58,49,00 65,52,20
EBT 0 0 0
Tax 5,50,000 5,20,000 4,52,000

Net Profit 46,37,00 53,29,00 61,00,20

After Taxation   0 0 0

Balance Sheet of King Fishers

Detail year 1 year 2 year 3

current Assets
cash 1,50,000 1,60,000 1,70,000
15,00,00 16,00,00 17,00,00
Account Receivables 0 0 0
Inventory (fishes) 3,00,000 3,00,000 3,00,000
other current assets 50,000 50,000 50,000
 17,00,00 21,10,00 21,20,00
Total Current Assets 0 0 0
Non-Current Assets
44,69,00 44,69,00 44,69,00
long term assets 0 0 0
Accumulated depreciation 0 0 0
44,69,00 44,69,00 44,69,00
Total Non -Current Assets 0 0 0
61,69,00 65,79,00 65,89,00
Total Assets 0 0 0
liability
current Liability
28,64,86 28,64,86 28,64,86
debt 7 7 7
Account Payable 0 0 0
other current liability 60,000 70,000 56,000
29,24,86 29,34,86 29,20,86
Total current Liability 7 7 7
long term liability 0 0 0
29,24,86 29,34,86 29,20,86
Total Liability 7 7 7

42,97,30 42,97,30 42,97,30

Paid Up capital 0 0 0
Retain Earning 0 0 0
42,97,30 42,97,30 42,97,30
Total Capital 0 0 0

Cash Flow Statement

Detail of Account Year 1 Year 2 Year 3

1,00,00,0 1,20,00,0 1,10,00,00

cash by sale 00 00 0
cash by receivables 0 40,000 10,000
1,00,00,0 1,20,40,0 1,10,10,00
Total Cash from operation 00 00 0

Additional cash received

interest earned 0 0 0
Investment in stock 80,000 90,000 67,000
profit from other activities 45,000 44,000 42,000
1,01,25,0 1,21,74,0 1,11,19,00
Total Cash Received 00 00 0

Expenditure

Operation Expenditure
Cash Spending 9,93,000 10,13,000 11,18,000
Bills Payments 0 0 0
Total Spent on Operations 9,93,000 10,13,000 11,18,000

Total Cash Spent 9,93,000 10,13,000 11,18,000

1,11,61,0 1,00,01,,00
Net Cash Flow 91,32,000 00 0