Fundamental of Business & Finance

Term Project
Financial Report

Department of Software Engineering

Group Member Detail

Name Roll No. Email Address

Mian M Arslan BSEM-F18-080 Bsem-f18-080@superior.edu.pk
Arslan Tayyab BSEM-F18-096 Bsem-f18-096@superior.edu.pk
Afaq Bhutta BSEM-F18-218 Bsem-f18-218@superior.edu.pk
Rizwan Ali BSEM-F18-092 Bsem-f18-092@superior.edu.pk

Submitted To

Mam. Rabia Aziz

 What Can I Do?
FINANCIAL PLAN

Describe the Source of Revenue

In recent years, the development of smart technologies in real-world has given the new fields of
education but as a student, they cannot get in touch with those fields which is growing very fastly
students just follow the trend of education so that there is a mess in that field so that unemployment
increase. So, our product is to teach the students about different degrees and their importance which
help them to choose their career.
We sell our services to get the revenue. Our product will be the income source for us.

Decide Selling Price

Price of a client is varied from Rs.800 to Rs.2000.

Prepare Sales Budget

No. of Custumers
Month Selling Price Revenue (Rs.)
(likely to be sold)

1 50 800 40000

2 120 800 96000

3 150 800 120000

4 200 800 160000

5 250 800 200000

6 325 800 260000

7 475 800 380000

8 600 800 480000

9 700 800 560000

10 850 1000 850000

 11 900 1000 900000

12 1000 1000 1000000

TOTAL 5046000

Total clients we have in year-1 = 5620

Prepare costs budget

1) Cost of goods
CGS

Cost per Month No. of Clients Amount per year (Rs.)

Domain (833.33 per month) 10,000

Hosting (15000 per month) 180,000

Web Development 5620 463,000

Marketing 100,000

Counsellor (10%) 500000

TOTAL 1,353,000

Total cost per client = Rs. 240 per client

2) Other operating expenses
50,000 × 12 = 600,000
Prepare Income Statement

Year-1 Year-2 Year -3 Year-4

Revenue 5,046,000 5,550,600 6,105,660 6,716,226

Less: CGS (1,353,000) (1,461,204) (1,578,100) (1,704,348)

= Gross Profit 3,693,000 4,089,396 4,527,560 5,011,878

Less: Other Operating expenses (600,000) (630,000) (661,500) (694,575)

= Profit Before Tax 3,093,000 3,459,396 3,866,060 4,017,303

Less: Tax (15%) (463,950) (518,909) (579,909) (602,595)

= Profit After Tax 2,629,050 2,940,487 3,290,151 3,414,708

Note: 10% annual growth in revenue and CGS while 08% and 5% in OOE inflation in expenses is
assumed each year

Prepare Balance Sheet

Year-1
Year-2 Year -3 Year-4
(day one)

ASSETS

Office Furniture 100,000 100,000 100,000 100,000

Air Conditioner 104,000 104,000 104,000 104,000

Multi Media 60,000 60,000 60,000 60,000

Maintainance 180,000 180,000 180,000 180,000

Total Assets 444,000 444,000 444,000 444,000

EQUITY

Opening Capital - - - -
 Profit 2,629,050 2,940,487 3,290,151 3,414,708

Drawings - - - -

LIABILITIES

Loan - - - -

Creditors - - - -

Total Equity & Liabilities 2,629,050 2,940,487 3,290,151 3,414,708

Step 7: Ratio Analysis

1) Gross Profit Margin (GPM) = Grocc Profit × 100
Revenue

2) Net Profit Margin (NPM) = Profit after tas × 100

Revenue

Illustration (Calculation Financial Ratios)*

Year-1 Year-2 Year-3 Year-4

GPM 47.4% 48.3% 49.3% 50.3%

NPM 28.1% 29.4% 30.8% 31.9%

* = Refer to step-4 for verifying the calculations

Break-even point
ÆnuuaS Operating Coct
Break-even point =
Contribution eerunit

Break-even point = 1353000 / 240 = 5620 cliets

Payback Period

Payback Period is the period in which initial investment is recovered”

Payback Period = No. of complete years + required ANount

nest cachfSow

Additional Illustration for Payback calculation

A business requires seed of Rs. 1,300,000 and expects annual cash profits as follows:
Calculation

Here you can see that investment will be recovered somewhere between end of year
2 and year 3 (when cumulative cash flows become positive), so use the
following formula to be precise.

Payback Period = No. of complete years +

1,300,000
Payback Period = 0 + = 1.42 years
715,000