Chapter V

Financial Aspect

This chapter talks about the Cost of the Project, Source of Investment,
Financial Assumptions, Balance Sheet, Cash Flow Statement, Income Statements,
Financial Analysis and Interpretation, Return on investment and Payback Period

J and Vlack
Income Statement
3 Months
Acquisition of Assets/ Payment for pre-operating expenses
Purchase of Assets
Payment for prepaid expenses
Pre-operating expenses
Total
Working Capital
Salaries expense
Internet Connection
Total
Selling & Administrative Expenses
Salaries and Wages
Utilities Expense
Advertising Expense
Office Supplies
Pre operating expeses
Rent Expense
Total

Initial Capital Requirements

Partner 1 45700
Partner 2 45700
Partner 3 45700
Partner 4 45700
Partner 5 45700

The following assumptioms will serve as the basis for the preparation of financial statements:

1 No increase in commision rate

2 Straight line method of depreciation shall be used
3 No work in progress
4 No Increase in Salaries
5 Profits and losses will be divided equally among the partners.
6
ource of Investment,
he partners.
 J and Vlack
Income Statement
31-Dec
Year
1 2 3
Gross Revenue
Cost of Sales
Gross Revenue

Operating Expenses
Salaries and Wages
Utilities Expense
Advertising Expense
Office Supplies
Pre operating expeses
Rent Expense
Depreciation Expense
Total Operaing Expenses

Net Income Before Tax

Tax
Net Income
 J and Vlack
Income Statement
31-Dec
Year
1 2 3
ASSETS
Current Assets
Cash
Total Current Assets

Non Current Assets

Land & Building, net

Machineries, net
Factory Furnitures & Fixtures, net

Total Non Current Assets

TOTAL ASSETS

LIABILITIES
Current Liability
Income Tax Liability
Total Current Liabilities
TOTAL LIABILITIES

EQUITY
Owners' Capital
Net Profit/Loss
TOTAL EQUITY
TOTAL LIABILITES AND EQUITY
 J and Vlack
Income Statement
31-Dec
Year
1 2 3
Beginning Balance
OPERATING ACTIVITIES
Cash received from customers
Cost of services actually paid
Other operating expenses paid
NET CASH FROM OPERATING ACTIVITIES

INVESTING ACTIVITIES
Initial Investment
Sale of Land
Purchase of Assets
NET CASH FROM INVESTING ACTIVITIES

FINANCING ACTIVITIES
Payment of long-term debt
NET CASH FROM FINANCING ACTIVITIES
TOTAL CASH FLOWS
 FINANCIAL STATEMENTS ANALYSIS
LIQUIDITY
Current Ratio
Current ratio = Current Assets / Current Liability
Year Current Assets Current Liability Current Ratio
1
2
3

PROFITABILITY
Return on Sales
Return on Sales = Net Profit / Total Sales X 100
Year Net Profit Total Sales Return on Sales
1
2
3

Payback Period
Cost of Investment Average Annual Cash Flows Payback Period

Return on Investment
Return on Investment = Net Profit / Cost of Investment X 100
Year Net Profit Cost of Investment Return on Investment
1
2
3