KELVINS' MARINE DEALERS

PRESENTED BY: KELVIN BARAKA NGOWA

INDEX NO: 1061200033

COURSE: CME21J

ADMISION NUMBER 48524

CENTRE NAME: KENYA NATIONAL COAST POLYTECHNIC

SUPERVISOR: WESLEY MICHILA

PRESENTED TO: KENYA COAST NATIONAL POLYTECHNIC FOR THE

AWARD OF CRAFT CERTIFICATE IN MARINE
ENGINEERING

SERIES: OCTOBER/NOVEMBER

i
 DECLARATION
My sincere dedications go to my beloved family members who despite my busy schedule have
been my source of encouragement and zeal and to the Almighty God, who gave me the strength,
courage and blessings to accomplish this business plan, I shall always be thankful to my family
and to the Almighty God for their continuous support and blessings on me.

ii
 ACKNOWLEDGEMENT
I wish to express and appreciate with special thanks my lecturer for the guidance, encouragement
and supervision, without which this proposal would not have been completed and geared towards
quality work. May I take this opportunity once more to thank God and all lectures, students and
staff who supported me and made this business plan a success. God Bless you all abundantly.

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 EXECUTIVE SUMMARY
1.0 BUSINESS DESCRIPTION
The proposed name of the business will be Kelvin marine dealers, located at Kwale county, the
address of the business will be;

Kelvin marine dealers,

P.O BOX 8720,

Email.kelvinmarine@gmail.com

The form of the business will be sole proprietorship, moreover will be wholesale. The business
will be aiming at achieving both long and short term goals.

The business shall serve retailers and wholesalers, the product will be offered at the premises,
and also will be of high quality.

The business has big growth strategies which will ensure the business remain highly competitive
in town.

2.0 MARKETING PLAN

The customers of Kelvin marine dealers will be from the entire Kwale county spare parts. The
business will have different groups of customer for example; commercial customers, customers
from all over the county.

Advertising, promotion and placing of posters will be placed at different places to extend the
market size as a way of competing with other competitors. The business will also employ two
method of selling their product direct selling and the used of discount.

3.0 ORGANIZATION AND MANAGEMENT

The business will have the following management categories of workers, general manager,
Assistant manager, personal manager, sale and marketing, purchasing manager, accounting,
storekeeper and the rest workers will be offered with training and promotion legal document
such as licensee will be obtained from county council to ensure smooth running of the business.

iv
The product will be distributed through various channels for example the brokers will act as
intermediary. In addition the business will strive to capture 55% of the market share.

4.0 OPERATION AND PRODUCTION PLAN

The business will employ several equipment and material to ensure running of the business for
example; lathe machines, stationary, computers and the rest. Again there will be production
strategy and the processes used in production, health services and standard will be observed as
per the requirement, fire extinguisher will be installed for fire fighting in case of an emergency
of fire and finally proper disposal of waste product from the firm will be done .

5.0 FINANCIAL PLAN

In the financial plan the business will include pre operational plan that will entail designing,
licenses, installation, electricity and water deposits with each having certain amount. The
business will have to prepare an estimation of the working capital that includes; current assets,
current liabilities and cash flow projection for more convenience the business will prepare a pro-
forma income statement that will be projected for three years. The business will also have pro-
forma balance sheet that will be projected for three years. There will also be a desire financing
which include pre-operational cost, working capital and non-current asset.

Lastly is a proposed capitalization which includes owner’s contribution and borrowed funds.

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 TABLE OF CONTENTS

DECLARATION........................................................................................................................................ii
ACKNOWLEDGEMENT..........................................................................................................................iii
EXECUTIVE SUMMARY........................................................................................................................iv
1.0 BUSINESS DESCRIPTION.............................................................................................................iv
2.0 MARKETING PLAN.......................................................................................................................iv
3.0 ORGANIZATION AND MANAGEMENT.....................................................................................iv
4.0 OPERATION AND PRODUCTION PLAN.....................................................................................v
5.0 FINANCIAL PLAN..........................................................................................................................v
TABLE OF CONTENTS...........................................................................................................................vi
CHAPTER ONE..........................................................................................................................................1
1.0 BUSINESS DESCRIPTION..............................................................................................................1
1.1business name.....................................................................................................................................1
1.2 business location................................................................................................................................1
1.3 forms of business...............................................................................................................................1
1.4 types of business................................................................................................................................2
1.5 product and services..........................................................................................................................2
1.6 Justification of the opportunity..........................................................................................................2
1.7 Industry..............................................................................................................................................2
1.8 Business Goals...................................................................................................................................3
1.8.1 Short term goals..........................................................................................................................3
1.8.2 Long term goals..........................................................................................................................3
1.9 Entry and growth strategy..................................................................................................................3
1.9.1 Entry strategy..............................................................................................................................3
CHAPTER TWO.........................................................................................................................................4
2.0 MARKETING PLAN........................................................................................................................4
2.1 Customers..........................................................................................................................................4
2.2 Market share......................................................................................................................................4
2.3 Competitors.......................................................................................................................................5
2.4 Methods of promotion and advertising..............................................................................................6
2.4.1 Promotion...................................................................................................................................6
2.4.2 Advertisement.............................................................................................................................6

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 2.5 Pricing Strategy.................................................................................................................................6
2.6 Sale Strategy......................................................................................................................................6
2.7 Distribution........................................................................................................................................6
CHAPTER THREE.....................................................................................................................................7
3.0 ORGANIZATION AND MANAGEMENT......................................................................................7
3.1 Business managers’ duties and qualifications....................................................................................7
3.1.1 General Manager........................................................................................................................7
3.1.2 Assistant manager.......................................................................................................................8
3.1.3 Marketing manager.....................................................................................................................8
3.1.4 Personnel manager......................................................................................................................9
3.1.5 Purchasing manager....................................................................................................................9
3.1.6 Accountant..................................................................................................................................9
3.1.7 Secretary...................................................................................................................................10
3.2 Other and personnel duties and responsibilities...............................................................................10
3.2.1 Cleaner......................................................................................................................................10
3.2.2 Watchman.................................................................................................................................10
3.2.3 Store keeper..............................................................................................................................11
3.3 Recruitment, Training and Promotion..............................................................................................11
3.3.1 Recruitment..............................................................................................................................11
3.3.2 Training....................................................................................................................................11
3.3.3 Promotion.................................................................................................................................12
3.4 Remuneration and incentives...........................................................................................................12
3.4.1 Salaries.....................................................................................................................................12
3.4.2 Incentive...................................................................................................................................12
3.5 License permits and by-laws............................................................................................................12
3.6 Support service................................................................................................................................13
CHAPTER FOUR.....................................................................................................................................14
4.0 OPERATION AND PRODUCTION PLAN...................................................................................14
4.1 Production facility and capacity.......................................................................................................14
4.2 Production strategy..........................................................................................................................14
4.3 Operational production process.......................................................................................................15
4.3.1 Purchasing of products from suppliers......................................................................................15
4.3.2 Receiving of goods ordered......................................................................................................15

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 4.3.3 Inspecting and sorting...............................................................................................................15
4.3.4 Storage of the stock...................................................................................................................16
4.3.5 Selling of stock.........................................................................................................................16
4.4 Rules and regulation affecting operation.........................................................................................16
4.4.1 Health.......................................................................................................................................16
4.4.2 Safety........................................................................................................................................16
4.4.3 Environment.............................................................................................................................16
CHAPTER FIVE.......................................................................................................................................17
5.0 FINANCIAL PLAN........................................................................................................................17
5.1 Pre-operational cost.........................................................................................................................17
5.2 Estimation of working capital..........................................................................................................18
5.3 Cash flow projection for 2021.........................................................................................................19
5.4 Cash flow projection for 2022.........................................................................................................20
5.5 Cash flow projection for 2023.........................................................................................................21
5.6 Pro-forma Income Statement...........................................................................................................22
5.6.1 Hussein Proforma Income Statement for 2021.........................................................................22
5.7 Pro-forma Balance Sheet.................................................................................................................25
5.7.1 Hussein Balance Sheet As at 31st Dec 2021..............................................................................25
5.7.2 Hussein Balance Sheet As at 31st Dec 2022..............................................................................26
5.5.3 Hussein Balance Sheet As at 31st Dec 2023..............................................................................27
5.6 Calculation of break-even analysis..................................................................................................28
5.6.1 Break-even in unit.....................................................................................................................28
5.6.2 Break-even in value..................................................................................................................28
5.7 Calculations of profitability ratio.....................................................................................................28
5.7.1 Gross Profit Ratio.....................................................................................................................28
5.7.2 Net Profit Ratio.........................................................................................................................28
5.8 Desire Financing..............................................................................................................................29
5.9 Proposed Capitalization...................................................................................................................29

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 CHAPTER ONE
1.0 BUSINESS DESCRIPTION
1.1business name
The name of the business will be called KELVIN MARINE DEALERS the name Kelvin as
derived from the first two letter of my first name and the two letters of my second name.

I have chosen the name because I love my name, it is short easy to pronounce and remember and
further more to enhance uniqueness with other grain milling factories.

1.2 business location

Kelvin marine dealers will be located at Diani in Kwale County, it will be located at the entry at
Diani town a few meter from the Kwale county government, and it is well recognized because of
the main road as it leads to a busy town in the County.

The business is suitable following various activities carried out in the town and the surrounding
and such as a result of improved infrastructure in Diani

This contributes toward access to good communication and transport, there is enough security in
Diani Kwale Sub County.

KELVIN MARINE DEALERS

P.O BOX 8720,

KWALE

1.3 forms of business

The business will sole proprietorship type of business with the owner Kelvin being the manager.
The reason for choosing this form of ownership is due to decision making is easy, been the
ownership you can make your own decision on time incase profit is made you are also the one to
enjoy. The capital to start the business is little and finally limited legal requirement is needed.

1
1.4 types of business
Kelvin marine dealers shall be dealing with selling, servicing and repair of marine engines and
generators which shall be used by different people for different purposes, the business shall offer
both retail and wholesale services.

The firm shall concentrate on selling, servicing and repair marine engines and generators used by
fisherman and recreational facilities in the area

1.5 product and services

Kelvin marine dealers will provide marine engines and generators to residents around the county.
The product will be offered at the premises, they will be sold to both local community within and
outside Kwale County at affordable prices. The business will have different kind of machines to
provide different kind of services. The product will be of affordable price for the customers to be
able to buy and discount services for bulk buyers.

1.6 Justification of the opportunity

The products produced at Kelvin marine dealers will be of a high quality, because the entire
requirement needed will be available in the business. So this quality of level of excellence will
attract many customers due to the selling price will be fair to all. Also customers will meet their
need on time.

1.7 Industry
Kelvin marine dealers is a business in the product industry. It will be of medium size and it will
operate legally following the necessary legal formalizers, it will make sure that it provides good
high standard and satisfy customer need in addition it will be nearer Diani pier hence profitable
and most of people stay at the place from coast region whose favourite trip are boat trips and
majority of the people practice fishing as an economic activity hence there wiIl be a readily
available market. The demand for the product sometimes is very high especially during the
summer and December holidays due to the arrival of tourist from around the country for a taste
of the beach life where sales are high. Technology is one of the factors in the business because of
growing competition from entrepreneur’s competitors. This is because of high level of

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technology Kelvin marine dealers invests in high computerized machine which is liable and offer
services effectively.

The capital required to commence the business shall include personal savings, borrowing from
parents and manageable loan from youth funds.

1.8 Business Goals

The reason for starting Kelvin marine dealers is to achieve both long term and short term goals.
Long term goals are term which the business wants to attain after a period of more than one year.
Short term which the business would want to achieve with a short period less than one year

1.8.1 Short term goals

They include customer satisfactory by charging them reasonable prices of product to all
customers attending Kelvin marine dealers produce net profit as they establish sustainable
business by the end of the year, while competing with other competitors in the market and never
fail to practice good public relation.

1.8.2 Long term goals

Utilization of skill which the owner has acquire from the craft course this will lead to
specialization hence innovation and invention. As it improve the living standard of the people
because of creating employment to the owner and the other jobless people from the college also
creating employment opportunities in Diani town, kwale.

1.9 Entry and growth strategy

Kelvin marine dealers will commerce by advertising their business through putting posters
around trading market.

1.9.1 Entry strategy

Posters will be placed at a strategic location so as to create customer awareness, Kelvin shall also
maintain high public relations and practice good care, product shall be of high quality and long
lasting. Price of the affordability of the weak customers thus trying to complete highly within
other traders.

After two year of operation the business shall open another spare parts in Mombasa County

3
 CHAPTER TWO
2.0 MARKETING PLAN
2.1 Customers
The customers of Kelvin marine dealers will be found in Diani town, Kwale County and the
boats owners around the area who we will provide engine spare parts and generator repairs to.
They use the boats to bring fish for sale in the market. Due to there is a high demand for the
products.

2.2 Market share

The location of the business has an approximate of 6 000 people the owner of the business
knows clearly the number of the customers in the first and second year expected

At the first year the competitor for example Mohamed spare parts will be doing well with a
market share of 50% this is because it is running under famous workers and more customers will
be attracted to their product.

Ali spare parts also is doing quite better with a market shares of 30% because it popular while
Kelvin marine dealers has a market share of 20% because the business is not known by many
customers.

In the second year Kelvin marine dealers use

key promotion advertisement and good servicers

leading the business to capture 55% of the
Hus- market share and customers will be aware of
sein
ma- the business.
rine
deal
ers
1st year 2st year
20%
Mohamed spare parts 50% 25%

50% Ali spare parts 30% 20%

Kelvin marine dealers 20% 55%

ali
30% 4
2.3 Competitors
Within the area of the business there exist two other competitors that is Ali and Mohamed.
Mohamed is located near Kelvin marine dealers, it’s only that they do not deal with wheat flour
production. Ali offers refrigeration radiator and air-condition services.

Competition analysis

Name of the enterprise Strength Weakness

Mohamed Being in business for a long It offers repair but pricing is
time Ali has competent very expensive.
employees who have
experience in serving
customers. Deals mostly with electrical
Ali
Run under famous workers works
and therefore many customers
will be attracted to use their
produced product.

Hussein business will offer various products for examples maize, wheat and sorghum flour and
many. Also these goods will be of high quantity and good quality.

2.4 Methods of promotion and advertising

2.4.1 Promotion
This will be designed to create awareness to the customers and usefulness of using the product.
Free offers will be offered to the customers through honest and reliable people.

2.4.2 Advertisement
Advertisement will be made to create customer awareness about the existence of the product
offered on the location, using direct selling demonstration and networking will reach large
number of people.

5
2.5 Pricing Strategy
Hussein marine dealers will set the product charge at affordable levels by the majority of
customers and the price will be fair. It will choose suppliers with reasonable prices which are fair
and maintain a transaction between them and the business to give good services at a right charge.
The business will set price different from the competitor’s price and according to the quality of
goods.

2.6 Sale Strategy

Hussein marine dealers will employ two methods of selling their products, that is direct selling
and the use of discounts. In direct selling some of the employees will be in the repair and
maintenance section attend to maintenance related tasks. Some employees will be in the sales
section to attend to buying customers. The cash discount will be offered upon buying of the
product in large quantities mostly but also those buying in small quantities will be given
discounts. All these methods will create awareness to the business since the employees will be
able to explain to the customers the advantages and benefits of using the products.

2.7 Distribution
Product will be distributed through various distributions channels the brokers will ad as
intermediary, they will be dealing with the consumer also, In distributing the goods to customers,
the business will run from 8.00am to 6.00pm from Monday to Saturday. On Sunday it will
remain closed the whole day. In the weekdays the employee going to the market will be ready by
9.00am to meet the needs of customers early enough.

CHAPTER THREE
3.0 ORGANIZATION AND MANAGEMENT
3.1 Business managers’ duties and qualifications

General Manager

Assistant Manager

6
 Personal manager / sold and marketing Purchasing manager

Store keeper Sales and marketing Secretary

Accounting

Messenger Cleaner
Watchman

3.1.1 General Manager

Qualification

1. Must be a diploma holder

2. Should be a computer literate
3. Should have a good human resource skills

Responsibilities

1. Ensure the smooth running of the business are taking place

2. Organizing the workers and employing works as well as replacing those workers whose
work is not pleasing
3. Making sure all business goals and observation are achieved

3.1.2 Assistant manager

Qualification

1. Must be a diploma holder

2. Should be a computer literate

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 3. Should have at least 2 years of work experience

Responsibilities

1. In absence of general manager he/she must assist in controlling of the business

2. Manage and evaluate revenue and expense reports
3. Monitoring inventory and ordering merchandise base on demand

3.1.3 Marketing manager

Qualification

1. Should have a diploma in sales and marketing

2. Should have at least 2 years work experience

Responsibilities

1. Should ensure that the service and product provided in the business are of right quality
2. Responsible for advertising of good business product
3. Developing the marketing strategy for the company in line with company objective.
4. Overseeing the company marketing budget.

3.1.4 Personnel manager

Qualification

1. Should be a diploma holder

2. Should have at least 2years work experience
3. Should be a computer literate

Responsibilities

1. Responsible in recruiting, training and remunerating

2. Motivating of the employees

3.1.5 Purchasing manager

Qualification

8
 1. Should be a diploma holder in business or economic related to field
2. Should be able to demonstrate excellent practical skills

Responsibilities

1. Buying or approving the acquisition of good and services needed by the company
2. Responsible in advertising and receiving of good
3. Keep a constant check on stock levels
4. Buying the best quality equipment of good and services

3.1.6 Accountant
Qualification

1. must be a diploma holder in accountancy

2. should be a holder of at least CPA 2
3. should have at least 2 year work experience
4. should be a computer literate

Responsibilities

1. Inspect account books and accounting system to keep up to date

2. Examine statement to ensure accuracy
3. Organize and maintain financial record.

3.1.7 Secretary
Qualification

1. Must be a diploma holder in secretarial

2. Must be a computer literate
3. Should have at least 2 years work experience

Duties

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 1. Writing minute during meeting
2. Making travel arrangement
3. To ensure the venue of meeting is clean before the meeting

3.2 Other and personnel duties and responsibilities

3.2.1 Cleaner
Qualification

1. should have high skilled in cleaning and emptying waste containers

2. Eliminating of debris from the premises to designate the area.
3. Should have skills of using different tools and chemical use in cleaning process
4. Able to use detergents

Responsibilities

Carry out general cleaning

3.2.2 Watchman
Qualification

1. Able to communicate both English and Kiswahili

2. Must be a form four level

Responsibilities

Guarding the premises

Ensure no employee leave the premises in possession of any property of the business

3.2.3 Store keeper

Qualification

1. Should have at least 1-3 years’ work experience

2. Must be able to speak English and Kiswahili
3. Ability to prepare inventory report

Responsibilities

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Ensure proper scheduling record keeping of items

Inspect for damage good

Find, sort or move goods between different parts of the business

3.3 Recruitment, Training and Promotion

3.3.1 Recruitment
The job vacancies will be advertised through newspaper and posters. The interviews will be oral
and written and those that succeed shall be recruited as the right person for the vacant position.
The newly recruited employees shall be subjected for orientation in the business by the personnel
manager.

3.3.2 Training
Newly employed employees will be trained for the first two weeks and this increases efficiency
in the business. It will be done through job training method of on-job training, it will be preferred
since it’s cheap and saves time.

This method also enables employees to acquire new skills and increase their knowledge to
perform high task. It will be done by sending the employees to attend seminars and part time
courses.

3.3.3 Promotion
Hardworking employees will be given promotions as the days goes on to encourage the
motivation and moral of the employee, this will increase productivity. And salary increase also
will be done.

3.4 Remuneration and incentives

3.4.1 Salaries
Hussein marine dealers will be paying salaries to their workers depending on level of education,
qualification, work experience, their skills and also responsibilities.

Employees Number Salary

11
 General manager 1 65,000
Assistant manager 1 60,000
Personnel manager 1 58,000
Marketing and sales 1 55,000
Manager 1 50,000
Purchase manager 1 48,000
Accountant 1 45,000
Secretary 1 40,000
Storekeeper 2 30,000
Cleaner 2 25,000
Watchman 1 25,000
Total 501,000

3.4.2 Incentive
Hussein marine dealers will introduce several incentives to motivate the employees. The
incentives which managers will introduce are lunch allowance especially when meeting are
carried out in the business. Transport allowance will also be provided with, medical insurance
fund and good working conditions are also provided to the employees.

3.5 License permits and by-laws

The management will be consulting the county council to be issued with trade license. This will
be renewed on yearly basis as the government policy stipulates the registration fee of a trade will
be ksh 1,500 which is non-refundable. The trade license of ksh 300 valid for only one year will
be renewed at a fee of ksh 500 annually.

This will be acquired at Kwale county council, other legal requirement such as permit will be
acquired at kwale Municipal Council at ksh 15,000

3.6 Support service

Some of the services that the business may require for smooth running towards achieving its
goals and objectives include postal service, garbage service and banking service.

Postal services

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They are obtained from kwale post office which is only twenty meters from the business
location. All correspondence will be channeled through Hussein marine dealers

Garbage collection

This will assist collection and disposal of any waste materials from the business. Thus will be
obtained from the council of Diani

Banking services

Hussein marine dealers shall need banking services for the purpose of loan and security. The
business shall bank with Equity bank because this bank has got low loan interest.

CHAPTER FOUR
4.0 OPERATION AND PRODUCTION PLAN
4.1 Production facility and capacity
The following equipment and materials will be employed to ensure smooth running of the
business.

Items/equipment/material Capacity/quantity Cost Ksh

Computers 2 20,000
Empty bags 3 rolls 750

13
 Telephone line High quantity 20,000
Furniture’s Plastics 3,000
Receipt 3 booklets 750
Lorry Heavy duty 120,000

Total 199,500

4.2 Production strategy

Items Monthly Yearly cost
Electricity 1,300 15,600
Transport 2,700 32,400
Stationary 22,000 26,400
Maintenance 600 7,200
Rent 3,000 3,600
Advertisement 960 8,280
Total 93,480

The benefit of this strategy is that it’s effective and creates customer satisfaction. Also it’s
convincing.

4.3 Operational production process

Purchasing of product from suppliers

Receiving the goods ordered

Inspecting and sorting of goods

14
 Storage of the stock

Selling of stock

4.3.1 Purchasing of products from suppliers

The product will be purchased from the suppliers and delivered to the premises. Then the product
will be purchased as per the demand of the customers.

4.3.2 Receiving of goods ordered

The accounts clerk also the store man receives the goods from the suppliers together with
delivery note and the goods are then kept in the accepting room for inspection and sorting.

4.3.3 Inspecting and sorting

The accounts clerk/store man inspects the goods supplier have supplied to the business to make
sure that the goods are as per the order. Also compares with purchasing note and delivery note
and checks whether the goods are of good quality and in good condition. If the goods are not
found to be in accordance with the order then a good return order is written and they are returned
to the supplier.

4.3.4 Storage of the stock

The purchased good will be stored properly and in the correct way by the storekeeper and this
will be after a record has been made. Then properly stored in the stores and be protected from
damage.

4.3.5 Selling of stock

After putting everything in order, the selling will take place whereby the salesman and woman
will supply them to the potential customers for use.

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4.4 Rules and regulation affecting operation
4.4.1 Health
Health service and standards must be observed in Hussein marine dealers as per the requirements
by the act, law and the Ministry of health

4.4.2 Safety
Fire extinguisher will be installed in the business for the firefighting in case of an emergency in
the business.

4.4.3 Environment
Proper disposal of waste product from the firm will be done to avoid littering and making the
environment dirty.

There will be no smoking inside the working place this is due to smoking in public for long
period can affect other people’s health. There will be penalties and fines for those who are found
smoking in public and chances for losing their jobs is very high.

Taxes imposed by the government will be regulated by Hussein marine dealers thus will be
force to comply with incase there will be an increase in the taxes payment, Hussein marine
dealers will be forced to increase the selling price.

CHAPTER FIVE
5.0 FINANCIAL PLAN
5.1 Pre-operational cost
Items Cost

Traveling research 10,000

16
Designing 9,000

Licensing 10,000

Advertisement 7,000

Instillation 6,000

Rent deposit 15,000

Recruitment 7,000

Total 64,000

5.2 Estimation of working capital

Estimation of working capital =current asset – current liabilities

WC = CA – CL

Current asset sh

Cash in bank 480,000

Cash in hand 50,000

17
Stock 45,000

Debtors 30,000

605,000

Current liabilities

Creditor 65,000

Bank overdraft 20,000

65,000

WC = CA – CL

= 605,000 – 65,000

= 540,000/=

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5.3 Cash flow projection for 2021
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec totals
B/d 98000 115000 105000 91000 71000 56000 47000 44000 49000 46000 42000 764000
Loan 100000 100000
Sales 30000 20000 15000 10000 10000 15000 20000 30000 30000 20000 15000 10000 225000
Debtors 10000 9000 4000 3000 1000 27000
D. Received 10000 10000 5000 4000 5000 3000 37000
Cash in 150000 137000 130000 115000 101000 91000 84000 77000 74000 74000 64000 56000 1153000
Payment cash out
Purchase 10000 4000 9000 8000 14000 15000 16000 17000 9000 4000 6000 4000 116000
Salaries 12000 12000 12000 12000 12000 12000 12000 12000 12000 12000 12000 12000 144000
Creditors 8000 4000 4000 16000
Discount allowed 3000 2000 5000 4000 14000
Insurance 8000 8000
Lisence 7000 7000
Rent 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 48000

Total Cash outflow 52000 22000 25000 24000 30000 35000 37000 33000 25000 28000 22000 20000 353000
Net Cash 98000 115000 105000 91000 71000 56000 47000 44000 49000 46000 42000 764000 1528000
Accumulative cash 98000 213000 318000 409000 480000 536000 583000 627000 676000 722000 764000 1528000

19
5.4 Cash flow projection for 2022
Creditors 9,000 5,000 5,000 19,000
Discount allowed 4,000 3,000 6,000 5,000 18,000
Insurance 9,000 9,000
License 8,000 8,000
Rent 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 60,000

Total Cash outflow 65,000 28,000 30,000 29,000 35,000 41,000 43,000 38,000 30,000 35,000 27,000 25,000 426,000
Net Cash 65,000 93,000 123,000 152,000 187,000 228,000 273,000 308,000 338,000 372,000 399,000 424,000 2,557,000
Accumulative cash 235,000 492,000 739,000 968,000 1,171,000 1,359,000 1,544,000 1,731,000 1,928,000 2,196,000 2,391,000 2,577,000

20
5.5 Cash flow projection for 2023

Cash in 566,000 559,000 554,000 537,000 522,000 518,000 522,000 529,000 542,000 552,000 555,000 550,000 6,506,000
Payment cash out
Purchases 20,000 6,000 12,000 10,000 16,000 17,000 18,000 12,000 6,000 7,000 6,000 5,000 135,000
Salaries 18,000 18,000 18,000 18,000 18,000 18,000 18,000 18,000 18,000 18,000 18,000 18,000 216,000
Creditors
Discount allowed 5,000 4,000 6,000 6,000 1,000 22,000
Insurance 10,000 10,000
License 9,000 9,000
Rent 7,000 7,000 7,000 7,000 7,000 7,000 7,000 7,000 7,000 7,000 7,000 7,000 84,000
Total Cash outflow 69,000 35,000 37,000 35,000 41,000 48,000 43,000 37,000 37,000 32,000 31,000 31,000 476,000
Net Cash 497,000 524,000 517,000 502,000 481,000 470,000 479,000 492,000 505,000 520,000 524,000 519,000 6,030,000
Accumulative cash 497,000 1,021,000 1,538,000 2,040,000 2,521,000 2,991,000 3,470,000 3,962,000 4,467,000 4,987,000 5,511,000 6,030,000

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5.6 Pro-forma Income Statement
5.6.1 Hussein Proforma Income Statement for 2021
Sales 150,000

Sale returns 50,000

Total sales 100,000

Cost of sales

Purchase 20,000

Carriage inwards 20,000 40,000

Gross profit 60,000

Expenses

Salaries 10000

Rent 9000

Water bill 800

Transport 500

Telephone 500

Electricity 600

Postage 700 22,100

Net profit = Gross profit – Expenses 37,900

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5.6.2 Hussein Proforma Income Statement for 2022

Sales 160,000

Sale returns - 30,000

Total sales 130,000

Cost of sales

Purchase 20,000

Carriage inwards 25,000 45,000

Gross profit 85,000

Expenses

Salaries 15,000

Rent 900

Water bill 600

Transport 600

Telephone 700

Electricity 10,000

Postage 800 28,600

Net profit = Gross profit – Expenses 56,400

23
5.6.3 Hussein Proforma Income Statement for 2023

Sales 170,000

Sale returns - 20,000

Total sales 150,000

Cost of sales

Purchase 20,000

Carriage inwards 30,000 50,000

Gross profit 100,000

Expenses

Salaries 20,000

Rent 11,000

Water bill 1000

Transport 700

Telephone 900

Electricity 800

Postage 700 35,100

Net profit = Gross profit – Expenses 64,900

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5.7 Pro-forma Balance Sheet
5.7.1 Hussein Balance Sheet As at 31st Dec 2021
Non-current assets

Land 92,000

Furniture fitting 24,000

Building 24,000

140,000

Current assets

Stock 45,000

Cash in bank 480,000

Cash in hand 50,000

Debtors 30,000

605,000

Current liabilities

Creditors 65,000

Bank overdraft 20,000

85,000 520,000

Total assets 660,000

Financed by

Capital 450,000

Add profit 110,000

560,000

Non-current asset

Bank loan 100,000

660,000

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5.7.2 Hussein Balance Sheet As at 31st Dec 2022
Non-current assets

Land 92,100

Furniture fitting 24,100

Building 24,100

140,300

Current assets

Stock 45,100

Cash in bank 480,100

Cash in hand 50,100

Debtors 30,100

605,400

Current liabilities

Creditors 65,100

Bank overdraft 20,100

85,200 520,200

Total assets 660,500

Financed by

Capital 450,100

Add profit 110,100

560,200

Non-current asset

Bank loan 100,300

660,500

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5.5.3 Hussein Balance Sheet As at 31st Dec 2023
Non-current assets

Land 92,200

Furniture fitting 24,200

Building 24,200

140,600

Current assets

Stock 45,200

Cash in bank 480,200

Cash in hand 50,200

Debtors 30,200

605,800

Current liabilities

Creditors 65,200

Bank overdraft 20,200

85,400 520,400

Total assets 661,000

Financed by

Capital 450,200

Add profit 110,200

560,400

Non-current asset

Bank loan 100,600

661,000

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5.6 Calculation of break-even analysis
5.6.1 Break-even in unit
= Fixed cost/unit

= 140/5

= 28 units

5.6.2 Break-even in value

=Fixed cost/unit x selling price

= 140/5 x 160

= 4480 shillings

5.7 Calculations of profitability ratio

5.7.1 Gross Profit Ratio
GPR = Gross profit/sales x 100

= 60000/150000 x 100

= 40

5.7.2 Net Profit Ratio

NPR= Net profit/Sales x 100

= 37900/150000 x 100

= 25.27

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5.8 Desire Financing
Its equal to pre – operational cost 64,000

Working capital 520,000

Non-current assets 140,000

Total 724,000

5.9 Proposed Capitalization

Item amount

Owner contribution 500,000

Borrowed funds 100,000

Total 600,000

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