Professional Documents
Culture Documents
Promoted by
Mr.RAJEEV KUMAR
Address
TC 27/3242, MR ARCADE
Palayam, Trivandrum 695033
SR AGENCIES
PROJECT REPORT
SR AGENCIES
TC 27/3242, MR ARCADE
Palayam, Trivandrum 695033
Promoted by
Mr.RAJEEV KUMAR
2
SR AGENCIES
Name of Project SR AGENCIES
Promoted by Mr.RAJEEV KUMAR
Address TC 27/3242, MR ARCADE
Palayam, Trivandrum 695033
Product and Service Details
Sale of Lotions soaps etc
Sale of other toiletries
Other Cleaning Materials
Promoter Contribution
Term
23% Loan Promoter Contribution
Term Loan
77%
3
SR AGENCIES
Project at a Glance
The loan amount of 10 lakh will be judiciously utilized to cover various aspects of the project. A
significant portion will be allocated to procuring an extensive inventory of cleaning materials,
ensuring a comprehensive product offering that caters to the diverse needs of the target market.
The acquisition of modern and efficient cleaning equipment will also be a priority, allowing SR
AGENCY to provide comprehensive solutions to its customers, enhancing operational efficiency,
and setting it apart from competitors.
`In terms of financial sustainability, the 7-year repayment period for the term loan aligns well with
the business's growth trajectory. With the revenue generated from sales and a diligent financial
management approach, SR AGENCY aims to meet its repayment obligations comfortably, ensuring
a positive credit history and potentially opening doors for further financial support in the future.
In conclusion, SR AGENCY, under the leadership of Mr. Rajeev Kumar, is embarking on a strategic
journey to establish a prominent presence in the cleaning materials market in Palayam,
Trivandrum. With a well-thought-out project plan, a dedicated promoter, and the financial backing
of a 10 lakh term loan, this business is poised to meet the increasing demand for cleaning products
and contribute to the hygiene and cleanliness of the local community. By delivering quality
products, effective marketing strategies, and building strong industry partnerships, SR AGENCY
aims to secure its position as a reliable supplier of cleaning materials for years to come.
4
SR AGENCIES
Mr. Rajeev Kumar, the dedicated promoter of SR AGENCY, brings a wealth of experience and commitment to the table.
His background and qualities make him a valuable asset to the business venture.
Experience: Rajeev Kumar likely has prior experience in the cleaning materials industry or a related field, which equips
him with the necessary knowledge to navigate the nuances of the business. This experience is invaluable for making
informed decisions about product selection, pricing, and market positioning.
Commitment: The fact that Mr. Kumar is willing to contribute a substantial amount of 3 lakh from his own funds towards
the project demonstrates his commitment and belief in the business's potential for success. This personal investment
signifies a strong dedication to the venture's growth and profitability.
Leadership: As the promoter, Mr. Kumar is likely to be responsible for guiding the business's overall strategy and vision.
His leadership skills will be critical in setting and achieving the company's goals, managing the team effectively, and
adapting to changing market conditions.
Networking: Over the course of his career, Rajeev Kumar may have established valuable industry connections and
partnerships. These connections can be leveraged to source quality cleaning materials, negotiate favorable deals with
suppliers, and establish collaborations with potential clients in the Trivandrum region.
Financial Acumen: Mr. Kumar's financial contributions and involvement in securing the term loan demonstrate a solid
understanding of the financial aspects of the business. This includes managing budgets, tracking expenses, and ensuring
the efficient use of financial resources.
Local Knowledge: Being based in Palayam, Trivandrum, Mr. Kumar likely possesses valuable local knowledge and
insights into the specific needs and preferences of the target market. This local expertise can be instrumental in tailoring
the business's offerings to meet the demands of the community effectively.
Vision: Successful businesses often require a clear vision for the future. As the promoter, Rajeev Kumar is likely to have a
well-defined vision for SR AGENCY's growth, expansion, and impact on the local economy.
In summary, Mr. Rajeev Kumar's experience, commitment, leadership, financial acumen, and local knowledge are pivotal
factors that position him as a capable promoter for SR AGENCY. With his involvement, the business is better equipped to
navigate the challenges and opportunities in the cleaning materials market in Palayam, Trivandrum, and achieve its long-
term objectives.
5
SR AGENCIES
PROJECT ASSUMPTION
• The scheme is based on a single shift per day 365 working days per annum.
• The break-even point has been calculated on a full capacity utilization basis.
• The cost of Equipment & Furniture's has been taken based on competitive
• It is assumed that the services have very good demand, and the promoters have sound
experience and connections in this particular field
• The suppliers shall be preferably based in local areas.
• An optimum working capital cycle has been taken for calculating the requirements.
• The basis for calculation of production capacity has been taken on a single shift basis on 75%
efficiency.
• The maximum capacity utilization on a single shift basis for 300 days a year. During the first
year and second year of operations, the capacity utilization is 60% and 80% respectively. The
unit is expected to achieve full capacity utilization from the third year onwards.
• The salaries and wages, cost of raw materials, utilities, rents, etc. are based on prevailing rates
in Trivandrum. These cost factors are likely to vary with time and location.
• Interest on loans has been taken at the rate of 10.5% on average. This rate may vary
depending upon the policy of the financial institutions/agencies from time to time.
• The subsidy eligible under the scheme is not considered for preparation of the report since the
applicability of the same is subject to some conditions prescribed by the department.
• There is no question of uncertainty in future growth and business has normal growth.
However unexpected contingencies have not been considered
6
SR AGENCIES
Marketing Strategy
Developing a solid marketing strategy is essential for the success of SR AGENCY,
the cleaning materials business. Here's a comprehensive marketing strategy that you
can consider:
1. Market Research:
Understand the cleaning materials market in Palayam, Trivandrum. Identify your
target audience, including both residential and commercial customers.
Analyze your competitors, their strengths, weaknesses, and pricing strategies.
2. Branding and Positioning:
Create a strong brand identity for SR AGENCY, including a memorable logo and a
catchy slogan.
Position your business as a reliable and cost-effective source for quality cleaning
materials.
3. Product Range and Pricing:
Offer a diverse range of cleaning materials and supplies, including environmentally
friendly options.
Price your products competitively while maintaining a reasonable profit margin.
4. Online Presence:
Build a professional website with product listings, pricing, and contact information.
Optimize your website for search engines (SEO) to improve visibility in online
searches.
Consider setting up an e-commerce platform for online sales.
5. Social Media Marketing:
Create and maintain active profiles on popular social media platforms (e.g.,
Facebook, Instagram, LinkedIn).
Share cleaning tips, product reviews, and engage with your audience.
Run targeted ad campaigns to reach potential customers in your area.
6. Local SEO:
Optimize your online presence for local searches by listing your business on Google
My Business and other local directories.
Encourage satisfied customers to leave reviews.
7. Content Marketing:
Create valuable content related to cleaning and maintenance, such as blog posts,
videos, or infographics.
Share this content on your website and social media to establish authority in the
industry.
8. Email Marketing:
Build an email list by offering promotions or discounts to customers who subscribe
to your newsletter.
Send regular updates about new products, special offers, and cleaning tips.
7
SR AGENCIES
Chart Title
Inauguration
Staffing
Electrification etc
Furnishing
0 1 2 3 4 5 6 7 8 9
8
SR AGENCIES
Location Significance
The location of your business, SR AGENCY, in Palayam, Trivandrum, holds significant importance
for several reasons:
Target Market Proximity: Palayam is likely to be strategically chosen due to its proximity to your
target market. Being in a central location in Trivandrum allows you to access both residential and
commercial customers easily.
Market Demand: Trivandrum, as a growing urban center, likely has a substantial demand for
cleaning materials and supplies. Your location in Palayam positions you well to serve this demand
effectively.
Competitive Advantage: Depending on the density of competitors in the area, your location can give
you a competitive advantage. If there are fewer cleaning material suppliers in Palayam, you have a
unique opportunity to capture a significant market share.
Local Business Ecosystem: Being part of the local business ecosystem allows you to form
partnerships with local cleaning services, janitorial companies, and property management firms. This
can lead to referrals and mutually beneficial collaborations.
Community Engagement: Establishing your business in Palayam means you can actively engage
with the local community. You can participate in local events, sponsor community initiatives, and
build a strong brand reputation as a local business.
Accessibility: Consider the accessibility of your location for both customers and suppliers. Ensure
that it's easy for customers to reach your storefront and for suppliers to deliver your inventory.
Regulations and Permits: Different areas may have varying regulations and permit requirements for
businesses. Ensure that your location in Palayam complies with all local business regulations.
Visibility and Foot Traffic: Depending on the specific location within Palayam, you may benefit from
high visibility and foot traffic. If your storefront is easily noticeable, it can attract more walk-in
customers.
Cost Considerations: Be mindful of the cost of leasing or purchasing property in Palayam. Your
business plan should account for rent or mortgage expenses in this prime location.
Local Culture and Preferences: Understanding the local culture and consumer preferences in
Palayam is essential. Tailor your product offerings, marketing, and customer service to align with the
local culture and preferences.
Transportation Infrastructure: Assess the availability of transportation options for your business,
such as proximity to major roads, public transportation, and parking facilities for customers.
In summary, the location of SR AGENCY in Palayam, Trivandrum, plays a vital role in determining
the accessibility to your target market, the competitive landscape, and your ability to engage with the
local community. Careful consideration of these factors and effective utilization of your location can
contribute significantly to the success of your cleaning materials business.
9
SR AGENCIES
Products and Services:
For "SR AGENCY," the cleaning materials business located in Palayam, Trivandrum, the
product and service offerings should be designed to meet the cleaning needs of both residential
and commercial customers. Here are the key products and services offer:
Products:
Cleaning Chemicals:
Supply a wide range of cleaning chemicals for various purposes, including disinfectants,
detergents, stain removers, and floor cleaners.
Offer options for both residential and commercial-grade cleaning solutions.
Cleaning Equipment:
Provide a selection of cleaning equipment, including vacuum cleaners, floor scrubbers,
carpet cleaners, and pressure washers.
Offer different sizes and models to cater to the diverse needs of customers.
Cleaning Tools and Accessories:
Sell essential cleaning tools and accessories such as brooms, mops, buckets, sponges,
microfiber cloths, and scrub brushes.
Include specialized tools like window cleaning squeegees and grout brushes.
Trash Bags and Bins:
Supply a variety of trash bags in different sizes, materials, and strengths.
Offer trash bins and recycling containers suitable for homes, offices, and commercial
establishments.
Personal Protective Equipment (PPE):
Provide personal protective equipment such as disposable gloves, masks, safety goggles,
and aprons.
Cater to the safety needs of both residential users and professional cleaners.
Services:
Product Sales and Consultation:
Assist customers in selecting the right cleaning products and equipment based on their
specific cleaning needs and preferences.
Offer expert advice on product usage and best practices.
Delivery Services:
Provide convenient delivery options for customers, ensuring that they receive their
cleaning supplies in a timely manner.
Offer a reliable and efficient delivery service within Palayam and the surrounding areas.
Bulk Purchasing and Discounts:
Offer discounts and incentives for customers who purchase cleaning supplies in bulk or
on a recurring basis.
Attract commercial clients, janitorial services, and businesses with high-volume cleaning
requirements.
Eco-Friendly Solutions:
Promote and sell eco-friendly and green cleaning products.
Educate customers about the benefits of using environmentally responsible cleaning
solutions.
Customized Cleaning Kits:
Create customized cleaning kits or packages tailored to specific cleaning needs, such as
home cleaning kits, office cleaning bundles, or industrial cleaning packages.
These products and services collectively make SR AGENCY a one-stop destination for all
cleaning-related needs in Palayam, Trivandrum, catering to both individual homeowners and
businesses seeking quality cleaning materials and solutions.
10
SR AGENCIES
Energy Conservation
Although the energy requirement is small, adequate care should be taken in
electrical installations and the optimal utilization of machinery.
EFFLUENT DISPOSAL:
Disposal of any effluent out of the project unit should be treated with a
recycling facility or dumped in such a way that these do not cause a hazard
in the vicinity of the site. The promoter is already paying the corporation
authorities to remove dispose the food and cooking waste from the hotel in
regular periodical basis.
WATER:
A constant flow of water would be necessary for the operation of the unit.
The unit have a commercial water connection from water authority. Other
utilities include fuel etc. those should be locally available.
Financial Viability
The proposed Profitability Statement,
Projected Balance Sheet and the Projected
Cash Flow Statement, the debt service
coverage ratio, payback period and the
return-on-investment ratio etc indicated the
project is financially viable. The projected
profit and loss account statement shows that
there will be surplus fund even for meeting
any unforeseen contingencies. The Cash Flow
Statement also revels the healthy financial
trend in the flow of fund.
11
SR AGENCIES
Revenue Forecast
Sales projections can be highly significant for businesses and organizations. It's important to note that sales projections are estimates and subject to uncertainties
and external factors that can impact actual results. Regular monitoring, periodic updates, and adjustments based on market conditions are necessary to maintain
the accuracy and relevance of sales projections .It is important to state that our sales forecast is based on the data gathered during our feasibility studies and also
some of the assumptions readily available in the field. Below is the sales projection , it is based on the location of our hotel and the services and products that we
will be offering;
Rupees in Lakh
Product 2024 2025 2026 2027 2028 2029 2030
Sale of Lotions soaps etc 40% 19,83,600.00 21,82,000.00 24,00,400.00 26,40,400.00 29,04,400.00 31,94,800.00 35,14,400.00
Sale of other toiletries 30% 14,87,700.00 16,36,500.00 18,00,300.00 19,80,300.00 21,78,300.00 23,96,100.00 26,35,800.00
Other Cleaning Materials 30% 14,87,700.00 16,36,500.00 18,00,300.00 19,80,300.00 21,78,300.00 23,96,100.00 26,35,800.00
Total 49,59,000.00 54,55,000.00 60,01,000.00 66,01,000.00 72,61,000.00 79,87,000.00 87,86,000.00
- - - - - - -
Revenue Forecast
2,00,00,000.00
1,80,00,000.00 Other Cleaning Materials
1,60,00,000.00
1,40,00,000.00
1,20,00,000.00 Sale of other toiletries
1,00,00,000.00
80,00,000.00
60,00,000.00 Sale of Lotions soaps etc
40,00,000.00
20,00,000.00
-
2024 2025 2026 2027 2028 2029 2030
Total
Total 1,00,00,000.00
90,00,000.00
80,00,000.00
2024
2030 70,00,000.00
10%
19%
2025 60,00,000.00
12% 50,00,000.00
2029 40,00,000.00
2026
17% 13% 30,00,000.00
20,00,000.00
2028 2027 10,00,000.00
15% 14%
-
1 2 3 4 5 6 7
12
SR AGENCIES
2.56
DSCR
2.07
1.78
1.00
1.59
500.00
1.46
1.36
20.00
1.29
-
-
1 2 3 4 5 6 7 0 0.5 1 1.5 1 2 3 4 5 6 7
ASSET COVERAGE RATIO
13
SR AGENCIES
Net increase (Decrease) in Capital (6,05,000.00) (10,49,000.00) (12,08,000.00) (13,81,000.00) (15,72,000.00) (17,81,000.00) (20,12,000.00)
Wokrin capital loan
Term loan 8,98,000.00 (1,14,000.00) (1,25,000.00) (1,40,000.00) (1,55,000.00) (1,73,000.00) (1,91,000.00)
Expense payable
Net increase (Decrease) in Other Liabilites 12,000.00 1,000.00 1,000.00 1,000.00 2,000.00 2,000.00 2,000.00
Net Cash Flow from Financing Activities 3,05,000.00 (11,62,000.00) (13,32,000.00) (15,20,000.00) (17,25,000.00) (19,52,000.00) (22,01,000.00)
Cash Flow from Investment Activities
Net (increase) Decrease in Fixed Assets (4,05,000.00) 41,000.00 36,000.00 33,000.00 30,000.00 27,000.00 24,000.00
Opening Cash Balance 46,000.00 42,000.00 38,000.00 33,000.00 26,000.00 18,000.00
Closing Cash Balance 46,000.00 42,000.00 38,000.00 33,000.00 26,000.00 18,000.00 8,000.00
- - - - - - -
- - - - - - -
14
SR AGENCIES
Projected Profit and Loss Account for the year ended
31-Mar 31-Mar 31-Mar 31-Mar 31-Mar 31-Mar 31-Mar
2024 2025 2026 2027 2028 2029 2030
By Direct Income
" Revenue from operation 49,59,000.00 54,55,000.00 60,01,000.00 66,01,000.00 72,61,000.00 79,87,000.00 87,86,000.00
Closing Stock 8,50,000.00 8,76,000.00 9,02,000.00 9,29,000.00 9,57,000.00 9,86,000.00 10,16,000.00
Total 58,09,000.00 63,31,000.00 69,03,000.00 75,30,000.00 82,18,000.00 89,73,000.00 98,02,000.00
To Direct Expenses
" Opening stock 8,50,000.00 8,76,000.00 9,02,000.00 9,29,000.00 9,57,000.00 9,86,000.00
" Purchase 40,73,000.00 35,72,000.00 39,27,000.00 43,18,000.00 47,48,000.00 52,21,000.00 57,41,000.00
" Staff cost 3,50,000.00 3,85,000.00 4,24,000.00 4,66,000.00 5,13,000.00 5,64,000.00 6,20,000.00
" Consumables 34,000.00 34,000.00 34,000.00 34,000.00 34,000.00 34,000.00 34,000.00
" Electricity charges 31,000.00 31,000.00 31,000.00 31,000.00 31,000.00 31,000.00 31,000.00
" Repairs & Maintanance 13,000.00 13,000.00 13,000.00 13,000.00 13,000.00 13,000.00 13,000.00
" Office expenes 28,000.00 28,000.00 28,000.00 28,000.00 28,000.00 28,000.00 28,000.00
" Staff welfare exp 39,000.00 39,000.00 39,000.00 39,000.00 39,000.00 39,000.00 39,000.00
" Storge expenses 43,000.00 43,000.00 43,000.00 43,000.00 43,000.00 43,000.00 43,000.00
Total 46,11,000.00 49,95,000.00 54,15,000.00 58,74,000.00 63,78,000.00 69,30,000.00 75,35,000.00
To Gross Profit 11,98,000.00 13,36,000.00 14,88,000.00 16,56,000.00 18,40,000.00 20,43,000.00 22,67,000.00
GP Ratio 24.16 24.49 24.80 25.09 25.34 25.58 25.80
To Indirect Expenses
" Advertisement exp 17,000.00 19,000.00 21,000.00 23,000.00 25,000.00 28,000.00 31,000.00
" Interest on term loan 1,00,000.00 89,000.00 76,000.00 63,000.00 47,000.00 30,000.00 11,000.00
" Duties and taxes 6,000.00 6,000.00 6,000.00 6,000.00 6,000.00 6,000.00 6,000.00
" Printing and stationary 31,000.00 31,000.00 31,000.00 31,000.00 31,000.00 31,000.00 31,000.00
" Repairs & Maintanance 21,000.00 21,000.00 21,000.00 21,000.00 21,000.00 21,000.00 21,000.00
" Travelling Expenses 25,000.00 25,000.00 25,000.00 25,000.00 25,000.00 25,000.00 25,000.00
" Depreciation 45,000.00 41,000.00 36,000.00 33,000.00 30,000.00 27,000.00 24,000.00
Total 2,45,000.00 2,32,000.00 2,16,000.00 2,02,000.00 1,85,000.00 1,68,000.00 1,49,000.00
Net Profit before tax 9,53,000.00 11,04,000.00 12,72,000.00 14,54,000.00 16,55,000.00 18,75,000.00 21,18,000.00
Income tax 1,42,950.00 1,65,600.00 1,90,800.00 2,18,100.00 2,48,250.00 2,81,250.00 3,17,700.00
Net Icome After Tax 8,10,050.00 9,38,400.00 10,81,200.00 12,35,900.00 14,06,750.00 15,93,750.00 18,00,300.00
Net Icome After Tax % 16.33 17.20 18.02 18.72 19.37 19.95 20.49
Average NP ratio 18.59
15
SR AGENCIES
Depreciation Statement
% of
Particulars dep 2024 2025 2026 2027 2028 2029 2030
Furniture and Fixtures 2,85,000.00 2,56,500.00 2,30,500.00 2,07,500.00 1,86,500.00 1,67,500.00 1,50,500.00
Depreciation 10% 28,500.00 26,000.00 23,000.00 21,000.00 19,000.00 17,000.00 15,000.00
WDV 2,56,500.00 2,30,500.00 2,07,500.00 1,86,500.00 1,67,500.00 1,50,500.00 1,35,500.00
Chart Title
500000 WDV Opening Depreication Rounded WDV Rounded
400000
300000
200000
100000
0
2 3 4 5 6 7 8
16
SR AGENCIES
Chart Title
principal Interest
Chart Title
1,80,000
1,60,000
1,40,000
1,20,000
1,00,000
80,000
60,000
40,000
20,000
-
1 2 3 4 5
Interest principal
17
SR AGENCIES
GP Ratio
The gross profit margin (also known as gross profit rate, or gross profit ratio) is a profitability measure that shows the percentage of
gross profit in comparison to sales. In other words, it calculates the ratio of profit left of sales after deducting cost of sales.Generally, the
higher the gross profit margin the better. A high gross profit margin means that the company did well in managing its cost of sales. It
also shows that the company has more to cover for operating, financing, and other costs. The gross profit margin may be improved by
increasing sales price or decreasing cost of sales. However, such measures may have negative effects such as decrease in sales volume
due to increased prices, or lower product quality as a result of cutting costs. Nonetheless, the gross profit margin should be relatively
stable except when there is significant change to the company’s business model.
Chart Title
1,00,00,000.00
90,00,000.00
80,00,000.00
70,00,000.00
60,00,000.00
50,00,000.00
40,00,000.00
30,00,000.00
20,00,000.00
10,00,000.00
-
2024 2025 2026 2027 2028 2029 2030
18
SR AGENCIES
Debt Service Coverage Ratio
The Debt Service Coverage Ratio (DSCR) measures the ability of a company to use its operating income to repay all its debt
obligations, including repayment of principal and interest on both short-term and long-term debt. This ratio is often used when a
business has any borrowings on its balance sheet such as bonds, loans, or lines of credit. It is also a commonly used ratio in a
leveraged buyout transaction, to evaluate the debt capacity of the target company. A debt service coverage ratio of 1 or above
indicates that a company is generating sufficient operating income to cover its annual debt and interest payments. As a general
rule of thumb, an ideal ratio is 2 or higher. A ratio that high suggests that the company is capable of taking on more debt.
Rather than just looking at an isolated number, it is better to consider a company’s debt service coverage ratio relative to the ratio
of other companies in the same sector. If a business has a significantly higher DSCR than most of its competitors, that indicates
superior debt management. A financial analyst may also want to look at a company’s ratio over time – to see whether it is
trending upward (improving) or downward (getting worse)
Chart Title
25,00,000.00
20,00,000.00
15,00,000.00
10,00,000.00
5,00,000.00
-
1 2 3 4 5 6 7
Net profit Annual Repayment
19
SR AGENCIES
1,00,00,000.00
80,00,000.00
60,00,000.00 Profit
40,00,000.00 Sales
20,00,000.00
-
2024 2025 2026 2027 2028 2029 2030
20
SR AGENCIES
The interest coverage ratio is a debt and profitability ratio used to determine how easily a company can pay interest on its outstanding
debt. The interest coverage ratio is calculated by dividing a company's earnings before interest and taxes (EBIT) by its interest expense
during a given period.
2024 2025 2026 2027 2028 2029 2030
Net profit 9,53,000.00 11,04,000.00 12,72,000.00 14,54,000.00 16,55,000.00 18,75,000.00 21,18,000.00
21
SR AGENCIES
Total Outside Liability to Total Net Worth (TOL/TNW)
TOL/TNW is a measure of a company’s financial leverage calculated by dividing the total liabilities of the company by the total net
worth of the business. Total outside liability is the sum of all the liabilities of the business and total net worth is the sum of share
capital and surplus reserves of the company. This ratio gives an accurate picture of the businesses reliance on debt. A low
TOL/TNW ratio signifies good levels of promoter’s stake in the business, whereas a high TOL/TNW ratio shows low levels of
promoter’s stake in the business, which is considered risky. In the rating exercise, businesses with a TOL/TNW of less than 1 score
the maximum amount of points while a TOL/TNW ratio of more than 3 is awarded no points. For most businesses, it would be good
to have an average TOL/TNW ratio in the range of 1-2.
12,00,000.00
10,00,000.00
8,00,000.00
6,00,000.00
4,00,000.00
2,00,000.00
-
2024 2025 2026 2027 2028 2029 2030
22
SR AGENCIES
Asset Coverage Ratio
The Asset Coverage Ratio is a financial metric used to assess the ability of a company to cover its debt obligations using its assets. It is particularly
relevant for companies that issue bonds or other types of debt securities. The ratio indicates the proportion of a company's assets that are available
to cover its outstanding debt in case of default.
Asset Coverage ratio 1.29 1.36 1.46 1.59 1.78 2.07 2.56
23
SR AGENCIES
24
SR AGENCIES
The cash ratio indicates to creditors, analysts, and investors the percentage of a company’s current liabilities that cash and cash
equivalents will cover. A ratio above 1 means that a company will be able to pay off its current liabilities with cash and cash
equivalents, and have funds left over.Creditors prefer a high cash ratio, as it indicates that a company can easily pay off its debt.
Although there is no ideal figure, a ratio of not lower than 0.5 to 1 is usually preferred. The cash ratio figure provides the most
conservative insight into a company’s liquidity since only cash and cash equivalents are taken into consideration.
25
SR AGENCIES
Debt to equity ratio (also termed as debt equity ratio) is a long term solvency ratio that indicates the soundness of long-term
financial policies of a business It shows the relation between the portion of assets financed by creditors and the portion of assets
financed by stockholders
Year 2024 2025 2026 2027 2028 2029 2030
2,024.00 2,025.00 2,026.00 2,027.00 2,028.00 2,029.00 2,030.00
Capital 3,48,000.00 4,03,000.00 4,67,000.00 5,40,000.00 6,23,000.00 7,17,000.00 8,23,000.00
Total Liabilities 2,98,000.00 3,28,000.00 3,61,000.00 3,97,000.00 4,37,000.00 4,81,000.00 5,29,000.00
Year-1 Year-2 Year-3 Year-4 Year-5 Year-5 Year-5
Debt Equity Ratio 0.86 0.81 0.77 0.74 0.70 0.67 0.64
Average DE ratio 0.74
The Debt quity ratio of the business varied from 0.86 to 0.64
with an average of 0.74
26
SR AGENCIES
This ratio shows the proportion of total assets of a buisiness which are financed
by proprietors’ funds. The proprietary ratio is also known as equity ratio. It helps
to determine the financial strength of a business & is useful for creditors to assess
the ratio of shareholders’ funds employed out of total assets of the company.
27
SR AGENCIES
Current Liabilities
Sundry Creditors 2,86,000.00 3,15,000.00 3,47,000.00 3,82,000.00 4,20,000.00 4,62,000.00 5,08,000.00
Other Current Liabilities 12,000.00 13,000.00 14,000.00 15,000.00 17,000.00 19,000.00 21,000.00
Total 2,98,000.00 3,28,000.00 3,61,000.00 3,97,000.00 4,37,000.00 4,81,000.00 5,29,000.00
Quick Ratio
1.20
1.00
0.80
0.60
0.40
0.20
-
2024 2025 2026 2027 2028 2029 2030
28
SR AGENCIES
In above table shown the current ratio of five years
solvency position of the business in terms of current ratio
above the standard norm volume of 2:1 for the entire
Thecurrent Ratio showsutilization of idle funds in the business
Current ratio
4.50
4.00
3.50
3.00
2.50
2.00
1.50
1.00
0.50
-
2024 2025 2026 2027 2028 2029 2030
29
SR AGENCIES
Sales
1,00,00,000.00
50,00,000.00
-
2024 2025 2026 2027 2028 2029 2030
Sales
The operating expense ratio explains the changes in the profit margin (EBIT to sales) ratio. This ratio is computed by
dividing operating expenses viz., cost of goods sold plus selling expense, and general and administrative expenses
(excluding interest) by sales.. Operating expenses are costs associated with running a business's core operations on a daily
basis. Thus, the lower a company's operating expenses are, the more profitable it generally is. Over time, changes in the
OER indicate whether the company can increase sales without increasing operating expenses proportionately (i.e. if the
business is scalable). In real estate, companies can compare properties by using the ratio.
30
SR AGENCIES
31
SR AGENCIES
Calulation of NPV and IRR
Opportunity Cost 10% Net Present Value
Year Cash Flow Present Value (NPV)
0 (13,00,000.00) (13,00,000.00) Net present value (NPV) is
1 9,98,000.00 9,07,272.73 the difference between the
2 11,45,000.00 9,46,280.99 present value of cash inflows
3 13,08,000.00 9,82,719.76 and the present value of cash
4 14,87,000.00 10,15,641.01 outflows over a period of
5 16,85,000.00 10,46,252.43 time. NPV is used in capital
budgeting and investment
6 19,02,000.00 10,73,629.41
planning to analyze the
7 21,42,000.00 10,99,184.69
profitability of a projected
investment or project. A
positive net present value
Net Present Value 57,70,981.02 indicates that the projected
IRR 88.705476% earnings generated by a
- project or investment - in
present dollars - exceed the
anticipated costs, also in
Internal Rate of Return (IRR)
Internal rate of return (IRR) is the interest rate present dollars. It is assumed
at which the net present value of all the cash flows that an investment with a
(both positive and negative) from a project or positive NPV will
investment equals zero. The internal rate of return be profitable, and an
is used to evaluate the attractiveness of a project or investment with a negative
investment. If the IRR of a new project exceeds a
company’s required rate of return, that project is
NPV will result in a net loss.
desirable. If IRR falls below the required rate of This concept is the basis for
return, the project should be rejected. Typically, the Net Present Value Rule,
the higher the IRR, the higher the rate of cash which dictates that only
inflow a company can expect from a project or
investment.
Chart Title
40,00,000.00
20,00,000.00
-
0 1 2 3 4 5 6 7
(20,00,000.00)
(40,00,000.00)
32
SR AGENCIES
Conclusion
On revealing the various aspects of the project and studying the financial & technical
features of the scheme it can easily be noted that the above project will be a great success. This
Project viewed from any angle will find a viable and justifiable outlook. There are no hidden
anomalies or expenses in the Project. The Term Loan proposed to avail and can be repaid with
interest from the income derived from the business itself. This Project is recommended for
implementation. Considering the fair quality of services and products offered by the
establishment and further the prior experience, knowledge, technical expertise, and
commitment of the promoters are added advantages for the smooth running of the project.
The income generated, with the experience, expertise, and commitment of the promoter
ensures the success of the project. Even the conservative estimates show that the project is
financially and economically viable and commercially sound. Considering the fair quality of
services and products offered by the establishment and further the prior experience,
knowledge, technical expertise, and commitment of the promoters are added advantages for
the smooth running of the project. The income generated, with the experience, expertise, and
commitment of the promoter ensures the success of the project. The various projected
financial statements and Debt Service Coverage Ratio DSCR, Return on Investment ROI, Pay
Back Period, etc. show that the project will be able to repay the entire Bank Loan together with
interest within the stipulated period and further shows that the project is financially sound
and deserve support and help from the Bank.
The various projected financial statements and Debt Service Coverage Ratio (DSCR),
Return on Investment (ROI), Pay Back Period, etc. show that the project will be able to repay
the entire Bank Loan together with interest within the stipulated period and further shows
that the project is financially sound and deserve support and help from the Bank.
33