Business Plan On

Vehicle maintenance service and

Auto Spare Part Sales

Owner of the Business

Mr. Shiferaw Zeleke

Addis Ababa

November, 2023
Table of Contents
1. Executive Summery.........................................................................................................................2
1.2 Background of the company..............................................................................................................3
1.3Business Description...........................................................................................................................3
1.4 Mission, Vision and Objective of the Business...................................................................................4
2 Service Offering........................................................................................................................................5
3. Marketing strategy..................................................................................................................................5
3.1 Pricing................................................................................................................................................6
3.2 Competitors analysis..........................................................................................................................7
3.4 Advertising & sales............................................................................................................................7
4. Management and....................................................................................................................................7
4.2 Human Resource...............................................................................................................................8
5 Financial Analysis......................................................................................................................................8
5.1 Working Capital requirement-estimation..............................................................................................9
5.1 Loam Amortization Schedule.............................................................................................................1
5.2Expected income projection from the next four Consecutive year....................................................1
5.3 Relevant assumptions............................................................................................................................2
5.4. Projected Cash Flow........................................................................................................................3
5.5 Projected Balance Sheet....................................................................................................................4
5.6 Financial Ratios..................................................................................................................................5
 1. Executive Summery

Shiferaw Zeleke Vehicle maintenance service and

Business Name Auto Spare Part Sales

Project owner Shiferaw Zeleke

Medium scale Vehicle maintenance service and

Type of Establishment Auto Spare Part Sales

Nationality Ethiopian

Legal form Sole ownership

location Addis Ababa

Service Type Vehicle maintenance service and

Auto Spare Part Sales

Target Market
Individuals, Insurance institutions, unions .

Working Capital 5,000,000 Birr

Requirement

Investment capital and 5 million Birr of total investment 4.9 million from
sources of Financial long term bank loan & the remaining finance by
owners’ equity.

Financial viability
The project is highly attractive with positive cash
flow.
The need for business plan in our business dealing is becoming very imperative in
today’s dynamic and complex marketplace. As everyone knows, business plan is
one of the integral steps in fulfilling one’s business targets. Accordingly, this plan
is developed with the intent of ensuring effective preparation for the
implementation and positioning of our programs and allied activities that best
achieve our long term and short-term goals. It will assist our management team in
setting the long-term directions and policies of our company and in making
decisions on short term priorities and resource allocations. It will also assist to
develop and implement programs by providing guidance for multiyear program
plans and budgets.

Thus, this business plan was created with the goal of directing our services.
Shiferaw Zeleke was founded and began operations in 1998 in Addis Ababa city,
offering Isuzu truck maintenance services, including engine overhauls, gir box
maintenance, body repairs, alignments, power string services, and spare part sales
to customers from the Welega area, South West Shoa, as well as from Addis Ababa
city, including individuals, insurance institutions, unions, etc.

He moved the company to the Oromia region, Sheger city, Gefersa Nono sub-city,
Filidoro area in 2007 E.C., as a result of the growing business's demand for a wide
working space and the time constraints for heavy vehicles in Addis Ababa..

with Commercial registration number ORO/SPZ/8RGN/1/0000694/2007 and

trade License number 04/25896/03/1550/2007 with initial paid-up capital of Birr
92,964.00 (ninety two thousand nine hundred sixty four birr) issued by Oromia
Regional Administration Trade Bureau which was Renewal on 24/06/2015 E.C.
and Tin no 000562979.

The auto repair industry is highly competitive. Each workshop within this field has
high capital costs, low margins, and a high intensity of competition, but thanks to
the increase in sales of cars in Ethiopia, which drives the need and demand of
high-quality auto repair and service workshop.
The company usually repairs light and heavy vehicles using its own spare parts,
and it is known that the price of these spare parts has increased significantly.
However, recently the company competed with different customers and tenders, so
it is necessary to purchase more exchange in order to deliver the works received to
the customers in a timely manner It is necessary to get a loan from the bank to
overcome this lack of purchase.

The Company is planning to increasing Service income and Improving profitability

of the business, the company requires additional financial resources for covering
its operational costs and the plan indicate that working capital loan from Leander
institution will be obtained in order to avoid financial strain at the beginning of the
2016 E.C. fiscal year in order to run at the expected level.

The Strategy indicated that the Company needs to invest a total of ETB 5 million
covering its operational costs, of which ETB 4.9 million obtained from bank credit
facility that will be fully settled in 4 years and the remaining finance covered by
owners’ equity. This lending option will be extremely helpful to us in achieving our
goals as a company.

Beside to this, the promoter believes the loan will strengthened the relationship
between the investor and the bank. in addition to this loans and advances to
various sectors of the economy on the strength of viability and assessment of
concentration risk will increase the success of the business.

The project is financially viable with an average yearly growth of 30% and Positive
cash inflow over the next few years,

The Business also will create employment Advantage and will create backward
linkage with suppliers and forward linkage with the sub sectors and generate
income for the Government in terms of tax revenue and payroll tax.
1.2 Background of the company

Shiferaw Zeleke was established & started operation in 1998E C. at Addis Ababa
city by providing vehicle maintenance service for Isuzu truck such as Isuzu NPR,
Isuzu FSR, Isuzu NQR and Isuzu FTS Trucks Engine overhaul, Gir box
maintenance, body repair, electric and battery repair, alignment, power string
service, and spare part sale to its customer from Welega area, South west Shoa
and also from Addis Ababa city such as individuals Insurance institutions, unions,
etc.
The business is located in Oromia region sheger city, Gefersa Nono Sub-City
Filidoro Wereda main road from Addis Ababa to Ambo Welega Road on 1,200 karee
land space with 50 karee store and office, large work shop and small spare part
shop on the compound. Moreover, the area was found on central location that gave
advantages to maintain business relation with customers and easy access to heavy
trucks.

1.3Business Description
Shiferaw Zeleke Providing vehicle maintenance service for Isuzu truck such as
Isuzu NPR, Isuzu FSR, Isuzu NQR and Isuzu FTS Trucks Engine overhaul, Gir box
maintenance, body repair, electric and battery repair, alignment, power string
service, and spare part sale to its customer from Welega area, South west Shoa
and also from Addis Ababa city such as individuals Insurance institutions, unions,
etc.

Shiferaw Zeleke Auto Parts Stores is in the auto parts stores industry to service a
wide range of clients and of course to make profits, which is why we will ensure we
go all the way to make available a wide range of auto parts from top manufacturing
brands in the Europe, Asia and other countries of the world.

In addition to this, the promoter plans to increase its current inventory and
suppliers while adding new products available on the market by creating a supply
chain with Auto Spare part supplier companies. As the most progressive company
in the industry, The Company plans to offer a greater number of products and
services in the future so as to create another dimension of competitive advantage.

1.4 Mission, Vision and Objective of the Business

Vision:
 We are dedicated to become well recognized and competitive company in the
business through providing outstanding customer service via committed and
professional team
Mission: Our mission is to continually expand our successful line of Service by
providing the best quality and reliable Service that excel our customers’
expectations; keep our margins as high as possible with continual growth in our
market share and work competitively and profitably in all businesses that we deal
by adopting and utilizing modern technology and well-trained personnel in socially
responsible manner

Objectives: The main objective of our company is to achieve our sales, gross
margins and net profit forecasts for the coming years, as outlines in this business
plan. Specifically, we will strive to achieve the following objectives

 Long-lasting relationship with diverse customer and supplier in

different countries, both in domestic and regional level.
 Forming a valid and enforcing contractual agreement
 Effective utilization of state-of-the-art machinery, and information and
communication technology for quality and speedy operation.
 Visionary and committed management.
 Skilled, experienced and motivated work force and lastly, modern
strategic management, marketing and operational management
system.
2 Service Offering
Our overall strategy aimed at developing quality partnership with customers,
suppliers, brokers and other service agents with whom we continually operate.
Providing quality products and service that are preferable in the market to meet
the needs and demand of our customers is a primary concern of us with affordable
prices. We work jointly with our partners to exceed expectation of every client of
our company, be a customer or supplier by offering outstanding quality products
and best service to them.

For this end, we will continually increase our flexibility and improve our efficiency
to readily expedite our domestic and Regional transaction. We will all strive to
increase our productivity, sales and profitability through teamwork, commitment
and dedication. By and large we dig out the way our clients receive the most
effective and valuable satisfaction and hence continue their reputation with us.

Therefore, some of the products and Service which we intend to offer our
customers are

Providing vehicle maintenance service for Isuzu truck such as Isuzu NPR, Isuzu
FSR, Isuzu NQR and Isuzu FTS Trucks Engine overhaul, Gir box maintenance,
body repair, electric and battery repair, alignment, power string service, and spare
part sales.

3. Marketing strategy

The main business strategy of the company is customer driven approach and
focused to address the need and want of their valuable customers.

The Company’s strategy is therefore to supply products and service required by

customers at the quality and quantity level they demanded. The Company can
 also compete on prices besides the flexibility and quality factors as it will only
trading on demand and hence can significantly reduce the stock carrying costs.

SWOT Analysis

 Strength
 Huge Service Line with variations.
 Business will have longer hours and better prices as compared to
competitors.
 Discounts are available for customer.
 Expertise in getting new service to the market quickly.
 Expertise in providing good customer service.
 Customization available for individual customers.

 Weakness:
 Huge capital required to start business as credit is not easily available
from supplier in start.
 Marketing expense in the start will be huge, to establish brand name
required lot of advertising.
 Threats

The threats we are likely to face in this business are likely to come from a
change in government policies, slowing demand, or entry of new competitors
into the industry and political instability. However, as a business with a
vision in sight, we will be able to handle any threats that might crop up
during the course of running the business.

3.1 Pricing

Penetration Pricing will be the pricing strategy for our business, as our business
is at the high street of Addis Ababa where competition is huge, so we try to give
good quality at low price to penetrate in the market and try to achieve higher sales
volume to set low price and better-quality strategy. Once we achieve this objective
then try to charge higher price for our customized service for value addition.
3.2 Competitors analysis

The market is very competitive because they offer the same products and services,
but has different physical attributes to the Product and different costs, which
buyers have choices to choose from. Companies want to provide the best products
and services to attract buyers by lowering cost and improving products, which
makes the industry very competitive

3.4 Advertising & sales

The main marketing strategy begins as a provide quality, unique and full package
services; deliver to the needs of potential customers, that will fill the needs of
them. We are planning our marketing strategy so that we ensure excellence
product and Service with affordable price.

Our promotion channels include print ads in the form of business card, brochures,
fliers and banners that keep the company name, phone and address of the
company in front of the customer.
We will give advertising in different newspaper and magazine in our country. In
addition, we intend to participate in business workshop and related exhibition.

On the other hand, Word of Mouth - By giving first-time customers great service
and a fair price, the word is sure to spread.

All marketing decisions with regard to specific media choices, frequency, size,
and expenditures will be conducted on an on-going basis with careful
considerations of returns generated.

4. Management

It is evident that for the proper and continuous profitable of the business, due
consideration has to be given to the organization and management.
 The owner, being accountable to the business, will manage all activity of the
business, market information and customer needs and wants as well as
providing new and quality service that satisfy customer needs. The owners will
manage all financial and operational aspects the business.

The Company is owned and managed by Mr Shiferw Zelke who are highly
professional with commendable business experience in the sector more than 20
years garage service..

4.2 Human Resource

The company currently has 10 staff members which are permanent and, contract
employees.
S.no Description No Staff
1 General Manager 1
2 Deputy Manager 1
3 Technicians 3
4 Messenger 1
5 Sales Man 1
6 Casher 1
7 Cleaner 1
8 Guard 1
Total 10

5 Financial Analysis

The Company is planning to increasing Service income and Improving profitability

of the business, the company requires additional financial resources for covering
its operational costs and the plan indicate that working capital loan from Leander
institution will be obtained in order to avoid financial strain at the beginning of the
2016 E.C. fiscal year in order to run at the expected level.
The Strategy indicated that the Company needs to invest a total of ETB 5 million
covering its operational costs, of which ETB 4.9 million obtained from bank credit
facility that will be fully settled in years and the remaining finance covered by
owners’ equity. This lending option will be extremely helpful to us in achieving our
goals as a company.

Based on the nature of the financing, we have chosen the Commercial Bank of
Ethiopia to be our bank for filling our financial need. Accordingly, we have decided
to lodge our financing request of Birr 4.9 million to be addressed by in the form of
term loan. In order to secure the requested loan, the company is willing to offer
collaterals worth of Birr 5.7 million.

As it is discussed above, Purchase of Spart part and Service related costs

are bottlenecks for the company such as operational costs, fuel and
lubricants rent of work shop & warehouse, There are also other costs like,
salary and wages, Utility etc.

5.1 Working Capital requirement-estimation

Estimated working
Description capital
Cost of Purchase Spare parts 3,500,000
goods
Rent of work shop & warehouse 480,000
Salary and wages 528,000
Utility 120,000
Other Operating Cost 372,000
Total Requirement ETB 5,000,000

Note:- From The total working capital requirement 4.9 million covered by bank loan and the
remaining fund covered by owners equity.

Cost of Purchase Spare parts goods

The company usually repairs light and heavy vehicles using its own spare parts,
and it is known that the price of these spare parts has increased significantly.
However, recently the company competed with different customers and tenders, so
it is necessary to purchase more exchange in order to deliver the works received to
the customers in a timely manner It is necessary to get a loan from the bank to
overcome this lack of purchase.

Basic assumption in forecasting our Purchase Spare parts goods costs is the
following:

Quantity
in Price per
No Spare part unit unit Total Price
4,000.0 320,000.0
Bering
1 80 0 0
2,500.0 175,000.0
2 Fuel Filters 70 0 0
5,500.0 275,000.0
3 Oil Filters 50 0 0
10,000. 190,000.0
4 Air Cleaner 19 00 0
4,500.0 315,000.0
5 Valve Seals 70 0 0
13,500. 675,000.0
6 Three V Joint 50 00 0
8,000.0 360,000.0
7 Life Spring 45 0 0
7,500.0 337,500.0
8 Break Pad 45 0 0
5,000.0 250,000.0
9 Engine Oil 50 0 0
450.0 22,500.0
10 Break Oil 50 0 0
5,500.0 104,500.0
11 Gear Bok Oil 19 0 0
5,500.0 115,500.
12 Satellite Gear 21 0 00
8,000.0 288,000.0
13 Clutch 36 0 0
3,600.0 72,000.0
14 Break Kit 20 0 0
83,550.0 3,500,000.0
Total 0 0
Operating and Administrative Expenses
The Company’s operating and administrative expenses are estimated as
follows:

● Salary and Wage expense- it is computed taking the following

assumptions regarding the required number of staff, basic salary

Table 1- Staff Salary and Wage Plan

Monthly Annual
S.no Description No Staff
Salary Salary

1 General Manager 1 10,000.00 120,000.00

2 Deputy Manager 1 10,000.00 120,000.00
3 Technicians 3 5,000.00 180,000.00
4 Messenger 1 2,000.00 24,000.00
5 Sales Man 1 2,000.00 24,000.00
6 Casher 1 2,000.00 24,000.00
7 Cleaner 1 1,500.00 18,000.00
8 Guard 1 1,500.00 18,000.00
Total 10 34,000.00 528,000.00

● This shows that the Company’s annual salary and benefit expense

will be Birr 528,000 offering competitive salary and employing

adequate staff.

● Rent Expenses- the company will pay office, Work Shop and store

rent which is presented as follows.

 Monthly Annual
S.no Description
Rent Rent

Work Shop and

1 Stor rent 40,000.00 480,000.00

Total 40,000.00 480,000.00

● Utility- expenses comprise Electric , water and related expenses. The

Company annual electric and Water will be birr 120,000.

● Loading un-loading- it will be significant cost element and it is

expected to cost 1% of the total cost of purchase.

● Administrative expenses- comprises stationery and printing,

professional fees, license and legal fees, travel and postage, per diem,
telephone, bank charges, etc. It is expected that administrative
expenses amounts to 5% of annual sales.

● Profit tax- Annual profit tax is computed assuming effective tax rate of
35%. Income tax liability of a fiscal year is assumed to be paid in the
same year

● Interest Expenses: - It is planned that the Company will obtain bank

term loan of ETB 4.9 million to be repaid in 4 years as shown in the

table below. The loans are expected to be obtained at annual interest
rate of 15.5%.
5.1 Loam Amortization Schedule
Enter values
Loan amount Annual interest rate Loan period in $ 4,900,000.00
years 15.50 %
Number of payments per year
4
Start date of loan
Optional extra payments 4
1/2/2024

Loan summary
Scheduled payment Scheduled number of $ 416,649.57
payments Actual number of payments 16
Total early payments
16
Total interest
$ -
$ 1,766,393.07

Pmt. Date Scheduled Ending

No. Beginning Balance Payment Total Payment Principal Interest Balance Cumulative
Interest

1 4/2/2024 $ 4,900,000.00 $ 416,649.57 $ 416,649.57 $ 226,774.57 $ 189,875.00 $ $ 189,875.00

4,673,225.43
2 7/2/2024 $ 4,673,225.43 $ 416,649.57 $ 416,649.57 $ 235,562.08 $ 181,087.49 $ $ 370,962.49
4,437,663.35
3 10/2/2024 $ 4,437,663.35 $ 416,649.57 $ 416,649.57 $ 244,690.11 $ 171,959.45 $ $ 542,921.94
4,192,973.24
4 1/2/2025 $ 4,192,973.24 $ 416,649.57 $ 416,649.57 $ 254,171.85 $ 162,477.71 $ $ 705,399.65
3,938,801.39
5 4/2/2025 $ 3,938,801.39 $ 416,649.57 $ 416,649.57 $ 264,021.01 $ 152,628.55 $ $ 858,028.21
3,674,780.37
6 7/2/2025 $ 3,674,780.37 $ 416,649.57 $ 416,649.57 $ 274,251.83 $ 142,397.74 $ $ 1,000,425.95
3,400,528.55
7 10/2/2025 $ 3,400,528.55 $ 416,649.57 $ 416,649.57 $ 284,879.09 $ 131,770.48 $ $ 1,132,196.43
3,115,649.46
8 1/2/2026 $ 3,115,649.46 $ 416,649.57 $ 416,649.57 $ 295,918.15 $ 120,731.42 $ $ 1,252,927.84
2,819,731.31
9 4/2/2026 $ 2,819,731.31 $ 416,649.57 $ 416,649.57 $ 307,384.98 $ 109,264.59 $ $ 1,362,192.43
2,512,346.33
10 7/2/2026 $ 2,512,346.33 $ 416,649.57 $ 416,649.57 $ 319,296.15 $ 97,353.42 $ $ 1,459,545.85
2,193,050.19
11 10/2/2026 $ 2,193,050.19 $ 416,649.57 $ 416,649.57 $ 331,668.87 $ 84,980.69 $ $ 1,544,526.55
1,861,381.31
12 1/2/2027 $ 1,861,381.31 $ 416,649.57 $ 416,649.57 $ 344,521.04 $ 72,128.53 $ $ 1,616,655.07
1,516,860.27
13 4/2/2027 $ 1,516,860.27 $ 416,649.57 $ 416,649.57 $ 357,871.23 $ 58,778.34 $ $ 1,675,433.41
1,158,989.04
14 7/2/2027 $ 1,158,989.04 $ 416,649.57 $ 416,649.57 $ 371,738.74 $ 44,910.83 $ 787,250.30 $ 1,720,344.23
15 10/2/2027 $ 787,250.30 $ 416,649.57 $ 416,649.57 $ 386,143.62 $ 30,505.95 $ 401,106.68 $ 1,750,850.18
16 1/2/2028 $ 401,106.68 $ 416,649.57 $ 401,106.68 $ 385,563.80 $ 15,542.88 $ $ 1,766,393.07
-
5.2Expected income projection from the next four Consecutive year
The company's plan is to maintain and operate 100 cars annually while utilizing
all available resources to accept customer orders from individual insurance
companies in order to meet sales targets for the following four years.

Expected income projection from the next four Consecutive years are as follows

Profit and Loss Total

Projection

Year 2016 2017 2018 2019

Revenue 19,442,180.75 25,274,834.98 32,857,285.47 42,714,471.11 120,288,772.30

Total revenue 19,442,180.75 25,274,834.98 32,857,285.47 42,714,471.11 120,288,772.30

Cost of Service
Cost of Sales 13,609,526.53 19,967,119.63 25,957,255.52 33,744,432.18 93,278,333.85
Total Cost of Sales 13,609,526.5 19,967,119.63 25,957,255.52 33,744,432.18 93,278,333.85
3

Gross Profit 5,832,654.23 5,307,715.34 6,900,029.95 8,970,038.93 27,010,438.45

Administration -
Expense
Salary and Benefits 528,000.00 607,200.00 698,280.00 803,022.00 2,636,502.00

Printing and stationery 2,000.00 2,300.00 2,645.00 3,041.75 9,986.75

Communication 8,000.00 9,200.00 10,580.00 12,167.00 39,947.00

Professional fee 30,000.00 34,500.00 39,675.00 45,626.25 149,801.25
Rent Expense 480,000.00 552,000.00 634,800.00 730,020.00 2,396,820.00

License and 1,200.00 1,380.00 1,587.00 1,825.05 5,992.05

registration
Transportation 50,000.00 57,500.00 66,125.00 76,043.75 249,668.75

Depreciation 1,000,000.00 1,150,000.00 1,322,500.00 1,520,875.00 4,993,375.00

Miscellaneous 85,000.00 97,750.00 112,412.50 129,274.38 424,436.88

Interst Expense 705,399.65 547,528.19 363,727.23 149,738.00 1,766,393.07

Total Expense 2,889,599.65 3,059,358.19 3,252,331.73 3,471,633.18 12,672,922.75

Net Profit/Loss 2,943,054.58 2,248,357.15 3,647,698.22 5,498,405.76 14,337,515.71
Before Tax
5.3 Relevant assumptions

The following relevant assumptions are considered to draw financial

projections.

 The financial plan is prepared taking into account the internal

capability an existing physical facility as well as environmental
opportunities and threats.
 The previous year's financial performance serves as the key forecasting
basis for the years under consideration.
 The fiscal year refers to a period of 12 months covering from Hamle 1
to Sene 30 of Ethiopian Calendar.
 To finance the growth in sales, it is projected that, the company will
secure additional loan in the form of term loan from banks.
Interest rate on the loan is assumed to be 15.5% per annum

 Previous period sales revenue was taken as base year for comparison.
Based on this scenario, the 2016 E.C sales will grow by 20% as per
critical assumptions explained previously in this paper.

 For long-term assets, the business employed the straight-line

deprecation method.

 Sales will increase by average 30% every year after 2016 E.C.

 Administrative and Selling Expenses is assumed to increase by 15%

per annum.

 Profit margin is Assumed as 30%.

 Operational costs are considered from historical costs.

 Income tax of 35% is applied on profit.

5.4. Projected Cash Flow

2016 2017 2018 2019

Year
Cash Inflow
1,080,520.00
Beginning Cash
Income 19,442,180.7 25,274,834.98 32,857,285.47 42,714,471.11
5
Laon 4,900,000.00
25,422,700.7 25,274,834.98 32,857,285.47 42,714,471.11
Total Inflow 5
Cash outflow
Cost of Sales 13,609,526.5 19,967,119.63 25,957,255.52 33,744,432.18
3
Salary and Benefits 528,000.00 607,200.00 698,280.00 803,022.00
Printing and stationery 2,000.00 2,300.00 2,645.00 3,041.75
Communication 8,000.00 9,200.00 10,580.00 12,167.00
Professional fee 30,000.00 34,500.00 39,675.00 45,626.25
Rent Expense 480,000.00 552,000.00 634,800.00 730,020.00
License and registration 1,200.00 1,380.00 1,587.00 1,825.05

Transportation 50,000.00 57,500.00 66,125.00 76,043.75

Depreciation 1,000,000.00 1,150,000.00 1,322,500.00 1,520,875.00
Miscellaneous 85,000.00 97,750.00 112,412.50 129,274.38
Interst Expense 705,399.65 547,528.19 363,727.23 149,738.00
Profit tax 1,030,069.10 786,925.00 1,276,694.38 1,924,442.02
Total Outflow 17,529,195.2 23,813,402.82 30,486,281.63 39,140,507.37
8
7,893,505.47 1,461,432.15 2,371,003.84 3,573,963.74
Net Cash Flow

The cash flow projection is made assuming that:

● The Company will obtain ETB 4,900,000 loan finance at the beginning of

operation,

● Interest rate assumed 15.5 %.

● Beginning cash balance taken from Previous year financial statement.

● All purchases are on cash basis.

● The annual sales of the company will be collected in the current year,

● Profit tax of the fiscal year will be paid in the same year.
 Overall, the projected cash flow shows that the Company will generate series of
surplus cash flows after covering all operational and financial commitments that
confirms its liquidity.

5.5 Projected Balance Sheet

STATEMENT OF PROJECTED BALANCE SHEET

Beginning of the
Year Year, 1
ASSETS
Current assets
Cash and cash equivalent 1,080,520 7,893,505
Trade and Other Receivable 669,522 736,474
Prepayments - 0
Inventories 0 722,589
Other current assets - 0

Total current assets 1,750,042 9,352,569

Non-current assets

Property, plant and equipment 16,000,000 17,600,000

16,000,000 17,600,000

Total non-current Assets 16,000,000 17,600,000

Total assets 17,750,042 26,952,569

Liabilities and equity

Current liabilities
Trade payable 80,484 100,605
Tax payable 425,218 1,030,069
Other current liabilities - -
Total current liabilities 505,702 1,130,674

Non-current liabilities

Bank Loan - 4,900,000.00

Total non-current liability - -

Total liabilities 505,702 6,030,674

Equity
Capital 92,964 92,964
Owners account 0 17,885,876
Retained Earning 17,151,376 2,943,055
Total equity 17,244,338 20,921,895
Total equity and liabilities 17,750,040 26,952,569

5.6 Financial Ratios

A financial ratio is used to calculate a company’s financial status or production

against other firms. It is a tool used by investors to analyze and gain information
about the finance of a company’s history or the entire business sector. To calculate
financial ration, numbers are taken from the balance sheet, income statement,
and cash flow statement. The financial ratio is not a calculation but an
explanation of the economic status of a company, in terms of profit, liquidity,
leverage, and market valuation. A ratio may serve as an indicator, red flag or clue
for various issues.

Return on Equity = Net Profit before tax 2,943,054.58 0.113975

Net Equity 25,821,894.77

Current ratio = Current asset 9,352,568.76 8.271676

Current Liability 1,130,673.99

Quick ratio = Current asset- Inventory 8,629,979.76 7.632598

Current Liability 1,130,673.99

Debit to Equity = Total Liability 1,130,673.99 0.043787

Net Equity 25,821,894.77