Professional Documents
Culture Documents
Financial budget
Project implementation cost
Sources of finance
Projected cash flow statements
Projected profit & loss statements
Projected balance sheet statements
Financial Plan Steps
Step 1:
Prepare the project implementation cost’s schedule.
Prepare table of depreciation for each fixed asset owned or
purchased by the company.
Step 2:
Prepare the source of fund to finance the project’s cost.
Prepare a loan amortization schedule for term loan.
Prepare hire-purchase repayment schedule if hire-purchase
financing is used.
MEDEC/ETR300 RS
Sources of Finance
Source RM
Equity Contribution
Cash 27,500
Asset 45,000
Term Loan 45,000
Hire-purchase 20,000
TOTAL 137,500
Loan Amortization Schedule
Loan amount : RM45,000
Loan period : 5 years
Interest rate : 10%
Method : Reducing balance (annually)
Interest Principal Payment Balance
0 0 0 45,00
4,500 9,000 14,500 36,000
3,600 9,000 12,600 27,000
2,700 9,000 11,700 18,000
1,800 9,000 10,800 9,000
900 9,000 9,900 0
MEDEC/ETR300 RS
Hire-purchase Repayment
Cost of asset : RM25,000
Down payment : RM 5,000
Loan amount : RM20,000
Loan period : 5 years
Interest rate : 8%
Method : Flat
Year (annually)Principal
Interest Payment Balance
0 0 0 0
20,000
1 1,600 4,000 5,600
16,000
2 1,600 4,000 5,600
12,000
3 1,600 4,000
MEDEC/ETR300
5,600 RS
8,000
Cash-flow Pro-forma Statements
MEDEC/ETR300 RS
Elements in Cash-flow
Cash Inflows
Equity – cash only
Term-loan
Cash sales
Collection of receivables
Sales of asset
MEDEC/ETR300 RS
Elements in Cash-flow
Cash Outflows
Operational expenditure
Marketing expenditure
Administrative expenditure
Loan repayment
Hire-purchase repayment
Purchase of fixed assets
Pre-operational expenses
Miscellaneous expenses
MEDEC/ETR300 RS
Elements in Cash-flow
Cash Surplus or Deficit
Inflows > Outflows = Surplus
Inflows < Outflows = Deficit
Cash Position
Beginning cash + Surplus/(- Deficit) =
Ending cash
Note: The ending cash balance for a particular month
becomes the beginning balance for the next
consecutive month
MEDEC/ETR300 RS
Example: Cash-flow Pro-forma Statement
Month Pre-Operation Jan Feb Mac Apr May June July Aug Sept. Oct. Nov. Dis. Year 1
A CASH INFLOWS
Beginning cash balance 0 30,000 30,909 31,818 32,727 33,636 34,545 35,454 36,363 37,272 38,181 39,090 39,999 0
Equity - Cash 27,500 27,500
Term-loan 45,000 45,000
Cash sales 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 240,000
B Total Cash Inflows 72,500 50,000 50,909 51,818 52,727 53,636 54,545 55,454 56,363 57,272 58,181 59,090 59,999 312,500
C CASH OUTFLOWS
Operational Expenditure:
Raw materials 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 36,000
Direct labor 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 36,000
Operational overheads 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 24,000
Marketing Expenditure:
Sales commission 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12,000
Entertainment allowance 500 500 500 500 500 500 500 500 500 500 500 500 6,000
Adminstrative Expenditure:
Salaries & Wages 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
EPF & SOCSO 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12,000
Adminstrative overheads 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 24,000
Loan Repayment:
Principal 750 750 750 750 750 750 750 750 750 750 750 750 9,000
Interest 375 375 375 375 375 375 375 375 375 375 375 375 4,500
Hire-purchase repayment:
Down payment 5,000 5,000
Principal 333 333 333 333 333 333 333 333 333 333 333 337 4,000
Interest 133 133 133 133 133 133 133 133 133 133 133 137 1,600
Capital Expenditure:
Machinery & Equipment 23,000 23,000
Furniture & Fixtures 7,000 7,000
Renovation 4,000 4,000
Pre-operational Expenditure 2,700 2,700
Deposits 800 800
D Total Cash Outflows 42,500 19,091 19,091 19,091 19,091 19,091 19,091 19,091 19,091 19,091 19,091 19,091 19,099 271,600
E Cash Surplus/(Deficit) 30,000 30,909 31,818 32,727 33,636 34,545 35,454 36,363 37,272 38,181 39,090 39,999 40,900 40,900
F Ending cash balance 30,000 30,909 31,818 32,727 33,636 34,545 35,454 36,363 37,272 38,181 39,090 39,999 40,900 40,900
MEDEC/ETR300 RS
Example: Cash-flow Pro-forma Statement
Year Year 1 Year 2 Year 3
A CASH INFLOWS
Beginning cash balance 0 40,900 77,000
Equity - Cash 27,500 0 0
Term-loan 45,000 0 0
Cash sales 240,000 276,000 317,400
B Total Cash Inflow s 312,500 316,900 394,400
C CASH OUTFLOWS
Operational Expenditure:
Raw materials 36,000 37,800 39,690
Direct labor 36,000 37,800 39,690
Operational overheads 24,000 25,200 26,460
Marketing Expenditure:
Sales commission 12,000 12,600 13,230
Entertainment allowance 6,000 6,000 6,000
Adminstrative Expenditure:
Salaries & Wages 60,000 63,000 66,150
EPF & SOCSO 12,000 12,600 13,230
Adminstrative overheads 24,000 25,200 26,460
Loan Repayment:
Principal 9,000 9,000 9,000
Interest 4,500 3,600 2,700
Hire-purchase repayment:
Down payment 5,000 0 0
Principal 4,000 4,000 4,000
Interest 1,600 1,600 1,600
Capital Expenditure:
Machinery & Equipment 23,000 0 0
Furniture & Fixtures 7,000 0 0
Renovation 4,000 0 0
Pre-operational Expenditure 2,700 1,500 1,500
Deposits 800 0 0
D Total Cash Outflow s 271,600 239,900 249,710
E Cash Surplus/(Deficit) 40,900 77,000 144,690
F Ending cash balance 40,900 77,000 144,690
MEDEC/ETR300 RS
Profit & Loss Pro-forma
Statements
A projected statement which shows the expected
profit or loss throughout the planned period (3
consecutive years).
For manufacturing companies first prepare the
manufacturing account.
For trading companies first prepare the trading
account.
For service companies straight away prepare the
profit and loss account.
MEDEC/ETR300 RS
Elements in A Profit & Loss
(Manufacturing & Trading (Service Companies)
Companies)
Sales
Sales
Less: Expenses
Less: Cost of Goods Sold
Administrative
Gross Profit
Marketing
Less: Expenses
Operational
Administrative
Financial
Marketing
Financial Depreciation charges
Depreciation charges Other expenses
Other expenses Net Profit
Net Profit
MEDEC/ETR300 RS
Manufacturing & Trading Company
Sales
240,000
Less: Cost of Goods Sold 90,000
Gross Profit
150,000
Less: Expenses
Administrative 96,000
Marketing
18,000
Financial:
Interest on term loan 4,500
Interest on hire-purchase 1,00
Depreciation charges 11,800
Pre-operational expenditure 2,700
MEDEC/ETR300 RS
Total Expenditure
Service Companies
Sales 240,000
Less: Expenses
Administrative 96,000
Marketing 18,000
Operational 96,000
Financial:
Interest on term loan 4,500
Interest on hire-purchase 1,600
Depreciation charges 11,800
Pre-operational expenditure 2,700
Total Expenditure 230,600
Net Profit 9,400
MEDEC/ETR300 RS
Balance Sheet Statements
It is a projected statement which shows the financial
position of the company a specific point in time in
terms of assets owned and how those assets are
financed.
Statements are prepared for the period of three (3)
years.
MEDEC/ETR300 RS
Elements in Balance Sheet
Fixed Assets
List all fixed assets at its book value (Cost – Accumulated
depreciation)
Current Assets
List all current assets (e.g. cash, stocks, account receivables,
deposits etc.)
Equity
Equity contribution (cash + assets) plus net profit
(accumulated)
Long-term Liabilities
Term-loan (year end balance)
Hire-purchase (year end balance)
MEDEC/ETR300 RS
Manufacturing & Trading Companies
Fixed Assets
Machinery & Equipment 24,000
Renovation 3,2
Van
20,000 47,200
Current Assets
Cash
40,900
Closing stock for raw materials 3,000
Closing stock for finished goods 3,000
Deposits 8
47,700
Total Assets
94,900
Equity
Capital
27,500
Net profit
15,400 42,900
MEDEC/ETR300 RS
Long-term Liabilities
Service Companies
xed Assets
Machinery & Equipment 18,400
Furniture and Fixtures 5,600
Renovation 3,200
Van 20,000
urrent Assets
Cash 40,900
Deposits 800 41,7
tal Assets
uity
Capital 27,500
Net profit 9,400
ng-term Liabilities
Term-loan 36,000
Hire-purchase 16,000 52,0
tal Equity & Liabilities 88,9
MEDEC/ETR300 RS