Cash Flow (Pro Forma statement)
description
Transcript of Cash Flow (Pro Forma statement)
Financial Planning
Cash flow pro forma statement Income statement Balance sheet
Usually prepare for 3 years projection
Involve all type of cost to enable company to start the operation (whether short term or long term)
Purpose: to estimate total budget required in order to start with the business
Short term cost working capital required until business able to
gain sales working capital depends on how long business
able to get profit from the sales
Long term cost Involve capital investment i.e. machine, plant
and equipment
Capital Investment Land
Buy or own – list in project cost Lease- a part of deposit
Building Buy or own – current cost of the building Lease – list in deposit
Renovation
Machine and Equipment Rent – list in deposit Hire purchase – current cost
Furniture and office equipment
Vehicles Rent – list in deposit
Expenses for :Legal feeCompany registrationLicense feeExpertise servicesFeasibility studies Insuranceetc
Allocation for financing the daily operation such as Buy raw material Inventory Administrative expenses Factory overhead Other expenses involve company’s operation
Working capital is usually prepared for 1 to 3 months depending on how long the company able to gain its first sales
To overcome increases in material priceMiscalculation during preparing the project
implementation costUsually 5 – 10% from project cost
Salary Fee Accounting Bank charge Maintenance and repair Electric, water and telephone Insurance Rental Legal fees Post & stamp Printing & stationary Staff training travelling
Promotion 1% of total sales Example:
Sales projection = 283,880 Promotion expenditure = 2840
Delivery Fluctuate from year to year Estimate from previous year average rate
Vehicle expenditure Semi fluctuate Fixed component
Road tax Insurance of vehicle
Fluctuate component Estimation of 0.3% from sales
ADMINISTRATIVE EXPENDITURE MARKETING EXPENDITURE OPERATIONS EXPENDITURE
Fixed Assets RMFixed Assets RM Fixed Assets RM
Land & Building 50,000
Furnitures 9,000 Signboard 5,000 Machinary and Equipment 100,000
Computer 5,000 van 70,000 Lorry 80,000
Renovation 30,000 Forklif 130,000
Equipment 7,000
Working Capital Working Capital Working Capital
Salary, EPF & SOCSO 10,000 advertisement and promotion 1,000 Raw Materials & Packaging 39,000
Travelling allowance 100 Carriage Inward & Duty
petrol/diesel 250 Salaries, EPF & SOCSO 3,363
Salary,EPF & SOCSO 900 petrol/diesel 500
Other Expenditure Other Expenditure Other Expenditure
Other Expenditure 200 Other Expenditure 300 Other Expenditure 400
Pre-Operation Pre-Operation Pre-Operation
Deposit (rent, utilities, etc.) 7,200 Deposit (rent, utilities, etc.) Deposit (rent, utilities, etc.)
Business Registration & Licences 300 Business Registration & Licences Business Registration & Licences
Insurance & Road Tax for Motor Vehicle
Insurance & Road Tax for Motor Vehicle 2,000
Insurance & Road Tax for Motor Vehicle 1,000
Other Expenditure 100 Other Expenditure 2,200 Other Expenditure 1,350
TOTAL 118,800 TOTAL 81,750 TOTAL 355,613
ABC Construction
PROJECT IMPLEMENTATION COST & SOURCES OF FINANCE
Project Implementation Cost Sources of Finance
Requirements Cost Loan Hire-Purchase Own Contribution
Fixed Assets Cash Existing F.
Assets
Land & Building 50,000 40,000 10,000
Furnitures 9,000 600 5,400 3,000
Computer 5,000 1,000 4,000
Renovation 30,000 24,400 5,600
Equipment 7,000 5,000 2,000
Signboard 5,000 3,500 1,500
van 70,000 45,000 21,000 4,000
Machinary and Equipment 100,000 34,000 58,000 8,000
Lorry 80,000 50,000 25,000 5,000
Forklif 130,000 105,000 23,000 2,000
Working Capital 2 months
Administrative 20,004 15,004 5,000
Marketing 4,500 3,300 1,200
Operations 85,726 75,726 10,000 Pre-Operations & Other Expenditure 15,050 9,050 6,000
Contingencies 10% 61,128 58,128 3,000
TOTAL 672,408 469,708 132,400 70,300
depreciation
Total = RM672408
For every fixed assets excluding land Methods:
Straight line methodsDeclining balance
FIXED ASSETS Econ. Life (yrs) FIXED ASSETS Econ. Life (yrs)
Furnitures 5 5 Computer 5 5 Renovation 5 Machinary and Equipment 5 Equipment 5 Lorry 5 Signboard 5 Forklif 5 van 5 5
Fixed Asset FurnituresCost (RM) 9,000 Method Straight Line Economic Life (yrs) 5
Annual Accumulated Year Depreciation Depreciation Book Value
- - 9,000 1 1,800 1,800 7,200 2 1,800 3,600 5,400 3 1,800 5,400 3,600 4 1,800 7,200 1,800 5 1,800 9,000 - 6 0 0 - 7 0 0 - 8 0 0 - 9 0 0 -
10 0 0 -
Depreciation value per year = (Original Price – Scrap Value)/Economy Life
= (9000 – 0)/5= RM 1800/ year
Scrap value = estimation of asset value at its last year of economy life
LOAN (if required)
Interest rate 10%
Loan duration 5
Interest payment method* 2
* Method: 1 = flat rate 2 = annual rest
HIRE-PURCHASE (if required)
Interest rate 5%
Hire-purchase duration 8
ABC Construction
PROJECT IMPLEMENTATION COST & SOURCES OF FINANCE
Project Implementation Cost Sources of Finance
Requirements Cost Loan Hire-Purchase Own Contribution
Fixed Assets Cash Existing F. Assets
Land & Building 50,000 35,000 15,000
Furnitures 9,000 600 5,400 3,000
Computer 5,000 1,000 4,000
Renovation 30,000 24,400 5,600
Equipment 7,000 5,000 2,000
Signboard 5,000 3,500 1,500
van 70,000 45,000 21,000 4,000
Machinary and Equipment 100,000 34,000 58,000 8,000
Lorry 80,000 50,000 25,000 5,000
Forklif 130,000 105,000 23,000 2,000
Working Capital 2 months
Administrative 20,000 15,000 5,000
Marketing 4,500 3,300 1,200
Operations 85,726 75,726 10,000 Pre-Operations & Other Expenditure 15,050 9,050 6,000
Contingencies 10% 61,128 58,128 3,000
TOTAL
672,404 464,704 132,400 75,300
LoanHire
Purchase
ABC Construction
LOAN & HIRE-PURCHASE AMMORTISATION SCHEDULES
LOAN REPAYMENT SCHEDULE HIRE-PURCHASE REPAYMENT SCHEDULE
Amount 464,704 Amount 132,400
Interest Rate 10% Interest Rate 5%
Duration (yrs) 5 Duration (yrs) 8
Method Baki Tahunan
Year Principal Interest Total PaymentPrincipal Balance Year Principal Interest Total Payment
Principal Balance
-
-
464,704
-
- 132,400
1 92,941 46,470 139,411 371,763 1 16,550 6,620 23,170 115,850
2 92,941 37,176 130,117 278,822 2 16,550 6,620 23,170
99,300
3 92,941 27,882 120,823 185,881 3 16,550 6,620 23,170
82,750
4 92,941 18,588 111,529 92,941 4 16,550 6,620 23,170
66,200
5 92,941 9,294 102,235 -
5 16,550 6,620 23,170
49,650
6 0 0 -
- 6 16,550 6,620 23,170
33,100
7 0 0 -
- 7 16,550 6,620 23,170
16,550
8 0 0 -
- 8 16,550 6,620 23,170
-
9 0 0 -
- 9 0 0
-
-
10 0 0 - 10 0 0
-
-
RM4647045 years
464704 x 10%
92941+46470
464704-92941
Cash inflow and cash outflow for operation cost or buying fixed asset
Cash inflow Cash sales, capital(in cash), loan, account
receivable Cash outflow
Raw material, administrative expenditure, factory overhead etc
Balance of cash at certain period of time Usually prepared for 3 years of operation 1st year is in monthly basis Prior to pro forma statement, sales
forecasting must be prepared first (from marketing planning)
SALES PROJECTION
Month 1 3,600
Month 2 4,000
Month 3 4,800
Month 4 4,800
Month 5 4,800
Month 6 6,000
Month 7 6,000
Month 8 6,400
Month 9 6,400
Month 10 6,000
Month 11 6,000
Month 12 6,000
Total Year 1 64,800
ToTal Year 2 74,520
Total Year 3 89,424
OPERATIONS EXPENDITUREFixed Assets RM
Machinary and Equipment 100,000
Lorry 80,000
Forklif 130,000
Working Capital
Raw Materials & Packaging 9,000
Carriage Inward & Duty
Salaries, EPF & SOCSO 3,363
petrol/diesel 500
Other Expenditure Other Expenditure 400Pra-Operasi Deposit (rent, utilities, etc.) Business Registration & Licences Insurance & Road Tax for Motor Vehicle
1,000
Other Expenditure 1,350
TOTAL 325,613
PURCHASE PROJECTION
Month 1 9,000
Month 2 10,000
Month 3 12,000
Month 4 12,000
Month 5 12,000
Month 6 15,000
Month 7 15,000
Month 8 16,000
Month 9 16,000
Month 10 15,000
Month 11 15,000
Month 12 15,000
Total Year 1 162,000
ToTal Year 2 186,300
Total Year 3 223,560
assume
CASH COLLECTIONS FOR SALES
In the month of sale 70%
1 month after sale 20%
2 months after sale 10%
Total 100%
MONTHPre-
Operations1 2 3 4 5 6 7
CASH INFLOW
Capital (Cash) 75,300
Loan 398,704
Cash Sales 2,520 2,800 3,360 3,360 3,360 4,200 4,200 Collection of Accounts Receivable 720 1,160 1,360 1,440 1,440 1,680
TOTAL CASH INFLOW 474,004 2,520 3,520 4,520 4,720 4,800 5,640 5,880
70%
10% + 20%(of the 2nd month sales)
20%
CASH PAYMENTS FOR PURCHASES
In the month of purchase 80%
1 month after purchase 20%
2 months after purchase
Total 100%
Operations Expenditure
Cash Purchase 7,200 8,000 9,600 9,600 9,600
Payment of Account Payable 1,800 2,000 2,400 2,400
assume
80% 20%
LHDN imposed tax to company depends on:Sole propriety and partnership - imposed
tax on individual incomeCompany under company act – imposed tax
on the profits
employer contribute 12% employee contribute 11%
From the employee salary
Wahab, I.A.,Ibrahim, M.D., Ahmad, F. (2002)‘Rancangan Kewangan Perniagaan Kecil dan Sederhana’, 1st Ed. Prentice Hall. Malaysia