Section 8
Financial Plan
5.0 INTRODUCTION TO FINANCIAL PLAN
The financial is the last step in the preparation of the business plan. It is the most crucial aspect of the
business plan and involve the calculation of the total project cost, the choices of financial source and
the preparation of financial projection in term of proforma statement which include the cash flow,
income statement and balance sheet.
In addition, the financial statement should be supported by depreciation schedule for every fixed
asset owned as well as amortization schedule loan for repayment. The financial plan is prepared after
all budgets pertaining to marketing, operation and administrative aspects are completed.
THE IMPORTANT OF FINANCIAL PLAN
To determine the size of investment
To ensure the initial capital is sufficient
To identify the relevant cost of finance
To be used as a guideline in running the business
PURPOSE OF FINANCIAL PLAN
To control and ensure the flow of money is in the right position
To make a budget for the next accounting period
To provide a bonus if generate income higher than previous
THE SOURCES OF DATA USED IN FINANCIAL BUDGET
Administration expenses
Operation expenses
Marketing expenses
Project Implementation Cost Schedule
Project Implementation Cost
Requirements Cost
Fixed Assets
Land & Building 5,000
Office furniture and fittings 6,900
Office Equipment 6,760
Signboard 1,000
Machinery and equipment 9,898
Working Capital months 1 34,275
Other Expenses 4,262
Contingencies 5% 3,405
TOTAL 71,500
Sources of Finance Schedule
Suggested Sources of Financing
Loan Hire-Purchase Own Contribution
Cash Existing Assets
- - 5,000 -
- - 6,900
- - 6,760 -
- - - -
- - - -
- - 1,000 -
- - - -
- - 9,898 -
- - - -
- - - -
- - - -
34,275 -
4,262 -
3,405 -
41,942 - 29,558 -
Loan Amortization (Repayment) Schedule
LOAN REPAYMENT SCHEDULE
Total 41,942
Interest Rate 7%
Duration (years) 6
Method Flat Rate
Year Principal Interest Total Payment Principal Balance
- - 41,942
1 6,990 2,936 9,926 34,951
2 6,990 2,936 9,926 27,961
3 6,990 2,936 9,926 20,971
4 6,990 2,936 9,926 13,981
5 6,990 2,936 9,926 6,990
6 0 0 - 6,990
7 0 0 - 6,990
8 0 0 - 6,990
9 0 0 - 6,990
10 0 0 - 6990
Fixed Asset Depreciation Schedule
Name of Assets Office furniture and fittings
Cost (RM) 6,900
Method of Depr. Straight Line
Duration (years) 5
Annual Accumulated
Year Depreciation Depreciation Book Value
- - 6,900
1 1,380 1,380 5,520
2 1,380 2,760 4,140
3 1,380 4,140 2,760
4 1,380 5,520 1,380
5 1,380 6,900 -
6 0 0 -
7 0 0 -
8 0 0 -
9 0 0 -
10 0 0 -
Name of Assets Office Equipment
Cost (RM) 6,760
Method of Depr. Straight Line
Duration (years) 5
Annual Accumulated
Year Depreciation Depreciation Book Value
- - 6,760
1 1,352 1,352 5,408
2 1,352 2,704 4,056
3 1,352 4,056 2,704
4 1,352 5,408 1,352
5 1,352 6,760 -
6 0 0 -
7 0 0 -
8 0 0 -
9 0 0 -
10 0 0 -
Name of Assets Signboard
Cost (RM) 1,000
Method of Depr. Straight Line
Duration (years) 5
Annual Accumulated
Year Depreciation Depreciation Book Value
- - 1,000
1 200 200 800
2 200 400 600
3 200 600 400
4 200 800 200
5 200 1,000 -
6 0 0 -
7 0 0 -
8 0 0 -
9 0 0 -
10 0 0 -
Name of Assets Machinery and equipment
Cost (RM) 9,898
Method of Depr. Straight Line
Duration (years) 5
Annual Accumulated
Year Depreciation Depreciation Book Value
- - 9,898
1 1,980 1,980 7,918
2 1,980 3,959 5,939
3 1,980 5,939 3,959
4 1,980 7,918 1,980
5 1,980 9,898 -
6 0 0 -
7 0 0 -
8 0 0 -
9 0 0 -
10 0 0 -
Proforma Cashflow Statement
Rafen’s Cafe
PRO FORMA CASH FLOW STATEMENT
YEAR YEAR
MONTH 1 2 3 4 5 6 7 8 9 10 11 12 TOTAL
2 3
CASH INFLOWS
Owners' Capital
(cash) 29,558 - - - - - - - - - - - 29,558 - -
Bank Loan 41,942 - - - - - - - - - - - 41,942 - -
42,93 42,93 42,93 42,93 42,93 42,93 515,17 540,93 567,97
Cash Sales 42,931 1 1 1 1 1 1 42,931 42,931 42,931 42,931 42,931 2 1 7
Collection of
Accounts
Receivable - - - - - - - - - - - - - - -
TOTAL CASH
114,43 42,93 42,93 42,93 42,93 42,93 42,93 42,931 42,931 42,931 42,931 42,931 586,67 540,93 567,97
INFLOWS
1 1 1 1 1 1 1 2 1 7
CASH PAYMENTS
Administrative
Expenses
15,50 15,50 15,50 15,50 15,50 15,50 186,00 195,30 205,06
Remuneration 15,500 0 0 0 0 0 0 15,500 15,500 15,500 15,500 15,500 0 0 5
Wi-Fi 195 195 195 195 195 195 195 195 195 195 195 195 2,340 2,457 2,580
Utilities 1,400 1,400 1,400 1,400 1,400 1,400 1,400 1,400 1,400 1,400 1,400 1,400 16,800 17,640 18,522
- - - - - - - - - - - - - - -
- - - - - - - - - - - - - - -
- - - - - - - - - - - - - - -
- - - - - - - - - - - - - - -
Marketing
Expenses
- - - - - - - - - - - - - - -
0 - - - - - - - - - - - - - - -
0 - - - - - - - - - - - - - - -
0 - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - -
Operations
Expenses
Cash Purchases 3,226 3,226 3,226 3,226 3,226 3,226 3,226 3,226 3,226 3,226 3,226 3,226 38,712 40,648 42,680
Payment of
Accounts Payable - - - - - - - - - - - - - - -
Carriage Inwards &
Duties - - - - - - - - - - - - - - -
Salaries, EPF & 13,95 13,95 13,95 13,95 13,95 13,95 167,44 175,82 184,61
SOCSO 13,954 4 4 4 4 4 4 13,954 13,954 13,954 13,954 13,954 8 0 1
- - - - - - - - - - - - - - -
- - - - - - - - - - - - - - -
- - - - - - - - - - - - - - -
Deposit - - - - - - - - - - - - - - -
Registration &
Licences 150 - - - - - - - - - - - 150 - -
Insurance & Road
Tax 1,200 - - - - - - - - - - - 1,200 1,200 1,200
Other Expenses 2,912 - - - - - - - - - - - 2,912 2,912 2,912
Purchase of Fixed
Assets - Land &
Building 5,000 - - - - - - - - - - - 5,000 - -
Purchase of Fixed
Assets - Others 24,558 - - - - - - - - - - - 24,558 - -
Hire-Purchase
Down Payment - - - - - - - - - - - - - - -
Hire-Purchase
Repayments
Principal - - - - - - - - - - - - - - -
Interest - - - - - - - - - - - - - - -
Loan Repayments
Principal 583 583 583 583 583 583 583 583 583 583 583 583 6,990 6,990 6,990
Interest 245 245 245 245 245 245 245 245 245 245 245 245 2,936 2,936 2,936
Tax - - - - - - - - - - - - - 0 0
TOTAL CASH
68,922 35,10 35,10 35,10 35,10 35,10 35,10 35,102 35,102 35,102 35,102 35,102 455,04 445,90 467,49
OUTFLOWS
2 2 2 2 2 2 6 3 6
EXCESS/
45,509 7,829 7,829 7,829 7,829 7,829 7,829 7,829 7,829 7,829 7,829 7,829 131,62 95,028 100,48
(DEFICIT)
6 1
OPENING 45,50 53,33 61,16 68,99 76,82 84,65 100,31 108,13 115,96 123,79
- 92,481 - 131,62 226,65
BALANCE 9 7 6 5 4 3 0 9 8 7
6 3
ENDING
45,509 53,33 61,16 68,99 76,82 84,65 92,48 100,31 108,13 115,96 123,79 131,62 131,62 226,65 327,13
BALANCE
7 6 5 4 3 1 0 9 8 7 6 6 3 4
Proforma Trading Account
Rafen’s Cafe
PRO FORMA INCOME STATEMENT
Year 1 Year 2 Year 3
Sales 515,172 540,931 567,977
Less: Cost of Goods Sold
Opening Stock
Purchases 38,712 40,648 42,680
tolak: Closing Stock
Carriage Inwards & Duty - - -
Gross Profit
Less: Expenses
Administrative Expenses 205,140 215,397 226,167
Marketing Expenses - - -
Registration & Licences 150 - -
Insurance & Road Tax 1,200 1,200 1,200
Other Expenses 2,912 2,912 2,912
Interest on Hire-Purchase - - -
Interest on Loan 2,936 2,936 2,936
Depreciation on Fixed Assets 4,912 4,912 4,912
Operations Expenses 167,448 175,820 184,611
Total Expenses 423,409 443,824 465,418
Net Profit Before Tax 91,763 97,106 102,560
Tax 16% 0 0 0
Net Profit After Tax 91,763 97,106 102,560
Accumulated Net Profit 91,763 188,869 291,429
Proforma Balance Sheet Account
Rafen’s Cafe
PRO FORMA BALANCE SHEET
Year 1 Year 2 Year 3
ASSETS
FIXED ASSETS (Book Value)
Land & Building 5,000 5,000 5,000
Office furniture and fittings 5,520 4,140 2,760
Office Equipment 5,408 4,056 2,704
- - -
- - -
Signboard 800 600 400
- - -
Machinery and equipment 7,918 5,939 3,959
0 - - -
- - -
- - -
24,646 19,735 14,823
CURRENT ASSETS
Deposit - - -
0 0 0
0 0 0
Accounts Receivable - - -
Cash 131,626 226,653 327,134
131,626 226,653 327,134
TOTAL ASSETS 156,272 246,388 341,957
OWNERS' EQUITY
Capital 29,558 29,558 29,558
Accumulated Net Profit 91,763 188,869 291,429
121,321 218,427 320,987
LIABILITIES
Loan Balance 34,951 27,961 20,971
Hire-Purchase Balance - - -
Accounts Payable - - -
Tax Payable 0 0 0
34,951 27,961 20,971
TOTAL OWNER'
EQUITY & 156,272 246,388 341,957
LIABILITIES