CHAPTER ONE

1.0 BUSINESS DESCRIPTION

1.1 BUSINESS NAME

The name of the business will be OLOMAYIANA ELECTRICALS AND ELECTRONICS

ENTERPRISE and it comes from the initials of the official name of the proprietor. The first initial-

OLOITIPTIP

1.2 BUSINESS LOCATION AND ADDRESS

The enterprise will be located at Kilgoris market in Shartuka location ,Narok County

OLOMAYIANA ELECTRICALS AND ELECTRONICS ENTERPRISE

P.O. BOX 178,

KILGORIS

[Link]. olomayianaelectricalsandelectronics enterprise@[Link]

The reasons which made the proprietor to choose the location are;

i)MARKET

; The presence of domestic and commercial customers will lead to high demand of goods and services

from the enterprise.

ii) COMPETITION

The proprietor will not have a competitor to her business since there is no any other enterprise near

selling same goods and services.

iii) GOOD TRANSPORT NETWORK

1
The availability of good roads in the area led to the starting of the business.

ELECTRICITY

The electrical energy necessary to power the machines within the county is enough for all the people to use

hence enabling them to purchase goods from the shop.

BANKING

The proprietor has a share at commercial bank of Kenya and hence will be given loan from the bank which

will enable her to start the enterprise.

POPULATION

The location is highly populated and this will bring out many customers to the business.

1.3 OWNERSHIP AND REGISTRATION

The business will be a sole proprietorship. This is because of the following reasons;

 It requires small amount of capital to start.

 It is easy to modify since the owner fills goods for the business since innovation and creativity

chances are not limited.

 It is easy for decision making since the business is managed by one person.

 It is flexible –Easy for an entrepreneur change business when there is a decline of customers.

 It is easy to form

1.4 TYPE OF BUSINESS

It will be a wholesaler enterprise which will offer quality goods and services to the customers. It will deal

with selling of electronic components and electrical accessories and equipments. It will also offer repair and

maintenance services to the electrical and electronic equipments and components. This is because the

proprietor has knowledge and skills on electrical and electronic engineering.

2
 1.5 PRODUCT AND SERVICES

The business will be selling high quality products so as to satisfies and attracts customer to the enterprise.

Goods will be sold a good reasonable prices. There will be after sales services and transportation services

for those customers who will purchase bulky goods. Therefore this will increase the number of customers to

the business. For those who would require installation services after purchase it will be done at a reduced

prices at about ten percentage of the original installation prices. The following are the products which will

be sold at the business:

 Discharge lamps Television

 Relays Radio

 Fuses Visual compact disc players

 Appliances and accessories Socket outlets

 Conduits Switches

 Electric room heaters Inverters

 Electric food wormers Circuit breakers

 Cable : 1.5 2.5m 0. Contactors

 Lighting fittings Diodes

 Supplying meter Solar panel

 Electric cooker Fluorescent tube

 Solar chargers and more others

1.6 JUSTIFICATION AND OPPORTUNITIES.

The proprietor is a graduate in diploma in Electrical and electronic engineering and thus chose to start the

business. After Kenya power and lighting company works, the consumer will required to purchase

services and appliance and accessories to complete installation to their houses therefore they will be;

3
 I. A high rate of electricity demand

II. High demand of electrical services and accessories

III. Due motivation from family members and relatives

IV. Work experience and acquired skilled

1.7 INDUSTRY

The business falls under the East- Africa Trade and Industry. There is no competition to the business

since the ones available are small and at a distance they cannot satisfy the high demand of customers. Their

services have not been updated due to lack of capital and poor management. Since the proprietor has already

discovered the problems, when she will start the business she will attract more potential customers due to his

stable capital and good managerial skills.

1.8 GOALS OF THE BUSINESS

The enterprise will have type of goals that it may wish to achieve namely;

primary goals

i. -attract more customers to the business.

ii. -offer high quality services to customers

iii. -maintenance and repair of electrical equipments at affordable

prices.

iv. -Improve the living standard of people by creating direct

andIndirect opportunities of employment to the local people.

v. -maximize profit that the business will target in making profit

from the capital invested by the end of the year.

2. *secondary goals ;as the business will be running the profit and part of the

4
 i. Capital will be used for increasing the stock of the appliances

and devices into the business.

3. *Long term goals ;The business will expand into large scale after a period of

two [Link] is because the incoming profit is high. Also other branches will

be opened at gesusu and nyangusu.

1.9 ENTRY AND GROWTH STRATEGY

*PRE-START STRATEGY

The enterprise will obtain a loan from commercial bank of kshs. 600000 and necessary trading license.

Other sources of finance are personal investment and donation from family, friends and relatives. Necessary

equipments like machinery , light fittings will be purchased.

*START-UP STRATEGY

The business will be opened by the family members. Trained employees will be responsible to the customers

and gifts , discounts prices and after sell services will be provide to customers. Advertisement will be done

through billboards, posters, radio, newspapers.

*GROWTH AND MATURITY

After the business has entered into the market , the customers will be maintained by selling products of high

quality at better price and offering better services to them . The profits which have been made will be used

for expanding and diversifying it by opening branches .

5
 CHAPTER TWO

2. 0 MARKET PLAN

The business will be situated where there will be good infrastructures which will make it easier to reach

customers and also transportation of goods to the enterprise.

2.1.0) MARKET OBJECTIVES

The main objective of the business is to increase the market share of products to expect profit at least 50%

within the first two years, therefore these will make the business to expand easily hence will create

employment within the town and due to this the living standards of the people will be improved.

2.1.1) SALES TURNOVER

The business will set goals at the end of the first two years which will make profit of about 80% of the sales

2.1.2) RETURN ON CAPITAL

The business will be expected to make a profit of 30% within two years and this will make the business

expand easily.

2.1.3) MARKET SHARE

The market share of the business will be in expected to be half of the potential clients.

2.2.0) CUSTOMERS

The enterprise will consider all kinds of consumers starting from small scale to large scale whereby they will

be able to purchase goods at cash and credit terms. The business will serve industrial consumers, domestic

consumers, institutional consumers and governmental organization.

6
 2.3.0) MARKET SHARE AND SEGMENTS

The industrial consumer will be calculated to be approximately 40%, domestic consumers will be

approximated to be 30%, the institutional consumers will be approximated to cover 20% and governmental

institutions will be approximated to cover 10%

Sales

KEY

INDUSTRIAL CONSUMERS INTITUTIONAL CONSUMERS

DOMESTIC CONSUMERS GOVERNMENTAL INSTITUTIONS

7
 2.4.0) COMPETITORS

The business will be compared with other electrical business within the town. The major competitors will

include;

COMPETITORS STRENGTH WEAKNESS OPPORTUNITIES TREATS

LETIP workshop Good No after sale Enough security Poor transport and

management services Experienced and communication

Good qualities Poor approach of skilled personnel network

Best display of workers and No room for future

their products customers expansion

Mwamba wiring Enough security Limited working Availability of room Competition from

Wide space for hours for expansion Letip

expansion Poor services Well organized Poor customer

Poor transportation management relationship

Dit private Qualified No room for Room for future Competition from

wiring personnel expansion expansion other similar enter

Offer after sale Limited working Enough capital

services hours

2.5.0) PRICING STRATEGY

The enterprise will offer credit facilities to the customer and will sell high quality products at affordable

price. Factors like transportation and payment as well as insurance and incentives shall be taken into

consideration.

8
 2.6.0) PROMOTION STRATEGY

The business will make extensive advertisement in radios and television both locally and internationally.

Gifts and discounts will be given to as per the purchase. Sign posts will be strategically positioned to guide”

OLOMAYIANA ELECTRICALS AND ELECTRONICS ENTERPRISE’s” customer. Periodically will

undertake advertisement campaigns during market days as well as giving free samples, bronchus,

organizational -chart of the firm

2.7.0) DISTRIBUTION STRATEGY

The enterprise will be located at a place which is accessible to customers. The enterprise will use different

means to distribute its products and services such as use motor cycles and vehicles. Also goods will be

packaged to the consumers as a way of reducing chances of wastes. Methods of distribution used will

depend on the accessibility and location of the customer’s premises

2.8.0) SALES TACTS

The official contact and address of the enterprise will be displayed or written on receipts which the

customers are given after the purchase. The enterprise will have a customer care desk to ensure direct

customer contact relation.

9
 CHAPTER THREE

3.0.0 THE ORGANISATION AND MANAGEMENT PLAN

The management in the business will be concerned on the employment, buying, salary inclement and

dealing with cash books.

3.1.0 OLOMAYIANA ELECTRICALS AND ELECTRONICS ENTERPRISE CHART STRUCTURE

MANAGING DIRECTOR

ASSISTANT MANAGER

SECRETARY

WAITER CUSTOMER SERVICE DRIVER SECURITY

10
 3.2.0 MANAGEMENT OBJECTIVES

The business will adopt a consultative type of leadership whereby the staff will be directly involved in

decision making. Their democracy will be used to determine the most suitable decision to them.

Decision making shall be by deligation, promotion and will be based on merit that is performance

qualification, experience and discipline among others. There will be fair distribution of work amongst

employees.

3.3.0 PERSONNEL

3.3.1 SENIOR PERSONNEL.

The top management will be the decision maker of the business.

QUALIFICATION

Must have a diploma and above holder in electrical and electronics engineering.

DUTIES

Will be responsible for planning, organizing, directing, coordinating and controlling activities of

OLOMAYIANA ELECTRICALS AND ELECTRONICS ENTERPRISE. Also will be in charge of

training and motivating all the staff members.

3.3.2 ASSISTANT MANAGER

QUALIFICATION

Should have a certificate, at certificate level in electrical and electronic engineering from a recognized

institution. Must have work experience of at least one year. Must be between 25 to 35 years old. Must be

able to display skills as a team leader and honesty while working at the business.

11
DUTIES

Will be in charge of supervising all members of staff, set business target acts as a production manager,

delegate duties to workers and ensure efficient communication system.

3.3.3 SECRETARY

QUALLIFICATION

Should be computer literate. Will be groomed fluently in language with working experience of at least two

years.

DUTIES

Will be receiving and dispatching all correspondence to and from the business, receiving and keeping form

records, compile and file essential documents of the business.

3.3.4 DRIVERS

QUALIFICATION

Should have a driving license and 30 to 40 years old.

DUTIES

Should be transporting goods to customers.

3.3.5 RECEPTIONIST

QUALIFICATIONS

Must have a certificate in secretarial with computer.

DUTIES

To carry out secretarial duties, receiving calls and giving direction to customers. Receiving documents of the

business and take them where they are supposed to be.

12
 3.3.6 STORE KEEPER

QUALIFICATION

Should have a certificate in store procurement and a work experience of at least one year.

DUTIES

Keeping records of all goods in the store and ensure that cleanness is also maintained in the store.

3.3.7 SECURITY

QUALIFICATION

Should be 35 to 50 years of age, speak and understand national language and poses personal integrity.

DUTIES

To give guidance to customers through receptionist, ensure safety in business enterprise, close and open the

gate for customers and screening them.

3.4.0 RENUMILATION AND INSENTIVES

DESCRIPTION NUNBER MONTLY ANNUAL MEDICAL HOUSE

SALARY SALARY ALLOWANCE ALLOWENCE

MANAGER 1 30000 360,000 4000 5000

ASSISTANT 1 20000 240,000 3000 4000

MANAGER

SECRETARY 1 140000 168,000 1,800 3000

DRIVER 1 10000 120,000 1000 2000

RECEPTIONIST 1 10000 120,000 1000 2000

13
STORE 1 8000 96,000 1000 2000

KEEPER

SECURITY 1 9000 108,000 1500 2000

TOTAL 101000 1,212,000 13300 20000

All the employees will be given house allowance and medical allowance every month, they will be given

motivation on top of their salaries. This will make employees to be hard working in the section without

being managed.

3.5.0) RECRUITMENT , TRAINING AND PROMOTION

a) RECRUITMENT

The manager will be in charge of decision making within the business and in charge of recruitment of new

workers to the enterprise.

b) TRAINING

It will be done in both internally and externally respectively whereby the manager will invite prominent

electrical business people who will give employee adequate training on business tactics. Training will also

be done through seminars and any organized training from electrical areas.

c) PROMOTION

The manager will be responsible for promotions and it will be based on competent workers and it will be

done in the form of salary increment. Also qualification, skills and working experience on that particular

area will also be considered.

3.6.0 REGAL REQUIREMENT

The enterprise will have a trading license from municipal control authority before starting to operate. The

business has also met all municipal laws. The building is well sited and there is adequate supply of water,
14
electricity ,a good transport network and the business will have enough space for effective working

operation.

3.7.0 SUPPORT SERVICES

The enterprise will get support from the following inorder to ensure that the business is maintained

Description Name Address Function

BANKING COMMERCIAL KILGORIS Keep the business profits and making the

BRANCH interest.

INSURANCE CIC INSURANCE PO BOX 33333 Ensure all employees and the business

NAIROBI against accident, theft and fire.

LAWYERS VINCENT PO BOX 35335 To give advice on running and operation

NAKURU of the business

AUDITORS EUNICE VIO 403605 KISII To monitor the book of account everyday

CONSOLTATION AMERICAN BOX 40666 To give adequate experience and advice

S RESEARCH KISUMU on productivity of best quality products.

15
 CHAPTER FOUR

IV.0 PRODUCTION AND OPERATION

It must be well defined and shown step by step to the last stage for business to be diversified.

4.1 PRODUCTIONFACILITIES AND CAPACITIES

This is the part of production where assembling and manufacturing of goods takes place. For any production

to be productive, the production tools and equipment must be available within the enterprise. Availability of

goods will be adequate to meet the demand imposed by the production plan. The ability and characteristics

of goods are detailed below:

4.1.1 MACHINERY AND EQUIPMENT

ITEM DESCRIPTIO PURPOSE QUANTIT UNITY TOTAL SUPPLIER

N Y PRICE

Generator 240,400W Stand by 2 20,000 40,000 susua

supplier enterprise

Motor 240,3Kg Drawing 3 15,000 45,000 M Tailor

Machine

Multmeter 3phase $Single Testing 4 500 2,000 Lightening

Phase suppliers

Table 4mby 6m Working 2 200 400 ouma

Area Faniture

Chairs Arm Chair Sitting 10 700 700 Briton

supplier

The above machines and equipments will be serviced within the enterprise. The workshop will be part of the

building and will contain different services as shown at 4.2.0

16
 4.1.2 RAW MATERIALS/ STOCK

DESRIPTION QUANTITY UNIT PRICE AMOUNT

Hammers 50 200 10,000

Discharge Lamps 50 50 2,500

Lamp Holders 50 40 2,000

Conduits 1,000 10 10,000

Supplier Meters 50 2,000 100,000

Cables 12 4,000 48,000

1.5mm,2.5mm$0.5mm

Florescent Tubes 60 2,000 120,000

Contactors 10 1,500 150,000

Electric Iron Box 10 2,000 20,000

Solar Pannel 10 5,000 50,000

Solar Chargers 20 250 5,000

Radio 10 2,000 20,000

Socket Outlet 50 200 10,000

Switch Boxes 500 40 20,000

Visual Compact Players 5 2,000 10,000

Diodes 100 20 2,000

Transistors 50 20 1,000

Fuses 200 50 10,000

Pliers 50 400 20,000

Switches 50 1,500 7,500

Total 618,000

17
4.2.0 FACILITY LAYOUT

Manager’s room
STORE
Ass. Manager

Cashier Room
ENTERPRISE ROOM Toilets

Consultation
room watchman

Fire room

Entrance

4.3 PRODUCTION OPERATION STRATEGY

For a successful production and operation in Kenya’s enterprise, the production of quality goods and

services should be offered to easy to customers, goods brought into the enterprise must be inspected by the

supervisor incharge before they are taken into the store. The item split in work must be adhered to improved

modern quality facilities should be available. The enterprise will have professional and skilled labour so as

to offer quality services to the customers. The enterprise will be working for twelve hours but the employees

18
will be working for six hours in shifts until the end of twelve hours. This will increase the processing speed

of orders to customers.

4.5.0 OTHER EXPENSES

DESCRIPTION MONTHLY YEARLY

Labor 101,000 1,212,000

Electricity 7,000 84,000

Telephone 3,000 36,000

Postage 2,000 24,000

Water 1,500 18,000

Rent 10,000 120,000

Advertisement 10000 1,494,000

134000 1614000

4.6REGULATION AFFECTING OPERATIONS

4.6.1 SAFETY REGULATION

Safety measures and regulations will be taken into considerations for the safety of workers and the
enterprise. Therefore, fire extinguishers will be strategically placed around and within the enterprise and
alarms to raise for any alerts incase of danger. Dust coats, helmets, gloves and boots will be provided for the
safety of the workers.

4.6.2 ENVIRONMENTAL REGULATIONS

For environment management and conservation, the enterprise has laid various regulations to adhere to such
as people are not allowed to smoke near and around the enterprise. The enterprise will be well ventilated and
spacious and litters should be collected and discarded appropriately.

4.6.3 GOVERNMENT REGULATIONS

The government rules and regulations will be taken into account to engage in fair competition,
pricing, advertisement and also to ensure right trade permits and licenses are obtained.

19
 CHAPTER FIVE

5.0FINANCIAL PLAN

This will show how his business is operating, source of business finance and capitalization process which
will contribute greatly in the event of stating the business.

5.1.0 PRE-OPERATIONAL COST

These are the costs incurred before the business starts to operate. The enterprise will have the following
equipments, tools and materials for learning the business in the year 2025.

PARTICULARS AMOUNT
{Ksh.}
MACHINERY
1. Generators 16,000
2. Motors 12,000
FURNITURE
1. Office desks 17,000
2. Tables 12,000
TOTAL 29,000
OTHER COSTS
1. Electricity 7,000
2. Water 1,500
3. Advertisement 10,000
4. Registration fee 5,000
TOTAL 23,500
GRAND TOTAL 80,500

5.2.0 ESTIMATION OF WORKING CAPITAL

20
OLOMAYIANA ELECTRICALS AND ELECTRONICS ENTERPRISE will work out Its working
capital be determining its current liabilities from current assets as shown below:

YEAR 1 YEAR 2 YEAR 3

STOCK 618,000 200,000 250,000

DEBTORS 60,000 100,000 200,000
CASH AT HAND 30,000 250,000 300,000
CASH IN BANK 600,000 300,000 4000,000
TOTAL 1,308,000 850,000 1,150,000

5.3 CASH BUDGETS

21
5.3.0 OLOMAYIANA ELECTRICALS AND ELECTRONICS ENTERPRISE CASH BUDGET
AS FROM THE YEAR 2025

JAN FEB MAR APR MA JUN JUL AUG SEP OCT NOV DEC
Y E Y U O
Opening _ 400,0 270,0 150,0 280,0 340,6 215,9 146,7 65,00 35,50 20,30 14,40
balance 00 00 00 00 00 00 00 0 0 0 0
Capital 200,0 _ _ _ _ _ _ _ _ _ _ _
00
Loan 600,0 _ _ _ _ _ _ _ _ _ _ _
00
Cash 20,00 40,00 30,00 60,00 50,00 40,00 30,00 200,0 80,00 18,00 120,0 150,0
0 0 0 0 0 0 0 00 0 0 00 00
Credit 500,0 _ _ _ _ _ _ _ _ _ _ _
00
TOTAL
PAYMEN
TS
Machinery 28,00 _ _ _ _ _ _ _ _ _ _ _
0
Furniture 29,00 _ _ _ _ _ _ _ _ _ _ _
0
Salaries 101,0 101,0 101,0 101,0 101,0 101,0 101,0 101,0 101,0 101,0 101,0 101,0
00 00 00 00 00 00 00 00 00 00 00 00
Rent 10,00 10,00 10,00 10,00 10,00 10,00 10,00 10,00 10,00 10,00 10,00 10,00
0 0 0 0 0 0 0 0 0 0 0 0
Purchases 618,0 100,0 50,00 40,00 30,00 10,00 50,00 40,00 35,00 30,00 60,00 60,00
00 00 0 0 0 0 0 0 0 0 0 0
Electricity 7,000 6,000 6,000 4,000 5,000 4,000 3,500 5,000 5,000 4,000 4,500 6,000
Water 1,500 1,500 1,200 900 1,000 1,000 1,300 1,500 1,000 1,200 1,500 1,000
Advertise 10,00 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000
ments 0
Insurance 13,30 _ _ _ _ _ _ 13,30 _ _ _ _
0 0
Travelling 20,00
0

22
5.3.2 OLOMAYIANA ELECTRICALS AND ELECTRONICS ENTERPRISE CASH BUDGET
AS FROM THE YEAR 2026

JAN FEB MAR APR MA JUNE JUL AUG SEP OCT NOV DEC
Y Y
Opening 50,00 420,0 280,0 180,0 30,00 350,0 225,0 170,8 80,00 40,20 28,80 19,45
Balance 0 00 00 00 0 00 00 00 0 0 0 0
Capital 250,0 _ _ _ _ _ _ _ _ _ _ _
00
Loan 150,0 _ _ _ _ _ 50,00 _ _ _ _ _
00 0
Cash 30,00 70,00 40,00 80,00 10,00 150,0 50,00 204,0 150,0 185,0 200,0 250,0
0 0 0 0 0 O0 0 00 00 00 00 00
Credit 120,0 _ _ _ _ _ _ _ _ _ _ _
00
TOTAL 600,0 490,0 320,0 260,0 40,00 500,9 325,5 374,8 230,0 225,2 228,8 269,4
00 00 00 00 0 00 00 00 00 00 00 50
PAYME
NTS
Machiner 28,00 _ _ _ _ _ _ _ _ _ _ _
y 0
Furniture 29,00 _ _ _ _ _ _ _ _ _ _ _
0
Salaries 110,0 110,0 110,0 110,0 110,0 110,0 110,0 110,0 110,0 110,0 110,0 110,0
00 00 00 00 00 00 00 00 00 00 00 00
Rent 10,00 10,00 10,00 10,00 10,00 10,00 10,00 10,00 10,00 10,00 10,00 10,00
0 0 0 0 0 0 0 0 0 0 0 0
Purchases 600,0 230,0 60,00 50,00 35,00 20,00 50,00 65,00 43,00 40,00 70,00 80,00
00 00 0 0 0 0 0 0 0 0 0 0
Electricity 10,00 7,500 7,300 7,000 8,000 9,000 8,200 7,500 7,200 9,000 9,500 10,00
0 0
Water 2000 1800 1500 1300 1500 1700 1710 1620 1450 1600 2000 2500
Advertise 1000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000
ment 0
Insurance 2000 2000
o 0
Travelling 2800
0
TOTAL
PAYME
NT

23
5.4 PROFOMA TRADING, PROFIT AND LOSS ACCOUT

This part will show how purchases and other expenses are carried out in the enterprise

5.4.1 OLOMAYIANA ELECTRICALS AND ELECTRONICS ENTERPRISE PROFOMA

TRADING, PROFIT AND LOSS ACCOUNT AS AT 31ST DECEMBER 2025

PURCHASES SALE KSH

Cash Ksh. 30,000 Cash 200,000
Credit Ksh. 500,000 Credit 500,000
Total Purchase Ksh. 530,000 Net Saes 700,000
Less Clossing stock Ksh. 50,000
Cost sale Ksh. 480,000

Net Sales Ksh. 785,000 Net Sales 785,000

Cost of Sales Ksh. 480,000 Cost of Sales 480,000
Gross Profit Ksh. 737,000 Gross profit 737,000

EXPENSES

DESCRIPTION AMOUNT
Ksh.
Salaries 101,000
Rent 10,000
Electricity 7,000
Telephone 3,000
Water 1,500
Loan 600,000
Advertisement 10,000

TOTAL 722,500

24
5.5 BALANCE SHEET

This is a statement that is describing the business loans and what it owes others. A statement combines and
retires expenses of the business and it indicates weather the operation is at profit or loss. It is a tool evaluate
performance.

5.5.1 OLOMAYIANA ELECTRICALS AND ELECTRONICS ENTERPRISE BALANCE

SHEET AS AT 31ST DECEMBER 2025

A SSETS LIABILITIES

FIXED ASSETS

Machinery Ksh. 43,000 Capital {Initial+Net Profit} Ksh. 150,000

Tools and equipments Ksh. 2,000,000 Net Capital =Gloss Profit –Total expenses
Furniture Ksh. 50,000 7,370,000-870,000
Total = Ksh. 6,500,000
TOTAL Ksh. 293,000
LONG TERM LIABILITIES
CURRE NT ASSETS Loan –Loan repayment

Stock Ksh. 618,000 SHORT TERM LIABILITIES

Debtors Ksh. 60,000 Bank Ksh. 100,000
Prepaid rent Ksh. 50,000 Creditors Ksh. 500,000
Cash at hand Ksh. 30,000
Cash at bank Ksh. 600,000 TOTAL Ksh. 600,000

TOTAL Ksh. 1,358,000 Total Sum Liabilities Ksh. 7,100,000

B/d 5,661,000
Total Sum of Assets Ksh. 1,651,000
b/d 5,661,000

25
5.6 BREAK EVEN POINT

It is a method of identifying the volume of sales at a given price in order to break even. It is the level at
which the business must operate without incurring any loss or profit.

Variable Costs Ksh.

Telephone 3,000
Electricity 7,000
Transport 10,000
Water 15,000
Purchases 530,000
Insurance 20,000

Total 571,500

Fixed Cost Ksh.

Loan Interest 600,000

Salaries 101,000
Rent 10,000
Advertisement 10,000
721,000
Total

26
5.7 FINANCIAL RETIOS

It helps in assessing the contribution of asset personal equity and sales in the business.

a)PROFITABILITY RATIOS

sales margin=Net profit/Net sales * 100

= 6,500,000/785,000*100

=828.025%

Return on capital=intrest/assets*100

=600000/1651000*100

=36.34%

b),LIQUIDITY RATIO

current ratio=C.A/C.L

=1651000/600000

=2.75

Academic test ratio

= C.A-stock/C.L

= (91651000-618000)/600000

=1.72

C) PERFORMANCE RATIO

Stock turn over=costs of sales-Average stock

= 480000-166666.67

= 313333.

Fixed assets turn over=sales/fixed assets

=785000/293000

=2.68

27
Average debtors collection=(Debtors/collection)*365

=(360000/737000)*365

=178.29

Average creditors=Creditors*365/Credit purchase

=(500000/530000)*365

= 344.340

Clearing Ratio=loan (capital employed)

= 600,000

5.8.0 SOURCES AND USES OF FUNDS

SOURCES AMOUNT PERCENTAGE %

Capital 150,000 10.09%
Loan 600,000 40.35%
Profit 337,000 49.56%
TOTAL 1,487,000 100%

28
APPENDIX 1

BUSINESS LOGO

29
APPENDIX II

To nyacheki

KILGORIS MARKET

OLOMAYIANA
From Kisii ELECTRICALS
ENTERPRISE
op

To Narok

30