Financial Plan The Sultan Production House total investment is Rs: 30 million. 30 percent is debt and 70 percent equity. The dividends on loan shall be paid after three year of run the business. We have taken the debts from the United Bank Limited (UBL). The Amount of loan is Rs 9 million. The interest on loan is 13 to 13.5 percent. This rate is computed by (KIBOR + 3) and KIBOR is 10 percent. We have taken mortgage loan; the value of this mortgaged asset is 20 percent above the value of loan. The total value of loan is Rs: 9 million and the value of mortgage are 10.8 million. We had taken business property (Building) and land as a mortgage with bank. SULTAN PRODUCTION HOUSE Sources of Funds for Startup SOURCES OF FUNDS Owners Investments Imran Khan Nadeem Alam Sayed Shah Sawar Total Investments Bank loan Short term Long term Total bank loan Other loans Total loan Percentage 40% 30% 30% 100% Amount in Rs. 8,400,000 6,300,000 6,300,000 Rs: 21,000,000 Amount 9,000,000 9,000,000 Rs: 9,000,000 TOTAL INVESTMENT AND LOANS Rs: 30,000,000 SULTAN PRODUCTION HOUSE Forecasted Income Statement For the year endings on: 31 Dec 2019, 2020, and 2021. Revenues Less Cost of Goods Sold: Gross Profit(loss) Less other expenses: Office rent Internet bill/connection Telephone bills Maintenance Electricity bill Employee trainings Marketing and Advertisement Travelling Salaries* Depreciations Vehicle Furniture and fixture Equipment Building Total depreciation Office supplies Miscellaneous expenses Total Expenses EBIT- income from operation Less interest expense EBT(earnings before tax) Less Taxes Net income/loss 2019 8,400,000* (1,000,000) 7,400,000 2020 9,600,000* (1,142,000) 8,458,000 2021 12,000,000* (1,427,500) 10,572,500 96,000 14,400 8,400 100,000 24,000 80,000 250,000 80,000 1,788,000 10,600* 14,400 9,000 140,000 25,000 270,000 85,000 1,966,800 116,160* 14,400 9,000 160,000 27,000 240,000 100,000 2,163,480 450,000 828,000 1,702,000 600,000 3,580,000 20,000 60,000 (6,010,800) 1,389,200 (1,170,000) 216,200 216,200 405,000 82,800 1,531,800 540,000 2,559,600 20,000 65,000 (5,260,400) 3,197,600 (1,057,550.36) 2,140,049.64 2,140,049.64 364,500 74,520 1,378,620 486,000 2,303,640 23,000 70,000 (5,226,680) 5,345,820 (930,482.27) 4,415,337.8 4,415,337.8 Note Revenues of each months forecasted Rs: 700,000 In 2020 revenues of each month Rs: 800,000 Rent of property increase 10% each year. Salaries of staff will increase 10% every year. In 2021 revenues per month Rs: 1,000,000. In Gilgit Baltistan income tax is exempted that’s why we did not less taxes. SULTAN PRODUCTION HOUSE Balance Sheet Projection Year End Date 2019 ASSETS Current Assets Cash Account Receivable Inventory Prepaid expense Total Current Assets Fixed Assets Vehicles Less: Accumulated Dep Furniture and fixtures Less: Accumulated Dep Equipments Less: Accumulated Dep Building Less: Accumulated Dep Total Fixed Assets Intangible Assets Software TOTAL ASSETS 600,000 2,000,000 1,095,203 2020 2021 1000,000 4,417,406 2,000,000 3,000,000 7,000,000 2,414,710 3,695,203 7,417,406 12,414,710 4500,000 (450,000) 4,050,000 920,000 (92000) 828000 17,020,000 (1,702,000) 15,318,000 4,050,000 (405,000) 3,645,000 828,000 (828,00) 745,200 15,318,000 (1,531,800) 13,786,200 3,645,000 (364,500) 3,280,500 745,200 (74,520) 670,680 13,786,200 (1,378,620) 12,407,580 6,000,000 (600,000) 5,400,000 25,596,000 5,400,000 (540,000) 4,860,000 23,036,400 4,860,000 (486,000) 4,374,000 20,732,760 60,000 29,351,203 60,000 100,000 30,513,806 33,247,470 LIABILITIES AND EQUITY Current Liabilities Account payables Accrued wages Income Taxes payables Unearned revenues Total Current Liabilities Long term liabilities Long term loan payables Less: installment Paid(principles) Total Long Term Liabilities Total Liabilities 9,000,000 100,000 50,000 100,000 7,157,555,9 (1,104,514.9 (864,997.23) (977,446.87) ) 8,135,002.77 7,157,555.9 6,053,041 Stockholders’ Equity Investment Capital Accumulated retained earnings Less dividends (3rd year 10%) 8,135,002.77 21,000,000 216200 21,216,200 Total Equity TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY 50,000 29,351,203 21,000,000 21,000,000 2,356,250 6,771,588 (677,159) 6,094,429 23,356,250 27,094,429 30,513,806 33,247,470 In 2021, 10% percent of retain earnings are given cash dividends. Depreciation is charge 10% reducing balance method. PRO FORMA CASH FLOWS Net income after Taxes Add Depreciation Cash flow 2019 216,200 2020 2,140,049.64 2021 4,415,337.8 3,580,000 3,796,200 2,559,600 4,699,649.64 2,303,640 6,718,977.8 Break Even Break Even (Sales) = Fixed Cost/Contribution Margin Contribution margin ratio = Rs: 7400000/8400000 = 88% So Break even (sales) = Rs: 6010800/0.88 Break even (sales) = Rs: 6830454.54 Net Present Value r = 13% Fixed Assets or initial investment = 28,440,000 NPV = PV (Inflows) – PV (outflows) NPV = 11,767,321 – 28,440,000 NPV = (16,767,321) Pay back Year before recovery + Receivables of the current year Amount of the Current year Year before recovery = 4th year Receivables of the current year= 1,511,676 Amount of the current year= 30,384,002 Now we put the above values in formula. 4 + 1,511,676 / 30,384,002 Payback period = 4 years and almost 1 month.