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.