cash flow (pro forma statement)

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Cash Flow (Pro Forma statement). Financial Planning. Financial statement. Cash flow pro forma statement Income statement Balance sheet. Usually prepare for 3 years projection. Project Implementation cost. - PowerPoint PPT Presentation

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Page 1: Cash Flow  (Pro Forma statement)

Financial Planning

Page 2: Cash Flow  (Pro Forma statement)

Cash flow pro forma statement Income statement Balance sheet

Usually prepare for 3 years projection

Page 3: Cash Flow  (Pro Forma statement)

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

Page 4: Cash Flow  (Pro Forma statement)

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

Page 5: Cash Flow  (Pro Forma statement)

Expenses for :Legal feeCompany registrationLicense feeExpertise servicesFeasibility studies Insuranceetc

Page 6: Cash Flow  (Pro Forma statement)

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

Page 7: Cash Flow  (Pro Forma statement)

To overcome increases in material priceMiscalculation during preparing the project

implementation costUsually 5 – 10% from project cost

Page 8: Cash Flow  (Pro Forma statement)
Page 9: Cash Flow  (Pro Forma statement)

Salary Fee Accounting Bank charge Maintenance and repair Electric, water and telephone Insurance Rental Legal fees Post & stamp Printing & stationary Staff training travelling

Page 10: Cash Flow  (Pro Forma statement)

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

Page 11: Cash Flow  (Pro Forma statement)

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

Page 12: Cash Flow  (Pro Forma statement)

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

Page 13: Cash Flow  (Pro Forma statement)

For every fixed assets excluding land Methods:

Straight line methodsDeclining balance

Page 14: Cash Flow  (Pro Forma statement)

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

Page 15: Cash Flow  (Pro Forma statement)

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

Page 16: Cash Flow  (Pro Forma statement)
Page 17: Cash Flow  (Pro Forma statement)

LOAN (if required)

Interest rate 10%

Loan duration 5

Interest payment method* 2

* Method: 1 = flat rate 2 = annual rest

Page 18: Cash Flow  (Pro Forma statement)

HIRE-PURCHASE (if required)

Interest rate 5%

Hire-purchase duration 8

Page 19: Cash Flow  (Pro Forma statement)

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

Page 20: Cash Flow  (Pro Forma statement)

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

Page 21: Cash Flow  (Pro Forma statement)
Page 22: Cash Flow  (Pro Forma statement)

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)

Page 23: Cash Flow  (Pro Forma statement)

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

Page 24: Cash Flow  (Pro Forma statement)

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

Page 25: Cash Flow  (Pro Forma statement)

assume

CASH COLLECTIONS FOR SALES

In the month of sale 70%

1 month after sale 20%

2 months after sale 10%

Total 100%

Page 26: Cash Flow  (Pro Forma statement)

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%

Page 27: Cash Flow  (Pro Forma statement)

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%

Page 28: Cash Flow  (Pro Forma statement)
Page 29: Cash Flow  (Pro Forma statement)

LHDN imposed tax to company depends on:Sole propriety and partnership - imposed

tax on individual incomeCompany under company act – imposed tax

on the profits

Page 30: Cash Flow  (Pro Forma statement)
Page 31: Cash Flow  (Pro Forma statement)

employer contribute 12% employee contribute 11%

From the employee salary

Page 32: Cash Flow  (Pro Forma statement)

Wahab, I.A.,Ibrahim, M.D., Ahmad, F. (2002)‘Rancangan Kewangan Perniagaan Kecil dan Sederhana’, 1st Ed. Prentice Hall. Malaysia