9.

FINANCIAL PLAN

The financial plan acts as a point where all financial information in the
administrative, marketing and operations plans are collected and
summarized to give a picture of the how much the business will cost to run.
The information in the financial plan is essential in analyzing the viability of
the project and will have an impact on whether the business venture will
continued as planned, be adapted or abandoned. When the business is
carried out as planned, the financial information can be used to control the
business expenses.
9.1

Project implementation cost schedule

The project implementation cost will show how mush investment in term of
fixed assets cost, monthly expenses and other cost are needed to start the
business.
Table 9.1: Project implementation cost schedule
A. Capital expenditure
Land & building (contributed by owner)
Machinery and equipment
Furniture and fixtures
Vehicle Van (hire purchase)
Renovation cost
Sub-Total
B. Working capital (2 months)
Marketing
Production/Operation
Administrative
C. Other expenditure
Pre-operating
Business registration
Insurance
Road tax
Sundries

RM
45,000
23,000
7,000
25,000

RM

RM

Deposits
Utilities (Tel/water/electricity)
Sub-Total
Grand Total
D. Add: Contingency cost (10%)
TOTAL PROJECT IMPLEMENTATION
COST

137,500
(sama
dengan
total
source of

fund)

9.2

Sources of funds schedule

Sources of funds will indicate availability of funds to finance the project

implementation cost.
Table 9.2: Sources of finance schedule
A. Equity contribution
Cash
Assets (land & building)
Sub-Total
B. External sources
Hire purchase (Van)
Term loan
Sub-Total
C. Others
TOTAL SOURCES OF FINANCE

RM

RM

137,500 (sama
dengan total
implementation
cost)

9.3

Fixed assets depreciation tables (optional)

Table 9.3: A depreciation schedule for a van

Type of asset:
Original cost:
Economic life:
Scrap value:
Method:

Van
RM25,000
5 years
RM0
Straight line

Year

Accumulated depreciation
(RM)
0
5,000
10,000
15,000
20,000
25,000

0
1
2
3
4
5

Annual depreciation
(RM)
0
5,000
5,000
5,000
5,000
5,000

Book value
(RM)
25,000
20,000
15,000
10,000
5,000
0

9.4

Loan amortization schedule (optional)

Information on term loan

Term loan
Loan amount:
Loan period:
Interest rate:
Method:

Hire purchase
Loan amount:
Loan period:
Interest rate:
Method:

RM45,000
5 years
10%
Annual rest

RM20,000
5 years
8%
Flat rate

Term loan
Annual payment of principal
RM45,000/5 years = RM9,000

Hire purchase
Annual payment of principal
RM45,000/5 years = RM9,000

Interest payment:
Year 1: RM45,000
RM4,500
Year 2: RM36,000
RM3,600
Year 3: RM27,000
RM2,700
Year 4: RM18,000
RM1,800
Year 5: RM9,000

x 10% =

Interest payment:
Year 1: RM20,000 x 8% = RM1,600

x 10% =

Year 2: RM20,000 x 8% = RM1,600

x 10% =

Year 3: RM20,000 x 8% = RM1,600

x 10% =

Year 4: RM20,000 x 8% = RM1,600

x 10% = RM900

Year 5: RM20,000 x 8% = RM1,600

Table 9.3: Term loan amortization schedule

Loan amount: RM45,000
Loan period: 5 years
Year
Interest
(RM)
0
0
1
4,500 (10% x
45000)
2
3
4
5

3,600 (10% x
36000)
2,700
1,800
900

Interest rate: 10%

Method: Annual rest
Principal
Payment
(RM)
(RM)
0
0
9,000 (interest
13,500
13500 9000 =
1125.00
4500)
monthly
9,000
12,600

Balance
(RM)
45,000
36,000 (45000
9000)

9,000
9,000
9,000

18,000
9,000
0

11,700
10,800
9,900

27,000

9.5

Hire purchase repayment schedule (optional) can be combined

with 9.5

Table 9.4: Hire purchase loan amortization schedule

Type of asset: Van
Cost of asset: RM25,000
Down payment: RM5,000
Year
Interest
(RM)
0
0
1
1,600 (8% x
20000)
2
1,600
3
1,600
4
1,600
5
1,600

Loan amount: RM20,000

Interest rate: 8%
Method: Flat rest
Principal
Payment
(RM)
(RM)
0
0
4,000
5,600
4,000
4,000
4,000
4,000

5,600
5,600
5,600
5,600

Balance
(RM)
20,000
16,000 (20000
4000)
12,000
8,000
4,000
0

9.6

Pro forma cash flow statement

Proforma cash flow will indicate the business cash situation of the company.
Table 9.5: A pro forma cash flow statement (Monthly)
Month
A

Cash flow
Equity
cash
Term loan
Cash sales

Total cash
flow

Cash
outflow
Operation
al
expendit
ure
operation
al plan
Raw
materials

Preoperat
ion

Jan

Feb

Mac

Apr

May

Jun

Jul

Aug

Sept

Oct

Nov

Dec

Year 1

20000
sales
forecas
tmarketi
ng plan
20000

240000
(20000
x 12)

3000

36000
(3000 x

312500
(27500
+
45000
+
240000
)

Direct
labor

3000

Operationa
l
overheads
Marketin
g
expendit
ure
marketin
g plan
Sales
commissio
n
Entertainm
ent
allowance
Administr
ative
expendit
ure
adminitra
tive plan
Salaries &
wages
EPF &
SOCSO
Other
administra
tive
overheads
Loan
repayment
: (refer
loan
schedule)
Principal

2000

1000
500

12)
36000
(3000 x
12)
24000
(2000 x
12)

12000
(1000 x
12)
6000
(500
x12)

5000

60000

1000

12000

2000

24000

750

9000

Interest
Hire
purchase
repayment
Down
payment
Principal
(refer hire
purchase
schedule)
Interest
(refer hire
purchase
schedule)
Capital
expendit
ure
operation
al &
administr
ative
plans
Machinery
&
equipment
Furniture &
fixtures
Renovation
Preoperationa
l
expenditur
e
Deposits
D Total cash
outflows
E Cash
surplus
(Deficit)

375

5000

4500

5000
333

4000

133

1600

23000

23000

7000

7000

4000
2700

4000
2700

800
4250
0
3000
0
(7250

19091

800
271600

909
(20000

909
(Dicem
ber

B-D
F

Beginnin
g cash
balance

G Ending
cash
balance

0
42500
)
0

30000

19091)

amount
)

30000
(preoperati
on)
30909
(30000
+ 909)

40900
(Dec
amount
)

Table 9.6: A pro forma cash flow statement (Annually)

Year
A

Cash flow
Equity cash
Term loan
Cash sales

Total cash flow (+ all A activities)

Cash outflow
Operational expenditure
Raw materials
Direct labor
Operational overheads
Marketing expenditure
Sales commission
Entertainment allowance
Administrative expenditure
Salaries & wages
EPF & SOCSO
Other administrative overheads
Loan repayment:
Principal
Interest
Hire purchase repayment
Down payment
Principal
Interest
Capital expenditure

Year 1 (Derive from

monthly transaction)

Year 2

Year 3

27500
45000
240000 (from
monthly schedule)
312500
(27500 +45000 +
240000)

0
0
276000
(Estimation)

0
0
317400
(Estimation)

Machinery & equipment

Furniture & fixtures
Renovation
Pre-operational expenditure
Deposits
Total cash outflows (+ all C
expenditures)
Cash surplus (Deficit) (B C)

Beginning cash balance

40900 (312500
271600)
0

Ending cash balance

40900 (from E)

271600

239900

249710

36100

67690

40900 (from
year 1)
77000 (36100
+ 40900)

77000 (from
year 2)
144690

9.7

Pro forma profit and loss statement/ Income statement (optional)

Pro forma profit and loss statement will show the business profit/loss estimation at the end of the
accounting period.
You must get cost of goods manufactured and gross profit
Calculation of cost of goods manufactured
RM
Raw material used
Opening stock (1/1) jika masih
ada
Add: Purchase of raw materials
Raw material available
Less: Closing stock (31/12) guna
untuk finished products
Direct materials

0
36000 (from cash
flow schedule)
36000
3000
33000 (36000
3000)
36000 (from cash
flow schedule
annually)
69000 (33000 +
36000)
28600
(24000 + ??? dummy

Direct labor
Prime cost
Manufacturing overheads*
(operational OH + Depreciation
charges)
Work-in-process
Add: Work-in-process (1/1)
Less: Work-in-process (31/12)

RM

0
0

Cost of goods manufactured

0
97600 (69000 +
28600)

(To be transferred to the trading

account)

* The amount of manufacturing overheads is not the same as the amount of the operations overhead
(RM24000) in the cash flow statement because depreciation charges for the plant, machinery and
equipment have been added on to the operational overheads. The depreciation charge does not appear in
the cash flow because it is a non-cash expenditure.

Table 9.6: Calculation of gross profit for a manufacturing company

RM
SALES
COST OF GOODS SOLD
Opening stock for finish goods
(1/1)
Add: Cost of goods manufactured
Goods available for sale
Less: Closing stock for finished
goods (31/12) telah proses; eg
CD dah sedia siap

RM
240000 (Year 1
data)

0
97600 (data cost)
97600
3000
94600 (97600
3000)
145400 (240000
94600)

GROSS PROFIT

Table 9.6: Calculation of gross profit for a trading company

RM
SALES
COST OF GOODS SOLD
Opening stock for finish goods
(1/1)
Add: Purchased of finished goods
Goods available for sale
Less: Closing stock for finished
goods (31/12)

0
36000
36000
3000

RM
240000

GROSS PROFIT

33000
207000

Table 9.7: A pro forma income statement for a manufacturing company

RM
SALES
COST OF GOODS SOLD
Opening stock for finish goods
(1/1)
Add: Cost of goods manufactured
Goods available for sale
Less: Closing stock for finished
goods (31/12)
GROSS PROFIT
LESS: OPERATING EXPENSES
Administrative expenses
Marketing
Interest:
Term loan
Hire purchase
Depreciation charges
Miscellaneous
Total operating expenses
NET PROFIT BEFORE TAX

RM
240000 (cash
flow schedule)

0
97600
97600
3000
94600
145400
96000
18000
4500
1600
7200
2700
130000
15400 (145400 130000)

Table 9.6: A pro forma income statement for a trading company

RM
SALES
COST OF GOODS SOLD
Opening stock for finish goods
(1/1)
Add: Purchased of finished goods
Goods available for sale
Less: Closing stock for finished
goods (31/12)
GROSS PROFIT
LESS: OPERATING EXPENSES
Administrative expenses
Marketing
Operations/productions
Interest:
Term loan
Hire purchase
Depreciation charges
Miscellaneous
Total operating expenses
NET PROFIT BEFORE TAX

RM
240000

0
36000
36000
3000
33000
207000
96000
18000
60000
4500
1600
11800
2700
194600
12400

9.8

Pro forma balance sheet (optional)

Proforma balance sheet will highlight the overall financial standing of the business at the end of the
accounting period.
Table 9.7: A pro forma balance sheet for a manufacturing company
RM
FIXED ASSETS
Land & Building
Machinery & equipment
Furniture and fixtures
Renovation
Van

RM

45000
18400
5600
3200
20000
92200

CURRENT ASSETS
Cash
Closing stock for raw materials
Closing stock for finished goods

40900
3000
3000

46900

OTHER ASSETS
Deposits

800

TOTAL ASSETS

139900

EQUITY
Capital
Accumulated profit
CURRENT LIABILITIES

72500
15400
87900
0

LONG-TERM LIABILITIES
Term loan
Hire purchase
TOTAL EQUITY AND LIABILITIES

36000
16000

52000
139900

Table 9.7: A pro forma balance sheet for a trading company

RM

RM

FIXED ASSETS
Land & Building
Machinery & equipment
Furniture and fixtures
Renovation
Van

45000
18400
5600
3200
20000

92200

CURRENT ASSETS
Cash
Closing stock for finished goods

40900
3000
43900

OTHER ASSETS
Deposits

800

TOTAL ASSETS

136900

EQUITY
Capital
Accumulated profit

72500
12400

CURRENT LIABILITIES
LONG-TERM LIABILITIES
Term loan
Hire purchase

84900
0

36000
16000

52200

TOTAL EQUITY AND LIABILITIES

136900