1. FINANCIAL PLAN Assoc. Prof. Dr. Ismail Ab.Wahab Assoc. Prof. Hj. Wan Ismail Wan Mamat Assoc. Prof. Dr. Mohamed Dahlan Ibrahim

21. Example: Pro Forma Cash Flow Statement

22. Example: Pro Forma Cash Flow Statement (contd.)

25. Example: Pro Forma Income Statement Year 1 Year 2 Year 3 Sales 240,000 276,000 317,400 Cost of sales 94,600 103,900 108,940 Gross profit 145,400 172,100 208,460 Less: Operating Expenses Marketing expenses 18,000 18,900 19,845 Administrative expenses 96,000 100,800 105,840 Depreciation charges 7,200 7,200 7,200 Miscellaneous 2,700 600 600 123,900 127,500 133,485 Operating income 21,500 44,600 74,975 Less: Financing expenses: Interest on term loan 4,500 3,600 2,700 Interest on hire-purchase 1,600 1,600 1,600 6,100 5,200 4,300 Net profit before tax 15,400 39,400 70,675

32. Example: Pro Forma Balance Sheet Year 1 Year 2 Year3 Non-Current Assets (book value) Land & building 45,000 45,000 45,000 Machinery & equipment 18,400 13,800 9,200 Furniture & fixtures 5,600 4,200 2,800 Renovation 3,200 2,400 1,600 Vehicles 20,000 15,000 10,000 Deposit 800 - - 93,000 81,200 69,400 Current Assets Inventory of raw materials 3,000 3,500 4,000 Inventory of finished goods 3,000 4,000 5,000 Cash 40,900 77,600 145,575 46,900 85,100 154,575 Total Assets 139,900 166,300 223,975 Owners’ Equity Capital 72,500 72,500 72,500 Accumulated profit 15,400 54,800 125,475 87,900 127,300 197,975 Long-term Liabilities Term loan 36,000 27,000 18,000 Hire-purchase 16,000 12,000 8,000 52,000 39,000 26,000 Total Owners’ Equity & Liabilities 139.900 166,300 223,975

35. Pro Forma Income Statement Year 1 Year 2 Year 3 Sales 576,000 662,400 794,880 Cost of sales 227,000 254,600 278,460 Gross profit 349,000 407,800 516,420 Less: Operating Expenses Marketing expenses 56,500 62,150 68,365 Administrative expenses 226,000 248,600 273,460 Depreciation charges 21,000 21,000 21,000 Other operating expenses 5,000 4,000 4,000 308,500 335,750 366,825 Operating income 40,500 72,050 149,595 Less: Financing expenses: Interest on term loan 16,500 13,200 9,900 Net income before tax 24,000 58,850 139,695

36. Pro Forma Balance Sheet Year 1 Year 2 Year3 Non-Current Assets (book value) Land & building 100,000 100,000 100,000 Motor vehicles 64,000 48,000 32,000 Office equipment 5,600 3,000 2,000 Renovation 16,000 12,000 8,000 Machinery 32,000 24,000 16,000 Other assets (deposits) 1,000 1,000 1,000 217,000 188,000 159,000 Current Assets Inventory of raw materials 2,000 3,000 4,000 Inventory of finished goods 5,000 6,000 8,000 Cash 46,500 105,350 244,645 53,500 114,350 256,645 Total Assets 270,500 302,350 415,645 Owners’ Equity Capital 105,500 105,500 105,500 Accumulated profit 24,000 82,850 222,545 129,500 188,350 328,045 Long-term Liabilities Term loan 132,000 99,000 66,000 Current Liabilities Accounts payable 9,000 15,000 21,600 Total Owners’ Equity & Liabilities 270.500 302,350 425,645

43. Step 7: Perform Basic Financial Analysis (contd.) 26.5 times 31.83 times 32.42 times Inventory turnover RM 10,500 RM8,000 RM 7,000 Average inventory RM278,460 RM254,600 RM227,000 Cost of sales Year 3 Year 2 Year 1

56. END OF MODULE 11