we already have a business plan for our project with its estimations of the balance sheet and income statement for the first 3 years.we are required to do some calculations for the financial plan according to instructions provided below
Follow the instructions.
? Assume your business expected life for 8 years.
? Decide your Total investment in your project.
? Decide the Capital Structure (combination of Debt + Equity percentage)
? Decide Dividend Payout Ratio; which is applicable after three years of business start.
? There should be Interest rate consideration as per market interest rate.
? Consider Corporate Government Taxes at the rate of Qatari Government Corporate tax norms after four years from starting business.
? Remember all the expected, projected numbers, ratios; group will decide for the business. It should be clearly mentioned in the project.
Prepare Balance sheet
2. Prepare Balance sheet
3. Asset and Liability side with genuine numbers of your business.
4. Asset side project Fixed Asset and Current Asset.
5. Apply Depreciation on the fixed asset at the rate of 7% after three years from the business commencement.
Prepare income statement.
6. Sales Revenue projection as compare to Total asset for the first year.
7. Then project sales revenue for subsequent 8 years.
? Decide Expected Sales Growth Ratio.
Overall Business Decision Criteria
8. Calculate Overall Average Growth Ratio of the business for 8 years period.
9. Calculate WACC for complete life of project.
10. Calculate the following methods and state your decision clearly.
a. PayBack Period,
b. Discounted PayBack Period,
c. Net Present Value,
d. Profitability Index,
e. Internal Rate of Return.
15. In closing Summery state based on above calculation numbers you should implement your business idea or not.
Checklist: Only alphabetical number points you need to show up in your project.
balance sheet and income statement for the project (all numbers are estimated)
We estimate an initial required investment of 1,750,000 QAR. The following is a summary financials for a three-year period.
3 year Income Statement projection
Year 1 (QAR) Year 2 (QAR) Year 3 (QAR)
Sales 1,314,000 1,445,400 1,662,210
Cost of goods sold 125,000 125,000 125,000
Gross Profit 1,189,000 1,320,400 1,537,210
Advertisements 152,208 87,904 23,904
Accommodation 584,640 584,640 584,640
Restaurant Rent 378,000 378,000 378,000
Total Expenses 1,114,848 1,050,544 986,544
Net Income 74,152 269,856 550,666
3 year Balance Sheet projection
Assets Year 1 (QAR) Year 2 (QAR) Year 3 (QAR)
Cash 455,476 656,180 941,990
Prepaid Rent 727,740 727,740 727,740
Total Current Assets 1,183,216 1,383,920 1,669,730
Vehicle 78,000 78,000 78,000
Equipment 200,000 200,000 200,000
Furniture 100,000 100,000 100,000
Total Long-term Assets 378,000 378,000 378,000
Total Assets 1,561,216 1,761,920 2,047,730
3 year Balance Sheet projection
Liabilities Year 1 (QAR) Year 2 (QAR) Year 3 (QAR)
Accounts Payable 125,000 125,000 125,000
Salaries Payable 1,352,064 1,352,064 1,352,064
Total Current Liabilities 1,477,064 1,477,064 1,477,064
Long Term Liabilities
Total Liabilities 1,477,064 1,477,064 1,477,064
Equity 10,000 15,000 20,000
Retained Earnings 74,152 269,856 550,666
Total Liabilities and Equity 1,561,216 1,761,920 2,047,730