Financial Projections as part of Business Plan by Ketoki Basu,

Outcome  The fund requirement for the project  Timing of fund requirement  The means of funding  Project cost  Direct costs  Indirect or fixed costs  Capital expenditure 2

Deliverables  Profit and Loss Account- Projected  Balance Sheet- Projected  Cash Flow Statement- Projected 3

Product/ Service  Identify costs associated with product/service  Are there likely to be some development costs?  The production cycle time  Stock of raw materials to be maintained 4

Sales  You know your customer/(s)  When does sales start?  Project sales quantity  Quantity to increase over a period of time  Determine unit selling price  Unit price can be increased from Year 2 or Year 3 5

Manpower  Head count and total cost to company  Escalation of salary costs  Direct  Production/Technical team  Indirect  Director  CEO  CTO  Marketing  Finance  Human Resources 6

Capital Expenditure  What is capital expenditure?  Create a plan for the projected period  Quantity of each capital item  Estimate cost of each item  When do they need to be bought 7

Revenue Expenditure  Direct costs of production/service  Have costs typical to the type of business been captured?  Should be variable/semi-variable costs  Indirect costs  Establishment/ (s)  Selling and distribution  Administration including depreciation  Escalate all costs 8

Receivables & Payables  Credit period to be offered to customers  Likely credit terms from suppliers  Expenses that are paid late  Rent- payable in advance or in arrears  Salary- end of the month or beginning of the next 9

Other Costs  Debt funding  Interest payments- P&L and cash flow  Principal repayment- cash flow and B/S  Stocks or Inventory  Deposit for factory/office space  Income Tax – years of profit 10

Ratio  Sales growth  Direct expenses to sales  Indirect expenses to sales  Gross Margin to sales  Operating Margin (EBITDA) to sales  Profit after tax (PAT) to sales  Return on equity  Return on capital employed 11

Summary  Project production & sale of product/service  Identify revenue and capital expenses  Determine time of capital purchases  Project revenue & expenses  Determine fund shortage 12

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