1. Module 2: Session 5 BUSINESS PLAN: LONG TERM PROJECTIONS Module 5: Session 51

2. 1)To make long term performance projections 2)To make long term cash flow projections 3)To differentiate between long term profits and cash using profit and cash flow projections 4)Review long term profitability and cash flow and make appropriate adjustments Session Objectives Module 5: Session 52

3.  Make assumptions on growth in works, revenues and costs  Identify long term investment needs  Make assumptions on capital development needs and preliminary capital structure.  Economic assumptions on price and costs  Assumption on the long term horizon such as on drawings, asset replacement, taxation.  Identify capital needs and work backward to restructure capital. Procedure for 5 year forecasting Module 5: Session 53

4.  Generate the income and the cash flow out of the forecasted data and analyze it.  Identify emerging patterns  Work out revenue trends  Work out cost trends  Work out profit and loss in long term  Work out cash flow  Derive balance sheets Analysis Module 5: Session 54

5. Year Yr 1Yr 2 Yr 3 YR 4 YR 5Total Revenues Revenues from other sources Total Expenditure: Materials Administration and overheads Labour Machinery and equipment Start up costs Depreciation Interest on loans Total Profit/loss Long term profit projection format Module 5: Session 55

6. Year Yr 2 Yr 3 YR 4 YR 5Total Accounts receivables Receipts from other sources Capital from owners or term loans Total PAYMENTS: Materials suppliers Administration and overheads Labour Equipment suppliers Drawings or dividends Taxes paid Total NET CHANGE IN CASH Balance from previous period Balance carried to next period Long term cash flow projection format Module 5: Session 56

7. 1)Using assumptions in case study develop a performance forecast for five years 2)Make five year cash flow projections 3)Note any emerging trends in profit and cash flow 4)Propose strategies that may be undertaken by Munaku to improve both profitability and cash flow Relate the strategies to your company. Activity Module 5: Session 57

8. THE END Q & A Module 5: Session 58