IV.

FINANCIAL PLAN

A. Total Projected Cost

TOTAL PROJECT COST

Fixed Assets/ Capital investments

Leasehold/ building improvements 300,000
Equipment 45,000
Furniture and fixtures 30,000

Pre-operating Expenses
Permits and licenses 2,500
Advance rental and deposits 40,000
Purchases- Mdse inventory 25,000
Office supplies 10,000

Operating expenses
Salaries 30,000
482,500

Add: 20% contingency 96,500

TOTAL PROJECT COST 579,000

B. Sources of Financing

The owner of the company would use debt finance as a source of

starting capital to support the business. The starting capital would be divided

into two: the equity and the liability, both would share equal parts – 50%. The

projected starting capital is ₱708,600.00, meaning the owner and the lender

would contribute ₱354,300.00 each. Since the business needs to be fully

managed by the owner, this type of financial source is the best one to be used.

Besides, the other advantages of using debt finance in business are:

1. Retain control. It means that when an owner agree to debt

 financing from a lending institution, the lender has no say in how

the owner manage his own company. The owner makes all the

decisions. The business relationship ends once the owner have

repaid the loan in full and as the business owner, you do not have

to answer to investors.

2. Tax advantage. It implies that the amount the owner pay in

interest is tax deductible, effectively reducing the owner’s net

obligation.

3. Easier planning. It means that the owner know well in advance

exactly how much principal and interest the owner will pay back

each month. This makes it easier to budget and make financial

plans.

4. Retaining profits. It implies that the owner’s obligation to his

lender is only making repayments within agreed time frames. The

owner do not have to share your business profits.

 C. Projected Financial Statement
Cake Bites
Projected Cash Flow
Projected Cash Flow
Statement
Pre-Operating (2018) 2019 (2018, 2019, 2020,
2020 2021, 2022) 2021 2022
CASH INFLOWS
Capital, beginning 579,000.00 - - -
Sales - 880,000.00 950,000.00 1,250,500.00 1,345,500.0
Total 579,000.00 880,000.00 950,000.00 1,250,500.00 1,345,500.0
CASH OUTFLOWS:
Leasehold/Building
Improvements 220,000.00
Machines 120,000.00
Equipments 65,000.00
Furniture and 40,000.00
Fixture
Purchases 20,000.00 200,000.00 290,000.00 310,000.00 350,000.00
Permits and licenses 2,350.00 - 8,000.00 9,000.00 10,000.00
Advance rental and 25,000.00 70,000.00 100,000.00 105,000.00 110,000.00
deposits
Office supplies 1,000 10,000.00 11,000.00 12,000.00 13,000.00
Salaries 20,000 220,000.00 230,000.00 250,000.00 270,000.00
Electricity - 34,000.00 37,000.00 40,000.00 45,000.00
Water - 5,000.00 6,000.00 6,500.00 7,000.00
Communications - 12,000.00 13,000.00 15,000.00 18,000.00
Transportation - 20,000.00 22,000.00 25,000.00 30,000.00
Miscellaneous - 10,000.00 10,000.00 10,000.00 10.000.00
Total 495,350.00 561,000.00 727,000.00 782,500.00 863,000.00
NET CASH FLOW 83,650.00 250,000.00 260,000.00 290,000.00 320,000.00
Add: Cash balance, - 83,650.00 333,650.00 593,000.00 883,000.00
beginning
CASH BALANCE, 83,650.00 333,650.00 593,650.00 883,000.00 1,203,000
END
 The table above shows the projected cash flow statement of the

business from 2018 to 2022. It involves cash inflows and cash outflows. In the

cash inflow, it involves capital, beginning and sales. For the year 2018, the capital

beginning is about P579, 000.00 and no sales because this is in the process on pre-

operational. The total cash inflows are increasing in the year 2019, 2020, 2021 and

2022. In the year 2022, the total cash inflows will be about P1,345,500.00.00. On

the other hand the total cash outflows in the year 2018 is about P495,350.00. It

involves improvements, machines, equipment, furniture and fixture, purchases,

permits and licenses, advance rentals and deposits, other supplies, salary

electricity, water, communications, transportation and miscellaneous. Also, the

total cash outflows is increasing in the year 2018,2019, 2020, 2021, and 2022. The

cash balance is the sum of net cash flow and the cash balance.
 Cake Bites
Projected Income Projected Income Statement
(2019, 2020, 2021, 2022)

Year 1 (2019) Year 2 (2020) Year 3 (2021) Year 4 (2022)

Revenues
Sales 880,000.00 950,000.00 1,250,500.00 1,345,500.00
Cost of Sales
Mdse Invtry, beg. - 12,000.00 25,000.00 35,000.00
Add: Purchases 220,000.00 290,000.00 310,000.00 350,000.00
TGAFS 220,000.00 302,000.00 335,000.00 385,000.00
Less: Mdse Invtry, end 12,000.00 25,000.00 35,000.00 42,000.000
208,000.00 277,000.00 300,000.00 343,000.00
Gross Income 579,000.00 660,000.00 750,000.00 800,000.00
Operating Expenses
Permits and licenses 2,350.00 8,000.00 9,000.00 10,000.00
Rental 70,000.00 100,000.00 105,000.00 110,000.00
Office supplies 11,000.00 11,000.00 12,000.00 13,000.00
Salaries 220,000.00 230,000.00 250,000.00 270,000.00
Electricity 34,000.00 37,000.00 40,000.00 45,000.00
Water 5,000.00 6,000.00 6,500.00 7,000.00
Communications 12,000.00 13,000.00 15,000.00 18,000.00
Transportation 20,000.00 22,000.00 25,000.00 30,000.00
Miscellaneous 10,000.00 10,000.00 10,000.00 10,000.00
384,350.00 437,000.00 472,500.00 513,000.00
NET INCOME 185,650.00 223,000.00 277,500.00 287,000.00
 The table above shows the projected income statement of the business.

It involves the total sales, gross income, and operating expenses. In the year

2019, the gross income will be P579,000.00, and total operating expenses is

P384,000.00. The net income is the difference of gross income and operating

expenses. The net income is increases as the years goes on. In the year 2022,

the net income is about 287,000.00.

Projected Balance Sheet
Pre-Operating (2018) Year 1 (2019) Year 2 (2020) Year 3 (2021) Year 4 (2022)

CURRENT
Cash 83,650.00 333,650.00 593,650.00 883,000.00 1,203,000.00
Mdse Invtry - 12,000.00 25,000.00 35,000.00 40,000.00
Prepaid Expenses 88,350.00 15,000.00 15,000.00 15,000.00 15,000.00
Total 172,000.00 360,650.00 633,650.00 933,000.00 1,258,000.00
NON-CURRENT ASSETS
Building Improvements 220,000.00 220,000.00 220,000.00 220,000.00 222,000.00
Less: Accumulated Deprn - 10,000.00 20,000.00 30,000.00 40,000.00
220,000.00 210,000.00 200,000.00 190,000.00 180,000.00
Machines 100,000.00 100,000.00 100,000.00 100,000.00 100,000.00
Less: Accumulated Deprn 12,000.00 25,000.00 35,000.00 42,000.00 45,000.00
88,000.00 75,000.00 65,000.00 58,000.00 55,000.00
Equipment 70,000.00 70,000.00 70,000.00 70,000.00 70,000.00
Less: Accumulated Deprn 11,000.00 25,000.00 38,000.00 40,000.00 44,000.00
59,000.00 45,000.00 32,000.00 30,000.00 26,000.00
Furniture and Fixture 40,000.00 40,000.00 40,000.00 40,000.00 40,000.00
Less: Accumulated Deprn - 4,500.00 9,000.00 13,500.00 18,000.00
40,000.00 35,500.00 31,000.00 26,500.00 22,000.00
Total 407,000.00 365,000.00 328,000.00 304,000.00 283,000.00

TOTAL ASSETS 579,000.00 665,000.00 828,000.00 1,004,000.00 1,183,000.00

LIABILITIES AND CAPITAL

LIABILITIES - - - - -
CAPITAL
Capital, beginning 579,000.00 579,000.00 579,000.00 579,000.00 579,000.00
Add: Net Income
Net Income for the Year - 86,000.00 163,000.00 176,000.00 179,000.00
Accumulated Net Income - - 86,000.00 249,000.00 425,000.00
- 86,000.00 249,000.00 425,000.00 604,000.00
TOTAL LIABILITIES AND 579,000.00 665,000.00 828,000.00 1,004,000.00 1,183,000.00
CAPITAL
 The table above shows the projected balance sheet of the business. The

current assets from the year 2028 to 2022 is P172,000.00, P360,650.00,

P633,650.00, P933,000.00, and P1,258,000.00 respectively. In the total non-

current assets from 2018 to 2022 is P407,000.00, P365,000.00, P328,000.00,

P324,000.00, ad P283,000.00 respectively. The total assets from the year

2018to 2022 is P579,000.00, P665,000.00, P828,000.00, P1,004,000.00 and

P1,183,000.00 respectively. The total liabilities and capital is the same as the

total assets. Therefore, total assets is equal to the sum of liabilities and equity

D. Profitability Indices