RHODA INTERNET MEDIA ADVERTISING

EXECUTIVE SUMMARY
Rhoda Internet Media advertising looks to offer the best services to our clients. We are located at

Nairobi CBD, Al Noor building 3rd floor. We always want the best for our clients and so we will

serve according to their interest. The services we offer are;

 Search Engine Optimization

 Paid Campaign Management

 Website Development

 Facebook ads

 Link Building Management

 Video Advertising

 Content Marketing Services

 Social Media Marketing Services

MARKETING PLAN

Marketing refers to any action a company uses to attract an audience to the company’s products

or services. It aims to deliver standardize value of prospers and consumers through content with

long term goal of demonstrating product value, strengthening brand and increasing sales. Rhoda

Internet Media Advertising will achieve all of this by advertising the services offered both in

print and electronic media. It will also have a website called www.rhodainternet.com here people

may be able to see all the services we offer and we will also include our business number so that

incase of any issue they may contact us.

ORGANISATION AND MANAGEMENT PLAN

The organization plan of the business will have a structure which will have a top-level manager

who will be in charge of the daily operations in the business, she will get assistance from the

lower management to ensure that business runs as usually every day. Other personnel working in

this organization will be copywriter, advertising account executive, digital account manager,

graphics designer, IT personnel and graphics designer. Salaries will be paid on time and

according to what was agreed when one was hired.

OPERATION AND PRODUCTION PLAN

It will involve bringing all facilities and equipment required in advertising. Operations involves

the daily task that will enable business achieve its goal.

FINANCIAL PLAN

For a business to operate smoothly it must have adequate funds. The organization will achieve its

funding through personal savings, contribution from friends and family and bank loan.

Financial plan.

Serial no. Source Amount

1 Personal Saving 400 000

2 Bank Loan 500 000

3 Contribution from family and 280 000

friends

Total 1,180,000
CHAPTER 1
BUSINESS DESCRIPTION
1.1 Business Name

The name of the business will be Rhoda Internet media advertising. The business is named

after the owner because she wanted to live a legacy behind so that her children will be able to

see what their parent started and also be able to continue with it. Being the owner, all the

management will be under me. This is the 21st century and we live in a digital environment

and most things have developed. Nowadays people usually use social media platforms and

the media at large as a source of advertising their products and services, using social media

as a site of advertising is good in that it will be easy to communicate with your target

audience. Nowadays it is not a must for one to go to the market to buy goods, one can just

place an order and the goods will be brought at his/her doorstep. Internet is used as a global

marketing platform. Advertising does not only involve the internet only but also the media

like television, radio, print and digital publications to mention just a few. Online advertising

allows you to find, reach and engage people who are likely to be interested in your business

without spending money on an overly broad audience.

1.2 Business Location

The business will be located at Nairobi CBD at Al Noor building 3rd floor, I wanted the

business to be in town where the internet network will be a little bit faster, for easy access for

our customers and since there is ready market in the area since there are many businesses

around the area who need to build their online image about their goods and services
1.3 Business address

RHODA INTERNET MEDIA ADVERTISING

P.O BOX 32376- 0021

NAIROBI

EMAIL: Rhodamediaadvert254@gmail.com

Telephone: 0769143240

1.4 Business ownership

Rhoda Internet Media Advertising will be a sole proprietorship that will be under me as the

C.E.O and will be assisted by the lower management. 50% of the starting capital will be

contributed by the owner while the rest of the capital will be as a loan from the bank and

from the help of family and friends.

1.5 Products and Services

Digital marketing services includes activities that help promote a business digitally via the

different online marketing channels. In the past it was possible to find success by

concentrating on one particular channel but for now it is not the case, to succeed in the

competitive online spaces you need to take advantage of all available marketing channels. To

cover the increased demand from clients, Rhoda Internet Media advertising was born, a full-

service digital marketing agency which offers a wide range of services to our clients that is

from Search Engine Optimization (SEO), to paid campaign management, Website

development, Content marketing services, Link building services, Facebook Ads

 Management, Social media marketing services, Video advertising and many more. This is

important for your business because online advertising can enable you to promote a business

beyond your immediate area and often reach a global audience. The internet can enable you

to connect with your audience quickly and avoid having to travel to expand the business.

This can make a company visible to millions of potential customers.

1.6 Nature of Opportunities

The purpose of starting this business is to allow and help our clients find, reach and engage

with people who are likely to be interested in the business without spending money on an

overly broad audience. Online advertising offers granular audience information, so you can

focus your efforts effectively. Advertising is often regarded as the most important means of

marketing a product or a service, our aim is to help our clients communicate a message to the

current customers or potential target new customers.

1.7 Justification of the business

We decided to start the Internet Media Advertising business because nowadays people prefer

doing things online because it is a fast way of communicating and reaching the potential

customers. Internet marketing is important because it helps one drive more qualified traffic

and reach more leads that are interested in your business. The ability to target specific leads

helps you drive traffic that takes an interest in your company. With the growth of technology,

it’s has become crucial that you have an effective internet marketing plan in place this will

help you to continue in growing your business.

 We will be able to manage the social media accounts of our clients, and help promote their

products and services so as to keep their target audience in check with what they need to

know about the client’s organization. We know that some people always like to hack into

people’s accounts and sometimes changing the content in the accounts so we will be able to

track everything and every business going on in the client’s social media accounts so as to

ensure that our client’s content are always safe and they are as they release them. One thing

which we know is that even if you operate locally, your audience is online that is why

organizations in the health sector use internet marketing to promote their services and expand

their care. As a marketer you want to reach potential customers where they live, work, shop,

get information and seek entertainment all of this can be wrapped up in one place and that is

the internet. Our business will continue to gain equity with reinforcement of compelling

narratives from stakeholders and our clients.

1.8 Goals and Objectives

 To promote online engagement for our clients

 To create target ads and increase brands awareness

 To increase customer reach and conversion to show how effective online

advertisements can be

 To improve Search Engine Optimization

 To increase revenue

 To manage online reputation

 To create employment not only for myself but also for others because as our business

grows, we will be able to create opportunities for others

  In the coming years we plan to expand our business since we believe that we will

grow to another level

1.9 Entry Plan

The business shall offer low prices to our clients in order to attract more customers hence

profit to the business, we will also create publicity by sending out press releases about our

business. The business shall do adverts to showcase its products and services on different

platforms like the social media platforms, newspapers. The business will carry out

promotions, offer discounts give out t-shirts, books, pens so as to attract more customers.
 CHAPTER TWO

MARKETING PLAN

2.1 Marketing Objectives

 Build brand awareness for our clients and also ourselves

 To become an influencer in our field of work

 To increase sales

 To increase lead quality

 To promote online engagement

 To create publicity for our clients’ products and services

 To increase customer value

 To grow social media presences

 To increase conversion rates

2.2 Benefits to customer

 To keep and inform our customers in check and with anything happening currently

 To offer convenience and quick services to our customers

 24/7 access to our sites

 To provide our audience with options if they are not satisfied at first

2.3 Business Promotion

As we plan to introduce Rhoda Internet Media Advertising, we shall deploy different methods to

market our business. Like many marketers two of our biggest concerns when evaluating our

options are cost effectiveness and results, we shall use different methods such as the company’s

website, the website is one of the most essential parts of the business it’s the online home and

where many potential customers will turn for information about our products and services. We

also plan to use Pay-per -click, this will allow the business to place ads in search engine results

for specific keywords this will essentially let us pay for placement of our target keywords. We

will also use social media platforms to reach and connect with our audience, social media is a

great place to advertise because there are so many consumers on these platforms.
CHAPTER THREE

3.1 Organization and Management Plan

The organization plan of the business will have a structure which will have a top level

manager who will be in charge of the daily operations in the business, she will get assistance

from the lower management to ensure that business runs as usually everyday

Management Team

Rhoda Media Internet Advertising will be managed by the owner who will be in charge of

the daily activities and also formulate the rules and regulations that govern the place. The

personnel involved are;

1. Chief Executive Officer

2. Advertising account executive

3. Graphic designer

4. Copywriter

5. IT specialist

6. Digital account Manager

3.2 Duties of the management members

Chief Executive Officer

 Set Corporate strategy

 Manage the overall operations of the business

 Build client relationships

 Build a tight knit team

Advertising account executive

 Act as a link between the agency and its clients

 Responsible for the coordination of advertising campaigns

 Undertake administrative tasks

 Handle budgets and maintain campaign costs

 Write client reports

Digital account manager

 Plan, develop and manage clients’ digital strategy

 Manage relationship with existing and potential clients

 Optimize web content in order to improve SEO

 Keep abreast with new trends in digital technology

 Analyze effectiveness of digital campaigns

Graphic designer

 Establish a distinct tone, style and identity

 Design logos for products and businesses

 Create visual communications

Copywriter

 Interpret Content briefs

 Research on clients, their competitors and the target audience

 Monitoring campaign effectiveness

  Updating and amending campaigns according to feedback

IT personnel

 Measure and report performances of all digital marketing campaigns

 Identify key consumer insights

 Choose technology to invest in

3.3 Recruiting and Training

The rank posts will be advertised, the willing and qualified individuals will send

application letters to the companies email account and there after called for an interview.

Other personnel that is the copywriter and IT personnel we will use recruitment agencies

who will bring us the individuals who have qualified for the position.

Training

Induction training will be given to newly employed staff and those who are promoted.

The employees will be on job training in that they will be trained as they work

Training is important because

 Improves employee performance

 Increase engagement

 Address weakness

3.4 Renumeration and incentive

Renumeration

The business policy on renumeration is to offer attractive salaries to employees so as

to motivate and retain them.

Table. Renumeration and incentives

Title No. Monthly Pay

Chief Executive 1 36000

Officer

Advertising 1 27000

account

executive

Digital account 2 25000

manager

Graphic 2 25000

designer

Copywriter 2 23000

IT specialist 1 23000

3.5 Incentives

Lunch will be provided to all employees.

CHAPTER FOUR

OPERATION/ PRODUCTION PLAN

4.1 Production facilities and capacity

The proposed business will buy its machines which will be used in the organization from

different suppliers at affordable prices. The machines purchased we will be of high quality so

as to ensure that we do not experience any damage or breakdown when we are in the line of

duty. The following equipment will be needed so as for the business to be effectively at its

best and to operate smoothly.

Item Quantity Unit cost Total cost

Computers 6 70 000 420 000

HubSpot 1 2 755 (per month) 2 755

Video camera 3 101 000 303 000

Laptops 4 84 630 338 520

Printer 3 27 475 82 425

Office chairs 7 12 000 84 000

Table 5 15 000 75 000

Telephone 3 2400 7200

1 312 900

4.2 Maintenance and repair

The business shall have regular maintenance of the machines to ensure that there are no

damages or breakdown which may slow the working process in the cause of the daily

business operations. We will have the contacts of the suppliers of the machines so that they
will help when we want to conduct the regular maintenance which will be done on monthly

basis. The maintenance will be done in order to make sure that we as an organization we

deliver to our client the best of work so that they may put their trust in us because we are here

to serve them.

4.3 Production strategy

The strategy of the business will show the materials that will be required on a monthly basis.

The computers will be allocated to the workers desk and one at the C.E.Os office, the printer

will be placed in the main office so that it can be easily be accessed and used by each and

very worker in the business. Once work is done it will be the responsibility for every

employee to switch of the machines after use so as to save power and to avoid any damages

or breakdown. We shall always ask for a person from the company which we purchased the

products to come help with the repairs this will help save time and money, we also plan to

expand our business by opening branches in different locations. Since we are an advertising

agency, we will advertise what we do and what we offer as a business we will also put our

contacts in our official website. All of the information about our business will be in the

company’s website. The management will make sure that there will be proper inspection of

every service which we offer to our clients to make sure that we do and perform to our level

best.

4.4 Production process

The production process will begin with creating an internet plan then evaluate the website

and fix the real problems

a) Production stage

In order for one to turn visitors into customers, you need to know your target

audience and give them reasons to work with you instead of the competition.

b) Distribution stage

When one is in the daily work process or when one is delivering, he/ she is likely to

experience challenges in the business. Some of the factors may be lack of proper

communication between the employees’ and the clients, lack of electricity supply

among others.

For all this process to complete a lot of effort is needed, among those is manpower

and digitalized equipment to perform the work according to plan. For the business to

do well the cost of production should be less than the sales so as to enable the

business make maximum profit.

4.5 Regulations affecting operations

The safety of every employee comes fast before anything else, every employee will

work effectively in a conducive environment. We as a business will insure every

worker so that incase of any damages in the line of duty the organization will be able

to cater for their needs. The business will follow all regulations put forward by the

government to avoid any inconvenience.

4.6 Government regulations

License

Every business must have a license, this is one of the most important documents that

a business needs before it starts. The trade license will be obtained from the local

government of Nairobi.
Business registration

This will be obtained from the registrar of company’s office in Nairobi.

 CHAPTER FIVE
FINANCIAL PLAN

The proposed business will have the following objectives for it to run smoothly.
1. To employ well trained staff to be in charge of financial records.
2. To ensure there is continuous supply of peanut produce by ploughing back profits to the
business.
3. To source for business start-up loan from other financial institutions that will offer
additional services to the business.

5.1 PRE OPERATIONAL COST

ITEM COST
Electricity operation 3000
Telephone connection 2000
Water connection 2000
Building/ rent repayment 35000
Insurance 1000
Permit and licence 7500
Stock 140000
Machinery and equipment 56000
Total 244500

5.2 working capital

The following capital for the proposed business will be:

Working capital =current assets –current liabilities

Particulars 2021 2022 2023

Current
assets
Cash in hand 49394.50 186309.50 452389.50

Cash at bank 444550.50 1798285.50 4187855.50

Stock 140000 168000 201600

Debtors 201000 75000 171000

Total assets 834945 22275.95 5015045

Current liabilities

Creditors 201000 75000 171000

Total current 201000 75000 17100
liabilities
Working capital 633945 215250 4844045

5.2.2 Loan repayment schedule

To be able to raise capital the proposed business will require a bank loan of Kshs 200000 which will be
acquired from Kenya Commercial Bank and paid over a period of 1 year at a rate of 15%-20%.

Month Principal amount Interest charged Monthly Balance

payment
1 200000 40000 16667 183333

2 183333 36667 16667 166666

3 166666 33333 16667 149999

4 149999 30000 16667 133333

5 133332 26666 16667 116665

6 116665 23333 16667 99998

7 99998 20000 16667 83331

8 83331 16666 16667 66664

9 66664 13333 16667 49997

10 49997 9999 16667 33330

11 33300 6666 16667 16660
12 16663 3333 16667 0

CASHFLOW
RHODA INTERNET MEDIA ADVERTISING PROJECTED CASHFLOW STATEMENT FOR THE YEAR
2021.
particula JAN FEB MA APRI MA JUN JULY AUG SEP OCT NOV DEC Total
rs RCH L Y E T
Cash in Kshs Kshs Kshs Kshs Kshs Kshs Kshs Kshs Kshs Kshs Kshs Kshs Kshs
flow
Balance 200 241 273 259 305 432 463 487 752 484 484 523 4444
B/F 000 000 950 900 300 295 745 295 545 945 945 495 874
sales 202 135 144 150 120 126 135 120 120 135 144 120 1657
000 000 000 000 000 000 000 000 000 000 000 000 000
Bank 200 2000
loan 000 00
Debtors 600 450 360 600 2010
00 00 00 00 00
Total 602 376 417 409 483 447 567 628 607 623 628 703 6496
cash 000 000 950 900 350 650 295 745 295 545 945 495 870
inflow
Pre- 244 2445
operatio 500 00
nal
Purchase 400 450 480 500 400 420 450 400 400 450 480 400 5230
s 00 00 00 00 00 00 00 00 00 00 00 00 00
Transpor 500 500 500 500 500 500 500 500 500 500 500 500 6000
t 0 0 0 0 0 0 0 0 0 0 0 0 0
Creditors 600 450 600 2010
00 00 00 00
Rent 750 750 750 750 750 750 750 750 750 750 750 750 9000
0 0 0 0 0 0 0 0 0 0 0 0 0
Salaries 390 390 390 390 390 390 390 390 390 390 390 390 4680
00 00 00 00 00 00 00 00 00 00 00 00 00
Licenses
Loan 500 500 500 500 2000
repayme 00 00 00 00 00
nt
Loan 250 250 250 250 1000
interest 0 0 0 0 0
Electricit 300 200 150 150 100 240 180 200 200 200 200 200 2400
y 0 0 0 0 0 0 0 0 0 0 0 0 0
Insuranc 200 200 200 200 200 200 200 200 200 200 200 200 2400
e 0 0 0 0 0 0 0 0 0 0 0 0 0
Water 150 200 180 120 150 200 180 120 100 180 100 100 1780
0 0 0 0 0 0 0 0 0 0 0 0 0
Repair 175 175 175 235 170 275 175 175 205 150 195 155 2280
0 0 0 0 0 0 0 0 0 0 0 0 0
Advertis 500 500 500 1500
ement 0 0 0 0
Postage 500 500 500 1500
Telepho 200 150 150 100 100 200 180 120 120 180 200 200
ne 0 0 0 0 0 0 0 0 0 0 0 0
Transpor
t
Stationer 100
y 0
Miscella 800 100 120 900 100 170 600 150 160 700 100 120 1200
neous 0 0 0 0 0 0 0 00 00
Total cash 353 106 161 110 166 158 106 146 159 106 109 213 1932
outflow 550 750 750 450 000 850 250 150 350 300 450 550 600
Balance 248 269 256 299 317 288 461 482 447 517 519 489 4564
b/d 450 950 200 450 350 300 045 595 945 245 495 945 270
RHODA INTERNET MEDIA ADVERTISING PROJECTED CASH FLOW STATEMENT FOR THE YEAR
2022
Particul JAN FEB MA APRI MAY JUN JULY AUG SEPT OCT NOV DEC Total
ars RCH L E
Cash in Ksh Ksh Ksh Kshs Kshs Kshs Kshs Kshs Kshs Kshs Kshs Kshs Kshs
flow s s s
Balance 493 609 735 855 971 107 117 125 133 141 152 166 1311
B/F 945 445 045 545 445 694 134 464 404 929 649 309 5290
5 5 5 5 5 5 5
Sales 230 240 240 230 220 210 200 200 200 220 250 320 2760
000 000 000 000 000 000 000 000 000 000 000 000 0000
Debtors 200 300 100 150 7500
00 00 00 00 0
Total 723 869 975 111 119 128 138 145 153 163 179 198 1595
cash 945 445 045 954 544 694 134 464 404 929 149 309 0290
inflow 5 5 5 5 5 5 5 5 5
Purchas 500 510 510 500 530 540 570 520 520 500 510 510 6170
es 00 00 00 00 00 00 00 00 00 00 00 00 00
Creditor 200 300 100 150 7500
s 00 00 00 00 0
Rent 800 800 800 800 800 800 800 800 800 800 800 800 9600
0 0 0 0 0 0 0 0 0 0 0 0 0
Salaries 450 450 450 450 450 450 450 450 450 450 450 450 5400
00 00 00 00 00 00 00 00 00 00 00 00 00
Licenses 150 1500
 0
Electrici 150 150 150 120 800 900 100 120 100 100 000 100 1340
ty 0 0 0 0 0 0 0 0 0 0
Insuran 200 200 200 200 200 200 200 200 200 200 200 200 2400
ce 0 0 0 0 0 0 0 0 0 0 0 0 0
Water 100 100 150 150 120 100 100 120 110 130 900 120 1380
0 0 0 0 0 0 0 0 0 0 0 0
Repair 100 120 130 900 800 100 120 105 100 100 800 100 1225
0 0 0 0 0 0 0 0 0 0
Advertis 500 500 500 1500
ement 0 0 0 0
Postage 500 500 500 200 1700
Telepho 100 120 120 100 120 120 100 100 120 100 120 800 1300
ne 0 0 0 0 0 0 0 0 0 0 0 0
Transpo 500 500 500 500 500 500 500 500 500 500 500 500 6000
rt 0 0 0 0 0 0 0 0 0 0 0 0 0
Statione 100 1000
ry 0
Miscella 150 150 150 150 150 150 150 150 150 150 150 150 1800
neous 0 0 0 0 0 0 0 0 0 0 0 0 0
Total 117 137 118 151 118 119 132 118 122 115 131 123 1381
cash 500 400 500 100 500 600 700 250 800 800 400 000 700
outflow
Balance 606 732 836 968 109 116 124 133 141 152 166 186 1456
b/d 445 045 545 445 294 734 864 639 124 347 009 009 8590
5 5 5 5 5 5 5 5
RHODA INTERNET MEDIA ADVERTISING PROJECTED CASH FLOW FOR THE YEAR 2023
particul JAN FEB MA APRI MAY JUN JULY AUG SEP OCT NOV DEC Total
ars RCH L E T
Cash in Kshs Kshs Kshs Kshs Kshs Kshs Kshs Kshs Kshs Kshs Kshs Kshs Kshs
flow
Balance 493 609 735 859 971 107 117 125 133 141 152 166 1311
B/F 945 445 045 545 445 694 134 464 404 929 649 309 5290
5 5 5 5 5 5 5
sales 750 360 370 380 390 350 350 360 370 380 390 360 4410
000 000 000 000 000 000 000 000 000 000 000 000 000
Bank
loan
Debtors 400 450 300 360 1710
00 00 00 00 00
Total 221 246 265 293 313 333 388 375 401 421 445 467 4144
cash 309 669 229 209 339 629 789 569 849 559 959 379 3940
inflow 5 5 5 5 5 5 5 5 5 5 5 5
Purchas 600 610 620 620 640 650 610 610 620 630 640 630 7480
es 00 00 00 00 00 00 00 00 00 00 00 00 00
Credito 400 450 300 360 1710
rs 00 00 00 00 00
Rent 880 880 880 880 880 880 880 880 880 880 880 880 1056
0 0 0 0 0 0 0 0 0 0 0 0 00
Salaries 650 650 650 650 650 650 650 650 650 650 650 650 7800
00 00 00 00 00 00 00 00 00 00 00 00 00
License 150 1500
s 0
Electrici 500 300 200 200 200 200 200 300 300 350 250 300 3400
ty 0 0 0 0 0 0 0 0 0 0 0 0 0
Insuran 200 200 200 200 200 200 200 200 200 200 200 200 2400
ce 0 0 0 0 0 0 0 0 0 0 0 0 0
Water 100 100 120 150 120 100 100 120 100 135 900 120 1350
0 0 0 0 0 0 0 0 0 0 0 0
Repair 100 100 100 100 100 100 100 100 100 100 100 100 1200
0 0 0 0 0 0 0 0 0 0 0 0 0
Adverti
sement
Postage 200 200 200 200 8000
0 0 0 0
Telepho 100 120 800 100 100 120 100 800 120 100 120 150 1310
ne 0 0 0 0 0 0 0 0 0 0 0
Transpo 300 300 300 300 300 300 300 300 300 300 300 300 3600
rt 0 0 0 0 0 0 0 0 0 0 0 0 0
Station 120 1200
ery 0
Miscell 120 120 120 120 120 120 120 120 120 120 120 120 1440
aneous 0 0 0 0 0 0 0 0 0 0 0 0 0
Total 149 187 149 192 149 148 126 147 184 157 149 153 1858
cash 700 200 500 500 200 200 000 000 700 500 60 200 200
outflow
Balance 206 227 250 273 298 318 341 360 383 404 430 456 3938
b/d 339 849 279 959 419 809 189 869 379 589 999 009 5740
5 5 5 5 5 5 5 5 5 5 5 5
PROFORMA INCOME STATEMENT FOR THE YEAR 2021

PARTICULARS 2021
Sales 1651000
Less cost of sales 52300
Gross profit 112800
Less expenses
Salaries and wages 468000
Insurance 24000
Licence and permits 1500
Electricity 24000
Water 17800
Stationary 1000
Advertisement 10000
Postage 1500
Repair and maintenance 22000
Telephone 19000
Miscellaneous 120000
Total expenses 60600
Profit before tax 521400
Less 50% tax 26070
Net profit after tax 4955330

PROFORMA INCOME STATEMENT FOR RHODA INTERNET MEDIA ADVERTISING 2022

PARTICULARS 2022
Sales 2760000
Less cost of sales 617000 2
Gross profit 2143000
Expenses
Salaries 540000
Insurance 24000
Licence and permit 1500
Electricity 13000
Water 13500
Transport 60000
 Advertisement 15000
Postage 1700
Repair and maintenance 12450
Telephone 13000
Miscellaneous 18000
Total expenses 712850
Profit before tax 1430150
Less 50% tax 71507.50
Net profit after tax 1358642.50

PROFORMA INCOME STATEMENT FOR RHODA INTERNET MEDIA ADVERTISING 2023

PARTICULARS 2023
Sales 4410000
Less cost of sales 749000
Gross profit 3661000
Less expenses
Sales 780000
Insurance 24000
Licence and permits 1500
Electricity 34000
Water 13500
Stationary 1200
Advertisements 8000
Postage 1500
Repair 12000
Telephone 13100
Miscellaneous 14400
Total expenses 903200
Profit before tax 2757800
Less 50% tax 137890
Net profit after tax 2169910
PROFORMA BALANCE SHEET FOR THE YEAR 2021, 2022 AND 2023

PARTICULARS 2021 2022 2023

Fixed assets
Machinery 50000 49000 48020
Less 2% depreciation 1000 980 960
Total assets 49000 48020 47060

Current assets
Stock 140000 168000 201600
Debtors 201000 75000 171000
Cash at book 444550.50 1798285.50 4189855.50
Cash in hand 49394.50 186309.50 452559.50
Total current assets 834945 2227595 5015045
Total assets 803945 22275615 5062105

Current liability
Creditors 201000 75000 171000
Long term liability
Owners’ equity 682945 2200615 4891105
Total 883945 2275615 5062105

6.4 BREAK EVEN ANALYSIS

Break-even point=fixed cost/contribution margin

Contribution margin=sales-variable cost

Fixed cost 2021 2022 2023

Salaries and wages 468000 540000 78000
Licence 1500 1500 1500
Loan repayment 200000
Transport 60000 60000 36000
Rent 90000 96000 105600
Advertisement 15000 15000 8000
Interest 10000
Miscellaneous 12000 18000 14400
Total fixed cost 856500 730500 945500

Variable costs 2021 2022 2023

Telephone 19000 13000 13100
Water 17800 13800 13500
Postage 1500 1700 1500
Stationary 1000 1000 1200
Repair 22500 12400 12000
Electricity 24000 13400 34000
Total variable costs 86100 55350 75300

Break-even point for year 2021

Contribution margin in percentage=contribution margin/total sales *100%

(1564900/1651000) *100% = 94.8%

Break-even point = fixed costs/contribution margin percentage

856500/ 94.8 = 9034.8

Break-even point for year 2022

Contribution margin = 75- VC

2760000-55350

=2704650

BEP FC/ CM *SALES

 730500/2704650 * 2760000 2704650/2760000 *100 =97.99%

=708713

730500/97.99= 3454.49

Break-even point in 2023

Contribution margin in 2023

CM = TS-VC

4410000-75000= 4334700

CONRIBUTION MARGIN PERCENTAGE contribution margin/total cost *100%

BED = total fixed cost/contribution percentage

945500/98.29 = 9619.2

6.5 PROFITABILITY RATIOS

TYPES OF FORMULAR 2021 2022 2023

RATIOS

GP RATIO GP/TS *100% 29.9% 67.5% 102.6%

RETURN OF Net profit after tax 72.5% 61.7% 53.6%

ENTRY /
owners’ equity
RETURN OF Net profit after 30% 49.25% 59.4%
INVESTMENT tax/
Total invest