BUSINESS PLAN

KIM FRUIT VENDER AND VEGS

NAME: MUKAYE KIMURI EVALINE

INDEX NO: 1061200406

COURSE CODE: 1802

COURSE NAME: CRAFT CERTIFICATE IN FOOD AND BEVERAGES SERVICE

AND SALES

INSTITUTION: KENYA COAST NATIONAL POLYTECHNIC

SUPERVISOR: MADAM SALLY ALMIRA

PRESENTED TO: THE KENYA NATIONAL EXAMINATION COUNCIL IN

PARTIAL FULFILLMENT OF THE CRAFT CERTIFICATE IN FOOD AND
BEVERAGE PRODUCTION SERVICE AND SALES

TIME PRESENTED: NOVEMBER SERIES

1
 DECLARATION
I hereby solemnly affirm and declare that all information and particulars furnished in here is
to the best of my research and knowledge and I have not submitted it for a craft certificate in
food and beverage production service and sales.

Candidate name________________________________________________

Index number___________________________________________________

Signature_______________________________________________________

Date___________________________________________________________

Supervisor’s name __________________________________________________

Sign_______________________________________________________________

Date_______________________________________________________________

2
 DEDICATION
I dedicate this piece of work to my fellow food and beverage students

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 ACKNOWLEDGEMENT
I would love to acknowledge the highest God for giving me a great opportunity to undertake
this business plan. I also want to acknowledge my able supervisor Madam Sally Almira for
her efforts to nature me and the team to have a quality work. Finally I would wish to express
my gratitudes to my lovely parents by helping to ensure that all was available and that I
completed my work in time.

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EXECUTIVE SUMMARY
1.1 BUSINESS DESCRIPTION
This chapter covers the following;

The business name, form of business ownership ,products and services, justification of
business opportunity, entry and growth plan and lastly business goals and objectives.

1.2 MARKETING PLAN

This will be chapter two and it will consist of Customers, market share, competitors,
pricing strategy, sales tactics, methods of advertisement and promotion and distribution
strategy.

1.3 ORGANISATION AND MANAGEMENT PLAN

This will be chapter three and it will consist of;

The business manager qualification and duties and responsibilities, recruitment, training
and promotion, other personnel’s qualifications, duties and responsibilities, number and
salary to be paid, remuneration and incentives, by-laws, license and permit and support
services.

1.4 PRODUCTION AND OPERATIONAL PLAN

This chapter covers the following;

Products, services and design development, production and operational facilities and
capacity, production and operational process.

1.5 FINANCIAL PLAN

This chapter covers the following;

Overview, pre-operational costs, projected cash flow statement, proforma cash flow
projection for the first three years, proforma income statement for the first year,
proforma income statement for the first three years, proforma balance sheet, break-even
analysis, profitability ratios, desired financing, proposed capitalization.

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 CHAPTER ONE
1.0 BUSINESS BDESCRIPTION
The name of the business is “KIM FRUIT VENDER AND VEGS”. The first name “KIM” is
derived from my middle name Kimuri while the rest consists of the products that I will be
offering for sales that is fruits, fruit juice and vegetable salads. The business will be located
at town centre near Mombasa post office, Digo road. My main aim to carry out this kind of
business where is located is to gain more customers who will passing by the shop and near by
organization and offices.

Address

Name: KIM FRUIT VENDER AND VEGS

Email: kimfruitvender@gmail.com

P.O Box: 199793, Mombasa

1.1 FORM AND TYPE OF BUSINESS

KIM FRUIT VENDER AND VEGS will be a sole proprietorship form of business that will
be producing fruits, fruit juice and vegetable salads to specific market. It will involve
preparation of fresh fruit juice, vegetable salads and selling all kind of fruits to potential
customers. The business will also get assistance of labour from close by relatives. It is to be
solemnly for easier management and also be in close contact with the clients to create a good
rapport. It a retail type of business mainly for exposure purposes of the products and also to
create a convenient environment for customers to compare and choose at what price and kind
of product they need.

1.2 PRODUCTS AND SERVICES

The main products that I will be dealing with is preparation and service of fresh fruit juice,
vegetable salads and fruits.The quantity of the products will be determined by customer’s
preference and taste. The fruits and vegetable salad will be served on plastic tins while for the
juice is too packaged on well-designed bottles.

1.3 JUSTIFICATION OF OPPORTUNITY

Reason as to why I choose this kind of business is because all products am dealing with are
natural in nature and conducive to environment since there will be no kind of pollution
occurrence. These products are excellent source of essential vitamins and minerals and they
are high in fiber. Fruits and vegetables also provide a wide range of health boosting

6
antioxidant. A diet high in fruits and can reduce a person’s risk of developing heart diseases
and many other and promote good health.

1.4 INDUSTRY
The proposed business falls under horticulture industry that produce and serve fresh fruits
and vegetables that creates a value-added food products for human consumption. The
business will also be producing fresh juice extracted from natural fruits without adding sugar
syrup in it. This will all be for the benefits of my potential clients. Generally this sector has
not been fully utilized as only few firms offer the same products and services. The business
adopt the capital intensive technique in its operations in that the packaging equipment are
expensive. The firm will not need to employ workers in the beginning since it will be getting
assistance from family members and also due to the nature of the business. In accordance to
research carried out it is realized that these operations in this sector on a small scale get a
profit of approximately 30,000 while those operating on large scale get a net profit of 60,000
shillings per annum.

1.5 BUSINESS GOALS

Short term goals

My main aim is to offer products and services of high quality and standardized measures to
the market and also create employment opportunities to the society. To be known locally and
bring more ideas and suggestions of customers into action. The business will also wish to be
self reliant as it runs its operations.

Long term goals

To expand my business to a high standards and to have more branches of the same. To be
able and supply my products to supermarket and hotel industries .In five years time the
business should be able to export its products to other countries. To sustain and ensure the
survival of the business.

1.6 ENTRY AND GROWTH STRATEGY

1.6.1 ENTRY
On entry, the business will offer samples of the products for clients to taste before promoting
the sales of the establishment. The business will also offer the product and services at
affordable price as compare to the competitors. The business establishment will therefore
operating in 15 hours in a day starting from 7:00am-9:00 pm so as to make more people

7
aware of the business existence. The business will also be involved in hosting local events to
increase brand awareness and credibility while strengthening bonds between clients and
partners.

1.6.2 GROWTH STRATEGY

The growth of the business will depend on the entrepreneur’s public relations to the people
around the it. The business will have to employ qualified PERSONEL in various fields. The
profit earned from the be business will be invested back to facilitate it’s expansion ,
rewarding employees , discounts and credit sales will be used in order to attract more clients
and paying supplies and workers on time. In five years time the business will be declared
stable therefore intend to supply its products to supermarkets and also export their products to
neighboring countries as well as opening more branches of the same. Through expansion of
the business this gives an impression of greater financial viability of the business

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 CHAPTER TWO
2.0 MARKETING PLAN
2.1 CUSTOMERS
The potential customers are mainly targeted from the near by offices, organizations and
fellow workers around the business. The business will also aim at getting customers who will
be passing by the business site. The business is meant to serve all genders, of any age and
with different financial status. Since customers are going to compare the price charged by
different competitors in relation to the quality and do not intend to pay exorbitant price for
low quality production and service, in this respect they are going to be charged fairly in
consideration to what other competitors charge .

2.1MARKET SIZE/SHARE
KIM FRUIT VENDER AND VEGS is targeting customers from offices around the business
premise, public servants, passer-by and other workers. The competitors taking 50%
population in total market area, the business will be occupying 20% at the start up with a
vision of expanding it’s market shares up to 40% while 30% being that is not been
exploited. This can only be achieved when ensuring products are available and at affordable
price. The business should also be able to high quality service and products. All this should
be put into consideration so as to improve and maintain market shares achieving targets
returns on investment.

Sales

30%

50%

20%

CHARLLY FRUT VENDER AND VEGS KIM FRUIT VENDER

UNEXPLOITED

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2.2 COMPETITION

Competition is one of most prevailing factors for the success of the business. Competition
analysis is carried out in or to note the strength and weaknesses of the business as well as the
gaps in the market that are not exploited. The biggest challenge being that the industry has a
stiff competition with other business premises that offer the same products. Therefore the
business projects to beat them since they do not offer their services door to door. The firm
also aim to pioneer and offer an exceptional quality services that surpasses our customers
needs. Furthermore the business numerous kind of products will create more options for the
clients and this will have an upper hand and also creating a prestige yet still at relatively
affordable price.

2.3 METHOD OF PROMOTION AND ADVERTISING

Since the business is sole proprietorship, it is going to have a close contact with its clients
hence creating a good rapport and therefore being able to communicate to them on informing
other new clients on existence of the business. The business will use billboards and put
posters in strategic areas giving full business details that is the name of the business, location,
service and products it offers and hours of operation. The will also intend to offer special
credit facilities to regular customers and promoting business sales by buying one product and
get one for free. The business will also design on how to package their products to be more
attractive in eyes of the clients. The increase in the number of customers as more
advertisements are made is going to gauge the effectiveness of the advertisement.

2.4 PRICING STRATEGY

Pricing is a major factor to consider in the market since it provides income to the business.
Therefore pricing of the service is of Paramount importance as it can either lead to losses or
profit of the business. The selling price is determined by the total cost used in production thus
not setting price that is not too high nor too low so as to avoid encountering any loss. The
selling price is also going to be based on the competitor’s price but not on government price
due to the liberalization of the economy. Denaturation pricing may be as a result of high
competition within the market area whereby the business sets low price to enter a competitive
market and raising its price later.

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2.5 SALES TACTICS
The business being under horticulture industry is directly going to offer high quality products
with freshness obtaining a good market share rate. The business will also ensure those
customers who buy goods in bulky get promotional rewards which will increase the business
sales. The quality and uniqueness of products will make it attractive and achieve more
customers.

2.6 DISTRIBUTION STRATEGY

Due to the existence of marketing trends, the business will decide on finding manpower who
are equipped with skills and techniques of handling logistics department. All orders
encountered will be distributed respectively as required by the clients. All this will be made
possible since the business owns a van that will provide services to those in long distances
away from the business premise.

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 CHAPTER THREE
3.0 ORGANIZATION STRUCTURE

GENERAL MANAGER

ACCOUNTANT CLERK
SALES MANAGER

SALES AGENT SURBODINATE STAFF

Being a newly starting business, the proprietor will be responsible for managing the firm. Her
major duty is planning, directing, organizing, controlling and funding the business with the
necessary resources to run the business smoothly. The. Owner qualifies for above function as
she holds a certificate in business and marketing and a craft certificate in food and beverage
therefore being fully aware of the market is dealing with. Sales Maher should have a diploma
in business and marketing, well communication skills and experienced for about two years
and above.

3.1 PERSONAL, NUMBER AND DUTIES

The business is to employ a maximum of seven staff members at the start due to the nature of
the business that is capital intensive and less labour intensive. The personnel included are one
sales manager, one cashier, online team that consist of two staffs, a driver, a cleaner and
watchman. The sales manager is to hire, train and provide professional development for the
team and ensure to meet sales targeted for the organization through effective planning.
Cashier is responsible for receiving payments. Driver is to be hired in basis of experience of

12
about two to three years within the country, he will be in charge of bringing the fruits and
vegetables needed in the industry and offer delivery services to clients. The online team is to
receive orders online with a qualification of diploma in information technology. Watchman is
responsible for safe guarding the premises against theft, fraud and nuisance from strangers
therefore he should be strong well trained for security purposes so as to ensure safety to other
staff members and the premises at large.

3.3 RECRUITMENT, TRAINING AND PROMOTION

3.3.1 RECRUITMENT
Employment opportunities would arise and recruitment vacancies available shall be
advertised through magazine, television shows and radios and interviews carried out. After
completion of interviews the candidates will be given reporting dates and time for the jobs.

3.3.2 TRAINING
The training of the recruited staff members shall be done pertaining to the specific job one is
to do through orginised business seminars which will enhance improvement on their
efficiency and performance

3.3.3 PROMOTION
Promotion will be done on basis of commitment, merits and individual productivity so as to
improve on workers attitude and responsibility, therefore it will depend on qualifications and
commitment of the staff members.

3.4 RENUMERATION AND INCENTIVE

3.4.1 RENUMERATION
The industry will use different type of enumeration to increase performance and efficiency of
the staff members. Each staff will get paid immediately at the of every month so as to avoid
retard to employees which can lower their motivation at work place. Employees will also
receive transport and medical allowance of ksh.1500.00.

3.4.2 INCENTIVE
Employees will enjoy incentives by giving them bonuses on their holidays, off duties and
leaves annual to encourage them to work hard and being loyal

TITLE SALARY (KSH) ALLOWANCE TOTAL

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 Managing 15000.00 16500.00
director
Sales manager 12000.00 1500.00 13500.00
Cashier 10000.00 1500.00 11500.00
Online team(2) 9000.00(2) 1500.00(2) 21000.00

Driver 8000.00 1500.00 9500.00

Watchman 7000.00 1500.00 8500.00
Steward 5500.00 1500.00 7000.00
Total 87500.00

3.5 LINCENSES, PERMIT AND BY-LAWS

This will be approached every financial year to audit the business books, the proprietor is
under law to obtain linces the cost will be KSH 2400 per annum. The business will also
acquire a permit from the municipal council and business by-laws should be made sure that
they exist, they include the employment act, workers salary act labour laws and insurance.

3.6 SUPPOTIVE SERVICES

3.6.1 BANKING SERVICES
For the firm banking services will include saving its money and at a time taking loans for
expansion of the business to high levels. The business will be carrying this activities with the
Kenya commercial bank in Mombasa, this will cost 5000 per year.

Street : Mwembe tayari

Email address: mwembetayari@kcbgroup

Tel No : +254 718 772 437

3.6.2 INSURANCE SERVICE

The industry will insure itself with Kenya alliance insurance company located in Mombasa
with an insurance cover of product liability insurance, the business will be giving KSH 6000
annually to the insurance company

Address: Trade center, Nkrumah road, Mombasa

Tel No : 041 222 2296

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3.6.3 CONSULTING SERVICES
The proprietor will acquire management advice and any matters concerning the expansion of
the business from big firm that will be running the same business and experts like Rotary
technical in Mombasa.

3.6.4 LEGAL SERVICES

CHAPTER FOUR
4.0 OPERATIONAL FACILITIES AND CAPACITY
For the business to run smoothly it will require some important equipment for its efficiency
that is; the blender, freezer, service equipment, furnitures, cutleries, spiral slicer cutting
board, salad spinner, food chopper, scrap shovel and bowls. The kitchen with be designed as
one wall kitchen which is simple and efficient spacing for necessary activities in the industry.
The premises will also need to have an open layout type of office since no much privacy is
required and to enhance collaboration of staff members as well as to improve in their
productivity at work place. This will benefit proprietor due minimizing on expenses in office
equipments such computer, the business will provide one to be used by both cashier and the
online staff. The production will be done in large masses so as to provide for regular clients
and new as well.

FIRM LAYOUT

MANAGER’S OFFICE ENTRANCE STORE

15
 CANTEEN

WASHROOM
EXIT STAFFROOM

4.1 PRODUCTION STRATEGY

The business intends to use the modern technology in offering services in order to cope with
its competitors, will purchase fruit vender machine for keeping drinks cold , fruits and
vegetables fresh and electronic tax register is to be introduced where all products and their
prices are programmed in machine and store all the business. It will also produce receipts for
purchased products. The adaption of technology will enable the owner to know the overall
performance of the business costing 17000 Shillings. The business will design disposal cups
for drinks and tins for the fruits and vegetables which will cost the business 5000 shillings per
month.

4.2 PRODUCTION PROCESS

For large fruits such as apples, pears, peaches, plums and nectarines are to be washed and
cut into quarters removing the core , oranges are to cut into segments, grapes to be cut into
halfs, banana and kiwi fruits are to be cut into slices, pineapple into chunks. Fruits are to be
served as main dish component since the company only deals with fresh fruits and vegetables
salads and juice fruit as also as per the preference of the customers. Vegetable salads are to be

16
washed throughly and dried completely then cut into reasonable size that are edible. For the
fruit juice it involves washing, extracting and clarifying of fruits that have over ripen but not
rot so as to utilize the available resources well and to avoid wastage. The products are to be
served in designed disposal tins for the fruits and vegetables while cups for the fruit juice. In
general the most common preservation methods include cold storage for the ones cut, use of
modified atmosphere packaging and addition of synthetic preservation.

4.3 REGULATIONS AFFECTING OPERATIONS

4 .3.1 HEALTH REGULATIONS
The firm is to ensure that it works as required by the health authorities. The campany will
contribute some amount to the registered provided organization as insurance to its workers in
case of any accidents or any risk which might occur. Proper hygiene, treated water for use
and general cleanliness should be paramount to all staff members

4.3.2 SAFETY
The firm is to ensure that all staff members get to wash their hands with clean water and soap
before getting into kitchen premises and we’ll dried. This will prevent bacteria to being in
contact with food.The raw materials. Installation of electrical fly killer to control paste and
avoid flies in the premises that may lead to harmful microorganisms and bacteria to the
products consumed or yet to be used.

4.3.3 ENVIRONMENTAL REGULATION

The company will be insured against fire, theft and other possible risk which may occur and
premium will be paid promptly for any risk or accident occurrence.

4.4 EQUIPMENTS
Equipments Cost

Blender 9500

Freezer 49000
Service equipments
5000

Furniture 30000

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 Cutleries 15000

Spiral slicer 1500

Cutting board 500

Salad spinner 700

Scrap shovel 900

Food chopper 4500

Bowls 3000
Total 92600

CHAPTER FIVE
5.1 PRE OPERATIONAL COSTS
Licenses and permits 10000
Advertisement 20000
Insurance 10000
Rent 30000
Recruitment 5000
Electricity 2000
Office equipment 15000
Computers 60000
Bikes and bicycles 360000
Total 512000

5.2 ESTIMATION OF WORKING CAPITAL

Working Capital = Current Assets - Current liabilities

18
CURRENT ASSETS AMOUNT
Stock 360000
Cash 100000
Bank 250000
Debtors 50000
TOTAL 760000
Current liabilities 200000
Creditors

Working capital 560000

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 5.3 CASH FLOW PROJECTION
5.3.1 CASH FLOW PROJECTION FOR YEAR ONE
CASH in JAN FEB MAR APR MAY JUNE JULY AUG SEPT OCT NOV DEC AMOUNT

Balance 86000 167000 228000 263000 294800 333300 354800 373800 395800 433800 467700 3398000
b/d
Sales 390000 399000 402000 403500 404300 405000 407000 410000 412000 415000 420000 525000 4992800

Debtors 50000 55000 39000 20000 22000 21000 19500 15000 18000 24000 70000 73000 326500

Discount 10000 8000 9500 9000 7500 6000 5000 10000 7000 12000 10000 12000 106000

Loan 30000
TOTAL 480000 548000 617500 660500 696800 726800 764800 789800 810800 846800 838800 927700 8753300

CASH
OUT
Salaries 222000 222000 222000 222000 222000 222000 222000 222000 222000 222000 222000 222000 2664000

Rent 30000 30000 30000 30000 30000 30000 30000 30000 30000 30000 30000 30000 360000
Creditors 20000 12000 17500 22000 25000 20000 30000 31000 30500 30000 32000 29000 299000

Electricity 2000 2000 2000 2000 2000 1500 2500 3000 2800 3000 2700 3000 28500

Bike fuel 120000 115000 118000 121500 123000 120000 126300 130000 130500 128000 129400 130000 1491700

Total 394000 381000 389500 397500 402000 393500 410000 416000 415000 413000 416100 414000 4541600

CASH 86000 167000 228000 263000 294800 333300 354800 373800 395800 433800 467700 513700 3675000
FLOW
TOTAL 30830400

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 5.3.2 CASH FLOW PROJECTION FOR YEAR TWO
CASH JAN FEB MAR APR MAY JUNE JULY AUG SEPT OCT NOV DEC AMOUN
IN T
Bal b/d 51370 52170 55200 581000 601000 627300 650300 676800 704800 727200 758700 847200 7761700
0 0 0
Sales 41500 42000 41800 425000 430000 428000 431000 432000 427000 440000 470000 520000 5276000
0 0 0
Debtors 13000 15000 10000 5000 7500 8000 4500 7000 8000 6000 10000 10500 104500
Discount 6000 5000 6000 3000 5000 6500 4000 7000 5000 5000 8000 9500 70000
TOTAL 92870 96170 98600 101400 104350 106980 108980 112280 114480 117820 126670 138720 13193200
0 0 0 0 0 0 0 0 0 0 0 0
CASH
OUT
Salaries 22200 22200 22200 222000 222000 222000 222000 222000 222000 222000 222000 222000 2664000
0 0 0
Rent 30000 30000 30000 30000 30000 30000 30000 30000 30000 30000 30000 30000 360000
Creditors 27000 28000 26500 30000 31000 32000 30000 33000 30000 31000 30000 35000 363500
0
Electricit 3000 3200 2500 3000 3200 3500 3000 3000 2800 2500 3000 3500 36200
y
Bike fuel 12500 12650 12400 128000 130000 132000 128000 130000 132800 134000 134500 135000 1559800
0 0 0
Total 40700 40970 40500 413000 416200 419500 413000 418000 417600 419500 419500 423500 4983500
0 0 0
Cash 52170 55200 58100 601000 627300 650300 676800 704800 727200 758700 847200 961700 8209700
flow 0 0 0
TOTAL 44582100

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 5.3.3 CASH FLOW PROJECTION FOR YEAR THREE
CASH IN JAN FEB MAR APR MAY JUNE JULY AUG SEPT OCT NOV DEC AMOUN
T
Bal/bd 961700 107055 117805 125755 133275 141425 151025 159225 168815 177245 185545 194845 17581858
0 0 0 0 0 0 0 0 8 0 0
Sales 505000 510000 500000 498000 502000 508700 512000 515000 520000 525000 530000 550000 6175700
Debtors 20000 22000 10000 8000 11000 15000 10000 18000 9000 11000 13000 10000 157000
Discount 10000 8000 5000 9000 11000 13000 9000 14000 10000 8000 14000 20000 131000
Total 149670 161055 169305 177255 185675 195095 203925 213925 222715 231645 241245 252845 24043550
0 0 0 0 0 0 0 0 0 0 0 0
CASH
OUT
Salaries 222000 222000 222000 222000 222000 222000 222000 222000 222000 222000 222000 222000 2604000
Rent 30000 30000 30000 30000 30000 30000 30000 30000 30000 30000 30000 30000 300000
Creditors 35000 37000 40000 42000 43000 40000 45000 47000 48500 50000 51000 50000 528500
Electricit 3150 3500 3500 3800 4000 3700 4000 4100 4200 4000 4000 3500 45450
y
Bike fuel 136000 140000 140000 142000 143500 145000 146000 142000 150000 155000 157000 154000 1756500
Total 426150 432500 435000 439000 442500 440700 440700 451100 454700 461000 464000 459500 5353150
CASH 107055 117805 125755 133275 141425 151025 159025 168815 177245 185545 194845 206895 18689108
FLOW 0 0 0 0 0 0 0 0 8 0 0 0
TOTAL 77425836

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5.4 PROFORMA INCOME STATEMENT
5.4.1 YEAR ONE PROFORMA INCOME STATMENT
Sales 4,992,800
Discount received 106,000
Net sales 4,886,800
EXPENSES
Salaries 2,664,000
Rent 360,000
Creditors 299,000
Electricity 28,500
Bike fuel 1,491,700
4,841,600
Net profit 45,200

5.4.2 YEAR TWO PROFORMA INCOME STATEMENT

Sales 5,276,000
Discount received 70,000
Net sales 5,206,00
Expenses
Salaries 2,664,000
Rent 300,000
Creditors 299,000
Electricity 28,500
Bike fuel 1,491,700
4,983,500
Net profit 222,500
5.4.3 YEAR THREE PROFORMA INCOME STATEMENT
Sales 6,175,700
Discount received 131,000
Net sales 6,044,700
EXPENSES
Salaries 2,664,000
Rent 360,000
Creditors 528,500
Electricity 45,450
Bike fuel 1,756,500
5,353,150
Net profit 691,550

34
5.5 PROFORMA BALANCE SHEET
5.5.1 PROFORMA BALANCE SHEET FOR YEAR ONE

A=C+L

Non-current Assets Amount

Bicycles and bikes 360,000

Computers 60,000
Office equipment 15,000
Current Assets
Stock 360,000
Debtors 326,500
Bank 100,000
Current liability
Creditors 299,000 487,500
Net current Assets 922,500
Financed by
Capital 847,300
Net profit 45,200
Non - current
liabilities
loan 30,000
922,500

5.5.2 PROFORMA BALANCE SHEET FOR YEAR TWO

Non-Current Assets Amount
Bikes and bicycles 360,000
Computers 60,000
Office equipment 20,000
Current Assets
Stock 360,000
Debtors 104,000
Bank 150,000 614,500

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Current Liability
Creditors 363,500 251,000
Net current Assets 691,000
Financed by
Capital 468,500
Net profit 222,500
691,000

5.5.3 PROFORMA BALANCE SHEET FOR YEAR THREE

Non-current Assets AMOUNT
Bikes and bicycles 360,000

Computers 60,000
Office Equipment 25,000
Current Assets
Stock 450,000
Debtors 157,000
Bank 250,000 857,000
Current liability
Creditors 528,500 328,500
Net current Assets 773,500
Financed by
Capital 81,950
Net profit 691,550
773,500

5.6 DESIRED FINANCING

ITEM AMOUNT
Pre - operational cost 512000
Working capital 560000
Fixed assets 435000
1,507,000

5.7 PROPOSED CAPITALISATION

ITEM AMOUNT

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 Owners contribution 847300
Borrowed funds + 30000
877300

5.8 CALCULATION OF PROFITABILITY RATIO

i. Gross profit ratio = G.P x 100

Sales

45200 x 100 = 0.9053%

4992800

ii. Net Profit ratio = N.P x 100

Sales

= 959250 x 100 = 5.833%

16444500

iii. Return on Equity

Owners’ Equity = (Capital + profit) - Withdrawals

Equity = 1397750 + 959250

N.P x 100 = 959250 x 100

Owners’ Equity 2357000

= 40.69%

iv. Asset Turn over = Sales Revenue (Totals Sales)

Assets (C.A + F.A)

= 16444500

760000 + 435000

= 13.76%

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V. Quick Ratio = Current Assets - Closing stock

Current Liability

= 1841000 - 1080000

1092000

= 0.70%

Vi. Liquidity Ratio C.A = 1841000

C.L 1092000

= 1.69%

38