DAISY CLINICAL RESEARCH COMPANY

TITLE : BUSINESS PLAN

CANDIADATE NAME : CEROTICH DAISY

INDEX NO. : XXXXXXXX

INSTITUTION NAME. : RIFTVALLEY NATIONAL POLYTECHNIC

COURSE : CRAFT CERTIFICATE IN SCIENCE AND LABORATORY

TECHNOLOGY

CENTRE CODE : XXXX

PAPER NO. : 1904/201

PRESENTED TO : THE KENYA NATIONAL EXAMINATION COUNCIL

FOR THE PARTIAL FULFILMENT FOR THE AWARD OF

CRAFT CERTIFICATE IN SCIENCE AND LABORATORY

TECHNOLOGY.

SUPERVISOR. : XXXXXXXX

EXAM SERIES : JULY 2024

 DECLARATION.
I hereby declare that this is my original work done by my own effort.
This work has never been presented to THE KENYA NATIONAL EXAMINATION COUNCIL
before by any person for the award.

STUDENTS NAME: Cherotich Daisy

SIGNATURE: ______________________________________
DATE: ___________________________________________

DECLARATION BY SUPERVISOR.

TUTOR: MR. xxxxxxxxxxxx

SIGNATURE: ______________________
DATE: _____________________________

i
 DEDICATION.

This business plan is dedicated to my parents, who has been nicely my supporter until my
research was fully finished, and my beloved family who for the past months, has encouraged me
attentively with their fullest and truest attention to accomplish my work with truthful self-
confidence.

ACKNOWLEDGEMENT.

ii
I would like to thank the Almighty God for the far He has brought me.
I would also like to express my special thanks of gratitude to my supervisor who gave me the
golden opportunity to do this wonderful business plan, which also helped me in doing a lot of
Research and I came to know about so many new things I am really thankful to him.

Table of Contents
DECLARATION......................................................................................................................................i
DEDICATION.........................................................................................................................................ii

iii
ACKNOWLEDGEMENT......................................................................................................................iii
EXUCUTIVE SUMMARY.....................................................................................................................v
CHAPTEER ONE...................................................................................................................................1
1.1. Background information...................................................................................................................1
1.2 Nature of the business........................................................................................................................1
1.3 Business Location..............................................................................................................................1
1.4 Ownership.........................................................................................................................................2
1.5 Business Objectives...........................................................................................................................2
1.6 Mission..............................................................................................................................................2
1.7 Vision................................................................................................................................................2
1.8 Product and Services.........................................................................................................................2
CHAPTER TWO.....................................................................................................................................3
2.1. Customers.........................................................................................................................................3
2.2. Market share.....................................................................................................................................3
2.3. Competition......................................................................................................................................4
2.4. Advertising and promotion Strategy.................................................................................................5
2.5. Sale tactics........................................................................................................................................5
CHAPTER THREE.................................................................................................................................6
3.1. Organization.....................................................................................................................................6
3.2. Key Management Team....................................................................................................................7
3.3. Key Subordinate Staff.......................................................................................................................7
3.4 Recruitment, Training And Promotion..............................................................................................9
3.5 Remuneration and Incentives.............................................................................................................9
3.6 Legal Requirements of The Laboratory...........................................................................................10
3.7 Support Products.............................................................................................................................11
CHAPTER FOUR.................................................................................................................................12
4.1. Products Design and Development.................................................................................................12
4.2 Product Facilities and Capacity.......................................................................................................12
4.3 Production Strategy.........................................................................................................................12
4.4. Government Regulations Affecting Operations..............................................................................13
4.5. Health Regulation...........................................................................................................................13
4.6. Safety Regulations..........................................................................................................................13
CHAPTER FIVE...................................................................................................................................14

iv
 5.1. Pre-Operational Cost......................................................................................................................14
5.2 Working Capital Requirements........................................................................................................14
5.3 Daisy Clinical Research Company Projected Cashflow Statement............................................16
5.4. Proforma Statement of Daisy Clinical Research Company.............................................................17
5.5 Pro-Forma Balance sheet.................................................................................................................18
5.6 Break Even Analysis as Per Income Statement................................................................................19
5.7 Break Even Level............................................................................................................................19
5.8 EXPECTED PROFITABILITY RATIO.........................................................................................20
5.9 Desired Financing............................................................................................................................20
5.10 Proposed Capital Daisy Clinical Research Company.....................................................................21
APENDIX.............................................................................................................................................22

EXUCUTIVE SUMMARY.

CHAPTER ONE

v
BUSINESS DESCRIPTION
The chapter focus on the location of the business which will be in Kabianga in Kericho County.
The business name will be:
DAISY CLINICAL RESEARCH COMPANY
P.O BOX 06,
KABIANGA.
PHONE NUMBER: 0796021713
The chapter will also focus on satisfaction objective growth and entry strategy and also the
clinical research industry.

CHAPTER TWO
MARKETING PLAN
This chapter focus on marketing plans.
The business will have clients from the neighboring hospitals and laboratories that doesn’t have
sophisticated equipment.

CHAPTER THREE
ORGANISING PLAN
The organization will comprise of twelve employees, manager, cashier, lab technicians, cleaners
and security personnel. All coordination will come from the manager who will ensure that the
workers follow for better results. Recruitment of workers will be done through interview. The
business will also engage other supportive services e.g. insurance, postal and banking among
others. It will also include planning methods, promotion of employees and salaries of employees

CHAPTER FOUR
PRODUCTION PLAN

vi
The company shall put in place measures to ensure that customer satisfaction is met through our
entire service delivery.

CHAPTER FIVE
FINANCIAL PLAN
This will include employees’ wages and salaries including profit and loss accounts, working
capital ratios and balance sheets over a period of time.

SOURCE AMOUNT
Owners’ equity 500,000
Loan received 500,000
Contribution from family members 1,000,000
Total proposed capitalization 2,000,000

vii
 CHAPTEER ONE.
BUSINESS DESCRIPTION

1.1. Background information.

Cherotich Daisy will be the owner of the business. She is in her early twenties. She is a
resident of Kericho county.
The owner of the business started her education in the year 2006 where she joint pre-school
then later a primary level in Kericho Primary school and completed standard eight in the year
2014 and obtained Kenya certificate of primary education (K.C.P.E) and was admitted in
Kipsigis Girls secondary school in the year 2015 as a form one student and due to her hard
work and determination, she managed to complete her secondary level in the year 2018
where she come out with Kenya certificate of secondary education (K.C.S.E) successfully
and this led her the level she is currently studying at Rift Valley Institute of Science and
Technology pursuing a course in diploma in dietetics management. Due to her subject
teacher encouragement on entrepreneurship, the owner of the business decided to venture
into a plan of starting a business after her course so as to apply the knowledge and skills
being obtained.

1.2 Nature of the business.

The business owner plans to start the business in the year 2024 which will be immediately
after completing her course. The business will be registered under the name Daisy Clinical
Research Company. The business will be located in an urban area where there is availability
of infrastructures like roads; electricity and also water for this are the main core factors for
the research facility efficiency for both the owner and customers.

1.3 Business Location.

The business will be located in the booming and rapid expanding downtown section of
Kabiangga town. Ideally, the business lease space in Kabianga Town, the location of our
primary target market. to capitalize on accessibility and population visiting the area. The
parking will be available alongside street and in the 100vehicle parking.
The business will also set up a strong contract with a large local laboratory to outsource the
more difficult tests, ensuring fast service and good rates.

1
1.4 Ownership.
The owner of the business will be a sole proprietorship form of business. She chooses this
farm because of the following reasons;
i) Decision making is simple since only one person operates on it.
ii) The owner also will be able to keep the secrets of the business.
iii) The owner as well will enjoy all the profits alone and earn income from it.
This proposal also will create job opportunities to the youths in its environs and also to award
the community, this place will be able to deliver its services to hard-to-reach areas around the
restaurant.

1.5 Business Objectives.

The Daisy Clinical Research Company has the following objectives:
i) To gain 60% of the Professional Building’s blood testing work.
ii) Develop 20% of the revenues from offices outside the Professional Building.
iii) Reach profitability within 12 months.

1.6 Mission.
It is Daisy Clinical Research Company mission to become the number one choice when it
comes to clinical research in the whole of Kericho county and also to be amongst the top 10
clinical research company organizations in the Kenya within the next 10 years.

1.7 Vision.
Daisy Clinical Research Company. is in business is to establish a first-class clinical research
company that will be known for coming up with ground breaking researches and solutions
for our clients. We want to become one of the leaders in the contract research organizations
industry in Kericho county and Kenya.

1.8 Product and Services.

Our intention of starting our clinical research company is to become one of the leading brands in
the industry and of course to also make profits and we will do all that is permitted by the law in
Kenya to achieve our aim and business goal. These are the clinical research services that Daisy
Clinical Research Company will be offering;
i. Performing clinical research for pharmaceutical.
ii. Biomedical and biotechnology companies
iii. Performing clinical research for medical device manufacturers.

2
 CHAPTER TWO.
Marketing plan.

2.1. Customers.
Daisy Clinical Research Company will focus on hospital referrals and private clienteles. Our
services will accommodate all types of clients within and beyond the region.
Our market categories will be:
Hospitals.
Clinics.
Private patients and clients.

2.2. Market share

The Daisy Clinical Research Company potential customers per day against the three
competitors will be 48% of the total market share. Kapsuser will range about34% and Kericho
labs 18% of the share.

Competition pie chart.

SALES

18%

34%
Kapsuser Daisy CRC

Kericho Labs

48%

3
2.3. Competition.

The Daisy Clinical Research Company has identified two competitors within the market area.
This are:
a) Kapsuser Hospital.
b) Kericho Labs.
The business is located near hospitals, homes and offices making it easier for clients to access in
house services and consultations.

Table showing competitors strength and weakness

COMPETITORS STRENGHTS WEAKNESSES
Kapsuser hospital Have regular customers than Laboratory services take
Daisy Clinical Research longer for obtaining results.
Company

Situated in a strategic No better skills of

position where customers
management.
are accessed easily than
Daisy Clinical Research
Company
Kericho Labs Offer cheap and affordable Produce low quality
prices of products products.

Already well-established Fewer member of staff

compared to Daisy Clinical
Research Company and
Kapsuser hospital which are
still developing

Daisy Clinical Research Services are more extensive Small in size

Company
than inhouse test where all
client needs are met.
Services offered meet the
quality standards, this helps

4
 also in marketing the
business.

2.4. Advertising and promotion Strategy.

Daisy Clinical Research Company will employ 3 distinctive marketing tactics to increase
and maintain customer awareness. This will be achieved through the following:
a) posters
The use of posters has been proved to be very effective since it can be presented everywhere in
town and attract many people and this will cost Ksh 5,000.
b) Sign posts
The business will design and strategies a large sign post which is attractive by drawing a picture
of the building and some decorations along the main road this being the main route where most
of the people pass and this will cost Ksh 20,500.
c) Mass media
This is through Radio whereby most people listen to always especially in stations such as Hero
Radio, PPP TV and also through Chamgei FM classified station casting up to 80,500Ksh.

2.5. Sale tactics

Daisy Clinical Research Company offers routine research tests on-site and more complex
research tests outsourced to a central research center. The business will be located inside the
Main Street which is home to numerous physicians. Currently, when the doctors need blood
work done, they have to send their patients to an off-site laboratory, a 15-minute drive from the
doctor’s office.
The advantages to the physicians and their patients include: convenience (blood can be drawn
within the same building), and faster service (there is no driving or transportation time to get the
blood drawn), and for the most commonly requested tests the analysis occurs in-house
guaranteeing results within 24 hours.

5
 CHAPTER THREE
Organization and Management Plan

3.1. Organization.
A good proposed qualified management is required for the business to attain its target.
Good organization and management plan will enable the business to expand and also to profit
any growth, at the beginning the Laboratory will have a total of 12 employees.
The following flowchart shows the staff structure of Daisy Clinical Research Company.

Manager

Supervisor

Accountant. Laboratory asst Clinical officer

Bench technologist.
Cleaners.

Store keeper
Security.

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3.2. Key Management Team
The proposed business will be managed by the owner having responsibilities and duties as
follows:
i) Makes rules and regulations governing all the employees
ii) Planning the go forward of the company (financially)
iii) Recruit new employees
iv) Decision maker in the laboratory management.
v) Finance the business budget.
She will be earning a net income of 75,000 monthly as at the start.

3.3. Key Subordinate Staff

1. supervisor
Qualifications
i) Should be above 25 years old.
ii) Must have experience of not less than 2 years
iii) Should be a Diploma holder in Laboratory science from a recognized institution.

Duties and responsibilities

i) Ensures that laboratory duties are done as required
ii) Acts as a link between the manager and other employees
iii) Informs the manager way forward in business.
iv) Ensures that, all workers perform their duties effectively
v) Encourages team-work among the employees of Daisy Clinical Research Company
His remuneration will amount to 60,000 but other commission accounted

2. Accountant
Qualifications
i) Should be 27 – 35 years old

7
 ii) Must have done Accountancy course in a recognized institutions or be a C.P.A holder
iii) Should have worked in the same/related field for more than 2 years before.
iv) He/she should be an honest person and hardworking
Duties and responsibilities
i) Recording and keep daily records of the business properly.
ii) Receives and makes payment on behalf of Daisy Clinical Research Company
iii) Deposits money on behave of the business.
iv) Prepares ledges for the business.
v) Makes payments to the employees on behalf of the manager
vi) Prepares profit and loss and balance sheet statements for the restaurant in good time.
His remuneration will be Kshs 35,000 but other payment will be accounted on commission basis.
3. Store keeper
Qualification
i) Should have gone through a course of the related field. (supplies chain management)
ii) Have experience of I year
iii) Should have good physical experience
Duties and responsibilities
i) Arrange store well to accommodate in carrying stock
ii) Ensure clean environment in the store daily
iii) Inform the supervisor on the goods in store before they are over.
iv) Issue what it is needed to be used in the laboratory for the daily basis.
4. Cleaners
i) They should ensure that, the environment of the laboratory is always clean and
conducive for both the staff customers as well as the staff.
ii) They should be of age between 20-25 old.
Security man
Qualifications
i) Be above 30 years and physically fit with good personality
ii) Should be from a recognized security guard company
iii) Should be a Kenyan citizen
iv) Be hardworking, strong and courageous.

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 Responsibilities
a) Be able to maintain security in the premise
b) Investigate and liaise with the top management in case of any security.
c) Guide customers whenever they are stranded

3.4 Recruitment, Training And Promotion

a) Recruitment
The managerial of Daisy Clinical Research Company will invite job applicant to apply for Job
when there is labor, turnover transfer, when need arise. This will be done by advertising the
vacancies on local newspaper or by use of posters.
The manager will shortlist and indicate the day on the interview which in this case notification
will be made for the successful candidates and write to them a letter of invitation.
b) Training
After orientation, the supervisor will organize seminars in service course for training and can
also take them to bigger laboratories of the same within the town to obtain information and
experience therein. At this time the manager will invite professionals in the same field who will
train the new employees in their various areas which will enhance productivity in the
organization.
c) Promotion
This will be one of the tools which the business will use to appreciate the performance of the
workers. It will be done in accordance of the hardworking employees will have their salaries
increased.

3.5 Remuneration and Incentives

a) Remuneration
The manager intends to remunerate the employees ranking system whereby it will not give high
salaries to employees in the first years because the business will not have known its optimum
profits.
The manager intends to pay her profit rise with time but any depending on the academic and
professional grounds of individual as well as the duties and responsibilities played by each
employee. The awards proposed by the management personnel include:
i) Free Tours

9
 Annual tours will be organized for employees to visit successful restaurants of
the same field like Magadi springs and this will enable employees to enjoy
themselves with other workers of the same field thus sharing ideas about the
successfulness of the restaurants each according to the area of special grid food
café action.
ii) Annual parties
The managing and organizing team will organize an annual party after a successful business year
which invites friends of the employees as well as the frequent customers also to feast with them
all as a way of appreciation by the management.

Table showing how Daisy Clinical Research Company will pay the employees

Personnel No. of Personnel Basic Salary Total Pay

Manager 1 75,000 75,000
Supervisor 1 60,000 60,000
Accountant 1 35,000 35,000
Lab assistant 2 20,000 40,000
Clinical officer 1 20,000 20,500
Bench technologist 1 30,500 30,000
Store keeper 2 18,000 18,000
Cleaners 2 10,000 20,000
Security Man 1 10,000 20,000
Total monthly salary payment 308,500

3.6 Legal Requirements of The Laboratory

a) Licenses And Permits
The firm will seek trade licenses from local authority of Kericho County Council permits to
be obtained by the premise before it can operate and will include:
i) health permits Act Cap 241
it will be given by the ministry of health Kericho (Kericho County)
ii) employment Act Cap 227

10
it indicates the right that are created by the local government to protect employees on equal pay
act, age discriminations and the discriminations against persons with disabilities.
It also contains the rights of employees on compensation and employees or preferences.
iii) Property Act 233
Daisy Clinical Research Company has a right to possess, enjoy and dispose any product or object
of value without regard to whether this is absolute or coordination perfect or imperfect legal or
equitable because the firm is legally registered.

Insurances
Daisy Clinical Research Company should be insured under the insurance Act of companies. This
will enable the firm to trade well and incase of any accident either by the Laboratory premise, or
even the employees they will have a cover for compensation.
In connection to that there are certain amount payable to the insurance company every month to
cover the loss in case it arises.

3.7 Support Products

The business will require professional to assist in any risk or losses or any other problems that
the business may face.
i) Legal adviser
The business adviser to any inconvenience concerning the business will be
ii) Banking products
The Daisy Clinical Research Company will rely on service rendered by Absa Bank. The bank is
located in Kericho Town address;
ABSA BANK
P.O BOX 442
KERICHO
iii) Insurance company
The role is to protect and proficiently manage the business against any risk that may arise in the
restaurant. The Restaurant will be covered by:
BLUE SHIELD INSURANCE COMPANY
P.O BOX 30364
NAKURU

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Tel : (053) 2032004

CHAPTER FOUR
Operational/Production Plan

4.1. Products Design and Development

In order to render an appropriate products and products, this chapter analyze the steps and
procedures anticipated to be followed.

4.2 Product Facilities and Capacity

The production facilities and their capabilities regulations that could attract the business
production strategy process.
Item Number quantity Value (Ksh) Total
Refrigerator 1 30,000 30,000
Microscope 6 5000@ 30,000
Clinical chemistry 4 4,000 16,000
Weighing machine 2 1500@ 3,000
Beds 3 20,000@ 60,000
Microplate readers 10 200@ 8,000
Autoclave 1 5,000 5,000
Incubators 3 3,000 3,000
Storage cupboard 3 7,500 22,500
Total 374,800

4.3 Production Strategy.

Daisy Clinical Research Company will sell its products basing on the customer’s requirement
needs. In case of any orders the management will ensure that customers are being attended to
their satisfaction. The services may also be done outside the business i.e., by setting up tents to
allow outdoor consultations.
Monthly expenses (Ksh) cost

12
 Transport (average for the 1yr) 55,000
Advertisement (average for the 1yr) 30,000
Rent and water (Average for the 1yr) 40,000
Telephone and electricity, (average for 1yr) 15,000

Total 150,000
Monthly production expenses Cost Total
Admission and sampling 20966 3,600
Urine analysis 27134 2,400
Clinical chemistry 133702 2,000
Specialized clinical chemistry 75594 3,500
hormones 147741 14,400
tumor markets 15598 5,000
hematology 50925 40,000
coagulation 17866 300
blood bank 8968 800
serology 104909 8,000
immunology 34831 4,000
microbiology 3611 2,000
other 4235 600
Total 641,645 823,100

4.4. Government Regulations Affecting Operations

The business will have rules and regulations governing the business and its staff. It will be the
duty of every worker to observe those rules and regulations. These will include: environmental
and health regulations. The proposed business will be kept as clean as possible always and also,
workers/staff will observe these rules. These will be attained either by taking clean food, water
and also ensuring that the environment is always clean.

4.5. Health Regulation

Before employment of any employee, the person who wants to be employed should have a
certificate from the ministry of health sharing the health condition of the person.
Health authority will also certify the building and the production facilities used in the firm.

13
4.6. Safety Regulations
All safety regulations relating to the equipment used in the restaurant of Daisy Clinical Research
Company premise will be placed at open area for easy studying and with documents indicating
no harms to users. Fire extinguishers will be provided by the management of the firm in case of
emergency care and hygiene will be highly practiced to avoid contamination.

CHAPTER FIVE
Financial Plan.
This is where all financial to be incurred proposed business are shown
(i) Depreciation of fixed items i.e furniture, sufuria (cooking) appliances, refrigerator
e.t.c shall be at a rate of 10% per annum.
(ii) Staff/employees number shall remain constant for the first three years of operation.
(iii) Value of rent, advertisement, transport shall be increasing at the rate of 5% per
annum.
(iv) Interest an electricity telephone, postage charges and stationary bills shall remain
constants for the 1st three yrs of operation.

5.1. Pre-Operational Cost

Items
Purchases i.e
Genetic analysis equipment 500,000
Mass spectrometry instruments 200,000
Sample separation instruments 200,000
Cell factory systems 140,000
Clinical laboratory refrigerators 100,000
supplies 60,000
Reagents 30,000
Salaries 200,000
Advertisement 20,000
Office and lab remodelling 400,000
Leasing of vehicles 150,000

14
 Net pre-operational costs
2,000,000

5.2 Working Capital Requirements

Item Year I (Ksh) Year II (Ksh) Year III(Ksh)

Stock of goods 450,000 495,000 544,500
Stock in progress 30,000 33,000 36,300
Debtors 50,000 47,500 45,125
Cash in hand 200,000 240,000 288,000
Cash at bank 180,000 216,000 259,200
Total 910,000 1,031,500 1,173,123

Assumptions
Stock of goods will be increasing at the rate of 10% yearly stock in progress will be increasing at
the rate of 5% yearly. Debtor will have a reduction of 5% annually.
Cash in hand shall increase by 20% annually.
Cash at bank shall increase at 20% annually.

15
5.3 Daisy Clinical Research Company Projected Cashflow Statement.

Column1 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
cash inflow
starting capital 1E+06 1000000
cash sales 300000 300000 300000 310000 310000 310000 315000 315000 315000 320000 32000 320000 3735000
debtors 100000 100000 100000 100000 100000 110000 11000 110000 120000 120000 120000 1190000
Totalcash inflow 1E+06 400000 400000 410000 410000 410000 42500 42500 425000 440000 44000 440000 4925000
cash outflows
purchases 123100 123100 123100 123100 123100 123100 123100 123100 123100 123100 123100 123100 1477200
credit purchases 70000 70000 70000 75000 75000 75000 80000 80000 80000 85000 85000 85000 930000
transport 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 60000
salaries and wages 82500 82500 82500 82500 82500 82500 82500 82500 82500 82500 82500 82500 990000
electricity 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 120000
telephone 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 60000
advertisement 3500 3500 3500 3500 3500 3500 3500 3500 3500 3500 3500 3500 42000
stationary & 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 12000
printing
postage 900 900 900 900 900 900 900 900 900 900 900 900 10800
rent and water 4300 4300 4300 4300 4300 4300 4300 4300 4300 4300 4300 4300 51600
other expenses 1300 1300 1300 1300 1300 1300 1300 1300 1300 1300 1300 1300 15600
total cashoutflow 306600 306600 306600 302600 302600 302600 316600 316600 316600 321600 321600 321600 3769200
net cash 993400 93400 93400 107400 107400 107400 108400 108400 108400 118400 118400 118400 2182800
tax provision 10% 99340 9340 9340 10740 10740 10740 10840 10840 10840 11840 11840 11840 218280
net cash after tax 894060 84060 84060 96660 96660 96660 97560 97560 97560 106560 106560 106560 1964520
accumulation 894060 978120 1E+06 1158840 125500 1352160 1449720 1547280 1.6E+0 1751400 1751400 1964520
7

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5.4. Proforma Statement of Daisy Clinical Research Company

Items 2024
Year 1
Total sales (cash + credit sales) 4,925,00
Less Cost of goods sold
Opening stock 30,000
Add purchases 1,477,200
Less closing stock (20,000)
1,487,200 1,487,200
Gross profit 3,437,800
Expenses:
Transport 60,000
Salaries and wages 990,000
Electricity and telephone 180,000
Advertisements and stationeries 54,000
Posters 2,000
Rents and water 25,000
Other expenses 12,000
Total expenses 1,323,000 (1,323,000)
Net profit 2,114,800
Tax provision 10% 211,480
Net profit after tax 1,903,320

Assumptions
(i) total sales increases at the rate of 2% yearly.
(ii) Purchases reduces at the rate of 5% yearly
(iii) Some expenses like transport, salaries and wages etc are fixed.

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5.5 Pro-Forma Balance sheet
Daisy Clinical Research Company Balance sheet
As at 31st Dec 2024

Item Year 1,2024

Fixed Assets
Refrigerator 30,000
Furniture 30,000
Cooking appliances 16,000
Others 98,800
Total fixed assets 174,800
Current assets
Debtors (credit sales) 1,190,000
Cash in hand 200,000
Cash at bank 180,000
Total current assets 1,570,000
Net assets 1,744,800
Current liabilities
Creditors 250,000
Total 250,000
Equity 1,529,900
financed by: 1,779,900
Equity Capital 1,000,000
Add Net profit 2,792,700
Total Net profit 3,792,700

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Assumptions

i) fixed assets will increase by 2% in the 3rd year.

ii) Creditors will increase at 10% yearly
iii) Debtors are fixed for the 1st 3 years of operation
iv) There will be variation in both cash in hand and at bank as well.

5.6 Break Even Analysis as Per Income Statement

(i) Determining The Total Fixed Assets

Item Kshs
Rent and water 51,600
Salaries and wages 990,600
Insurance and license 1,400
Total 1,043,900

i) Variable Costs

Item Kshs
Purchases 1,477,200
Transport 60,000
Electricity 120,000
Telephone 60,000
Advertisements 42,000
Stationary and printing 12,000
Postage 10,800

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 Total 1,782,000

5.7 Break Even Level

(a) total contribution margin = sales – Total Variable cost

3,735,000 - 1,782,000 = 1,953,000

(b) contribution margin %

1953000
= ∗100 = 52%
3735000

(c) break-even point

¿ cost
∗100
contribution margin

1043900
= ∗100 = 1995984.70
52.3

5.8 EXPECTED PROFITABILITY RATIO

(d) gross profit percentage

pgross profit
= ∗100
sales

4465000
= ∗100 = 119.5%
373500

(b) Expected profitability ratio

n t profit after tax

= return on equity= ∗100
ownwers equi 쿔 y

20
 2792700
= ∗100 = 279.27
1000000

5.9 Desired Financing

Item Amount (Kshs)

Pre-operational cost 200,000

Working capital 600,000

Fixed Assets 400,000

Totals 1,000,000

5.10 Proposed Capital Daisy Clinical Research Company

The owner of Daisy Clinical Research Company intends to firm intends to raise money for
the business through the following means/sources.

Sources kshs %
Personal contribution 400,000 40
Loan from bank 500,000 50
Family (parents’ contributions) 100,000 10
Total 1,000,000 100

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APENDIX.
Location of the business

Daisy Clinical Research

Company

22