Financial Plan JLK Pad - Essay Example

Financial Plan JLK Pad A financial plan is a comprehensive projection of financial tolls that are used todetermine the financial requirements of a business as well as forecasting its future liquidity and profitability (Winston 29). The tools are group financial statements, which include- 1. Starting a projected Balance Sheet statement 2. Projected Income Statement 3. Statement of cash Flow 4. Notes to the Financial Plan The financial forecast below is based on the following assumptions:- 1. Sales forecast for the next three years on yearly basis.

The sales of the electronic products are as shown in the income statement forecast. 2. Costs are spread uniformly through the twelve months in a year for three years. This will entail annual maintenance costs. The projections are as follows:- 1. Projected Balance Sheet Statement. Year 1$ Year 2$ Year 3$ Cash 25,000 25,000 25,000 Marketable securities 729.000 54,000 870,000 Accounts receivable 17,480 100,250 190,000 Total current assets 771,480 179,250 1,085,000 Total assets 771,480 179,250 1,085,000 Accounts payable 350 850 850 Total current liabilities 350 850 850 Total liabilities 350 850 850 Retained earnings (89,075) (67,488) (145,000) Other equities 850,000 850,000 850,000 Total liabilities and Equities 682,755 112,612 940,850 2.

Projected Income Statement Year 1$ Year 2$ Year 3$ Revenues Bills 92,000 102,250 103.000 Travel 12,000 16,000 20,000 Administration 6,000 8,000 10,000 Total revenues 110,000 126,250 133,000 Costs of sales Direct travel 12,000 16,000 20,000 Gross margin 98,000 110,250 113,000 Expenses Marketing 10,000 5,000 4,000 Salaries 60,000 65,000 70,000 Communication 2,000 2,500 3,000 Maintenance 500 600 700 Depreciation 3,500 3,500 3,500 Lease 5,000 5,000 5,000 Travel expenses 1,800 1,900 2,100 Total expenses 82,800 83500 88,300 PBT 15,200 26,750 24,700 Tax estimate 3,600 2,000 3,000 PAT 11,600 24,750 21,700 3.

Statement of cash flow Year 1$ Year 2$ Year 3$ Operating profits 15,200 26,750 21,700 Cash income tax 70,800 82,000 89,000 Operations funds 720,000 830,500 900,000 Increase in working capital 90,000 150,000 170,000 Cash flow from operations 754,400 925,250 1,002,700 Non operating income 11,100 15,800 19,000 Investments 650.000 - - Net cash flows 1,415,500 941,050 1,021,700 4. Notes for the financial plan a) The asset base of the company is expected to grow steadily over the years with a decline at the second year.

The decline at year two could be attributed to the hard economic times anticipated during the same time. Resumption in growth is expected to start immediately. b) As observed in the projections above, it is highly anticipated that there would be a tremendous growth in profitability. Profitability is a measure of growth; therefore it means that the business is growth oriented. c) The trend of the net cash flows the future liquidity of the firm. Liquidity simply means that the firm is able successfully in the near future.

Work cited Ryan, Joan. Personal Financial Literacy. Mason: Cengage Learning, 2011. Print. Winston, William J. Marketing for financial services. New York: Routledge, 1986. Print.