Question

Create a pro forma (projected) balance sheet, income statement, and statement of cash flows for your entrepreneurial firm. Although you may not have enough experience or business activities to actually have real numbers, make assumptions for start-up costs, sales revenue, and expenses. Pro forma financial statements should be done on a monthly basis for the first two years, and then annually for the following three years, for five years total of business activity. Be sure to clearly articulate your assumptions.

Answer 1

	Basis assumption
	Rate of interest is 16 %
	Company sales customized water plant
	Sales increase by 25 % every year
	Cost of sales is 5% of sales
	Labour expenses is 4.5 % of sales
	Selling and admin exp increases by 2%
	Company operates in free trade zone
Projected Income statement					( $ in 000)
	Particular	MARCH	MARCH	MARCH	MARCH	MARCH
		2016-17	2017-18	2018-19	2019-20	2020-21
1	Gross Sales	PROJ.	PROJ.	PROJ.	PROJ.	PROJ.
i)	Domestic Sales	8.52	10.65	13.31	16.64	20.80
2	Net Sales	8.52	10.65	13.31	16.64	20.80
3	Cost of sales	0.43	0.53	0.67	0.83	1.04
4	Direct labour / Salary	0.38	0.48	0.60	0.75	0.94
5	Selling,Gen.and Admn. Exp.	0.90	0.92	0.94	0.96	0.97
6	Interest paid	0.00	0.00	1.20	1.00	0.80
	Total expenses	1.71	1.93	3.40	3.54	3.75
	Net Profit	6.81	8.72	9.91	13.10	17.05
Projected Balancesheet
					( $ in 000)
	Particular	MARCH	MARCH	MARCH	MARCH	MARCH
		2016-17	2017-18	2018-19	2019-20	2020-21
		PROJ.	PROJ.	PROJ.	PROJ.	PROJ.
	Ordinary Share Capital	10.00	10.00	10.00	10.00	10.00
	Retained earnings	6.81	8.72	9.91	13.10	17.05
	Non Current Liabilities
	Loan	-	0	7.5	6.25	5
	Other term deposits	1.50	0.75	2.50	2.50	1.65
	Trade payables	0.32	0.40	0.50	0.62	0.78
	Current Liabilites
	Expenses payable	0.23	0.23	0.23	0.24	0.24
	Total	18.85	20.10	30.64	32.71	34.72
	Fixed Assets
	Plant and machinery	6.00	4.80	3.60	2.40	1.20
	Furniture and Fixtures	4.00	3.20	2.40	1.60	0.80
	Computers	3.00	2.40	1.80	1.20	0.60
	Current Assets
	Cash and Bank	1.59	4.37	4.00	4.20	3.72
	Trade receiavbles	4.26	5.32	6.65	8.32	10.40
	Investment	0.00	0.00	12.19	15.00	18.00
	Total	18.85	20.10	30.64	32.71	34.72
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