FINANCIAL PLAN

A. Financial Forecast List

1. Total Project Cost (Table 4)

Items Sources
Equity Loan Others Total
a. Fixed Capital
Land 3,000,000.00 3,000,000.00
Building 3,500,000.00 3,500,000.00
Technology 500,000.00 500,000.00
Furniture and Fixtures 600,000.00 600,000.00
Others -
Sub-total 4,100,000.00 3,500,000.00 - 7,600,000.00

Pre-Operating Expenses 1,000,000.00 1,000,000.00

Working Capital
Cash 1,000,000.00 1,000,000.00
Sub-total 1,000,000.00 - - 2,000,000.00
GRAND TOTAL 5,100,000.00 3,500,000.00 - 9,600,000.00
GRAND TOTAL (%) 63.54% 36.46% - 100.00%

2. Financial Assumption
Tycoon’s Express Company assumed to stay in line with the continuing advances in
technology and commercial spaces for lease. TEC also assumed a healthy growth trend in the
local businesses.

a. Income Statement (Table 5)

Year 1 Year 2
Space Revenue 1,920,000.00 1,920,000.00
Security and Manpower Services 2,117,000.00 2,963,800.00
Less: Rent and Service Discount 240,250.00 282,590.00
Net Revenue 3,796,750.00 4,601,210.00

Gross Profit 3,796,750.00 4,601,210.00

Less: Operating Expenses
Utilities Expenses 108,000.00 120,000.00
Maintenance and Renovation Expense 83,000.00 60,000.00
Taxes and Licenses 53,000.00 42,000.00

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Salaries Expenses 2,230,000.00 2,350,000.00

Advertising Expenses 800,000.00 800,000.00
Supplies Expense 70,000.00 10,000.00
Depreciation – Building 125,000.00 125,000.00
Depreciation – Equipment 25,000.00 3,494,000.00 25,000.00 3,532,000.00

Net Loss/Profit 302,750.00 1,069,210.00

Table 5.2

Year 3 Year 4
Space Revenue 1,920,000.00 1,920,000.00
Security and Manpower Services 2,963,800.00 2.963,800.00
Less: Rent and Service Discount 282,590.00 193,282.00
Net Revenue 4,601,210.00 4,690,418.00

Gross Profit 4,601,210.00 4,690,418.00

Less: Operating Expenses
Utilities Expenses 118,000.00 122,000.00
Maintenance and Renovation Expense 90,000.00 40,000.00
Taxes and Licenses 42,000.00 44,000.00
Salaries Expenses 2,815,344.00 2,965,000.00
Advertising Expenses 500,000.00 400,000.00
Supplies Expense 20,000.00 30,000.00
Depreciation - Building 125,000.00 125,000.00
Depreciation - Equipment 25,000.00 3,735,344.00 25,000.00 3,751,000.00

Net Loss/Profit 865,866.00 939,418.00

Table 5.3

Year 5
Space Revenue 1,920,000.00
Security and Manpower Services 3,810,600.00
Less: Rent and Service Discount 218,786.00
Net Revenue 5,511,814.00

Gross Profit 5,511,814.00

Less: Operating Expenses
Utilities Expenses 126,000.00
Maintenance and Renovation Expense 42,000.00
Taxes and Licenses 48,000.00
Salaries Expenses 3,104,000.00
Advertising Expenses 450,000.00
Supplies Expense 25,000.00
Depreciation - Building 125,000.00
Depreciation - Equipment 25,000.00 3,945,000.00

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Net Loss/Profit 1, 566,814.00

Cash Flow (Table 6)

Cash Flow from Operations Year 1 Year 2 Year 3

Operating Income 505,750.00 1,261,210.00 1,057,866.00

Depreciation Expense 150,000.00 150,000.00 150,000.00

Increase in Accounts Receivable (102,000.00) (216,000.00) (303,000.00)

Decrease in Prepaid Expenses 23,000.00 12,000.00 18,000.00

Net Cash Inflow from Operating Activities 576,750.00 1,207,210.00 9

Cash Flows from Investing Activities

Purchase of Equipment - - (20,000.00)

Cash paid to Principal Loan (100,000.00) (150,000.00) (150,000.00)

Net Cash Flow from Investing Activities (100,000.00) (150,000.00) (

Cash Flows from Financing Activities

Payments of Dividends - 100,000.00 150,000.00

Net Cash Flow from Financing Activities - 100,000.00 1

Net Change in Cash 476,750.00 957,210.00 6

Beginning Cash Balance 125,000.00 601,750.00 1

Ending Cash Balance 601,750.00 1,558,960.00 2

Table 6.2

Cash Flow from Operations Year 4 Year 5

Operating Income

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1,133,418.00 1,764,814.00

Depreciation Expense 150,000.00 150,000.00

Increase in Accounts Receivable (402,000.00) (499,000.00)

Decrease in Prepaid Expenses 20,000.00 22,000.00

Net Cash Inflow from Operating Activities 901,418.00 1,437,814.00

Cash Flows from Investing Activities

Purchase of Equipment (50,000.00) -

Cash paid to Principal Loan (200,000.00) (200,000.00)

Net Cash Flow from Investing Activities (250,000.00) (200,000.00)

Cash Flows from Financing Activities

Payments of Dividends 300,000 300,000.00

Net Cash Flow from Financing Activities 300,000.00 300,000.00

Net Change in Cash 851,418.00 937,814.00

Beginning Cash Balance 2,161,826.00 3,013,244.00

Ending Cash Balance 3,013,244.00 3,951,058.00

c. Balance Sheet (Table 7)

Year 1 Year 2
ASSETS
Current Assets

Cash in Bank 530,000.00 456,000.00

Accounts Receivable 102,000.00 233,000.00

Less: Estimated
Uncollectible Accounts 5,000.00 97,000.00 7,500.00 225,500.00

Petty Cash Fund 15,000.00 15,000.00

Supplies 20,000.00 35,000.00

Total Current Assets 662,000.00 731,500.00

Non-current Assets

Building 3,500,000.00 3,500,000.00

Less: Accumulated
Depreciation 125,000.00 3,375,000.00 250,000.00 3,250,000.00

Equipment 500,000.00 500,000.00

Less: Accumulated
Depreciation 25,000.00 475,000.00 50,000.00 450,000.00
Total Non-Current
Assets 3,850,000.00 3,700,000.00

Total Assets 4,512,000.00 4,431,500.00

LIABILITIES AND

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OWNER'S EQUITY
Current Liabilities

Accounts Payable 1,460,500.00 1,350,370.00

Unearned Revenues 463,000.00 391,000.00

Total Current
Liabilities 1,923,500.00 1,741,370.00
Non-current Liabilities

Loans Payable 500,000.00 500,000.00

Total Non-Current
Liabilities 500,000.00 500,000.00

Total Liabilities 2,423,500.00 2,241,370.00

OWNER'S EQUITY

TEC's, Capital End. 2,112,045.00 2,145,000.00

Retained Earnings (23,545.00) 45,130.00

Total Owner's Equity 2,088,500.00 2,190,130.00

Total Liabilities and
Owner's Equity 4,512,000.00 4,431,500.00

Table 7.2

Year 3 Year 4
ASSETS
Current Assets

Cash in Bank 470,000.00 650,000.00

Accounts Receivable 202,000.00 380,000.00

Less: Estimated
Uncollectible Accounts 2,300.00 199,700.00 6,700.00 373,300.00

Petty Cash Fund 15,000.00 15,000.00

Supplies 24,000.00 37,000.00

Total Current Assets 708,700.00 1,075,300.00

Non-current Assets

Building 3,500,000.00 3,500,000.00

Less: Accumulated
Depreciation 375,000.00 3,125,000.00 500,000.00 3,000,000.00

Equipments 500,000.00 500,000.00

Less: Accumulated
Depreciation 75,000.00 425,000.00 100,000.00 400,000.00
Total Non-Current
Assets 3,550,000.00 3,400,000.00

Total Assets 4,258,700.00 4,475,300.00

LIABILITIES AND
OWNER'S EQUITY

Current Liabilities

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Accounts Payable 1,430,000.00 1,130,000.00

Unearned Revenues 298,000.00 245,300.00

Total Current
Liabilities 1,728,000.00 1,375,300.00
Non-current Liabilities

Loans Payable 500,000.00 500,000.00

Total Non-Current
Liabilities 500,000.00 500,000.00

Total Liabilities 2,228,000.00 1,875,300.00

OWNER'S EQUITY

TEC's, Capital End. 1,985,300.00 2,557,000.00

Retained Earnings 45,400.00 43,000.00

Total Owner's Equity 2,030,700.00 2,600,000.00

Total Liabilities and
Owner's Equity 4,258,700.00 4,475,300.00

Table 7.3

Year 5
ASSETS
Current Assets

Cash in Bank 475,000.00

Accounts Receivable 243,000.00

Less: Estimated Uncollectible Accounts 2,500.00 240,500.00

Petty Cash Fund 15,000.00

Supplies 40,000.00

Total Current Assets 770,500.00

Non-current Assets
Building 3,500,000.00

Less: Accumulated Depreciation 625,000.00 2,875,000.00

Equipments 500,000.00

Less: Accumulated Depreciation 125,000.00 375,000.00

Total Non-Current Assets 3,250,000.00

Total Assets 4,020,500.00

LIABILITIES AND OWNER'S EQUITY

Current Liabilities

Accounts Payable 997,500.00

Unearned Revenues 543,000.00

Total Current Liabilities 1,540,500.00

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Non-current Liabilities

Loans Payable 500,000.00

Total Non-Current Liabilities 500,000.00

Total Liabilities 2,040,500.00

OWNER'S EQUITY

TEC's, Capital End. 1,950,000.00

Retained Earnings 30,000.00

Total Owner's Equity 1,980,000.00

Total Liabilities and Owner's Equity 4,020,500.00

1. Financial Ratio Analysis

Test of
Profitability 1 2 3 4 5
a. Net Profit
Margin 0.08 0.23 0.19 0.20 0.28
b. Gross Profit
Margin 0.13 0.27 0.23 0.24 0.32
c. Return on
Investment 0.83 1.03 1.07 1.04 1.36

d. Return on SHE 1.79 2.08 2.25 1.79 2.76

Turnover Ratio
a. Fixed Assets
Turnover 0.99 1.24 1.30 1.38 1.70
b. Total Assets
Turnover 0.84 1.04 1.08 1.05 1.37

Leverage Ratio

a. Debt Ratio 0.54 0.51 0.52 0.42 0.51

b. Debt-to-equity 0.99 0.75 0.82 0.64 0.68

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Liquidity Ratio

a. Current Ratio 0.34 0.42 0.41 0.78 0.50

2. Break-even Analysis

Cost Control

a. Payback Period 4.252741113

Table 8

Interpretations

 Profitability Ratios
The profitability ratios show the rise and fall of the gain of profits of the business.
This indicates a wavy profitability in the first five years of the business.
Nevertheless, the figures still show signs of growth and success which is a
positive indicator of the proposed business’ rise.

 Turnover Ratio
The turnover ratio shows that there’s a high turnover which is a positive signal for
growth.

 Leverage Ratio
The leverage ratio depicts how well the business attends to it financial
obligations.

 Liquidity Ratio
The table shows high liquidity ratio. This is good because it indicates that the
services are highly liquid and that it can generate cash in shorter time.

 Break-even Analysis
The payback period is longer than expected.

3. Sources and Uses of Funds

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Tycoons’ Express Company’s source of funds bare form the owner’s equity which
is majority in share, stockholders and loan from the private sectors such as the
bank.

4. Budgeting Plan
TEC finance growth is basically through cash flow. TEC already assumed to grow
slower than the expected growth since the competition is high while the market
share is minimal, so TEC allocated budget for growth and maturity stage of
strategic planning to keep the business sustainable and profitable behind any
financial circumstances.
While TEC can’t be hard to push on collections that might lose valued clients,
there is a must on the administration to develop a permanent system of
receivables financing through tracking the monthly expected amount to be paid of
clients based on their contract with the company and give allowances for the
possible delayed and be able to cover the cost.

5. Stages of Financing

Seed Stage  Marketing Php 50 000. 00

Research Php 50 000. 00
 Service
Development

Start- Up Stage  Devised Business Php 60 000. 00

plan
 Advertisement Php 300 000. 00

First Stage  Unit Sales Php 960 000. 00

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Expansion Stage  TEC Branching Php 50 000 000. 00

 Service Php 10 000 000. 00
Diversification

Bridge Stage  Secure Funding Php 100 000 000. 00

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