1. Cash Flow (Pro Forma statement)
Financial Planning

2. Financial statement Cash flow pro forma statement Income statement
Balance sheet
Usually prepare for 3 years projection

3. Project Implementation cost
Involve all type of cost to enable company to start the operation (whether short term or long term)
Purpose: to estimate total budget required in order to start with the business
Short term cost
working capital required until business able to gain sales
working capital depends on how long business able to get profit from the sales
Long term cost
Involve capital investment i.e. machine, plant and equipment

4. Project Implementation cost
Capital Investment
Land
Buy or own – list in project cost
Lease- a part of deposit
Building
Buy or own – current cost of the building
Lease – list in deposit
Renovation
Machine and Equipment
Rent – list in deposit
Hire purchase – current cost
Furniture and office equipment
Vehicles

5. Pre operation expenditure
Expenses for :
Legal fee
Company registration
License fee
Expertise services
Feasibility studies
Insurance
etc

6. Working Capital (Modal Pusingan)
Allocation for financing the daily operation such as
Buy raw material
Inventory
Administrative expenses
Factory overhead
Other expenses involve company’s operation
Working capital is usually prepared for 1 to 3 months depending on how long the company able to gain its first sales

7. Contigencies To overcome increases in material price
Miscalculation during preparing the project implementation cost
Usually 5 – 10% from project cost

8. Expenditure

9. Administrative expenditure
Salary
Fee
Accounting
Bank charge
Maintenance and repair
Electric, water and telephone
Insurance
Rental
Legal fees
Post & stamp
Printing & stationary
Staff training
travelling

10. Marketing expenditure
Promotion
1% of total sales
Example:
Sales projection = 283,880
Promotion expenditure = 2840
Delivery
Fluctuate from year to year
Estimate from previous year average rate
Vehicle expenditure
Semi fluctuate
Fixed component
Road tax
Insurance of vehicle
Fluctuate component
Estimation of 0.3% from sales

11. ADMINISTRATIVE EXPENDITURE MARKETING EXPENDITURE
OPERATIONS EXPENDITURE
Fixed Assets RM
Land & Building
50,000
Furnitures
9,000
Signboard
5,000
Machinary and Equipment
100,000
Computer
van
70,000
Lorry
80,000
Renovation
30,000
Forklif
130,000
Equipment
7,000
Working Capital
Salary, EPF & SOCSO
10,000
advertisement and promotion
1,000
Raw Materials & Packaging
39,000
Travelling allowance
100
Carriage Inward & Duty
petrol/diesel
250
Salaries, EPF & SOCSO
3,363
Salary,EPF & SOCSO
900
500
Other Expenditure
200
300
400
Pre-Operation
Deposit (rent, utilities, etc.)
7,200
Business Registration & Licences
Insurance & Road Tax for Motor Vehicle
2,000
2,200
1,350
TOTAL
118,800
81,750
355,613

12. depreciation Total = RM672408 Fixed Assets Cash Existing F. Assets
ABC Construction
PROJECT IMPLEMENTATION COST & SOURCES OF FINANCE
Project Implementation Cost
Sources of Finance
Requirements
Cost
Loan
Hire-Purchase
Own Contribution
Fixed Assets
Cash
Existing F. Assets
Land & Building
50,000
40,000
10,000
Furnitures
9,000
600
5,400
3,000
Computer
5,000
1,000
4,000
Renovation
30,000
24,400
5,600
Equipment
7,000
2,000
Signboard
3,500
1,500
van
70,000
45,000
21,000
Machinary and Equipment
100,000
34,000
58,000
8,000
Lorry
80,000
25,000
Forklif
130,000
105,000
23,000
Working Capital 2
months
Administrative
20,004
15,004
Marketing
4,500
3,300
1,200
Operations
85,726
75,726
Pre-Operations & Other Expenditure
15,050
9,050
6,000
Contingencies
10%
61,128
58,128
TOTAL
672,408
469,708
132,400
70,300
depreciation
Total = RM672408

13. Depreciation schedule
For every fixed assets excluding land
Methods:
Straight line methods
Declining balance

14. Machinary and Equipment Equipment Lorry Signboard Forklif van
FIXED ASSETS
Econ. Life (yrs)
Furnitures 5
Computer
Renovation
Machinary and Equipment
Equipment
Lorry
Signboard
Forklif
van

15. Fixed Asset
Furnitures
Cost (RM)
9,000
Method
Straight Line
Economic Life (yrs) 5
Annual
Accumulated
Year
Depreciation
Book Value - 1
1,800
7,200 2
3,600
5,400 3 4 6 7 8 9 10
Depreciation value per year = (Original Price – Scrap Value)/Economy Life
= (9000 – 0)/5
= RM 1800/ year
Scrap value = estimation of asset value at its last year of economy life

16. Source of finance

17. Loan LOAN (if required) Interest rate 10% Loan duration 5
Interest payment method* 2
* Method: 1 = flat rate 2 = annual rest

18. HIRE-PURCHASE (if required)
Interest rate 5%
Hire-purchase duration 8

19. Hire Purchase Loan Fixed Assets Cash Existing F. Assets
ABC Construction
PROJECT IMPLEMENTATION COST & SOURCES OF FINANCE
Project Implementation Cost
Sources of Finance
Requirements
Cost
Loan
Hire-Purchase
Own Contribution
Fixed Assets
Cash
Existing F. Assets
Land & Building
50,000
35,000
15,000
Furnitures
9,000
600
5,400
3,000
Computer
5,000
1,000
4,000
Renovation
30,000
24,400
5,600
Equipment
7,000
2,000
Signboard
3,500
1,500
van
70,000
45,000
21,000
Machinary and Equipment
100,000
34,000
58,000
8,000
Lorry
80,000
25,000
Forklif
130,000
105,000
23,000
Working Capital 2
months
Administrative
20,000
Marketing
4,500
3,300
1,200
Operations
85,726
75,726
10,000
Pre-Operations & Other Expenditure
15,050
9,050
6,000
Contingencies
10%
61,128
58,128
TOTAL
672,404
464,704
132,400
75,300
Loan
Hire Purchase

20. ABC Construction
LOAN & HIRE-PURCHASE AMMORTISATION SCHEDULES
LOAN REPAYMENT SCHEDULE
HIRE-PURCHASE REPAYMENT SCHEDULE
Amount
464,704
132,400
Interest Rate
10% 5%
Duration (yrs) 5 8
Method
Baki Tahunan
Year
Principal
Interest
Total Payment
Principal Balance - 1
92,941
46,470
139,411
371,763
16,550
6,620
23,170
115,850 2
37,176
130,117
278,822
99,300 3
27,882
120,823
185,881
82,750 4
18,588
111,529
66,200
9,294
102,235
49,650 6
33,100 7 9 10
x 10%
RM464704
5 years

21. Pro forma statement

22. Cash inflow and cash outflow for operation cost or buying fixed asset
Cash sales, capital(in cash), loan, account receivable
Cash outflow
Raw material, administrative expenditure, factory overhead etc
Balance of cash at certain period of time
Usually prepared for 3 years of operation
1st year is in monthly basis
Prior to pro forma statement, sales forecasting must be prepared first (from marketing planning)

23. Monthly basis SALES PROJECTION Month 1 3,600 Month 2 4,000 Month 3
4,800
Month 4
Month 5
Month 6
6,000
Month 7
Month 8
6,400
Month 9
Month 10
Month 11
Month 12
Total Year 1
64,800
ToTal Year 2
74,520
Total Year 3
89,424
Monthly basis

24. OPERATIONS EXPENDITURE
Fixed Assets RM
Machinary and Equipment
100,000
Lorry
80,000
Forklif
130,000
Working Capital
Raw Materials & Packaging
9,000
Carriage Inward & Duty
Salaries, EPF & SOCSO
3,363
petrol/diesel
500
Other Expenditure
400
Pra-Operasi
Deposit (rent, utilities, etc.)
Business Registration & Licences
Insurance & Road Tax for Motor Vehicle
1,000
1,350
TOTAL
325,613
PURCHASE PROJECTION
Month 1
9,000
Month 2
10,000
Month 3
12,000
Month 4
Month 5
Month 6
15,000
Month 7
Month 8
16,000
Month 9
Month 10
Month 11
Month 12
Total Year 1
162,000
ToTal Year 2
186,300
Total Year 3
223,560

25. CASH COLLECTIONS FOR SALES
assume
CASH COLLECTIONS FOR SALES
In the month of sale
70%
1 month after sale
20%
2 months after sale
10%
Total
100%

26. 10% + 20%(of the 2nd month sales)
70%
20%
MONTH
Pre-Operations 1 2 3 4 5 6 7
CASH INFLOW
Capital (Cash)
75,300
Loan
398,704
Cash Sales
2,520
2,800
3,360
4,200
Collection of Accounts Receivable
720
1,160
1,360
1,440
1,680
TOTAL CASH INFLOW
474,004
3,520
4,520
4,720
4,800
5,640
5,880
10% + 20%(of the 2nd month sales)

27. CASH PAYMENTS FOR PURCHASES
In the month of purchase
80%
1 month after purchase
20%
2 months after purchase
Total
100%
assume
80%
20%
Operations Expenditure
Cash Purchase
7,200
8,000
9,600
Payment of Account Payable
1,800
2,000
2,400

28. tax

29. tax LHDN imposed tax to company depends on:
Sole propriety and partnership - imposed tax on individual income
Company under company act – imposed tax on the profits

30. KWSP

31. kwsp employer contribute 12% employee contribute 11%
From the employee salary

32. reference
Wahab, I.A.,Ibrahim, M.D., Ahmad, F. (2002)‘Rancangan Kewangan Perniagaan Kecil dan Sederhana’, 1st Ed. Prentice Hall. Malaysia