of 7

# Popple Financial Plan

Published on: Mar 4, 2016
Published in: Economy & Finance      Business

#### Transcripts - Popple Financial Plan

• 1. Financial Plan Popple Beverage Company <ul><li>This financial plan includes: </li></ul><ul><ul><li>General Assumptions </li></ul></ul><ul><ul><li>Break-Even Analysis + Chart </li></ul></ul><ul><ul><li>Projected Profit and Loss </li></ul></ul><ul><ul><li>Projected Cash Flow </li></ul></ul><ul><ul><li>Projected Balance Sheet </li></ul></ul><ul><ul><li>Business Ratios </li></ul></ul>
• 2. General Assumptions <ul><li>Popple Beverage Company assumes the sales revenue will be a flat curve at first because we are still new in the market. After we spend large amounts of money on advertising, it is likely, that is successful, we will be making revenue and then eventually profit. </li></ul>
• 3. Break-even Analysis <ul><li>Fixed costs = AED 10,000 per year </li></ul><ul><li>Variable costs = AED 1.00 per unit of output </li></ul><ul><li>Product is sold at AED 2.50 </li></ul><ul><li>The factory can produce a maximum output of 2,000 bottles per year </li></ul><ul><li>The break-even point of production is where total costs and total revenues cross. Popple must, therefore, sell 1,000 bottles of juice in order to avoid making a loss. Maximum profit is made when maximum output is reached. </li></ul><ul><li>The calculation method of break-even point is: </li></ul><ul><li>Selling Price – Variable Costs = Profit </li></ul><ul><li>2.50 – 1.00 = 1.50 </li></ul><ul><li>The average cost per unit will be: </li></ul><ul><li>Total Cost ÷ Output = 12 000 ÷ 5 000 = AED 2.45 per bottle </li></ul>
• 4. Projected Profit + Loss <ul><li>The profit and loss account shows how net profit is calculated. It begins with the Gross profit. </li></ul><ul><li>Sales turnover AED 5 000 </li></ul><ul><li>Cost of sales - AED 2 000 </li></ul><ul><li>GROSS PROFIT = AED 3 000 </li></ul><ul><li>Expenses:- </li></ul><ul><li>Wages AED 600 </li></ul><ul><li>Electricity AED 100 </li></ul><ul><li>Rent AED 200 </li></ul><ul><li>Advertising AED 500 </li></ul><ul><li> = AED 1 400 </li></ul><ul><li>NET PROFIT = AED 3 000 – 1 400 </li></ul><ul><li> = AED 1 600 </li></ul>
• 5. Projected Cash Flow 2 200 2 200 2 200 Total cash outflows: 26 400 21 600 17 800 Closing bank balance 4 800 3 800 2 800 Net cash flow 200 200 200 Rent 2 000 2 000 2 000 Raw materials Cash outflows: 7 000 6 000 5 000 Total cash inflows: 7 000 6 000 5 000 Cash sales Cash Inflows: 21 600 17 800 15 000 Opening bank balance March February January
• 6. Projected Balance Sheet <ul><li>The Balance Sheet shows Popple Beverage Company’s value of assets and liabilities at a particular time. </li></ul><ul><li>Assets are those items which are owned by Popple. </li></ul><ul><li>Liabilities are items owed by Popple to other business. </li></ul>AED 1 160 Capital employed AED 300 Long-term liabilities AED 500 + 360 = AED 860 Shareholders’ funds AED 1 160 Net assets AED 10 Working capital AED 130 Current liabilities AED 140 Current Assets AED 1 150 Fixed Assets
• 7. Business Ratios <ul><li>PERFORMANCE RATIOS: </li></ul><ul><li>Return on net assets (%) = Operating Profit x 100 </li></ul><ul><li>Net Assets </li></ul><ul><li>Gross profit margin (%) = Gross profit x 100 </li></ul><ul><li>Sales turnover </li></ul><ul><li>Net profit margin (%) = Net profit after tax x 100 </li></ul><ul><li>Sales turnover </li></ul><ul><li>LIQUIDITY RATIOS: </li></ul><ul><li>Current ratio = Current assets </li></ul><ul><li>Current liabilities </li></ul><ul><li>Acid test/liquid ratio = Current assets – stocks </li></ul><ul><li>Current liabilities </li></ul><ul><li>Stock turnover ratio = Cost of sales </li></ul><ul><li>Stocks </li></ul>