Financial Feasibility of Virtual Reality Business in Malaysia

Business
Entrepreneur
7 / 1 5 / 2 0 1 9

Business Entrepreneur 1
Contents
Financial feasibility.........................................................................................................................2
Sources and uses of funds statement...........................................................................................2
Assumption sheet.........................................................................................................................3
Pro forma of income statement....................................................................................................4
Pro forma of balance sheet..........................................................................................................5
Pro forma of cash flows...............................................................................................................6
Ratio analysis...............................................................................................................................8
References......................................................................................................................................11

Business Entrepreneur 2
Financial feasibility
In the new project, it becomes essential for company to conduct the financial feasibility, as it is
one of the most essential feasibility analyses. This analysis helps in understanding that project
lives up of its performance expectations (Penman, 2015). It is considered as the process through
which the profitability of Virtual reality in Malaysia on small scale can be estimated. The below
given are the financial projections related to the business of Virtual reality in Malaysia.
Sources and uses of funds statement
In the market of Malaysia, there is need of the effective sources as well as the uses of the funds
statement. The sources of the fund include cash invested by the group members in the business
and the loan taken by the company (Trotman & Carson, 2018). It has been found that 60% of the
funds come from the 5group members and 40% loan from bank. It has been assumed that the
capital required to the company for opening the business on small scale in Malaysia is 700000
because this business includes the new technology of virtual reality that requires a huge amount.
This amount is further used by the company for their business, which include investment in
technology, purchase of the machinery and equipment’s and many others. Moreover, it also
includes the amount required by the company for the daily operations.
Virtual reality in Malaysia
Sources and uses of funds statement
Sources of funds Amount
Capital Requirement and Sources of Capital
Equity
Amount from 5 group members MYR 420,000.00
Debt
Loan from bank MYR 280,000.00

Business Entrepreneur 3
MYR 700,000.00
Uses of funds
Uses Amount ($)
Fixed Expenses
Investment in technology MYR 150,000.00
Purchase of Machinery and equipment’s MYR 110,000.00
Rent MYR 20,000.00
Variable Expenses
Labor (7000*4) MYR 28,000.00
Office Staff (15000*2) MYR 30,000.00
Stores and Supplies MYR 20,000.00
Installation and maintained of machinery MYR 38,000.00
Working capital MYR 50,000.00
Total MYR 446,000.00
Assumption sheet
Assumption sheet
Funds
require
d
It is assumed that capital required for the company start-
up is 420000.
It is assumed that 71% of the capital will be bring by 5
members and remaining 29% will be gather through
loan from bank.
Income
statem
ent
It is expected that sales of company will increase by
12% and 18% in the year 2020 and 2021 respectively.
The expenses are expected to increase by 5%.
The tax rate is assumed as 30%.
Payment of loan interest is considered as 10%
Cash
flow
The cash sales in the cash flow statement are expected
as 25% of the total sales amount.