Comprehensive Financial Analysis: Business Plan for Contracting School

This document presents a detailed financial analysis for a contracting school business plan, including a pro forma income statement, balance sheet, and cash budget. Key assumptions and justifications are provided for each financial statement component, such as revenue recognition, grant contr...Read More

Running Head: BUSINESS PLAN 0
Financial Analysis

Running Head: BUSINESS PLAN 1
Table of Contents
Introduction................................................................................................................................2
STATEMENT OF PRO FORMA COMPREHENSIVE INCOME...........................................2
Assumptions and Justifications..............................................................................................4
Statement of Financial Position.................................................................................................5
Assumptions and justifications...............................................................................................6
Cash Budget...............................................................................................................................7
Assumptions and justifications...............................................................................................9
Scrutiny......................................................................................................................................9
Valuation..................................................................................................................................10
Conclusion................................................................................................................................11
References................................................................................................................................12

Running Head: BUSINESS PLAN 2
Introduction
To derive a business plan several layers needs to be included. The overall financial
needs of the business shall be overviewed with respect to the desired assets purchased to keep
the business for the long run. A contracting school engages in the community outreach, and
for this purpose the business requires specific amount of funding. A place whether purchased
or leased or rental for starting the contracting school. Also the funds would be required to get
equipment that the business would require for training the people. The contracting school also
requires huge amount of advertisement so that people get to know about the courses
available, the fees and they can compare the same. The company also needs to tie up with
other companies to provide placement to trained people.
There are various alternatives available for financing. Either the contractor school can
get short term or long-term funds or a combination of both depending upon the needs. The
priority shall be the highest level of liquidity so that the contractor school. Short term
methods of financing involve, taking loan from the banks, investment in funds and on the
other hand short term loans can be derived from the money lenders. Long term financing
involves arrangement of funds from the financial institution and long term loans from banks.
Therefore, the requirements of the business form the basis of the type of financing that the
company will require.
For the purpose of the business plan a pro forma balance sheet, income statement, ad cash
budget is prepared to have an in-depth analysis of the start-up.
Statement of pro forma comprehensive Income
FOR THE YEAR ENDED on 31ST MARCH 2018

Running Head: BUSINESS PLAN 3
Particulars Notes Amount
EXPENSES EXCLUDING LOSSESS
OPERATING EXPENSES
EMPLOYEE
RELATED 2a 1107300
PERSONNEL SERVICES 2b 1600
OTHER OPERATING
EXPENSES 2c 500768
MISC. EXPENSES 2d 6420
DEPRICIATION AND
AMORTISATION 2e 145600
TOTAL EXPENSES EXCLUDING LOSSES 1761688
REVENUE
SALE OF GOODS AND SERVICES 3a 2943040
INVESTMENT REVENUE 3b 6340
GRANTS AND CONTRIBUTIONS 3c 1236190
ACCEPTANCE BY CROWN
ENTITY OF EMPLOYEE BENEFITS AND
OTHER
LIABILITIES 3d 48450
OTHER REVENUE 6532
Total Revenue 4240552

Running Head: BUSINESS PLAN 4
GAIN/LOSS ON DISPOSAL 4 1460
OTHER LOSSES 5 -35220
Net Result 2442184
Assumptions and Justifications
The financial statements are general purpose financial statements for any company.
These statements are prepared on the basis of the accrual methods in accordance with:
 Accounting standards of United States (which includes evaluations from United States
accounting) and
 The financial reporting directors which are compulsory to be followed by the treasure.
The following key assumptions and judgements have been applied by the
management in preparing the financial statements.
Note 3a-Sale of goods and services includes the duration of the enrolments of the students for
the purpose of the recognition. It determines the number of students who are going to enrol
for the courses and the services are delivered to them. The sales also involve the fees of the
entire course material (Warren & Jones, 2018).
Note 3b- The grants and contributions are received via donations from the financial
institutions. Grants are provided by the Skills and Regional Development Department, the
Commonwealth, governmental organisations and third party entities.
Note 3c- Employee benefits and other liabilities include insurance benefits, retirement
benefits ad vacation policy.

Running Head: BUSINESS PLAN 5
Statement of Financial Position
FOR THE YEAR ENDED on 31ST MARCH 2018
Particulars Notes Amount
ASSETS
Current Assets
Cash and cash equivalents 6 459620
Receivables 7 270510
Total Current Assets 730130
Non-Current Assets
Receivables 7 4520
Property
Land & building 8 1034310
Plant and Machinery 8 56450
Total Property, Plant and
Equipment 1090760
Intangible Assets 9 35600
Other Financial Assets 10 362
Total Non-Current Assets 1126722
Total Assets 1856852
Liabilities
Current Liabilities
Payables 11 284884

Running Head: BUSINESS PLAN 6
Provisions 12 692040
Total Current Liabilities 976924
Non-current Liabilities
Provisions 13 8560
Total Non-Current
Liabilities 8560
Total Liabilities 985484
Net Assets
Equity
Reserves 14 2992480
Accumulated funds 15 1875450
Total Equity 4867930
Assumptions and justifications
Note 7 Current/Non-current Assets – Receivables – Management have estimated the
allowance for the impairment in accordance with the relevant accounting policy.
Note 8 Non-Current Assets –Property and Equipment- land and building were
purchased in the start of the January month, and further plant and machinery for practical
applications by students was purchased in the month of June (Goddard, 2017).
Note 11-Payables includes the creditors from the educational material have been
purchased to be attributable to the students (Mohapatra, 2016).

Running Head: BUSINESS PLAN 7
Note 12-Provisions-Provisins regarding the estimation of the settlement of
employment benefits and related costs.
Note-13-Provisions include the payables like rent, electricity, telephone, salary to
employees.
Cash Budget
Months
Jan
uar
y
Feb
ruar
y
M
arc
h
Ap
ril
Ma
y
Jun
e
Jul
y
Au
gus
t
Sept
emb
er
Oct
obe
r
Nov
emb
er
Dece
mbe
r
Receipts
Cash Sales
248
980
244
560
24
36
65
242
960
245
620
244
350
243
250
244
680
2485
60
244
230
2456
20
2465
65
Loan
123
256
0
Total
Receipts
148
154
0
244
560
24
36
65
242
960
245
620
244
350
243
250
244
680
2485
60
244
230
2456
20
2465
65
Payments

Running Head: BUSINESS PLAN 8
Cash
Purchases
402
00
412
30
42
88
4
436
55
435
40
405
73
413
36
400
40
4238
5
419
74
4061
6
4233
5
Creditors
234
50
224
60
25
68
4
235
60
225
90
245
60
251
70
226
50
2365
4
245
96
2394
0
2257
0
Fixed
Assets
103
431
0
924
12
Expenses 535 535
53
5 535 535 535 535 535 535 535 535 535
Total
Payments
105
776
0
224
60
25
68
4
235
60
225
90
116
972
251
70
226
50
2365
4
245
96
2394
0
2257
0
Net
Receipts/P
ayments
423
780
222
100
21
79
81
219
400
223
030
127
378
218
080
222
030
2249
06
219
634
2216
80
2239
95
Add:
Opening
Balance
439
80
467
760
68
98
60
907
841
112
724
1
135
027
1
147
764
9
169
572
9
1917
759
214
266
5
2362
299
2583
979
Closing
Balance
467
760
689
860
90
78
41
112
724
1
135
027
1
147
764
9
169
572
9
191
775
9
2142
665
236
229
9
2583
979
2807
974

Running Head: BUSINESS PLAN 9
Assumptions and justifications
 It is assumed that the 80% of the sales are in cash and the rest of the sales are in
credit.
 The loan is taken in the starting to purchase partial land and building and plant and
machinery.
 It is assumed that the stores, the materials for practical training given to the students
have been acquired by the creditors (Rajasekaran, 2014).
 Fixed assets have been purchased in the beginning as well as in the middle of the
month. It is assumed that the partial amount is taken from the bank and partially is
self- invested. However, it is a onetime investment. There are certain expenses of the
miscellaneous nature which are fixed in nature and have been incurred monthly.
 Further, the closing balances have been carrying forwarded after the end of each
month as the opening balances for the next month (Tracy, 2016).
Scrutiny
Scrutiny of the tangible and
the intangible costs
Tangible Intangible
Land and building
Plant and Machinery
Goodwill
It is assumed that the small portion of the land and building is served by the loan from the
bank partially and a piece of land was already available. The rest of the assets like plant and
machinery have been taken against the loan form the bank fully (Ilott, 2013).

Running Head: BUSINESS PLAN 10
Valuation
Equity valuation
The main aim of equity valuation is to estimate the value of a firm or its security. This
method is based on the assumption that the value of security is driven by the fundamentals of
firm’s business at the end of the day. The techniques involve three main methods which are:
• Discounted cash flow
• The cost approach
• Comparable approach
The main purpose of comparable approach is that the value of equity should be same as the
value of other equities also, to some extent. In financial terms, equity valuation is the process
of measuring the fair market value of securities (Swain & Reed, 2014). It is very important
to use these techniques because it is basically a backbone of new financial system. It provides
companies sound business models and help those who have a drop in their valuation. The
importance of equity valuation is as follows:
• It is very beneficial for the entire stock market ecosystem.
• The art and science of the technique forces the modern economic system for allocating
scare capital efficiently among the various market participants.
• It helps in understanding the business as a whole and assists the investors to take correct
decisions.
• The data reflected by valuation is important for the shareholders and the potential
investors.
• With help of equity valuation a company can measure the performance of its stocks.

Running Head: BUSINESS PLAN 11
• Forecasting about the future trends become easy.
Conclusion
The implementation is satisfied as the start-up is running at a satisfactory level. It will take
time to pace up. Due to more advertising and better educational services the students will
enrol in this educational start-up for their upliftment of the future. Hence a solid business plan
is required for its survival.

Running Head: BUSINESS PLAN 12
References
Ittelson TR, (2013). Financial statements: A step-by-step guide to understanding and
creating financial report. New York: Springer.
Goddard, A. (2017). Grounded theory approach to accounting studies: overview of
principles, assumptions and methods. In The Routledge Companion to Qualitative
Accounting Research Methods, 10(3), 115-135.
Ilott, T. (2013). Budgets and Markets: A Study of the Budgeting of European Films.
California: Routledge.
Rajasekaran, V. L. (2014). Corporate Accounting. London: Pearson Education India.
Mohapatra, A. D. (2016). International accounting. United States: John Wiley & Sons.
Swain, J. W., & Reed, B. J. (2014). Budgeting for public managers. California: Routledge.
Tracy J.A, (2016). Accounting for dummies. United States: John Wiley & Sons.
Warren, C. S., & Jones, J. (2018). Corporate financial accounting. New York: Cengage
Learning.