Financial Planning and Analysis for New Venture Creation Project

This document presents a financial analysis and business plan for a new venture, detailing startup costs, funding sources, and key assumptions. It includes a profit and loss account, cash flow forecasts, and a balance sheet projecting financial performance over three years. The analysis incorporates a break-even analysis, contingency planning, and key ratio analysis to assess the venture's viability and potential risks. The report also outlines assumptions regarding sales growth, tax rates, and operational expenses. The venture aims to secure funding through a combination of borrowing and equity contributions from partners. Desklib offers this document and many more solved assignments for students.

Running head: NEW VENTURE CREATION
New venture creation
Name of the student
Name of the university
Student ID
Author note

1NEW VENTURE CREATION
Table of Contents
Initial requirement......................................................................................................................2
Sources of funds.........................................................................................................................2
Assumptions made.....................................................................................................................2
Profit and loss account...............................................................................................................3
Cash flow forecasts....................................................................................................................5
Balance sheet..............................................................................................................................6
Break-even analysis...................................................................................................................6
Contingency planning................................................................................................................7
Key ratios and analysis...............................................................................................................8
References and Bibliography.....................................................................................................9

2NEW VENTURE CREATION
Initial requirement
START-UP COSTS Cost
Registrations
Business name £ 2,000.00
Licences £ 7,500.00
Permits £ 2,500.00
Domain names £ 3,100.00
Trade-marks/designs/patents £ 12,000.00
Membership fees £ 12,000.00
Accountant fees £ 15,000.00
Rental lease cost (Rent advance/deposit) £ 12,000.00
Utility connections & bonds (Electricity, gas, water) £ 9,000.00
Phone connection £ 3,000.00
Internet connection £ 7,500.00
Computer software £ 30,000.00
Training £ 5,000.00
Wages £ 20,000.00
Insurance
Building & contents £ 40,000.00
Product liability £ 45,000.00
Workers compensation £ 35,000.00
Printing £ 15,000.00
Stationery & office supplies £ 15,400.00
Marketing & advertising £ 19,000.00
Total start-up costs £ 3,10,000.00
Sources of funds
As per the above forecasting the start-up cost requirement will be £ 310,000. Out of
the total requirement £ 250,000 will be raised through borrowing and £ 60,000 will be
contributed by 6 partners £ 10,000 each.
Assumptions made
For the financial aspects of the business plan following assumptions have been made
–

3NEW VENTURE CREATION
 Debt will be raised from banks at the rate of 15% per annum for the entire borrowing
of £ 250,000.
 Sales for the 1st year will be £ 13,00,000 and cost of goods sold will be 60% of the
sales. Sales will be increased by 10% in 2019 as well as in 2020.
 Rate of tax on taxable income will be at the rate of 30%
 Payroll expenses for 1st year will be £ 80,000 for 2 people and the cost for developer 1
will be £ 70,000 and developer 2 will be £ 10,000.
 Rent and rates will be paid quarterly.
 Insurance expenses for the 1st six months will be £ 2000 per month and thereafter will
be increased by £ 166.67 for the rest of the months of the year.
 Payroll expenses and superannuation expenses will be same for all the months for 1st
year.
 Other expenses have been charged as and when incurred.
Profit and loss account
Income statement forecast
Particulars 2018 2019 2020
Sales £13,00,000.00 £14,30,000.00 £ 15,73,000.00
Cost of goods sold £ 7,80,000.00 £ 8,29,400.00 £ 8,65,150.00
Gross profit £ 5,20,000.00 £ 6,00,600.00 £ 7,07,850.00
Gross profit % 40% 42% 45%
Other income £ 2,30,000.00 £ 2,70,000.00 £ 3,10,000.00
Total income £ 7,50,000.00 £ 8,70,600.00 £ 10,17,850.00
Expenses
Accountants fees £ 54,000.00 £ 42,000.00 £ 48,000.00
Advertising and marketing £ 92,000.00 £ 80,000.00 £ 65,000.00
Bank fees and charges £ 56,000.00 £ 52,000.00 £ 46,000.00
Bank interest £ 7,000.00 £ 12,000.00 £ 16,000.00
Credit card fees £ 6,000.00 £ 7,000.00 £ 12,000.00
Utilities £ 22,000.00 £ 24,000.00 £ 29,000.00
Telephone charges £ 5,763.00 £ 2,200.00 £ 6,900.00
Loan payments £ 70,000.00 £ 70,000.00 £ 70,000.00
Rent and rates £ 4,200.00 £ 4,900.00 £ 5,400.00

4NEW VENTURE CREATION
Repairs and Maintenance £ 2,810.00 £ 3,260.00 £ 4,130.00
Stationary and printing £ 8,000.00 £ 14,000.00 £ 16,000.00
Payroll expenses £ 80,000.00 £ 90,000.00 £ 80,000.00
Insurance £ 25,000.00 £ 20,000.00 £ 25,000.00
Superannuation £ 65,000.00 £ 65,000.00 £ 75,000.00
Total Expenses £ 4,97,773.00 £ 4,86,360.00 £ 4,98,430.00
Profit before taxes £ 2,52,227.00 £ 3,84,240.00 £ 5,19,420.00
Taxes paid @ 30% £ 75,668.10 £1,15,272.00 £1,55,826.00
Net Profit after tax £1,76,558.90 £2,68,968.00 £3,63,594.00
Profit/loss percentage 13.58% 18.81% 23.11%

NEW VENTURE CREATION 5
Cash flow forecasts
Cash flow forecast
Particulars Jan Feb Mar Apr May June July August Sept Oct Nov Dec
OPENING
BALANCE
£
60,000.00 £ 83,744.83
£
1,20,313.5
0
£
1,20,627.00
£
1,91,722.33
£
2,45,375.67
£
2,94,559.00
£
3,52,737.67
£
4,32,250.43
£
5,16,766.30
£
5,93,556.97
£
6,75,983.73
Cash incoming
Sales
£
72,000.00
£
84,000.00
£
95,000.00
£
1,20,000.00
£
1,05,000.00
£
98,000.00
£
1,10,000.00
£
1,20,000.00
£
1,27,000.00
£
1,15,000.00
£
1,22,000.00
£
1,32,000.00
Other income
£
-
£
2,000.00
£
3,000.00
£
-
£
-
£
1,000.00
£
-
£
-
£
2,000.00
£
-
£
-
£
-
Total incoming
£
72,000.00 £ 86,000.00
£
98,000.00
£
1,20,000.00
£
1,05,000.00
£
99,000.00
£
1,10,000.00
£
1,20,000.00
£
1,29,000.00
£
1,15,000.00
£
1,22,000.00
£
1,32,000.00
Cash outgoing
Accountants
fees
£
4,000.00
£
4,000.00
£
4,000.00
£
4,000.00
£
4,000.00
£
4,000.00
£
5,000.00
£
5,000.00
£
5,000.00
£
5,000.00
£
5,000.00
£
5,000.00
Advertising
and marketing
£
10,000.00
£
10,000.00
£
9,000.00
£
9,000.00
£
9,000.00
£
7,500.00
£
7,500.00
£
7,500.00
£
7,500.00
£
5,000.00
£
5,000.00
£
5,000.00
Bank fees and
charges
£
4,666.67
£
4,666.67
£
4,666.67
£
4,666.67
£
4,666.67
£
4,666.67
£
4,666.67
£
4,666.67
£
4,666.67
£
4,666.67
£
4,666.67
£
4,666.67
Bank interest £
583.33
£
583.33
£
583.33
£
583.33
£
583.33
£
583.33
£
583.33
£
583.33
£
583.33
£
583.33
£
583.33
£
583.33
Credit card
fees
£
584.00
£
433.00
£
512.00
£
433.00
£
390.00
£
510.00
£
560.00
£
413.00
£
417.00
£
583.00
£
570.00
£
595.00
Utilities £
1,600.00
£
1,800.00
£
2,100.00
£
1,700.00
£
1,800.00
£
1,900.00
£
1,700.00
£
1,400.00
£
2,200.00
£
1,900.00
£
1,700.00
£
2,200.00
Telephone
charges
£
563.00
£
590.00
£
520.00
£
490.00
£
440.00
£
420.00
£
470.00
£
430.00
£
420.00
£
480.00
£
430.00
£
510.00
Loan
payments
£
5,833.33
£
5,833.33
£
5,833.33
£
5,833.33
£
5,833.33
£
5,833.33
£
5,833.33
£
5,833.33
£
5,833.33
£
5,833.33
£
5,833.33
£
5,833.33
Rent and rates £
- £ -
£
1,050.00
£
-
£
-
£
1,050.00
£
-
£
-
£
1,050.00
£
-
£
-
£
1,050.00
Repairs and
Maintenance
£
-
£
350.00
£
-
£
-
£
750.00
£
-
£
600.00
£
-
£
-
£
510.00
£
-
£
600.00
Stationary
and printing
£
883.00
£
791.67
£
583.33
£
615.00
£
460.00
£
970.00
£
345.00
£
677.00
£
600.00
£
750.00
£
600.00
£
725.00
Payroll expenses
£
6,666.67
£
6,666.67
£
6,666.67
£
6,666.67
£
6,666.67
£
6,666.67
£
6,666.67
£
6,666.67
£
6,666.67
£
6,666.67
£
6,666.67
£
6,666.67
Insurance £
2,000.00
£
2,000.00
£
2,000.00
£
2,000.00
£
2,000.00
£
2,000.00
£
2,166.67
£
2,166.67
£
2,166.67
£
2,166.67
£
2,166.67
£
2,166.67
Superannuatio
n
£
5,416.67
£
5,416.67
£
5,416.67
£
5,416.67
£
5,416.67
£
5,416.67
£
5,416.67
£
5,416.67
£
5,416.67
£
5,416.67
£
5,416.67
£
5,416.67
Income tax
£
5,458.50
£
6,300.00
£
7,200.00
£
7,500.00
£
9,340.00
£
8,300.00
£
10,313.00
-£
266.10
£
1,963.80
-£
1,347.00
£
939.90
£
3,165.90
Total outgoing
£
48,255.17 £ 49,431.33
£
97,686.50
£
48,904.67
£
51,346.67
£
49,816.67
£
51,821.33
£
40,487.23
£
44,484.13
£
38,209.33
£
39,573.23
£
44,179.23
Monthly cash
balance
£
23,744.83
£
36,568.67
£
313.50
£
71,095.33
£
53,653.33
£
49,183.33
£
58,178.67
£
79,512.77
£
84,515.87
£
76,790.67
£
82,426.77
£
87,820.77
CLOSING
BALANCE
£
83,744.83
£ 1,20,313.50 £
1,20,627.0
£
1,91,722.33
£
2,45,375.67
£
2,94,559.00
£
3,52,737.67
£
4,32,250.43
£
5,16,766.30
£
5,93,556.97
£
6,75,983.73
£
7,63,804.50

NEW VENTURE CREATION 6
0

7NEW VENTURE CREATION
Balance sheet
Balance sheet forecast
Particulars 2018 2019 2020
Current assets
Cash £ 7,63,804.50 £ 6,61,018.00 £ 6,83,644.00
Accounts receivables £ 25,000.00 £ 32,000.00 £ 29,000.00
Inventory £ 20,000.00 £ 1,90,000.00 £ 1,50,000.00
Total current assets £ 8,08,804.50 £ 8,83,018.00 £ 8,62,644.00
Non-current assets
Plant, property & equipment £ 50,000.00 £ 50,000.00 £ 45,000.00
Land and building £ 40,000.00 £ 40,000.00 £ 45,000.00
Furniture & fittings £ 5,000.00 £ 5,000.00 £ 15,000.00
Computer equipment £ 10,000.00 £ 10,000.00 £ 15,000.00
Total non-current assets £ 1,05,000.00 £ 1,05,000.00 £ 1,20,000.00
Total assets £17,22,609.00 £ 9,88,018.00 £ 9,82,644.00
Current/short-term liabilities
Accounts payable £ 7,20,000.00 £ 2,80,000.00 £ 3,10,000.00
Bank charges payable £ 1,20,000.00 £ 35,000.00 £ 46,000.00
Interest payable £ 40,000.00 £ 14,000.00 £ 16,000.00
Accrued wages £ 85,000.00 £ 52,000.00 £ 51,000.00
Income tax £ 95,000.00 £ 52,000.00 £ 35,000.00
Total current liabilities £ 10,60,000.00 £ 4,33,000.00 £ 4,58,000.00
Long-term liabilities
Borrowings £ 2,50,000.00 £ 50,000.00 £ 25,000.00
Total liabilities £13,10,000.00 £ 4,83,000.00 £ 4,83,000.00
Owner's equity
Issued capital £ 1,76,050.00 £ 1,76,050.00 £ 76,050.00
Shareholder's equity £ 60,000.00 £ 60,000.00 £ 60,000.00
Retained earnings £ 1,76,559.00 £ 2,68,968.00 £ 3,63,594.00
Total equity £ 4,12,609.00 £ 5,05,018.00 £ 4,99,644.00
Toal liabilities and equity £17,22,609.00 £ 9,88,018.00 £ 9,82,644.00
Break-even analysis
Break -even analysis
Timeframe (e.g. monthly/yearly)
Average price of each product/service sold £ 1,800.00
Average cost of each product/service to make/deliver £ 1,100.00
Fixed costs for the month/year £ 2,10,000.00

8NEW VENTURE CREATION
Profit percentage 38.89%
Total sales needed to break-even £ 5,40,000.00
Number of units sold needed to break-even 300
100 unit 300 unit 500 unit
£-
£100,000.00
£200,000.00
£300,000.00
£400,000.00
£500,000.00
£600,000.00
£700,000.00
£800,000.00
£900,000.00
£1,000,000.00
£180,000.00
£540,000.00
£900,000.00
£320,000.00
£540,000.00
£760,000.00
Break even analysis
Sales revenue
Total cost
Contingency planning
The contingency planning will be prepared for helping the management to overcome
or face the possible future circumstances or events (Authority 2016). The contingency plan
will include the system programming, internal auditors, applications programming, legal
department, safety, security and fire plan, insurance, responsibility, communications. Further,
the app can be developed or modified as per requirement. The plan will include the following
–
Problem Response
App not responding The client can report the issue online and the
solution will be provided in 24 hrs of time after
checking all the details of the user.
Non-availability of signal in client’s end In such circumstances the client must notify the

9NEW VENTURE CREATION
issue through the 24 hrs customer care services
and shall follow the instructions as will provided
by the customer care executive
Mobile Phone of the client lost or stolen The client can suspend the service through calling
the service centre number immediately and then
again start the service on new handset through
login password.
Key ratios and analysis
Ratio 2018 2019 2020 Analysis
Current ratio 0.76 2.04 1.88 The current ratio of the company for
the year 2018 will be lower than the
average that is 1, however, it is
expected to improve from next year
Debt equity ratio 3.17 0.96 0.97 The debt ratio of the company for the
year 2018 is quite high that is
funding through borrowing is high.
However, it is expected to improve
from next year (Vogel 2014)
Return on equity 0.43 0.53 0.73 Both ROA and ROE of the company
are expected to improve from the
2nd year that is from 2018 as the net
profit of the company is expected to
improve
Return on assets 0.10 0.27 0.37
Net profit margin 13.58% 18.81% 23.11% Net margin is expected to increase
each year as the sales will increase at
10% each year (Brigham and
Ehrhardt 2013)

10NEW VENTURE CREATION
References and Bibliography
Authority, N.I.F.H., 2016. Business Plan 2016/17.
Brigham, E.F. and Ehrhardt, M.C., 2013. Financial management: Theory & practice.
Cengage Learning.
Finch, B., 2016. How to write a business plan. Kogan Page Publishers.
Vogel, H.L., 2014. Entertainment industry economics: A guide for financial analysis.
Cambridge University Press.