busniess solution providers
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Semester Project Financial Management (69621)Summer-2015
Prepared By:
Muhammad Asif Khan (51271)
MBA (Operations Management)
Evening Program
PAF-KIET (City Campus)
Introduction:
After having a careful and thorough analysis of the increasing demand of the e-solutions to the business needs, we have been decided to establish the international standard software house to address those
business needs.
Our Vision:Would like to become an agile organization and wants to maintain ourselves as second to none.
Our Mission:We are committed to digitalize the each of every and every transaction of the organizations according their nature of business and as per their needs.
Objectives:
• To develop world class software for every customer.• To provide extraordinary after sales
services & support.• Acquisition & retention of customers
and transferring them into strategic business partner.
SWOT Analysis:
Strengths:Our exceptional software developers.Our updated software licenses.Our success on existing projects.Our exceptional offer of lifetime support & services to our valued customers.
SWOT Analysis:
Weaknesses:Lack of awareness among entrepreneurs effectiveness of technological development.Considering it as cost center rather than profit center.
SWOT Analysis:
Opportunities:A large potential market is available to serve.Currently less competitors existing in the market.Have an opportunity to capitalize the market through rendering exceptional services.
SWOT Analysis:
Threats:Entrance of multinational software houses in to the market.Introduction of new software technologies other than our licensors.
Costing Estimates:
Acquisition of Office: 21.00 PKR millionOffice Furniture, Fixtures & Equipment: 09.50 PKR millionPurchasing of Software Licenses: 32.50 PKR millionMarketing & Sales Activities: 06.50 PKR millionPurchasing of Office Vehicles: 12.50 PKR millionOffice Staff Salaries and Benefits: 04.00 PKR millionOther Office Overheads: 02.00 PKR millionTotal 88.00 PKR million
Proposed Financial Statements:Income Statement for the period ended Year 1 Year 2Net Sales Revenue 30.00 45.00
Less: Cost of Goods Sold (10.87) (20.00)Gross Profit 19.13
25.00Less: Fixed Operating expenses
except depreciation (21.03) (16.00)Depreciation Expenses (03.02) (03.02)Earnings before Interest & Expenses (EBIT) (04.92)
05.98Less: Interest Expense (00.60) (00.60)
Earnings before taxes (EBT) (05.52) 05.38Less: Taxes (40 %) (00.00)(02.15)
Net Income/Loss (05.52)03.23
Proposed Financial Statements:Balance Sheet as on June 30th
ASSETS Year 1Year 2
Current Assets:Cash & equivalents 05.00 07.00Accounts Receivables 15.00 25.00
Total Current Assets 17.00 32.00Fixed Assets:Office Building & Equipments 75.50 72.48
Less: Accumulated Depreciation (03.02) (03.02)Total Fixed Assets 72.48 69.46
Total Assets 89.48101.46
Proposed Financial Statements:Balance Sheet As on
(Amounts in millions of PKR)
LIABILITIES & EQUITIES Year1Year2
Current Liabilities:Account Payables 05.00 13.75Total Current Liabilities 05.00 13.75Long term Liabilities:Banks Loans 60.00 60.00Total Long Term Liabilities 60.00 60.00Total Liabilities 65.00 73.75Owners’ Equity:Initial Investment 30.00 24.48Retained Earning (05.52) 03.23Total Equities 24.48 27.71
Total Liabilities & Equities 89.48101.46
Proposed Financial Statements:Cash Flow Statement (Amounts in millions of PKR)
Year1 Year2
Operating ActivitiesRevenue through Sales 30.00 45.00
Less:Cost of Goods Sold (10.87) (20.00)Fixed operating expenses (21.03) (16.00)
Interest Charges (00.06) (00.06)Net cash flow Generated through operating activities (01.96) 08.94
Net Cash flow (01.96) 08.94
Proposed Financial Statements:Statement of Owner’s Equity
(Amounts in millions of PKR)
Year 1 Year2Opening Balance 30.00 24.48 Add/Less: Net Profit or Loss (05.52) 03.23 Less: Drawings (00.00) (00.00)
Total Owner’s Equities 24.48 27.71
Financial Ratios:
LIQUIDITY RATIOS:
Current Ratios= Current Assets =32.00
Current Liabilities 13.75 = 2.32 : 1
Working Capital= Current Assets – Current Liabilities= 32.00 - 13.75= 18.25 PKR Million
Financial Ratios:
ACTVITY / TURNOVER RATIOS:
Receivable Turnover= Sales
Average Receivable= 45.0020.00= 2.25 : 1
Financial Ratios:PROFITABILITY RATIOS:
Gross Profit Margin= Gross Profit = 25.00Sales
55.00 = 0.45 : 1
Operating Profit Margin=Operating Profit or EBITSales= 05.9845.00= 0.13 : 1
Financial Ratios:PROFITABILITY RATIOS:
Pre Tax Margins= EBT = 05.38Sales 45.00 = 0.11 : 1
Net Profit Margin= Net IncomeSales= 03.2345.00= 0.07 : 1
Financial Ratios:
LEVERAGE RATIOS:
Debt to Assets Ratio= Debt = 60.00Total Assets
101.46= 0.591 : 1
Debt to Equity Ratio= Debt = 60.00Equity
27.71= 2.165 : 1
Financial Ratios:
LEVERAGE RATIOS:
Times Interest Expenses= EBIT (Operating Income)
Interest Expenses = 05.980.60= 9.966 : 1
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