Cinema Caf

Lahore School of Economics

Submission Date: 14/9/2014
Submitted by: Abdul Basit
Student I.D: 13E00104

Contents
Executive
Sumamry
.3
Introduction of the business...................................................................................... 5
The Key People..................................................................................................... 6
Mission............................................................................................................... 6
Keys to Success.................................................................................................... 7
Market Segmentation.............................................................................................. 9
Environment...................................................................................................... 11
SWOT Analysis.................................................................................................. 14
Strengths of the Business....................................................................................... 14
Weaknesses of the Business.................................................................................... 14
Opportunities in the Marketplace.............................................................................14
Threats in the Marketplace..................................................................................... 15
Objectives......................................................................................................... 15
Marketing Plan................................................................................................... 16
Promotional Strategies.......................................................................................... 17
Advertising........................................................................................................ 17
Product and services:............................................................................................ 18
Management Summary......................................................................................... 20
Activities Schedule.............................................................................................. 23
Projected Profit and Loss....................................................................................... 25
Projected Cash Flow............................................................................................. 29
Balance Sheet..................................................................................................... 31

Executive Summary
This is a business plan for a restaurant with the best quality food and open air screening
of movies on a big cinema screen. Apart from the regular screening of the movies, gigs
and concerts will be organized every Sunday night. Good food has always been a need of
the Lahories. People of Lahore look for the new places where they can find the best
quality food with an entertaining environment. Because of this, this new venture would
be of great success because of the unique offering of live music and movie screening.
Although the competition is immense in this industry. Every day we see the launch of
new restaurants in Lahore, but very few succeed in surviving in this competition. People
look for the uniqueness and our restaurant would be a totally new experience for the
people of Lahore. In today's highly competitive environment, it is becoming
increasingly more difficult to differentiate one restaurant concept from another. Cinema
Caf does this by being the only where one can get the fun of watching his/her favorite
movie on the cinema screen along with the best quality food.
Cinema Caf is a theater/restaurant business that believes there is a significant number of
theater-goers that are craving a more satisfying and enjoyable way to catch a movie and a
bit to eat. Cinema Caf is renovating the downtown Majestic Theater and creating a
medium-size restaurant that will show second-run movies that have proven to still be
popular to our target market. We will offer a totally unique dining and movie experience
at an affordable price that will fill the theater space with repeat customers.
Cinema Caf is a one-stop movie theater and restaurant. We combine movies with a
casual dining experience, featuring a full-service menu offering a wide selection of food.
Choices include half-pounder burgers, homemade pizzas, chicken sandwiches, wings,
french fries, appetizers, and fresh salads, along with mouth watering beverages. Of
course, you can get traditional concession items such as soft drinks, candy, and freshpopped popcorn. Food at Cinema Caf is not what you would expect. It is restaurant
quality, cooked at the time of order placement, and served hot and delicious.
3

With a warm atmosphere, more than reasonable pricing, exciting movies, rocking music,
parties and events, outstanding food, and the beverage of your choice, Cinema Caf has
all the right moves for the whole family.

Customer satisfaction is paramount. When approached by a customer with a request, our

motto will be, "Yes is the answer; what is the question?" We will strive for broad appeal.
We want to be the restaurant of choice for everyone: families and singles, young and old,
male or female.
Employee welfare will be equally important to our success. All will be treated fairly with
the utmost respect. We want our employees to feel a part of the success of Cinema Caf.
Happy employees make happy guests.
We will combine menu variety, atmosphere, ambiance, and friendly staff to create a sense
of "place" in order to reach our goal of over-all value in the dining/entertainment
experience.

Introduction of the business

Are you a food lover or a film buff? But why pigeonhole ourselves. For those of us who
refuse categorization, then come and Experience the Outdoor Cinema and exciting gigs
featuring the best quality food in Lahore. It's the ultimate picnic in the park - no basket
required! Kick back and enjoy your gourmet street food in a beautiful park under the
stars. Our outdoor cinema screenings will hopefully provide a boost to tourism by
attracting hundreds of people to watch films in spectacular settings in future. Cinma
Caf is a unique entertainment opportunity for you, your friends and family. Over here,
one not only does get to see films for free in a fun and festive environment, but you also
get to quality foods in deals. A variety of quality, reasonably priced snack items and
beverages will keep customers satisfied during their movie experience. Admission is free
- all you pay is the price of the mouth-watering meals you'll inevitably wind up
purchasing. Good sight lines, the best of technology installed, and offer views to die for.
It is the ultimate outdoor experience: great films, great sound, great food, and great
company under the stars. We will be featuring films, matches on huge outdoor screen
with the best quality food of your choice. Cinemagoers can relax with some quality food
that we will provide at a nominal and affordable price, while listening to the sunset
sounds of acoustic sets from emerging musicians. Food and movies go together like, well,
popcorn and movies. Since food is one of the central themes of life, it stands to reason
that it would make a good theme for the cinema.
Name of the restaurant is cinema caf. The name is self explainatiry. It describes that the
services would be something related to cinema and food. Our core services include best
quality food with the screening of movies on a cinema screen for the customer to get the
feeling and experience of every mode of entertainment. The name of the restuant truly
reflects the services offered.
Location of our resturant would be in the suburbs of Lahore. As it would be a 3 canals
space so making the resturant in the suburbs would cost me comparitively low.

The Key People

Employees include hosts, kitchen staff, serving staff, technical staff, security staff and
cleanup staff, sufficient to cover the hours of operation, prep-time and cleanup.
Restaurant serving hours begin at 3 PM and the restaurant closes at 2:00 AM. Initially 10
people will be required for the operations where 4 will be in kitchen including a head
chef, 2 for technical purposes, 2 for restaurant services and 2 for security purposes.

Mission
Cinema Cafs mission is to create a new theater experience for our customers that will
be so enjoyable and satisfying that they will return often and recommend Cinema Caf to
their friends and family. Our customers will be delighted with our level of service, the
quality of the food, and a theater environment that is second to none. When the film ends
and the applause die out, we believe that our customers will prefer to watch a new movie
at Cinema Caf rather than to ever be squeezed into a Megaplex again.

Keys to Success

Selection of popular films that work best in the group viewing environment; i.e.
comedies, scary or adventure films.

Provide exceptional service that leaves an impression.

Consistent entertainment atmosphere and product quality.

Managing our internal finances and cash flow to enable upward capital growth.

Strict control of all costs, at all times, without exception.

Hiring the best people available, training, motivating and encouraging them, and
thereby retaining the friendliest, most efficient staff possible.
Industry Analysis
6

Who are the competitors?

Due to the rapid growth in the entertainment industry in past few years there are many
new cinemas entering the market. There are some who are well established in the market
and can give my business a strong competition. Cinemas such as DHA Cinema and
Cinestar are top at the list. It also includes Restaurants and cafes who present a potential
complimentary offering that we might exploit later through strategic alliances.
What percentage of the market share do they have?
60 % to 70% of the market share is held by these giant companies where they give the
services to their customers on regular bases and at a slightly less prices to maintain strong
customer base to gain MAXIMUM OF THE MARKET share and through effective
marketing policies .
How long have they been in business?
They are almost new entrants as this is a totally new trend that is being followed up and
the competitors have been in the businesses for not more than five to six years a recent
example of it can be DHA and cine stars that are recently come into entertainment based
business activities

Is the market stable or changing, with new competitors entering and/or leaving?
The market is changing as the social values attitudes and tastes of people are changing
due to globalization and lot of new businesses are exploring the potential of the market an
example of it can be new cafes and cinemas opening up in areas like DHA and Gulberg
etc.
What is the competitive edge of the principal competitor?
These include their experience, brand name, economies of scale that they attain through
operating efficiently, other variables that give them a competitive advantage over us in
their high responsiveness to the change in needs and demands of their customers
7

How profitable and efficient are they?

They are very profitable and efficient as they are very few in the number so only they
maintain high market share. They maintain efficiency by providing quality food and
entertainment at a very low price, so they are both at the same time profitable and
efficient
How do customers rate the principal competitor?
They rate them high as they provide services to them at very lower price by maintaining
economies of scale and operating in the most cost effective manner.
Are they active in the market place?
Yes they are very active in the market as they keep an eye on the changing demands and
needs of their customers by changing the product or modifying it. They have to be active
in order to high market share

Market Analysis
We believe that our unique dining environment with an unforgettable experience of
movie screening and music will attract our target customers. Once inside, the customer
will find watching a movie at comfortable seating, while enjoying great food, is an
experience to repeat again and again with friends.
We cannot survive just waiting for customers to come to us. Instead, we must focus on
the specific market segments whose needs match our offerings. Focusing on targeted
segments is the key to our future. We will attract customers with live performances
and distribution of brochures. Therefore, we need to focus our marketing message and
our product offerings. We need to develop our message, communicate it, and make good
on it

Market Segmentation
Families:
8

The focus will be on parents with children who want to catch a movie with food in the
afternoon or early evening, before or after shopping at the downtown mall.
Young Adults:
The second group that will be focused is young adults ages 18 - 26 for the evening
shows. We believe that this target group will enjoy this unique way to watch a film and
Cinema Caf will become a common place for friends to have an affordable evening's
entertainment together.

Families
Young Adults

What are the boundaries of my target market?

These are geographical boundaries by this I mean that I would not be possible to operate
out of Lahore. Yes later on we shall extend our boundaries for a greater market share this
can be done when we maintain a strong customer base
Will I be dealing with more than one customer segment?
I will be dealing with, more than one customer segment that includes the food lover,
movie lovers and music lovers. My aim would be to target all the three segments.
How often do they buy?
9

They will avail my service as often as possible as it is totally entertainment based there
would be only few customers from whom we can accept that that shall be rarely going to
purchase our services .
How much do they buy at one time?
The type of service I shall be selling is not an individual based in fact people would like
to come in groups or pairs there is very less probability that individuals will be attending
that is why I assume the customers to be buying in deals

Do they buy randomly or at specific times?

It can be both at specific times and randomly depending on the condition and the needs of
the customer .for example in case a release of new movie or screening of football, cricket
matches we can expect that customer will be buying for specific times but if there want to
get regular entertainment then that will be randomly.
Do some customers account for a high percentage of purchases?
Yes they will account for high percentage of purchases as we plan to target the movie, fun
and entertainment lovers .we can accept a much greater increase in percentage purchases
with better movies and special screening of matches
What percentage of the market can I expect in Year 1? Year 2? Year 3?
In the first two three years we cant except to cater to a larger customer base because of
the market share shall be very low for example in the first Year 1 around 4%, :Year 2:
7%, Year 3: Up to 12%
What are the existing distribution channels and structure of the market?
Market Structure is competitive as there are some competitors such as DHA Cinema,
Cinestar. Our competitors will also be some cafes who offer the facility of match
screening with food. They include Zee grill mini golf, Caf Rock, Hot Fuzon. So the
market is competitive. The existing through internet, telecommunication and brochures
10

Environment
What are the social trends?
The social trends are changing over the years due to globalization as people are becoming
more aware and socially active in the changing environment their values and believes are
changing with the changing environment. Moreover, in this rapidly changing world
where everyone is struggling, there are many few places where they can relax themselves
and can spend the quality time with their friends and families.

What are the economical factors?

Due to increase in competition and new companies entering the market, the prices of
kitchen equipments have gone down. Moreover, the prices of projectors, sound systems
and other technical appliances have also lowered.
What are the political factors?
There are some of the political forces e.g. IJT, J.I, etc. that are against all this which needs
to be catered as these are totally against all such entertainment that we plan to sell to our
customers Other political factors include the unstable government and their changing
policies over time.
What are the technological trends?
There is always new technology coming up within the entertainment and food industry,
which is more attractive to the people which help us in getting more customers attracted.
Companies are coming up with innovation in technology. And people are more aware of
the changing technological trends and expect the same from the growing entertainment
industry.
Demographics of the target market:

11

My services will be used by the families as well as by the young adults. Age bracket of
the consumers is 15 onwards. That will include mostly the students of different colleges
and universities such as LSE, LUMS, NCA, BNU.
Families - this segment focuses on adults and parents with younger children who don't
need to see the latest movies on release and seek an inexpensive, quality, family-oriented
entertainment experience.
Young adults - this segment is comprised of the 16-35 year old age group. This group
is interested in seeing comedy and action/adventure type movies that are not directed at
the younger and family markets

What will be the key external influences in the marketplace in the next three years?
The external influences include hyper inflation, slow economic growth, unstable
government, higher interest rates, and energy crises. These factors can influence my
business in a negative way, until these conditions are made favorable.
How will these influences affect the competition?
The above mentioned factors will have a negative effect on the competition. As, the
profits will go down and all the competitors will look for developing such strategies
which can help them in surviving in such a uncertain environment .As most of them will
be experiencing diseconomies of scale.
How will these influences affect my business?
If the external influences that include inflation, strict government policies etc ten this will
obviously make it difficult to survive but in case the external factors are favorable that
include controlled inflation and friendly government policies then there will be less risk
to start up the business.
Strategy and Implementation Summary
12

Our strategy is simple; we intend to succeed by giving our target customers a

combination of great food and a relaxed enjoyable environment that creates a memorable
experience.
Sales Strategy
Our initial sales strategy is to flood our target consumers with free movie coupons for the
first three months of operation. The Rs.100 charge for the film will be waived with the
coupon. These coupons will be in the city's daily paper as well as in the monthly
magazines of different universities and colleges.
The film charge is really incidental Cinema Cafs profits will come from food sales.
Menu pricing will reflect this focus. Our prices will be higher than a traditional
restaurants but we believe the unique dining environment will justify those prices with
our customers.

SWOT Analysis
This is a summary of the business's most important strengths, weaknesses,
opportunities and threats.
Strengths of the Business

Excellent quality products

Best quality food, music and movie all under one roof.
Good management skills.
Good ability to extract information.

Weaknesses of the Business

New Player
"Which means that" Credibility problem may affect initial sales

13

Lack of systems
"Which means that" The company needs to develop systemised operational &
sales techniques or sacrifice profits

Opportunities in the Marketplace

Add-on products
"Which means that" A potentially enormous market for the Cafe Cinema

Business to tap into.

Growing market segments.

"Which means that" our Cinema Caf Business should target all segments.
Explore new markets in Pakistan

Threats in the Marketplace

Increasing supplier prices.

"Which means that" Resulting in reduced profitability.

Political instability.

Objectives

General Objectives:

To provide our valued customers prompt and high quality food and service in a

friendly and courteous manner

To deliver a stunning, unbelievable, international menu to the customers with an

excellent environment.
To be the only option for food and movie lovers.
To gain the customer loyalty by providing the best services in town.
To keep our menu simple to maintain low food cost
To maintain and expand an outstanding reputation as being the best hang out place
in town.

14

Specific Objectives:

To gain the 10% of the market share by the end of first year.
Keeping food cost fewer than 30% of revenue.
Keeping employee labour cost between 15-20% of revenue.
To maximize the profit by exploring new markets in Pakistan.

Marketing Objectives:

To ensure customer satisfaction and build a repeat-customer base.

To entice regular customers to come back more often as well as introducing the

restaurant to new customers

To generate Cafes traffic by intensive marketing campaigns using email and
social networking pages.

Management Objectives:

To be socially responsible to the needs and challenges of society while

minimizing the negative impact of such demands upon the Cafe

To ensure proper staffing in each area of the theatre
To perform daily opening and closing operational duties
To assist employees in achieving their personal goals.
To have a complete check on the motivation level of the employees.

Financial Objectives:

Sales over $600K the first year, more than a million by the third.

Personnel costs less than $300K the first year.

Profitable in first year, with net profits increasing each year.

To have sponsorship from different big organizations.

15

Marketing Plan

Competitive Edge:
We are unique in a way that no other restaurant and cafe in Lahore is offering the
screening of movies on such a big screen that we offer. It is a complete new experience
for the customers. Here people can enjoy the best quality food with the screening of their
favorite movies along with live exciting music. We will stand out with sustainable value,
something that we can maintain and develop over time
Promotional Strategies
Advertising

Develop a corporate brochure.

Develop personalised business cards.
Create Basic Website as a tool to promote services. The Cappuccino Caf
will promote the business and specials over the Internet through a web
presence. The website will be updated monthly to advertise specials and

product offerings.
Advertise in local publications
Advertise monthly in magazines that are specifically targeted to the movie

and food lovers.

Advertise monthly in magazines that are aimed at the general industry.

Website:
The website will be initially developed with few technical resources. We will work with
a contracted user interface designer to develop the simple, classy, yet Internet focused
site. The user interface designer will work with a graphic artist to come up with the
website logo, and the website graphics. The website will include the complete
information regarding the menu and the schedule of movies. Moreover, discount coupons
will also be offered at the website.

16

17

Management Team & Company Structure:

Product and services:

The Menu:
The menu is extremely simple Choices include half-pounder burgers, homemade pizzas,
chicken sandwiches, wings, French fries, appetizers, and fresh salads, along with mouth
watering beverages.
Movies:
The films will be chosen with two target audiences in mind. The first is the families that
will come to Cinema Caf to watch movies like Shrek and Spy Kids. These movies will
be shown three times during the afternoon. The second group is young adults who will
come to the evening shows to watch movies like Jeepers Peepers, the Fast and the
Furious, and Rush Hour 2. There will be three evening showings of these films. In
addition, there will be midnight movies for the college crowd on Friday and Saturday.

18

Music:
Concerts and gigs will be organized on Sunday nights. Musical bands from all over the
city will be given a chance to perform live in front of the audience. They will be selected
on the basis of auditions.

19

Management Summary
Initially I will be responsible for hiring, training and supervision of all restaurant staff.
With the passage of time, professional managers will be hired in order to have a proper
check on the overall work of the staff. And the managers will be answerable for their
performances.
Planning operations:
All the marketing and advertisement campaign will be initially carried out by me.
The decisions making authority will be lead by me and all the decisions will be
made by my consent.
The menu and all the requirements of the restaurants and cinema will be decided
by me.
Formulating a people plan:
Kitchen staff will be hired on the basis of their experiences and specialities
Staff will be hired after complete session of interviews and tests
Other staff including waiters, technical staff security staff will be hired keeping in
mind the requirement of the business.
There will be a completer check of the performance of the employees and
managers will be answerable regarding their performances
Training session will be carried out in order to train the staff with the changing
needs.
Plan for premises:
The premises of the restaurant will be 3 canals of land. It will be in the suburbs of
Lahore which will cost me a bit less.
The office will be located within the premises of the restaurant including an
executive room, a conference room and the waiting area.
Plan for Equipment:

20

 Technical equipments: Projector, Cinema Screen, sound system, sound mixer,

lights e.t.c.
Kitchen accessories: It includes all the required machineries for the kitchen. It
also includes sheesha.
Easy chairs with tables.
Plan for materials:
Cutlery: It includes disposable plates, glasses, spoons e.t.c.
Other necessities such as tissue papers, stationary items, dustbins e.t.c.
All the ingredients required in the process of food making
How people would be managed:
People would be managed on the basis of their performance. Proper training sessions will
be given to the staff and senior employees would be expected to train the junior
employees. Performance of every individual will be closely monitored and on the basis of
the performance, bonus and incentives will be given.
How to recruit, retain and motivate staff:
A complete session of interview and tests will be carried out in order to hire the best staff.
The hired staff will be trained by the professionals. Regular training sessions will be
carried out for the changing customers needs. Bonus and incentives will be given on the
monthly basis. On the basis of hard work and good performance, employee of the month
will be nominated which will be provided with a special bonus. This would increase the
motivation level of the employees.
What will be your employment practices and how will you operate payroll and
personnel systems?
Pay structure would be monthly based. Pay would be transferred to the employees
account within first five days of the month.

How will you develop entrepreneurial team with all the required roles filled?
21

Employees will be motivated through bonuses and incentives. Work will be taken by the
employees in such a way that they do not feel it as a burden. Their requirements will be
closely viewed. Senior staff is required to motivate the junior staff and help them with
their problems. Moreover, senior staff will be in a direct contact with the CEO and they
would be answerable to the CEO regarding any problem.

Operations Plan
Marketing Policies:

Heavy advertisement will be done initially on social media websites.

Other advertisement channels such as radio, magazines, T.V will also be explored

later on.
Discount coupons will be given to the leading universities and colleges of Lahore.
For the first six months 10 % of the profit will be allocated for advertising.
City 42 which caters to the market of Lahore will be used for the advertisements
for the first six months.

Management Policies:

Experienced staff will be hired after a complete session of interview and tests.
Regular training sessions will be carried out for the changing needs of the

customers.
Senior staff is answerable for the performance of the junior staff.
Salary will be monthly based and will be transferred into the accounts of the
employees within the first five days of the month.

Financial Policies:

All the calculations and financial analysis will be initially carried out by the CEO.

Later on an expert will be hired for these purposes.

The prices of food and movies will be set by the CEO.
There will be no deal on credit basis.
Sponsorship from the companies will be evaluated by the CEO and the decision
authority lies with him.

22

Activities Schedule

Month/date
1st month
2nd month

Activity
To hire the best staff for the operations
Promotion of the restaurant. Initially through social media websites and

3rd month
4th month
5th month

cheap advertisements in magazines and newspaper.

Look for the problems in all departments and come up with the solution.
Hire more experienced and specialized staff for kitchen.
Start evaluating the feedback of the customers and will start working on

6th month

the changing needs.

Evaluating the performance of the first six months and set goals for the

6-12months
1-2yr

next six months.

Keep a close eye on all the operations and feedback of the customers.
Increase pays for the employees. Hire new staff if needed
Look for other potential markets the business could enter. Making a
research on how innovative the idea would be in other potential cities.

23

Product/ Service Design & Development Plan:

Development Plan:
Year 1
Potential Customers

Growth

Year 2

Year 3
CAGR

Families

15% 400,000 460,000 529,000 15.00%

Young Adults

10% 200,000 220,000 242,000 10.00%

Total

13.41% 600,000 680,000 771,000 13.41%

Financial Projections:
I will invest Rs. 300,000 of my own capital. This will provide the start-up financing
required. Our market and financial analyses indicate that with a start-up expenditure of
Rs300,000 we can generate Rs. 600,000 in sales by the end of year one, and produce
high net profits by the end of year three.

24

Rs. 1,200,000
Rs. 1,000,000
Rs. 800,000
Rs. 600,000
Rs. 400,000
Rs. 200,000
Rs. 0

Projected Profit and Loss

The following table and chart shows projected profit and loss

25

Rs. 15,000
Rs.12,000
Rs. 9,000
Rs. 6,000
Rs. 3,000
Rs. 0
(Rs. 3,000)
(Rs. 6,000)
(Rs. 9,000)
(Rs. 12,000)

26

Rs. 210,000
Rs. 180,000
Rs. 150,000
Rs. 120,000
Rs. 90,000
Rs. 60,000
Rs. 30,000
Rs. 0

Rs. 60,000
Rs. 50,000
Rs. 40,000
Rs. 30,000
Rs. 20,000
Rs. 10,000
Rs. 0

27

Rs.
700,000
Rs.
600,000
Rs
500,000
Rs.
400,000
Rs.
300,000
Rs.
200,000

28

Pro Forma Profit and Loss

Sales
Direct Cost of Sales
Movie Screening Expenses
Total Cost of Sales

Gross Margin
Gross Margin %

Expenses
Payroll
Sales and Marketing and Other Expenses
29

Depreciation
Leased Equipment
Utilities
Insurance
Rent
Payroll Taxes
Other

Total Operating Expenses

Profit Before Interest and Taxes

EBITDA
Interest Expense
Taxes Incurred

Net Profit

Net Profit/Sales

Projected Cash Flow

30

Rs. 210000
Rs.180,000
Rs. 150,000
Rs. 120,000
Rs. 90,000
Rs. 60,000
Rs. 30,000
Rs. 0

31

Pro Forma Cash Flow

Year 1
Cash Received
Cash from Operations
Cash Sales
Subtotal Cash from Operations
Additional Cash Received
Sales Tax, VAT, HST/GST Received
New Current Borrowing
New Other Liabilities (interest-free)
New Long-term Liabilities
Sales of Other Current Assets
Sales of Long-term Assets
New Investment Received
Subtotal Cash Received

Year 2

Year 3

Rs.692,100
Rs.692,100

Rs.860,000
Rs.860,000

Rs.1,150,000
Rs.1,150,000

Rs.0
Rs.0
Rs.0
Rs.0
Rs.0
Rs.0
Rs.0
Rs.692,100

Rs.0
Rs. 0
Rs.0
Rs.0
Rs.0
Rs.0
Rs.0
Rs.860,000

Rs.0
Rs.0
Rs.0
Rs.0
Rs.0
Rs.0
Rs.0
Rs.1,150,000

Expenditures

Year 1

Year 2

Year 3

Expenditures from Operations

Cash Spending

Rs.288,000

Rs.307,000

Rs.326,000

Bill Payments

Rs.337,234

Rs.475,500

Rs.607,541

Subtotal Spent on Operations

Rs.625,234

Rs.782,500

Rs.933,541

Rs. 0

Rs.0

Rs.0

Rs.0

Rs.0

Rs.0

Rs.0

Rs.0

Rs.0

Rs.0

Rs.0

Rs.0

Purchase Other Current Assets

Rs.0

Rs.0

Rs.0

Purchase Long-term Assets

Rs.0

Rs.0

Rs.0

Dividends

Rs.0

Rs.0

Rs.0

Subtotal Cash Spent

Rs.625,234

Rs.782,500

Rs.933,541

Net Cash Flow

Rs.66,866

Rs.77,500

Rs.216,459

Cash Balance

Rs 216,066

Rs 293,566

Rs 510,026

Additional Cash Spent

Sales Tax, VAT
Principal Repayment of Current
Borrowing
Other Liabilities Principal
Repayment
Long-term Liabilities Principal
Repayment

32

Balance Sheet
The table shows projected balance sheet for three years.

Pro Forma Balance Sheet

Year 1

Year 2

Year 3

Assets

33

Current Assets
Cash

Rs.216,066

Rs.293,566

Rs.510,026

Other Current Assets

Rs.10,000

Rs.10,000

Rs.10,000

Total Current Assets

Rs.226,066

Rs.303,566

Rs.520,026

Long-term Assets

Rs.0

Rs.0

Rs.0

Accumulated Depreciation

Rs.0

Rs.0

Rs.0

Total Long-term Assets

Rs.0

Rs.0

Rs.0

Total Assets

Rs.226,066

Rs.303,566

Rs.520,026

Long-term Assets

Liabilities and Capital

Year 1

Year 2

Year 3

Current Liabilities

Ratios

Current

Accounts Payable

Rs.50,638

Rs.38,047

Rs.50,999

Current Borrowing

Rs.0

Rs.0

Rs.0

Other Current Liabilities

Rs.0

Rs.0

Rs.0

Subtotal Current Liabilities

Rs.50,638

Rs.38,047

Rs.50,999

Long-term Liabilities

Rs.0

Rs.0

Rs.0

Total Liabilities

Rs.50,638

Rs.38,047

Rs.50,999

Paid-in Capital

Rs.300,000

Rs.300,000

Rs.300,000

Retained Earnings

(Rs.140,800)

(Rs.124,571)

(Rs.34,481)

Earnings

Rs.16,229

Rs.90,090

Rs.203,508

Total Capital
Year 1

Rs.265,519
Year 2 Rs.175,429 Year
3
Total Liabilities and Capital
Rs.226,066
Rs.303,566

Rs.469,026

4.46

Rs.469,026

Net Worth

7.98
Rs.175,429

10.20
Rs.265,519

Quick

4.46

7.98

10.20

Total Debt to Total Assets

22.40%

12.53%

9.81%

Return on Equity

9.25%

33.93%

43.39%

Debt to Net Worth

0.29

0.14

0.11

Current Debt/Total Assets

22%

13%

10%

Rs.520,026

34

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