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LEARNING OUTCOMES
Operations Plan
Operations Budget
Step 2: Determine the Project Implementation Cost
Internal sources
Equity contributions (cash and/or assets)
External sources
Term loan
Hire purchase
Others
Step 4: Prepare Pro Forma Cash Flow Statement
Owners’ Equity
Capital 72,500 72,500 72,500
Accumulated profit 15,400 54,800 125,475
87,900 127,300 197,975
Long-term Liabilities
Term loan 36,000 27,000 18,000
Hire-purchase 16,000 12,000 8,000
52,000 39,000 26,000
Total Owners’ Equity & Liabilities 139.900 166,300 223,975
Step 7: Perform Basic Financial Analysis
Owners’ Equity
Capital 105,500 105,500 105,500
Accumulated profit 24,000 82,850 222,545
129,500 188,350 328,045
Long-term Liabilities
Term loan 132,000 99,000 66,000
Current Liabilities
Accounts payable 9,000 15,000 21,600
• Liquidity Ratios
• Efficiency Ratios
• Profitability Ratios
• Solvency Ratios
Year 1: for every RM1 invested by the owner, the company has
RM1.02 debt financing
Step 7: Perform Basic Financial Analysis (contd.)
The debt to asset ratio measures the percentage of
the business’ assets financed by creditors relative to
the percentage financed by the entrepreneur.
This ratio is calculated by dividing the total debts by
total assets.
Debt to asset ratio = Total debts
Total assets
Year 1 Year 2 Year 3
Total debts RM141,000 RM114,000 RM87,600
Total assets RM139,900 RM166,300 RM223,925
Debt to total assets ratio 100.77% 66.55% 39.12%