This document is a Financial Plan for Dalnin Inc. a Sole proprietorship firm that sells women business suits. The document gives in summary the background of the firm, Sources of Capital and how the firm intends to use the same, Cash flow projections for the next three years, balance sheet at the end of the current financial year, profit and Loss Statement for the period under review and the anticipated Break even analysis. The financial plan is intended to give at a glance, the financial viability of Dalnin Inc.
Dalnim Inc was established as a sole proprietorship firm ten years ago (2003) at down town, Manchester city to sell women suits. Its target customers have been professional ladies in the corporate sector who value their professional dress code and outlook. The firm started by selling a limited range of sizes women suits but has over the years adopted the strategy of selling special sizes so as to meet its customers’ needs and as a competitive advantage strategy. The firm intends to achieve sustainable growth over the next three years despite competition by investing in new technology, offering specialized services and treating its employees well so as to serve their customers better than the competitors.
- Sources and Uses of Capital
Dalnim Inc was established with a starting capital of $65,000.00 ten years ago. However, as the firm grows, there is need to diversify its sources of capital with a view t strengthen its financial base. Some of the anticipated sources of capital that the firm can exploit include; Retained earnings, Bank Loans, Bank Overdrafts and Credit facilities from its major suppliers. Table I below is a summary of amounts expected to be raised for Capital use from various sources.
The above amounts once obtained shall be used to expand Dalnim Inc. through advertisements, acquiring of additional modern machine, training of the support staff on customer care and acquiring of more show room space for both display and selling of its products. Such a capital investment is likely to earn the firm good returns in the next three years.
- Cash flow projection
It is important for the firm to closely monitor its cash flows so as to ensure liquidity and grow profits. Lack of active monitoring of cash flows may lead to delayed payments of account payables and account receivables and at worst, running out of cash which affects the running of the day to day operations of the firm.
The projected annual cash flows for the next three years shall be as shown in Table II below:
The following is a summary of projected assets and Liabilities of the firm at the end of the next three years.
- Profit and Loss Statement
- Break-even analysis
Given the selling price, through a break-even analysis, one can be able to determine the volume of sales at which the firm is likely to recover its total costs. This is important as it guides one to have prior knowledge of the units to be sold so as to cover expenses and start earning profits.
The table below is a summary indicating the expected break-even point to recover the firm’s expenses:
The selling Price per Suit is expected to be at $5.00
The Break-even Units shall be = Total Fixed Costs
= 8000 Units
This therefore means that, the firm will have to sell 8000 suits to recover its expenses
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