CHAPTER 5

5.0 FINANCIAL PLAN

5.1 PRE-OPERATIONAL COSTS
ITEM COST (KES)

Machinery, tools & equipment 50000

Renovation of business premises 20000

Market research 35000

Licensing requirements 2700

Installations 22300

Legal fees 2000

TOTAL COST 150000

5.2 WORKING CAPITAL

PARTICULARS YEAR – I YEAR – II YEAR - III

Current Assets (KES) (KES) (KES)

Stock 150000 200000 310000

Cash-in-hand 87000 85,000 75,000

Cash-at-bank 100000 220000 300000

Debtors 50,000 32,000 90,000

Pre-paid rent 40000 40000 40000

Pre-paid insurance 4000 4000 4000

Total Current Assets 431000 581,000 819,000

Current Liabilities

Loans 150,000 180,000 120,000

Bank-overdraft 30,000 40,000 80,000

Creditors 100,000 180,000 210,000

Bills-payable 72,000 72,000 60,000

Total Current Liabilities 352000 472000 470000

Working Capital Requirement 79,000 109,000 349000

(Total C.A – Total C.L)
 5.3 CASHFLOW STATEMENTS
OKELLO BRICK CONSTRUCTION LIMITED
PROJECTED CASHFLOW STATEMENT FOR THE YEAR ENDED 31st DECEMBER 2024

PARTICULARS

JAN FEB MAR APR MAY JUN JULY AUG SEP OCT NOV DEC
Beginning Balance 25,000 191,850 357,190 433,410 592,620 612,670 731,620 850,085 1,100,995 1,200,990 1,374,870
Cash in hand 75,000 79,000 81,000 84,000 86,000 89,000 93,000 95,000 101,000 105,000 115,000 105,000
Accounts receivable 25,000 33,000 40,000 20,000 23,000 29,000 38,000 31,000 35,000 37,000 25,000 34,000
Others 10,000 5,000 12,000 8,000 15,000 7,000 20,000 12,000 22,000 23,000 17,000 11,000
Cash sales 100,000 100,000 118,000 129,000 100,000 80,000 120,000 125,000 130,000 128,000 124,000
Total cash receipts 110,000 242000 424850 587190 814,410 686410 843670 989620 1,133,085 1,395,995 1,485,990 1,648,870

Cash payments
Purchases 20,000 14,000 28,000 60,000 148,000 35,000 56,000 87,000 10,000 120,000 20,000 28,000
Creditors 28,200 19800 20,000 47,000 53,000 19,000 39,000 35,000 8,000 53,000 45,000 28,000
Wages 9,500 3,500 4,300 14,000 3,700 4,700 3,000 3,600 3,800 4,200 18,150 2,900
Rent 3,300 2,300 2,300 5,300 2,300 2,300 2,300 2,300 2,300 2,300 4,300 1,300
Water 300 400 350 450 480 370 360 355 420 440 480 460
Telephone 250 300 360 280 310 540 290 330 320 465 560 315
Electricity 1,500 1,400 1,300 1,600 1,550 1,700 1,650 1,300 1,200 1,450 1,350 1,500
Stationary 9,500 3,000 6,500 19,000 7,000 4,500 3,500 4,300 1,100 8,200 9,300 4,500
Loan interest 850 850 850 850 850 850 850 850 850 850 850 850
Advertisement 4,000 2,000 2,000 3,500 2,500 2,800 2,900 2,400 2,100 2,200 4,300 3,000
Sundries 7,600 2,600 1,700 1,800 2,100 2,400 2,200 2,100 2,000 1,900 7,150 3,050
Total cash payment 85000 50150 67660 153,780 221,790 73740 112,050 139535 32090 195005 111120 73,875
Ending cash balance 25000 191,850 357,190 433,410 592,620 612,670 731,620 850,085 1,100,995 1,200,990 1,374,870 1,574,995
 5.4 INCOME STATEMENTS
OKELLO BRICK CONSTRUCTION LIMITED
PRO-FORMA INCOME STATEMENT FOR THE YEAR ENDING 2025

PARTICULARS

JAN FEB MAR APR MAY JUN JULY AUG SEP OCT NOV DEC
Beginning Balance 1,574,995 1,699,455 1,858,175 2,005,060 2,158,145 2,303,615 2,478,505 2,669,430 2,840,065 3,021,615 3,191,815 3,361,675
Cash in hand 77,000 80,000 85,500 90,000 92,000 100,000 96,500 102,000 111,500 110,000 125,000 108,000
Accounts receivable 24,000 26,000 27,000 35,500 39,000 41,500 39,500 29,000 44,000 35,000 46,500 54,500
Others 12,000 24,000 25,000 20,500 26,000 24,500 28,000 23,700 21,500 39,000 28,750 31,000
Cash sales 100,000 135,000 120,000 105,000 100,000 125,000 120,000 125,000 122,500 105,000 95,000 122,500
Total cash receipts 1,787,995 1,964,455 2,115,675 2,256,060 2,415,145 2,594,615 2,762,505 2,949,130 3,139,565 3,310,615 3,487,065 3,677,675

Cash payments
Purchases 50,000 55,000 57,000 60,000 57,000 60,500 49,000 48,550 57,000 61,000 69,000 67,500
Creditors 20,000 30,000 35,000 25,000 40,000 40,500 29,000 42,500 40,450 38,000 36,500 25,000
Wages 2,500 4,000 4,000 3,250 3,000 2,800 2,850 4,400 4,350 4,470 4,950 5,000
Rent 2,300 2,300 2,300 2500 2500 2500 2500 2500 2500 2500 2500 2500
Water 250 300 250 270 150 160 130 255 290 120 120 200
Telephone 240 330 315 295 310 280 305 320 340 300 290 270
Electricity 1,600 1,300 1,450 1,400 1,200 1,600 1,770 1,650 1,500 1,470 1,550 1,700
Stationary 6,500 7,500 5,500 3,000 3,000 2,500 2,250 3,500 6,500 6,000 5,250 2,300
Loan interest 850 850 850 850 970 970 970 970 970 970 970 970
Advertisement 2,000 2,900 1,850 1,950 1,700 2,200 2,100 2,270 2,000 1,870 1,900 1,600
Sundries 2,300 1,800 2,100 1,900 1,700 2,100 2,200 2,150 2,050 2,100 2,360 2,900
Total cash payment 88,540 106,280 110,615 97,915 111,530 116,110 93,075 109,065 117,950 118800 125,390 109940
Ending cash balance 1,699,455 1,858,175 2,005,060 2,158,145 2,303,615 2,478,505 2,669,430 2,840,065 3,021,615 3,191,815 3,361,675 3,567,735
 5.5 BALANCE SHEET
OKELLO BRICK CONSTRUCTION LIMITED
PRO-FORMA BALANCE SHEET AS AT 31st DECEMBER 2026

PARTICULARS

JAN FEB MAR APR MAY JUN JULY AUG SEP OCT NOV DEC
Beginning Balance 3,567,735 3,709,885 3,887,605 4,008,245 4,149,995 4,306,170 4,479,540 4,666,510 4,845,005 5,016,215 5,179,155 5,347,435
Cash in hand 65,000 70,000 74,000 67,000 78,000 80,500 76,000 75,050 71,000 74,000 77,500 74,700
Accounts receivable 35,000 21,000 16,000 19,000 22,000 15,000 19,000 20,500 18,500 14,000 21,000 20,000
Others 22,000 20,000 11,000 13,000 14,000 18,500 23,000 13,750 20,750 15,000 14,570 12,000
Cash sales 89,000 122,000 90,000 97,000 97,000 115,000 132,000 130,000 128,000 127,000 123,500 97,000
Total cash receipts 3,778,735 3,942,885 4,078,605 4,204,245 4,360,995 4,535,170 4,729,540 4,905,810 5,083,255 5,246,215 5,415,725 5,551,135

Cash payments
Purchases 30,000 15,500 18,000 13,000 17,000 15,000 18,000 21,000 18,700 17,500 17,600 10,000
Creditors 23,000 23,000 35,000 23,000 21,000 24,000 29,000 25,000 31,700 32,000 33,500 22,000
Wages 3,300 3,500 2,500 4,000 3,700 3,400 2,600 2,300 3,200 3,600 3,750 2,800
Rent 2,300 2,300 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500
Water 200 250 300 320 215 260 270 265 200 210 290 230
Telephone 300 330 310 360 370 250 320 340 290 270 400 380
Electricity 1,100 1,850 1,550 1,570 1,700 1,670 1,300 1,400 1,200 1,880 1,600 1,500
Stationary 3,500 4,000 4,600 4,500 3,850 3,550 3,600 3,300 4,400 4,200 3,650 3,100
Loan interest 850 850 900 900 900 900 900 900 900 900 900 900
Advertisement 2,100 2,200 3,000 2,300 1,990 1,900 2,300 1,700 1,500 1,800 2,200 2,200
Sundries 2,200 1,500 1,700 1800 1,600 2,200 2,300 2,100 2,450 2,200 1,900 1,950
Total cash payment 68,850 55280 70,360 54,250 54,825 55,630 63,030 60,805 67,040 67,060 68,290 47,560
Ending cash balance 3,709,885 3,887,605 4,008,245 4,149,995 4,306,170 4,479,540 4,666,510 4,845,005 5,016,215 5,179,155 5,347,435 5,503,575
5.6 INCOME STATEMENTS
OKELLO BRICK CONSTRUCTION LIMITED
PRO-FORMA STATEMENT FOR THE YEAR 2024, 2025 AND 2026

PARTICULARS YEAR 2024 YEAR 2025 YEAR 2026

Sales 125,000 103,500 85,000
Less purchase 300,000 400,000 350,000
Gross profit 280,000 350,000 200,000
Expenses
Wages 3,800 3,900 2,700
Rent 2,500 2,250 2,300
Water 460 200 250
Telephone 350 270 360
Electricity 1,750 1,600 1,500
Advertisement 2,000 1,800 2,150
Stationary 4,700 2,300 4,100
Postage 1,500 1,700 2,000
Transport 3,000 3,300 3,300
Depreciation 1,500 2,500 2,200
Loan interest 850 850 850
Repairs & maintenance 8,500 15,000 11,900
Sundries 2,050 2,500 2,300
Total expenses 32,960 38,170 35,910
Net profit (before tax) 247,040 311,830 164,090
Provision for taxation (10%) 24,704 31,183 16,409
Net profit (After tax) 222,336 280,647 147,681

5.7 PRO – FORMA BALANCE SHEET AT THE END OF EACH YEAR

ITEMS YEAR 2024 YEAR 2025 YEAR 2026

Fixed Assets
Furniture 3,000 3,000 3,000
Laptop 24,000 24,000 24,000
Welding set 9,000 9,000 9,000
Total fixed Assets 36,000 36,000 36,000
Current Assets
Cash in hand 83,000 83,000 70,000
Cash at bank 180,000 350,000 560,000
Debtors 45,000 30,000 73,000
Stock 250,000 355,000 580,000
Total current Assets 558,000 818,000 1,283,000
Total Assets 594,000 854,000 1,319,000
Long term liabilities
Loan 85,000 170,000 150,000
Owner’s Equity 250,000 350,000 400,000
Savings 53,000 53,000 55,000
Relatives 15,000 20,000 25,000
Total Long Term Liabilities 403,000 593000 630,000

Current Liabilities
Creditors 50,000 100,000 200,000
Bank Overdraft 60,000 55,000 85,000
Bills payable 72,000 72,000 65,000
Total Current Liabilities 182,000 227,000 350,000

Total Liabilities 585,000 820,000 980,000

5.8 BREAK – EVEN LEVEL

Operating Expenses
Fixed Cost Amount (Kshs)
Salaries 9,000
Insurance 2,000
Loan 90,000
TOTAL 101,000

Variable Cost
Water 500
Electricity 1,650
Postage 2,000
Stationary 9,500
Advertisement 1,500
TOTAL 15,150

1. Total contribution margin = Sales – Total Variable Cost

= 125,000 – 15,150
= 109,850
2. Contribution Margin Percentage = Total contribution margin X 100%
Sales

109,850 x 100%
125,000

=87.88%
3. Total Fixed Cost = 101,000
 4. Break – Even Level of Sales = Fixed Cost ÷ Contribution Margin Percentage
= 101,000 ÷ 87.88%
= 1,149.30/-
5. Break – Even Level in Units = Contribution Margin ÷ Fixed Cost
= 109,850÷ 101,000
= 1.1 Units
5.9 PROFITABILITY RATIOS
1. Gross profit percentage = Gross profit ÷ sales x 100%
= 280,000÷ 125,000x100%
= 224%
2. Return – on – equity = Net Profit ÷ Owner’s Equity x 100%
= 247,040÷ 250,000x 100%
= 98.81%
3. Return Investment = Net Profit After Tax ÷ Total Investment Capital x 100%
= 222,336÷ 350, 000 x 100%
= 63.52%

5.9.1 DESIRED FINANCING

ITEM AMOUNT (KES)
Pre-operational costs 105,000
Working-capital 85,000
Non-Current assets 65,000
TOTAL DESIRED FINANCING 265,500

5.9.2 PROPOSED CAPITALIZATION

ITEM AMOUNT (KES)
Owner’s Contribution (Equity) 250,000
Borrowed Funds (Loan) 90,000
TOTAL 340,000
5.8 POTENTIAL RISKS.
NATURE/TYPE OF RISK CONSTINGENCY MEASURES

Theft Employing Security officers.

Fire Installing emergency kits (Fire extinguishers)