MUFAZZAL TURAB ALI 10230

SUBMITTED TO: SHEHRYAR MALIK

DATE OF SUBMISSION: 27th APRIL 2010

 TABLE OF CONTENTS
S.No Particulars Page Number

1 Acknowledgement 1

2 Scenario 2-3

3 Pictures 4-5

4 SWOT ANALYSIS, FOCUSED DIFFERENTIATION,EDGE 6

5 Calculation of variable and fixed cost 7-8

6 Amortization table

7 Sales & Cost

8 Operating expense
9 Cash budget

10 Income statement

11 Balance Sheet

12 NPV & IRR

13 Financial Ratios

14 References
 ACKNOWLEDGEMENT
First of all, I would like to thank Almighty Allah for blessing me with
the courage, strength, and ability with which I have able to complete
this report successfully.
Furthermore, I would like to extend my special thanks and
appreciation to our course instructor, MR. SHEHRYAR MALIK for
his constant guidance and encouragement throughout the semester,
and for making this feasibility report an incredible learning
experience. I would specially like to thank Mr. Atif (Marketing
person Dolmen Mall) and Mr. Tayab (Owner of Ice candy stall).
I am benefited a great deal while searching for the material and
making the report and hope that people will also be benefited from
it.
OoLaLa!!! Ice Candy Shop offers three types of ice candy plain cup, special cup
and jumbo which it will sell for Rs.40/-,Rs.60/- and Rs.120/- per unit. We manage
the inventory and finances of the shop. Estimated sales for first year are as
follows:

 Plain cup 3000 units (monthly)

 Special cup 1500 units (monthly)
 Jumbo 600 units (monthly)

We are preparing for a meeting with our financer to arrange financing for the
business to start. Based on our sales forecast and the following information
provided by us, your job as our financial analyst is to prepare a monthly cash
budget, monthly and quarterly Performa income statement, a quarterly balance
sheet and all necessary supporting schedules.

We are going to work on cash basis and payment for material will be made at the
time of purchase.

The major cost of production is the purchase of raw materials in the form of
syrups, dry fruits, condensed milk etc and raw material costs are expected to
increase by 10% each year. Labor is hired on monthly wage of Rs.8000/- and wage
is also expected to increase by 10%. The place in Dolmen mall is hired on
agreement for three years at constant rent of Rs.30000/- (per month) after three
years it will increase by 20%.

Ice crush machine and freezer will be fully depreciated in 8 years. Electric fixtures
will be fully depreciated in 3 years. The shop will not use the earnings for three
years to develop business in every mall. The average tax rate is 30%. Loan
amounts will be paid monthly.
We want to start a business of ice candy shop with a name of OoLaLa!!! Ice Candy
Shop with Rs.500000/-. The business will have expected sale of Rs.3816000 in 1 st
year, Rs.4823100/- in 2nd year and Rs.6046470/- in 3rd year. The expected cost of
goods sold are Rs.2203822/- in 1st year, Rs.2424204/- in 2nd year and Rs. 2666625
in 3rd year. Ice crush machine, freezer will be fully depreciated in 8 years and
electric fixtures will be fully depreciated in 3 years. The average tax rate is 30%.
We are predicting that cost will increase by 10% each year (except rent).

SHOP DEMO
PLAIN CUP RS.40/-

SPECIAL CUP Rs.60/-

JUMBO Rs. 120/-

CRUSH MACHINE Rs.17000/-

SWOT ANALYSIS:
• Strengths:-
– Flexibility.
– Hygienic product will be provided to customer.
– Variety in product.

• Weaknesses:-
– Not easy to make image for Sugar free candy for diabetic patients.
– Consumers easily switch to alternative product (Ice Cream).
– Leverage will be high because the expenses and fixed cost are high due to mall.

• Opportunities:-
– Can expand our business in other places.
– More variety could be introduced in future.
– We make a maximum profit just because of the atmosphere of the dolmen mall
food court.
– Climate of Karachi is hot.
– In Dolmen Mall there is no competition for ice candy stall, there are ice cream
and fast food stall but ice candy stall will be a new product for mall.

• Threats:-
– None profitable months could damage our product image.
– Pricing as compared to outside mall stalls will be high.
– It will be difficult to create awareness about presence of ice candy stall in mall
because it is not been introduced till yet in mall.

Focused Differentiation:
The market is narrow because we are opening ice candy stall in mall so we will be targeting the visitors
of mall. It is not available in any mall so it will be a unique product for a mall. The price is relatively high
as compared to the ice candy stalls available in other areas.

Competitive Advantage:
The quality of our product will be high and hygienic
CALCULATION OF VARIABLE COST
Plain Cup
No.of
Ingredients Cost (Rs.) Quantity Units Per Unit

   
Block of
Ice(Block) 50 ice 35 1.4

Flavor(Orange) 300 Per litre 180 1.7

Flavor(Ice cream soda) 300 Per litre 180 1.7

Flavor(Rooh Afza) 300 Per litre 180 1.7

Chocolate 120 Per litre 180 0.7

Condensed milk 60 Per can 7 8.6

Disposable cup & spoon 500 Packet 100 5

  1630 20.7

Wastage(5%) 81.5 1.0

Total 1712 22

         

CALCULATION OF VARIABLE COST

Special Cup
Per
Ingredients Cost (Rs.) Quantity No.of Units Unit
   
Ice(Block) 50 Block of ice 35 1.4
Flavor(Orange) 300 Per litre 180 1.7
Flavor(Ice cream soda) 300 Per litre 180 1.7
Flavor(Rooh Afza) 300 Per litre 180 1.7
Chocolate 120 Per litre 180 0.7
Condensed milk 60 Per can 7 8.6
Pineapple 70 Per can 16 4.4
Cashew nuts 1300 Per Kg 220 5.9
Coconut 70 Per Kg 45 1.6
Keeshmish 90 Per Kg 40 2.3
Disposable cup & spoon 500 Packet 100 5
  3160 34.8
Wastage(5%) 158 1.7
Total 3318 36
         

CALCULATION OF VARIABLE COST

Jumbo Box
No.of
Ingredients Cost (Rs.) Quantity Units Per Unit

   

Ice(Block) 50 Block of ice 17 2.9

Flavor(Orange) 300 Per litre 90 3.3

Flavor(Ice cream soda) 300 Per litre 90 3.3

Flavor(Rooh Afza) 300 Per litre 90 3.3

Chocolate 120 Per litre 90 1.3

Condensed milk 60 Per can 4 15.0

Pineapple 70 Per can 8 8.8

Cashew nuts 1300 Per Kg 110 11.8

Coconut 70 Per Kg 22 3.2

Keeshmish 90 Per Kg 20 4.5

Disposable Box & spoon 1000 Packet 100 10

  3660 67.5

Wastage(5%) 183 3.4

Total 3843 71

         

CALCULATION FOR
FIXED COST
           
Quantit Per Dep per
Item y Rate Value Life day month
  RS RS RS RS
Freezer 1 28000 28000 8 10 292
Ice Crush Machine 1 17000 17000 8 6 177
Electric Fixture 2000 3 2 56
Rent expense per month 30000 1000  
Labor 2 8000 16000 533  
Electricity, Maintenance 8000 267 8000
Supplies 400 13  
FIXED COST PER DAY 1831  
   
Expense amount for cash
budget 1813 54400
   
Fixed cost for 2011 1880 1897  
Fixed cost for 2012     1960   1977  

SALES (2010)
Quantit
SALES Price y Per day sale Per month sale
   
Expected sale of plain cup 40 100 4000 120000
Expected sale of special cup 60 50 3000 90000
Expected sale of jumbo 120 30 3600 108000
   
   
   
Monthly Income     10600 318000

COST (2010)

COS Quantit
Particulars T y Per day cost Per month cost
  RS RS RS
Material cost of plain cup 22 100 2170 65100
Material cost of special cup 36 50 1825 54741
Material cost of jumbo 71 30 2127 63811
Total material cost 183652
   
Fixed Cost 1831 54924
TOTAL COST     6122 238576

MONTHLY PROFIT
79424

SALES (2011)
Quantit
SALES Price y Per day sale Per month sale
  RS RS RS
Expected sale of plain cup 45 115 5175 155250
Expected sale of special cup 65 58 3738 112125
Expected sale of jumbo 130 35 4485 134550
   
   
   
Total     13398 401925

we are expecting 15%increase in sale each year

COST (2011)

COS Quantit Per day

Particulars T y cost Per month cost
  RS RS RS
Material cost of plain cup 24 100 2387 71610
Material cost of special cup 40 50 2007 60215
Material cost of jumbo 78 30 2340 70192
Total material cost 202017
   
Fixed Cost 1897 56924
TOTAL COST     6734 258941

Expected increase in cost is 10%

except rent

SALES (2012)
Quantit Per day Per month
SALES Price y sale sale
  RS RS RS
Expected sale of plain cup 50 132 6612.5 198375
Expected sale of special cup 70 66 4629 138863
Expected sale of jumbo 140 40 5555 166635
   
   
   
Total     16796 503873

COST (2012)
 COS Quantit Per day Per month
Particulars T y cost cost
  RS RS RS
Material cost of plain cup 26 100 2626 78771
Material cost of special cup 44 50 2208 66237
Material cost of jumbo 86 30 2574 77211
Total material cost 222219
   
Fixed Cost 1977 59324
TOTAL COST     7407 281543

OPRERATING
EXPENSE Qty Rate RS
Employees 2 8000 16000
Monthly Total 16000
Yearly Total 12 192000
   
Maintenance 8000
Rent 30000
Depreciation 524
Supplies 400
Total Expenses 38924
Total Operating Expenses 230924
   
   
   
EXPENSE AMOUNT FOR CASH
BUDGET     54400
 CASH BUDGET(2010)
1 3 4 5 6
PARTICULAR   MONTH 2 MONTH MONTH MONTH MONTH MONTH
    RS RS RS RS RS RS
OPENING 242, 28 33 37 41 46
BALANCE   600 6,635 0,643 4,622 8,573 2,495
               
ADD: RECEIPT              
318, 318 318, 318, 318, 318
SALES   000 ,000 000 000 000 ,000
               
CASH 560, 60 64 69 73 78
AVAILABLE   600 4,635 8,643 2,622 6,573 0,495
               
LESS: PAYMENT              
183, 18 18 18 18 18
Material cost   652 3,652 3,652 3,652 3,652 3,652
               
EXPENSES   54, 54, 54, 54, 54, 54
 400 400 400 400 400 ,400
13 1 1 1 1 1
LOAN+INTEREST   ,286 3,286 3,286 3,286 3,286 3,286
22 2 2 2 2 2
TAX(30%)   ,627 2,655 2,683 2,712 2,740 2,769
             
NET CASH 273, 27 27 27 27 27
PAYMENT   965 3,993 4,021 4,049 4,078 4,107
               
               
NET CASH 286, 330 374, 418, 462, 506
AVAILABLE   635 ,643 622 573 495 ,388

CASH BUDGET(2010)

7 8 9 10 11 12
PARTICULAR   MONTH MONTH MONTH MONTH MONTH MONTH
    RS RS RS RS RS RS
OPENING BALANCE 506388 550252 594086 637891 681665 725409
     
ADD: RECEIPT    
SALES 318000 318000 318000 318000 318000 318000
       
CASH AVAILABLE 824388 868252 912086 955891 999665 1043409
       
LESS:
PAYMENT      
Material cost   183652 183652 183652 183652 183652 183652
       
EXPENSES   54400 54400 54400 54400 54400 54400
LOAN+INTEREST 13286 13286 13286 13286 13286 13286
TAX(30%)   22799 22828 22858 22888 22919 22949
       
NET CASH PAYMENT 274136 274166 274196 274226 274256 274287
       
       
NET CASH AVAILABLE 550252 594086 637891 681665 725409 769122

CASH BUDGET (2011-2012)

PARTICULAR   2011 2012
    RS RS
OPENING BALANCE 769122 1825066
       
ADD: RECEIPT      
SALES   4823100 6046470
       
CASH AVAILABLE   5592222 7871536
       
LESS: PAYMENT      
Material cost   2424204 2666625
       
EXPENSES   676800 705600
LOAN+INTEREST   159428.7 159428.7
TAX(30%)   506723.1 797417
       
NET CASH PAYMENT 3767156 4329071
       
       
NET CASH AVAILABLE 1825066 3542465

INCOME STATEMENT 2010

1 2 3 1st
PARTICULAR   MONTH MONTH MONTH QUARTER
  RS RS RS RS

SALES 318,000 318,000 318,000 954,000

LESS:COGS 183,652 183,652 183,652 550,956

GROSS PROFIT 134,348 134,348 134,348 403,044

LESS: OPERATING EXPENSES 54,924 54,924 54,924 164,773

         

EBIT 79,424 79,424 79,424 238,272

LESS:INTEREST 4,000 3,907 3,813 11,720

EBT 75,424 75,517 75,610 226,551

LESS: TAX (30%) 22,627 22,655 22,683 67,965
         
           

NET INCOME   52,797 52,862 52,927 158,586

INCOME STATEMENT 2010

4 5 6 2nd
PARTICULAR MONTH MONTH MONTH QUARTER
  RS RS RS RS

SALES 318,000 318,000 318,000 954,000

LESS:COGS 183,652 183,652 183,652 550,956

GROSS PROFIT 134,348 134,348 134,348 403,044

LESS: OPERATING
EXPENSES 54,924 54,924 54,924 164,773
         

EBIT 79,424 79,424 79,424 238,272

LESS:INTEREST 3,719 3,623 3,526 10,868

EBT 75,705 75,801 75,898 227,404

LESS: TAX (30%) 22,712 22,740 22,769 68,221
         
         

NET INCOME 52,994 53,061 53,128 159,183

INCOME STATEMENT 2010

7 8 9 3rd
PARTICULAR MONTH MONTH MONTH QUARTER
  RS RS RS RS

SALES 318,000 318,000 318,000 954,000

LESS:COGS 183,652 183,652 183,652 550,956

GROSS PROFIT 134,348 134,348 134,348 403,044

LESS: OPERATING
EXPENSES 54,924 54,924 54,924 164,773
         

EBIT 79,424 79,424 79,424 238,272

LESS:INTEREST 3,429 3,330 3,231 9,990

EBT 75,995 76,094 76,193 228,282

LESS: TAX (30%) 22,799 22,828 22,858 68,485
         
         

NET INCOME 53,197 53,266 53,335 159,797

INCOME STATEMENT 2010-2012

PARTICULAR 2010 2011 2012

  RS RS RS

SALES 3,816,000 4823100 6046470

LESS:COGS 2,203,822 2424204 2666625

GROSS PROFIT 1,612,178 2,398,896 3,379,845

LESS: OPERATING EXPENSES 659,092 683091.67 711891.667

       

EBIT 953,086 1,715,804 2,667,953

LESS:INTEREST 41,662 26727 9897

EBT 911,424 1,689,077 2,658,057

LESS: TAX (30%) 273,427 506,723 797,417

       

       

NET INCOME 637,997 1,182,354 1,860,640

BALANCE SHEET JAN 2010

  ASSETS LIABILITY AND EQUITY
liablitie
  fixed assets   s  
R long term liablities
Freezer S 28,000 RS 400,000

Ice crush machine 17,000    

Electric fixture 2,000    

       
Total Fixed
Assets 47,000 Total 400,000
     
     
  current asset   equities  
     
 R
cash S 242,600 capital RS 100,000

Security deposit 180,000    

Prepaid Rent 30,000    

Supplies 400    
Total Current
Assets 453,000 Total 100,000
     

Total Assets   500,000     500,000

BALANCE SHEET 31 MARCH 2010

  ASSETS LIABILITY AND EQUITY
  fixed assets   liablities  
R
Freezer S 28,000 long term liablities 371,863
Ice crush machine 17,000    
Electric fixture 2,000    
less Acc.Depreciation 1573    
Net Fixed Assets 45,427 Total 371,863
     
     
  current asset   equities  
     
R capita
cash S 374,622 l RS 100,000
Security deposit 180,000    
Prepaid Rent 30,000 Add:Earnings 158,586
Supplies 400    
Total Current Assets 585,022 Total 258,586
     
Total Assets   630,449     630,449

BALANCE SHEET 30 JUNE 2010

  ASSETS LIABILITY AND EQUITY
liablitie
  fixed assets   s  
R long term liablities
Freezer S 28,000 RS 342,874

Ice crush machine 17,000    

Electric fixture 2,000    

less:Acc.
Depreciation 3146    
Total Fixed
Assets 43,854 Total 342,874
     
     
  current asset   equities  
     
R
cash S 506,388 capital RS 100,000

Security deposit 180,000    

Prepaid Rent 30,000 Add:Earnings 317,768

Supplies 400    

Total Current Assets 716,788 Total 417,768

     

Total Assets   760,642     760,642

BALANCE SHEET 31 AUG 2010

  ASSETS LIABILITY AND EQUITY
  fixed assets   liablities  
R long term liablities
Freezer S 28,000 RS 313,006
Ice crush machine 17,000    
Electric fixture 2,000    
less Acc.Depreciation 4719    
Total Fixed Assets 42,281 Total 313,006
     
     
  current asset   equities  
     
cash R 637,891 capital RS 100,000
 S
Security deposit 180,000    
Prepaid Rent 30,000 Add:Earnings 477,566
Supplies 400    
Total Current Assets 848,291 Total 577,566
     
       
Total Assets   890,572     890,572

BALANCE SHEET 31 DEC 2010

  ASSETS LIABILITY AND EQUITY
  fixed assets   liablities  
R long term liablities
Freezer S 28,000 RS 282,234
Ice crush machine 17,000    
Electric fixture 2,000    
less Acc.Depreciation 6292    
Total Fixed Assets 40,708 Total 282,234
     
     
  current asset   equities  
     
R
cash S 769,122 capital RS 100,000
Security deposit 180,000    
Prepaid Rent 30,000 Add:Earnings 637,997
Supplies 400    
Total Current Assets 979,522 Total 737,997
     
     
Total Assets   1,020,230     1,020,230

BALANCE SHEET 31 DEC 2011

  ASSETS LIABILITY AND EQUITY
  fixed assets   liablities  
R long term liablities
Freezer S 28,000 RS 149,532
Ice crush machine 17,000    
Electric fixture 2,000    
less Acc.Depreciation 12,583    
Total Fixed Assets 34,417 Total 149,532
     
     
  current asset   equities  
     
R
cash S 1,825,066 capital RS 100,000
Security deposit 180,000    
Prepaid Rent 30,000 Add:Earnings 1,820,350
Supplies 400    
Total Current Assets 2,035,466 Total 1,920,350
     
     
Total Assets   2,069,882     2,069,882

BALANCE SHEET 31 DEC 2012

  ASSETS LIABILITY AND EQUITY
  fixed assets   liablities  
R long term liablities
Freezer S 28,000 RS -
Ice crush machine 17,000    
Electric fixture 2,000    
less Acc.Depreciation 18875    
Total Fixed Assets 28,125 Total -
     
     
  current asset   equities  
     
R
cash S 3,542,465 capital RS 100,000
Security deposit 180,000    
Prepaid Rent 30,000 Add:Earnings 3,680,990
Supplies 400    
Total Current Assets 3,752,865 Total 3,780,990
     
     
Total Assets   3,780,990     3,780,990

NPV

  Year 1 Year 2 Year 3

  RS RS RS
Sales 3816000 4823100 6046470
less:cost 2203822 2424204 2666625
less:operating expense 659092 683091.6667 711891.6667
EBIT 953086 1715804 2667953
less:interest 41662 26727 9897
EBT 911424 1689077 2658057
less:tax(30%) 273427 506723 797417
EAT 637997 1182354 1860640
Add:depreciation 6292 6292 6292
OCF 644288 1188645 1866931
DF(15%) 0.8696 0.7561 0.6575
DCF 560273 898735 1227507
       
Initial investment 500000    
       
NPV 2186515    
       

IRR

   
Initial investment (PKR 500,000)
1st year PKR 560,273
2nd year PKR 898,735
3rd year PKR 1,227,507
IRR 134%

RATIO
S
Ratios     2010 2011 2012

LEVERAGE RATIO          
   
Cash coverage ratio= EBIT+depreciation
  interest payment 23.03 41.33 270.22
   
   
   
Time interest earned = EBIT
  Interset payments 22.88 64.20 269.58
               

PROFITABILITY
RATIO            
   
Net Profit margin= Netincome
  sales 0.17 0.25 0.31
   
   
   
Operating profit
margin= netincome+interest
  sales 0.18 0.25 0.31
               

REFERENCES
 Mr.Tayab (Owner of Ice Candy Stall at Dhorajee. Material cost, Ice crush
machine price).
 Home Electronics & Prime Electronics.(Freezer cost).
 Mr. Atif (Marketing Person of Dolmen Mall).
 Mr.Asif Khan (Owner of Ice Depot at Tariq Road).
 DipShop & Minimelts staff for sale estimation.
 StateBank Of Pakistan for KIBOR.