Eashwer Engineering- Financial Projections - Solution
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M/S Easwar Engg. Products Testing Equipments Pvt. Ltd. Amount(Rs. in lacs) Land 0.50 Building 2.50 Plant & Machinery 25.00 Others 2.50 Misc. Assets 8.35 Total 38.75 Sales: Year No. of units Selling Price Amount
I 12 5.00 60.00
II 15 5.00 75.00
III 20 5.00 100.00
RAW MATERIALS, LABOR, SALARIES & OTHER EXPENSES YEAR
I
II
36.00 (12)
45.00 (15)
60.00 (20)
LABOUR
2.52
2.88
3.60
SALARIES
3.00
3.00
3.00
OTHER EXPENSES
5.75
6.00
6.60
@ Rs. 3 lacs per unit
III
I DEPRECIATION Building @5% 0.125 Machinery @10% 2.75 TOTAL 2.88 SALES
60.00
II
III
0.125
0.125
2.75 2.88
2.75 2.88
75.00
100.00
PROFIT AND LOSS ACCOUNT Year
I
II
III
Sales
60.00
75.00
Raw Mat. Labour Salaries Other Expenses Depreciation
36.00 2.52 3.00 5.75 2.88
45.00 2.88 3.00 5.80 2.88
60.00 3.60 3.00 5.85 2.88
Cost of Prod.
50.15
59.56
75.33
2.25 0.60
1.65 0.60
2.88
3.37
100.00
. Interest T/L 2.85 Interest on deposits 0.60 Interest on W/C 2.36
Year I Cost of Production 55.96
II 65.49
III 81.70
PBT Tax @ 30% PAT Add Depreciation
4.04 1.21 2.83 2.88
9.51 2.85 6.66 2.88
18.30 5.49 12.81 2.88
Cash Accruals T/L repayment
5.71 2.00
9.54 4.00
15.69 4.00
D.S.C.R.
1.50
1.76
2.29
Calculation of DSCR DSCR = PAT + DEPRECIATION + INT. ON T/L + INT. ON W/C INT. ON T/L+INT. ON W/C+REPAYMENT OF INSTAL. YEAR I DSCR = 2.83+2.88+2.85+2.36 2.85+2.36+2.00 = 1.50 YEAR II DSCR = 6.66+2.88+2.75+2.88 2.25+2.88+4.00 = 1.76 YEAR III DSCR = 12.81+2.88+1.65+3.37 1.65+3.37+4.00 =2.29
Calculation of Interest on Term Loan (Rate of Interest 15% ) YEAR I INT. II Beginning of year 20.00 18.00 1-6 Month 20.00 1.50 16.00 6-12 Month 18.00 1.35 14.00 Total 2.85
INT. 1.20 1.05 2.25
III 14.00 12.00 10.00
INT. 0.90 0.75 1.65
BREAK EVEN ANALYSIS Year Net Sales
I 60.00
VARIABLE COST R.M. 36.00 Labor 2.52 Other Expenses 5.75 Int.on W.C. 2.36 46.63
II 75.00
III 100.00
45.00 2.88
60.00 3.60
6.00
6.60
2.88 56.76
3.77 73.97
Fixed Cost Selling & Adm. Int. T/L Int. Deposits Depreciation
3.00 2.85 0.60 2.88 9.33
3.00 2.25 0.60 2.88 8.73
3.00 1.65 0.60 2.88 8.13
Sales - V.C. Contribution
13. 37
18.24
26.03
B.E.P =
9.33 13.37 69.99%
8.73 18.24 47.86%
8.13 26.03 31.23%
CASH EXPENSES Year I II Labor 2.52 2.88 Salaries 3.00 3.00 Other Expenses 5.75 6.00 Int. T/L 2.85 2.25 Int. Deposits 0.60 0.60 Total 14.72 14.73 Per month 1.22 1. 22 Cost of Sales( FOR W.C. PURPOSE) Cost of Production 50.15 59.56 Less Depreciation 2.88 2.88 47.27 56 .68 Int. on T/L 2.85 2.25 Int. on Deposits 0.60 0.60 50.72 59.73 Per month 4.22 4.97
III 3.60 3.00 6.60 1.65 0.60 15.45 1.28 75.34
2.88 72.46 1.65 0.60 75.45 6.36
W/C 1st year Item Period
Amount
Margin
Permissible Limit
R.M. SIP F.G. Receivables Expenses
2.25 (25) 4.22 (25) 4. 22 (25) 6.33 (10) 1.22 (100)
0.57 1.05 1.05 0.75 1.22 4.61
1.68 3.17 3.17 6.75 --14.77
3 weeks 4 ,, 4 “ 6 “ 1 month
Working Capital Limit Interest @ 16% Margin
14.77 2.36 4.61
WORKING CAPITAL FOR II nd & IIIrd YEARS Item
Period
Year
Amount II
III
Margin (%)
II
III 0.93
Permissible Limit II III
RM
3W
2.81
3.75
(25)
0.70
SIP
4W
4.97
6.36
(25)
1. 24
F.G.
4W
4.97
6.36
(25)
RECEI VABLES
6W
7.45
9.54
(10)
1226
1.22
(100) 1.22 1.22 --______________________________
EXPENSES 1M
2.11
2.82
1.59
3.73
4.75
1.24
1.59
3.73
4.75
0.93
1.25
5.33 Interest @ 16%
6.48
8.44
18.01 2.88
11.25
23.57 3.77
I 12 5.00 60.00
II 15 5.00 75.00
III 20 5.00 100.00
RAW MATERIALS, LABOR, SALARIES & OTHER EXPENSES YEAR
I
II
36.00 (12)
45.00 (15)
60.00 (20)
LABOUR
2.52
2.88
3.60
SALARIES
3.00
3.00
3.00
OTHER EXPENSES
5.75
6.00
6.60
@ Rs. 3 lacs per unit
III
I DEPRECIATION Building @5% 0.125 Machinery @10% 2.75 TOTAL 2.88 SALES
60.00
II
III
0.125
0.125
2.75 2.88
2.75 2.88
75.00
100.00
PROFIT AND LOSS ACCOUNT Year
I
II
III
Sales
60.00
75.00
Raw Mat. Labour Salaries Other Expenses Depreciation
36.00 2.52 3.00 5.75 2.88
45.00 2.88 3.00 5.80 2.88
60.00 3.60 3.00 5.85 2.88
Cost of Prod.
50.15
59.56
75.33
2.25 0.60
1.65 0.60
2.88
3.37
100.00
. Interest T/L 2.85 Interest on deposits 0.60 Interest on W/C 2.36
Year I Cost of Production 55.96
II 65.49
III 81.70
PBT Tax @ 30% PAT Add Depreciation
4.04 1.21 2.83 2.88
9.51 2.85 6.66 2.88
18.30 5.49 12.81 2.88
Cash Accruals T/L repayment
5.71 2.00
9.54 4.00
15.69 4.00
D.S.C.R.
1.50
1.76
2.29
Calculation of DSCR DSCR = PAT + DEPRECIATION + INT. ON T/L + INT. ON W/C INT. ON T/L+INT. ON W/C+REPAYMENT OF INSTAL. YEAR I DSCR = 2.83+2.88+2.85+2.36 2.85+2.36+2.00 = 1.50 YEAR II DSCR = 6.66+2.88+2.75+2.88 2.25+2.88+4.00 = 1.76 YEAR III DSCR = 12.81+2.88+1.65+3.37 1.65+3.37+4.00 =2.29
Calculation of Interest on Term Loan (Rate of Interest 15% ) YEAR I INT. II Beginning of year 20.00 18.00 1-6 Month 20.00 1.50 16.00 6-12 Month 18.00 1.35 14.00 Total 2.85
INT. 1.20 1.05 2.25
III 14.00 12.00 10.00
INT. 0.90 0.75 1.65
BREAK EVEN ANALYSIS Year Net Sales
I 60.00
VARIABLE COST R.M. 36.00 Labor 2.52 Other Expenses 5.75 Int.on W.C. 2.36 46.63
II 75.00
III 100.00
45.00 2.88
60.00 3.60
6.00
6.60
2.88 56.76
3.77 73.97
Fixed Cost Selling & Adm. Int. T/L Int. Deposits Depreciation
3.00 2.85 0.60 2.88 9.33
3.00 2.25 0.60 2.88 8.73
3.00 1.65 0.60 2.88 8.13
Sales - V.C. Contribution
13. 37
18.24
26.03
B.E.P =
9.33 13.37 69.99%
8.73 18.24 47.86%
8.13 26.03 31.23%
CASH EXPENSES Year I II Labor 2.52 2.88 Salaries 3.00 3.00 Other Expenses 5.75 6.00 Int. T/L 2.85 2.25 Int. Deposits 0.60 0.60 Total 14.72 14.73 Per month 1.22 1. 22 Cost of Sales( FOR W.C. PURPOSE) Cost of Production 50.15 59.56 Less Depreciation 2.88 2.88 47.27 56 .68 Int. on T/L 2.85 2.25 Int. on Deposits 0.60 0.60 50.72 59.73 Per month 4.22 4.97
III 3.60 3.00 6.60 1.65 0.60 15.45 1.28 75.34
2.88 72.46 1.65 0.60 75.45 6.36
W/C 1st year Item Period
Amount
Margin
Permissible Limit
R.M. SIP F.G. Receivables Expenses
2.25 (25) 4.22 (25) 4. 22 (25) 6.33 (10) 1.22 (100)
0.57 1.05 1.05 0.75 1.22 4.61
1.68 3.17 3.17 6.75 --14.77
3 weeks 4 ,, 4 “ 6 “ 1 month
Working Capital Limit Interest @ 16% Margin
14.77 2.36 4.61
WORKING CAPITAL FOR II nd & IIIrd YEARS Item
Period
Year
Amount II
III
Margin (%)
II
III 0.93
Permissible Limit II III
RM
3W
2.81
3.75
(25)
0.70
SIP
4W
4.97
6.36
(25)
1. 24
F.G.
4W
4.97
6.36
(25)
RECEI VABLES
6W
7.45
9.54
(10)
1226
1.22
(100) 1.22 1.22 --______________________________
EXPENSES 1M
2.11
2.82
1.59
3.73
4.75
1.24
1.59
3.73
4.75
0.93
1.25
5.33 Interest @ 16%
6.48
8.44
18.01 2.88
11.25
23.57 3.77
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