Short-Term Financial Projections Training Session
This training session focuses on enabling participants to create short-term profit/loss and cash flow projections, identify financing requirements, evaluate income and expenditure projections, calculate net profit, analyze cash flow, and evaluate key financial ratios.
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Presentation Transcript
Module 2: Session 4 Financial short term projections Module 2: Session 4 1 9/24/2024
Session objectives 1) Enabling participants to make short term profit or loss projections 2) Enabling participants to formulate short term cash flow projections 3) Empower trainees to identify short term financing requirements and suggest means to improve performance and liquidity. Module 2: Session 4 2 9/24/2024
Income projection Identify sources and revenue patterns from each contract for a year. Indicate amounts expected in each month. Calculate total for the period. Add up total per month. Add up total for year. Evaluate the reasonableness of the figures Module 2: Session 4 3 9/24/2024
Expenditure projection Obtain works schedule and bills of quantities Work out expenditures [materials, labour, administration, overheads, financial costs] Indicate expenditure incurred each month for twelve months. Obtain total for each month. Obtain total for the year. Module 2: Session 4 4 9/24/2024
Netting off the income statement Deduct total costs from total revenue Compute 30% of net income as provision for taxation Obtain the net profit figure less taxes. Work out key ratios based on the annual totals such as: Gross profit margin ROI Fixed assets turnover Evaluate them as to reasonableness and acceptability Module 2: Session 4 5 9/24/2024
Netting off cash flow Work out the receipt and payment schedules per month Deduct payments from receipts for each month and note the monthly net cash flow Adjust for the opening balance and carry forward the balance Study the trend of the month end balances Evaluate the reasonableness and acceptability. If cash deficit, plan how to manage the gap; if cash surplus, plan how to invest it. Module 2: Session 4 6 9/24/2024
Projection of materials format unit cost Total Type Gravel Culverts Cement Stones Sand Total Quantity Module 2: Session 4 7 9/24/2024
Projection of overheads costs format Type Quantity Unit cost Total Office/site rent Technicians & supervisors salaries Tools and equipment Transport/fuel Firewood Insurance bonds Bid bonds. Total Module 2: Session 4 8 9/24/2024
Projection of labor costs format Type Quantity Unit cost Total Grade operators Dozer operators Machine operators Workers Total Module 2: Session 4 9 9/24/2024
Projection of administrative costs format Type Quantity Unit cost Total Stationary Office supplies Meetings expenses Transport/fuel Repairs and maintenance Bank and Loan costs Other sundry Total Module 2: Session 4 10 9/24/2024
Projection of machinery and equipment costs Type Quantity Unit cost Total Depreciation Insurance Repairs and maintenance Consumable tools Light Tools and equipment Total Module 2: Session 4 11 9/24/2024
Pro-forma income statement Expected revenues Revenues Revenues from other sources m 1 m2 m3 m4 M5 m12 Total Total Planned expenditure: Materials Administration and overheads Labour Equipment hire/running Depreciation Finance costs Total Projected Profit/loss Module 2: Session 4loss 12 9/24/2024
Cash flow projection format M5 m12 Expected cash receipts Revenues from clients Other sources e.g. loans m 1 m2 m3 m4 Total Total Planned cash payments Material suppliers Administration and overheads Salaries and wages paid Equipment hire/running Loan repayment Drawings or dividends paid Tax payment Total Net change in Cash Module 2: Session 4 13 9/24/2024
Group work (all) 1. Basing on the case study develop an income statement for the first year. 2.Develop a cash flow projection for the initial one year. 3.Discuss the similarities or differences between the two statements. 4. Advise Munaku on what strategy he could adopt to manage profitability and liquidity for the year. Module 2: Session 4 14 9/24/2024
END Q & A Module 2: Session 4 15 9/24/2024
