Lecture 4, 5 & 6 MG 445 Operations, O&M, Finance (1)
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Transcript of Lecture 4, 5 & 6 MG 445 Operations, O&M, Finance (1)
OPERATIONS MANAGEMENTOPERATIONS MANAGEMENT
Operation management is a systematic direction and control of the process that transform inputs into finished goods or services.
Operation managementOperation management
• Inputs Transformation
processes
•Manpower•Equipment/Machines
•Money•Energy•Utilities
•Raw materials
Outputs
Performance feedback.Efficiency evaluation
•Goods•Services
Fig.1 The production and operations Management system
OPERATIONS/PRODUCTION TYPES OPERATIONS/PRODUCTION TYPES OF ORGANIZATIONSOF ORGANIZATIONS
1.1 Manufacturing organizationsManufacturing organization include all chemical and process organization, engineering, mining, etcTransformation of inputs in terms of form, shape, structures, etc., to obtain final product.
There are three major categories:(a) Mass production organizations(b) Job shop production organizations(c) Batch manufacturing organizations
1.2 Service Organizations• Service organization change the
state/condition utility of a costumer. These include training institutions, hospitals, prison, hotels and accommodations, etc.
1.3 Supply Organizations• Here there is a change of ownership of
item. Supply organizations includes; shops, fuel station, commercial banks, etc.
1.4 Transport organizations• There is a change in location utility
from location A to B• These includes land transportation,
air and sea transportation.Summary: It is possible to find all four features in one organization, but the core feature is the one which underpin the identity of that particular organization.
2.0 LOCATION OF FACILITIES2.0 LOCATION OF FACILITIES2.1 Basis for choosing a Location• Availability/existence of infrastructure (road &
utilities)• Proximity to markets• Favorable labor climate• Proximity to raw materials• Security (availability)• Cost of land or site
2.2 Basis for choosing an equipment Technical factors Cost (economic) factors
2.2.1 Technical Factors• Competitive advantage;• Demand for product (specific against general
purpose equipment);• Risk of obsolescence;• Quality of the work produced;• Maintenance costs and reliability
2.2.2 Cost (economic) Factors Direct labour Direct materials Other operating costs Interest on capital invested
2.3 Two main categories of identifying the site location
• Quantitative or/and • Qualitative methods
Specific Techniques/Methods Used• Equal Weight method• Variable Weight method• Weight-cum-Rating method• Factor Point Rating method (poor, fair,
adequate, Good, Excellent)• Composite Measurement method (Multiple
criteria technique)
Consider an example Equal Weight MethodConsider an example Equal Weight Method
Factors Max. Point
Site 1 Site 2 Site 3 Site 4
F1 10 3 6 8 2
F2 10 4 5 9 3F3 10 7 2 6 3Sum of site ratings
30 14 13 23 8
Consider an example for Variable Weight Consider an example for Variable Weight MethodMethod
Factors Max. Point
Site 1 Site 2 Site 3 Site 4
F1 400 300 350 350 200
F2 300 150 200 150 100F3 100 50 75 80 40Sum of site ratings
800 500 625 580 340
Consider an example for Weight-cum-Consider an example for Weight-cum-Rating Method Rating Method
Factors Weight to
factor
Site 1 Site 2 Site 3 Site 4
F1 2 4 6 8 3
F2 3 4 4 9 2F3 5 5 3 7 2Site rating 45 39 78 22
Multiple criteria/Composite TechniqueAdvantages- ability to combine all types of criteria under
one denomination;- It is a technique that consider qualitative and
quantitative factors- it forms the basis for discussion.
Disadvantages- it is too subjective for qualitative attributes;- difficulty to perceive the problem in terms of
weight x score.
Consider example which has both qualitative and Consider example which has both qualitative and quantitative Factors – quantitative Factors – Composite Measure or Multiple TechniqueComposite Measure or Multiple Technique
Factors Location A Location B Location CCost of land including building development
55m 49m 45mLabour and raw materials charges
40m 25m 32mPower and water 10m 9m 10mFreight for incoming and outgoing 85m 85m 92m
Total 190m 168m 179mCost of living Moderate Low ModerateHousing Facilities Excellent Poor GoodCommunity Attitude Good Encouraging Indifferent
3. .03. .0 FACILITY LAYOUTFACILITY LAYOUTThere are 4 major kinds of Layout:1. Process Layout
In process Layout all machines/ Facilities Performing similar functions are placed in one location.
Advantages of Process Layout.– It has high Flexibility i.e. can accommodate changes
in production volumes without suffering high costs.– Can be adapted to skilled Labour hence makes
supervision easy.
Cont… FACILITY LAYOUTCont… FACILITY LAYOUTDisadvantages• Occupies a lot of space• It requires people who are well trained.
2. Product LayoutMachines/facilities are placed according to the production requirement. It is used in continuous production systems such as soft drink manufacturing
Cont… FACILITY LAYOUTCont… FACILITY LAYOUT
Advantages• High production efficiency.• Possible to employ semi skilled Labour.
Disadvantages• Lack of Flexibility in terms of ability of cope with
changes in production volume and product variety.
• One needs inventory between work stations to de-couple station interdependence
Cont…. FACILITY LAYOUTCont…. FACILITY LAYOUT
3. Hybrid Layout• This is a mixture of product and process
Layout.• The hybrid layout combines the advantages of
the two Layouts. An example is organization which fabricates components before assembling them into finished products.
• The former can be done through process Layout and the latter by a product Layout
Cont…. FACILITY LAYOUTCont…. FACILITY LAYOUT
4. Fixed Position LayoutThis is possible when the product is so large such that cannot move around work situations, for instance in ship building and dam construction.
Organization and Management
(O&M)
O&MO&M• The Organization and Management
(O&M) study aims at drawing up an effective organisation and management plan to achieve the entrepreneur’s objectives. It distinguishes the organisation and management activities for the pre-operating period from that for the project operation
Organization and Management Organization and Management The O&M study generally encompasses the
following aspects: • Form of organization• Organogram (organizational structure)• Staffing pattern• Pre-operating activities• Pre-operating costs• Schedule of pre-operating activities via
Gantt Chart
Form of OrganizationsForm of Organizations
• Single (sole) proprietorship • Partnership • Private Limited Company or
close corporation or Public Limited Company
Legal PersonalityLegal PersonalitySole
ProprietorshipPartnership Limited Liability
Advantages• Low start-up costs• Owner has direct
control and makes all decisions
• All profits go to the owner
Advantages• Divided start-up costs• Shared managerial
and leadership responsibilities between partners
• Easier access to capital
Advantages• Liability is limited to the
business• Easier to raise capital• Management is more
accountable• Has a board of directors
Disadvantages• Owner is
personally liable for all losses
• Difficult to raise additional capital
• Management is limited
Disadvantages• Partners are
personally liable for losses
• Profits are divided• Confusion in
managerial roles• Partners disputes
Disadvantages• Closely regulated by
Government• Extensive record-
keeping• Most expensive to start• Taxes are charged twice
Single (sole) proprietorship is Single (sole) proprietorship is characterised by:characterised by: • One person is sole owner;• Less government control;• Generally, no income tax on business,
only on owner;• Unlimited personal liability for
business debts;• Termination upon death of owner;• Owner is mostly the entrepreneur and
general manager.
Partnership characterised by:Partnership characterised by: • Two or more persons as owners;• Some owners may be active in
management, others only as financiers;• Partner’s rights and duties defined by
partnership agreement;• Unlimited personal liability for business
debts;• Termination upon death of any one of the
partners;
Company or close corporation (cc) Company or close corporation (cc) characterised by:characterised by: • Corporation has separate and legal
personality distinct from owners (stockholders or shareholders);
• Continuity unaffected by debt or transfer of ownership;
• Subject to more government control than a sole proprietorship or partnership;
• Income tax on profits and dividends;
Cont…Cont… Company or close Company or close corporation (cc) characterised bycorporation (cc) characterised by:: • Corporation mostly managed by
professional managers as distinct from the shareholders;
• Close corporations have mostly family members and/or friends as stockholders;
• A corporation which issues stocks to the public is also called a public company.
The choice of organization The choice of organization depends ondepends on:: • The objectives of the entrepreneur;• Capabilities of the entrepreneur, such as his
managerial and technical expertise, size of investment, desire for financial and management control, ability to attract financing, protection of confidential information;
• Entrepreneur’s view of the liabilities associated with each type of organisation.
How will the business be managed How will the business be managed and operated?and operated? • Some structure of authority and
responsibility (chain of command), • Division of labour (job distribution), and • Definition of what each one must do in
the business (job description). • And therefore, the business needs an
organisational structure. This is mostly depicted through an organisation chart.
Organizational Structure (Organogram)Organizational Structure (Organogram)
An organogram shows:
• The chain of command;• Relationship; and• Positions
Designing an organization structureDesigning an organization structureRequires an understanding of the following elements: • Identification of the major and key activities to be
done to meet business (project) objectives;• Grouping of these activities into related functions;• Assigning of various functions to specific
positions;• Determination of relationships of the various
activities to achieve co-ordination and unity of effort;
• Fixing of responsibility and authority for each task.
Organizational Structure (Organogram)Organizational Structure (Organogram)Owner-Director
Operations AdministrationMarketing Finance
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Staffing PatternStaffing Pattern
Staffing pattern indicates the personnel requirement by function (marketing, production, administration, finance) and an estimate of compensation for work input. Personnel requirement include:
• Position titles;• Necessary qualification, and • Number of personnel for each
position
Lending institutions normally require:Lending institutions normally require:
• Bio-data of the entrepreneur and his key staff;
• Management’s experience, character and capability are crucial factors in loan approval, even in determining collateral requirements and other loan conditions.
What pre-operating activities must be What pre-operating activities must be undertaken before the business can operate?undertaken before the business can operate? • Attendance at a training programme (whether
skill-related, management or entrepreneurship),
• Preparing a business plan, doing a market survey, making trips to machinery and raw materials suppliers,
• Registering the business, • Hiring a consultant, • Trial operation, etc.
Usefulness of a Gantt chartUsefulness of a Gantt chart Helps an entrepreneur to list and document
all pre-operating activities and decides:• When each activity will take place and • How long it will be, and• Who does it,• How much it will cost (determines pre-
operating expenses)
O&M CostsO&M Costs • Pre-operating investments (POI);• Costs of fixed assets such a typewriter, furniture
and fixtures, cabinets, electric fans, calculator, computer, vehicle, etc.
• Administrative costs (other operation costs or indirect costs) include the salary of the office secretary, directors, managers, bookkeeper, driver, security guard, depreciation of fixed assets, furniture and fixtures used in the office, communications, and office supplies, etc.
FinanceFinanceFinance provides:• the needed funds under the most
favourable terms, and • sees to it that the funds are
effectively used
Relationship of Finance with Relationship of Finance with other Business Functionsother Business Functions
Marketing Operations O&MFoundation
Finance
Operations Firms May Need Capital for:Operations Firms May Need Capital for:• Land• Building• Machinery and Equipment • Furniture and Fixtures• Accounts Receivable• Supplies• Finished Goods• Work-in-Process• Raw Materials• Cash• Pre-Operating Costs• Patents• Goodwill
Fixed Assets
Current Assets
Deferred Charges like Fixed Assets (non-tangible)
Sources of FinanceSources of Finance• Bank Credit/Overdrafts• Trade Credit• Instalment Credit • Customer advances• Lease/venture capital• Issue of share/debentures• Loans from banks/institutions • other financial institutions• Ploughing back of profits• Issue of shares• Issue of debentures• Loans from banks and other financial institutions• Ploughing back of profits
Short-term financing
Medium-term financing
Long-term financing
AN OVERVIEW ON FINANCEAN OVERVIEW ON FINANCE
CUSTOMERS
Final FinishedProduction and/or
Services
MARKET
FIXED INVESTMENT
Land
Buildings
Machines & Equipment Furniture, etc.
Depreciation
PRE-OPERATING EXPENSES
Registration & Licenses Business Plan Preparation
Trial Production & Skills Training
WORKING CAPITALRaw Materials Direct Labour (Wages)Utilities (Factory Overheads)
Selling & Administrative Expenses Interest loan repayment, and Tax etc.
PROFIT OR LOSS
CASHSALES
OWNER
Retained
EQUITY
Financial Statement
Investment Plan
Profit & Loss Statement
Cash Flow Statement
Balance Sheet Statement
Financial Analysis
LOAN
Withdrawn
Amortization
INVESTMENT PLANINVESTMENT PLAN
INVESTMENT PLAN (in Tshs) ITEMS
A. FIXED INVESTMENT1. Land 2. Building 3. Machinery & Equipment 4. Office Equipment
6. Others 5. Transport Equipment
Total Fixed Investment
1. Business Plan Preparation B. PRE-OPERATING INVESTMENT
Total Loan Equity
2. Licenses and Registration
Total Pre-Operating Investment (POI) 5. Others
3. Skills and management Training 4. Trial Production
C. TOTAL INVESTMENTS (A + B)
INVESTMENT PLANINVESTMENT PLAN
DIRECT OPERATING COST 1. Raw Materials
3. Salary for Production Staff 2. Salary for Marketing Staff
INDIRECT OPERATING COSTS Total Direct Operating Costs
2. Direct Labour Costs
1. Owner’s Salary
3. Factory Overhead
6. Office Supplies 7. Rentals 8. Other Expenses
4. Salary for Admin. & Finance Staff 5. Selling & Marketing Costs
Total Indirect Operating Costs (1) TOTAL ANNUAL OPERATING COSTS WORKING CAPITAL REQUIREDTOTAL PROJECT COST (C + D)
DEBT TO EQUITY SHARE (%)
(1) NOTE that this Indirect Operating Costs Still needs depreciation and POI amortization
INVESTMENT PLAN (Example of Filling/Service Station)INVESTMENT PLAN (Example of Filling/Service Station)(in Tshs)(in Tshs)
ITEMS A. FIXED INVESTMENT1. Land 2. Building 3. Machinery & Equipment 4. Office Equipment 5. Transport Equipment
Total Loan Equity 0 0
Total Fixed Investments B. PRE-OPERATING INVESTMENT
6. Others
180,000,000 15,789,4740
164,210,526105,000,000 95,789,4749,210,526
0 00 0
0
00
0 0285,000,000 260,000,00025,000,000
1. Business Plan Preparation
C. TOTAL INVESTMENTS (A + B)
5. Others (grills/plastering/etc.) Total Pre-Operating Investment (POI)
2. Licences and Registration
4. Trial Production Costs 3. Skills and Management Training
D. WORKING CAPITAL DIRECT OPERATING COSTS 1. Raw Materials Costs 2. Direct Labour Costs 3. Factory OverheadsTotal Direct Operating Costs INDIRECT OPERATING COSTS
1,699,800,00051,000,00017,412,600
1,768,212,600
1. Owner’s Salary 2. Salary for Marketing Staff
Total Indirect Operating Costs
4. Salary for Adm.& Finance Staff 3. Salary for Production Staff
5. Business Promotion & entertain 6. Office Supplies 7. Rent for Land Lease
WORKING CAPTIAL REQUIREDTOTAL ANNUAL OPERATING C
TOTAL PROJECT COST (C + D)
8. Other Expenses
EQUITY SHARE (%)
4,800,00000
19,140,0000
02,340,000
1,787,352,600
012,000,000
9,372,16550,000,00025,000,00034,372,165
335,152,165 285,152,16515 85
00
0OOOOO
25,000,000 275,780,000
00
15,780,00015,780,000
300,780,000
PROJECTED PROFIT & LOSSPROJECTED PROFIT & LOSS (In Tshs)ITEMS Year1 Year2 Year3 Year4 Year5
Planned Operations(in Units)A.Sales B.Direct Operating Cost1.Raw Materials Costs2.Direct Labour Costs 3.Factory OverheadTotal Direct Operating Costs C. GROSS PROFIT (A-B)
contcont’’d…d… Projected Profit & Loss Projected Profit & LossITEMS Year1 Year2 Year3 Year4 Year5
D.INDIRECT OPERATING COSTS
1.Owner’s Salary2.Salary of Marketing Staff3.Salary of Production Staff4.Salary of Admin.&Finance Staff
5.Selling & Marketing Costs6.Office Supplies7.Rentals8.Other ExpensesTotal Ind.Ope.Cost Bef.Dep.&POI
ContCont’’d… d… Projected Profit & LossProjected Profit & Loss(In Tshs)ITEMS Year1 Year2 Year3 Year4 Year5
9.Depreciation
10.POI AmortizationE.Total Ind.Operating CostsF.Operating Profit (C-E)G.InterestH.Profit Before Tax (F-G)I.TaxK.Profit (H-I)L.Breakeven point (E/C) 100%
DepreciationDepreciation
• Is derived from the Latin word ‘do’ meaning down and ‘pretium’ meaning price;
• In common use it means putting down the value of an asset due to wear, tear, passage of time, obsolescence, etc.,
Characteristic of DepreciationCharacteristic of Depreciation• Is always a fall in the value of asset• This fall is always gradual• The fall is of permanent character and it cannot be
recouped afterwards• It is a continuous process and it does not matter whether
the asset was put to use during the period or not• Is always on fixed assets and not on current or floating
assets• The fall is always in the book value of the asset and not
in market or exchange value• Is a result of the use of assets, passage of time and
obsolescence.
Need for Providing DepreciationNeed for Providing Depreciation
• To know the true profit and loss;
• To show true and fair view of financial position; and
• To provide funds for replacement of assets
Depreciation has Became Depreciation has Became Important in Production for:Important in Production for:
• Fixation of prices;
• Calculation of profit or loss analysis;
• Computation of taxable income;
• Calculation of managerial remuneration; etc.,
Factors to be Considered when Factors to be Considered when Determining DepreciationDetermining Depreciation
• Cost of the asset;• Useful life of the asset;• Salvage value;• Method of depreciation
Methods of DepreciationMethods of Depreciation
In this business plan will use:
Fixed installment or straight line method;
Fixed Installment or Straight Line Fixed Installment or Straight Line MethodMethod
Cost of the asset - Scrap value at the end
Depreciation = ------------------------------------------Life of the asset (number of years)
ContCont’’d… d… Projected Profit & LossProjected Profit & Loss ITEMS
Depreciation Calculator Value (Tsh) Period (yrs) AnnualDep’n
1.BUILDING 2.Machinery & Equipment3.Office Equipment4.Vehicles5.OthersTotalAmortization Calculator Value (Tsh) Period (yrs) Amort/yr
1.Pre-Operating Investment
PROJECTED CASH FLOWPROJECTED CASH FLOW
(In Tshs)ITEMS Year0 Year1 Year2 Year3 Year4 Year5
SalesA.Cash In Flow1.Cash Sales2.Receivable 3.Equity4.Fixed Investment Loan5.Working Capital Loan6. Beginning Cash Balance
Total Cash In Flow
ContCont’’d…. d…. Projected Cash FlowProjected Cash FlowITEMS Year
0Year1
Year2
Year3
Year4
Year5
Sales
B. Cash Out Flow
1.Total Investment
2.Direct Operating Costs 3. Total Ind. Oper. Costs bef. Dep’n and POI
4.Interest
5. Tax
Total Cash Out-Flow
ContCont’’d…. d…. Projected Cash FlowProjected Cash FlowITEMS Year
0Year1
Year2
Year3
Year4
Year5
Sales
C. Net Cash (A-B)
D. Loan Payments
1. Principal for Fixed Investment Loan 2. Principal for Working Cap. LoanTotal Loan Payments
E. Ending Cash Balance (C-D)
BALANCE SHEETBALANCE SHEET
Total Asset = Equity + Liabilities
PROJECTED BALANCE SHEETPROJECTED BALANCE SHEET
(In Tshs)ITEMS Year0 Year
1Year2
Year3 Year4 Year5
1. ASSETS1.1 CURRENT ASSETS1.Cash 2.Receivable3.InventoriesTotal Current Assets(A)
ContCont’’d….. d….. Projected Balance SheetProjected Balance Sheet
ITEMS Year0 Year1
Year2
Year3 Year4 Year5
1.2 Fixed Assets1.Land2.Building3.Machinery & Equipment4.Office Equipment5.Vehicles6.OthersTotal Fixed Assets
ContCont’’d…. d…. Projected Balance SheetProjected Balance Sheet ITEMS Year0 Year1 Year2 Year
3Year4
Year5
Accumulated DepreciationBook Value of Fixed Assets (B)POIAccumulated POIBook Value of POI (C )Total Assets (A+B+C)2. Liabilities & Equity2.1 Current Liabilities1. Account Payable2. Working Capital LoanTotal Current Liabilities(D)
Projected Balance Sheet Projected Balance Sheet ContCont’’d.d.
ITEMS Year0
Year1
Year2
Year3
Year4
Year5
2.2 Long Term Liabilities(E)
1. FIXED Investment Loan
Total Long Term Liabilities (E)
3. Equity 1.Owner’s Equity 2.Profit of Previous Period 3.Current ProfitTotal Equity (F)Total Liabilities & Equity (D+E+F)ROI(Profit/Total Assets)x100%
Financial AnalysisFinancial Analysis Potential entrepreneurs raise the
following issues: • Will the proposed business earn
adequate profits? • Can the future business meet its
obligations promptly? • Will an investment in the proposed
business be safe?
Cont……Cont…… Financial Analysis Financial Analysis Three sets of ratios are normally
measured and examined. These are: • Profitability, • Liquidity, and• Solvency
ProfitabilityProfitability The instruments used to measure
profitability are: – Net Profit Ratio, – Assets Turnover, and – Return on Investment (ROI)
Net Profit RatioNet Profit Ratio
measures the percentage ratio of net profit after taxes to net sales:
Net Profit After Taxes ___________________ = Net Profit Ratio Net Sales
Assets TurnoverAssets Turnover
is the ratio of annual net sales to the total assets used in the business. It measures the volume of sales derived from each unit of money invested in assets:
Net Sales ________________= Assets Turnover Ratio
Total Assets
Return on InvestmentReturn on Investment (ROI) (ROI)ROI is the combination of the two ratios above,
i.e., net profit and assets turnover ratios. It should be noted that neither the net profit ratio nor the assets turnover ratio by themselves provide an adequate analysis of the operating efficiency of the proposed business. The net profit ratio ignores the utilisation of assets, while the assets turnover ratio ignores profitability on sales. The use of the ROI ratio resolves these deficiencies by reflecting both factors in a single ratio.
Cont…Cont… Return on Investment Return on Investment (ROI) (ROI)ROI is given by:
Net Profit Ratio: x Assets Turnover Ratio: =
Net Profit After Taxes x Net Sales =Net Sales Total Assets
Net Profit After Taxes = ROITotal Assets
LiquidityLiquidity Examines the proposed business whether
it can meet all its future obligations promptly? The set consists of the following ratios:
• Current Ratio, • Acid Test (or Quick Ratio), • Average Collection, and • Inventory Turnover.
Current RatioCurrent Ratio Measures the ability of the proposed business to meet
all its short-term debts by relating current assets and current liabilities. A 2:1 ratio seems the most desirable one, but may not necessarily be valid in all cases. Current Ratios are sensitive to the practices within the industry in the country.
Current Assets _______________ = Current RatioCurrent Liabilities
SolvencySolvencyThis ratio assesses the financial strength of a
proposed business regarding its ability to meet its long-term financial obligations .
Total Debt ____________ = Debt-Equity Ratio Total Equity
SolvencySolvency• For bankers, a low debt-equity ratio will
be favourable since it indicates that there are enough assets to protect their principal lending.
• For stakeholders, a high debt-equity ratio may indicate increases in fixed charges against earnings and can consequently lead to decreases in future dividends
Profit & Loss Statement Using Transactions Profit & Loss Statement Using Transactions Cards of Company X in Dar es SalaamCards of Company X in Dar es Salaam
No Item Tshs.1 Office rent 50,000
2 Interest expenses 25,000
3 Sales 1,000,000
4 Selling & Marketing Costs 20,000
5 Tax Payable 10%
6 Depreciation of Office Equipment
50,000
Profit & Loss Statement Using Transactions Profit & Loss Statement Using Transactions Cars of Company X in Dar es SalaamCars of Company X in Dar es Salaam
No Item Tshs.7 Staff Salaries, etc. 130,000
8 Direct Labour 200,000
9 Raw Materials Purchased (in a period)
200,000
10 Raw Materials Beginning 100,000
11 Ending Stock of Materials 50,000
12 Factory Overhead 50,000
P & L Statement for X Company Using P & L Statement for X Company Using Transactions Cards of Company X in Dsm.Transactions Cards of Company X in Dsm.
Item Tshs ‘000Sales: 1,000Less: Cost of goods sold 500Gross Profit 500Less:Operating Expenses Office rent 50 Selling & administration 150 Depreciation of office equp.
50
Total Operating expenses 250
P & L Statement for X Company P & L Statement for X Company ContCont’’d.d.
Item Tshs TshsOperating Profit 250Less: Interest expenses 25Net Profit before tax 225Less: Tax (10%) 22.5Net Profit after tax 202.5
Balance SheetBalance Sheet (Transaction Cards of (Transaction Cards of Juakali Co. as of 31Juakali Co. as of 31stst August 2002) August 2002)
Items Tshs.
1. Cash 450
2. Accounts Receivable 2,000
3. Inventories 6,500
4. Land 1,050
5. Buildings & Improvements (net) 950
Balance SheetBalance Sheet (Transaction Cards Cont(Transaction Cards Cont’’d.)d.)
Items Tshs.6. Machinery (net) 1,000
7. Delivery Equipment (net) 500
8. Accounts Payable 450
9. Notes Payable 5,000
10.Capital 6,000
11. Retained Earnings 1,000
Balance Sheet as of 31Balance Sheet as of 31stst August August 2002 for Juakali Company2002 for Juakali Company
ASSETS
Current Assets Tshs.
Cash 450
Accounts receivable 2,000
Inventories 6,500
Sub-Total 8,950
Balance Sheet as of 31Balance Sheet as of 31stst August August 2002 for Juakali Company2002 for Juakali Company Cont Cont’’d.d.
Fixed Assets
Land 1,050
Building & Improvement (net) 950
Machinery (net) 1,000
Delivery Equipment (net) 500
Sub-Total 12,450
Balance Sheet Juakali CompanyBalance Sheet Juakali Company ContCont’’d.d.
Liabilities & Owner’s Equity
Liabilities
Accounts Payable 450
Long-Term Liabilities
Notes Payable 5,000
Sub-Total 5,450
Balance Sheet Juakali CompanyBalance Sheet Juakali Company ContCont’’d.d.
Owner’s Equity
Capital 6,000
Retained Earnings 1,000
Total Liabilities and Equity 12,450
Finance OverviewFinance Overview