Kasun Madhushanka Abeysiriwardhana

(Sensitive financial information and actual company data have removed) XXX (Pvt) Ltd. FINANCIAL FEASIBILITY ANALYSIS Prepared by: Kasun Abeysiriwardhana - BBA (B. Eco) sp. Col. Partner – KW Associates 2F, Gangarama Road Wewala, Piliyandala. 10300 -- Table of Contents A. Introduction & methodology 3 B. Initial financial requirement 4 C. Revenue & profits projection 5 D. SWOT Analysis 6 E. Appendices 7 2 Introduction & Methodology Purpose of conducting a feasibility study is to determine the viability of the project. A complete feasibility analysis expects to explore the market, analyze the technical matters, consider the economic factors and also includes an analysis on key financials. A financial feasibility study focuses specially on the financial aspects. It assesses the economic viability of the project by evaluating the startup costs, operating expenses, cash flows and making a forecast of future performance. Results of this study will determine whether the proposed project is financially viable & make a projection on the rate of return on invested capital. In conduction the financial feasibility study for “xxx (Pvt) Ltd.” first we identified the startup costs. Here we consider only those with actual financial value (actual cash outflows). We could recognize several key contributions to the project which have no actual financial liability. They receive as contributions, helps or complementary in general terms. Our attention is highly focused on market growth as this is highly competitive in current Sri Lankan market and the going concern of the project is highly depends on the profitability and sales volume. Our analysis was based on several successful online shopping platforms during recent past and financial data were obtained from one of them to consider industry growth. As the initial investment on xxx is not much crucial with its success, our analysis was not based on traditional return on investment ratios. Instead of that we drove over attention towards profitability and continued sales growth. Feasibility study determines the practicality of a management decision from an economic and operational standpoint. Preliminary analysis- Evaluate the current market conditions, obtained financial data from a business in similar nature, evaluate the strengths and weaknesses based on available data. Secondary analysis- Evaluate the key financial details (industry specific) to identify margins, sales growth, behavior of operational costs etc. 3 Initial Financial Requirement Description Amount (Rs.) 18,000/150,000/42,000/252,000/100,000/10,000/15,000/900,000/1,787,000/- Server charges Marketing expenses Rent Key money ( for 06 months) Front office arrangement, Name board etc. Furniture & equipment Utility expenses Working capital Total requirement Initial Financial Requirement - xxx (Pvt) Ltd. Server charges Marketing 1% 10% Rent 3% Server charges Marketing Key money 17% Rent Key money Office arrangement Working capital 60% Office arrangement 1% Office furniture Utility7% Office furniture Utility Working capital 1%  10% from total financial requirement has allocated for marketing (business promotion) expenses as it is an immediate requirement to grow customer base and earn reputation.  Key money and rent for office location is 20% from total expected financial requirement. Since it is essential to have an office place and key money is a general requirement, fund allocations were made accordingly.  Working capital requirement is 60% from total requirement. This may not be required totally at once. Accordingly, it is manageable and can be arranged accordingly on requirement, time to time. 4 Revenue & profits projection Year - Month Sales (Rs.) Purchase cost (Rs.) Gross profit GP % Overhead expenses (Rs.) April May June July August September October November December January February March 750,000 892,500 1,017,450 1,180,242 1,510,709 1,782,638 2,067,860 2,791,610 3,740,758 3,665,942 3,519,305 4,362,472 667,500 785,400 885,182 1,038,613 1,344,532 1,586,547 1,778,359 2,456,617 3,329,274 3,189,370 3,132,181 3,838,975 82,500 107,100 132,269 141,629 166,178 196,090 289,500 334,993 411,483 476,573 387,124 523,497 11% 12% 13% 12% 11% 11% 14% 12% 11% 13% 11% 12% 288,000 90,850 93,349 96,605 103,214 108,653 114,357 128,832 147,815 146,319 143,386 160,249 Net profit (Rs.) (205,500) 16,250 38,919 45,024 62,964 87,437 175,143 206,161 263,668 330,254 243,737 363,247  Revenue & profit projections were based on current capacity of the company as a startup business and based on actual market GP ratios.  Expected monthly sales growth as a result of increased reputation, promotion campaigns, market stabilization etc. has been considered 12% - 18%  Seasonal sales fluctuations also considered separately on sales growth and on operational cost fluctuations. March - April & December - January months have been considered as festival seasons and projections made according to it.  Overhead expenses were measured based on a fixed allocation for fixed overheads (Eg: office rent, hosting fees, internet charges etc.) and a variable allocation of 2% from monthly revenue for un expectable / variable overheads. 5 Financial SWOT analysis Opportunities Strengths Social economic trends Low capital requirement Low cost internet access Experienced owner Widely spread social media Easy access to supplier networks Increased usage of credit cards Capability on IT sector xxx (Pvt) Ltd. Weaknesses Threats Less reputation Increasing competition on industry Delivery cost Running with lesser margins Higher level of overheads at startup statutory requirements security issues on online payments.  As the social and environmental factors have direct impact on financials of the project, all possible social and environmental factors have considered under this SWOT analysis.  Limitations for fresh startups are high in every business model. The mentioned weaknesses are to be well managed to succeed in competitive business environment.  Well experienced founder is a great advantage to win the market within a shorter period of time. Accordingly, it is highlighted under “strengths’’ to the company.  The existing security situation and changing customer expectations will impact the success of the project. Hence, timely attention is highly emphasized. 6 Appendices  Financial model map – “xxx” development  Projected cash flow statement – Year 1 (monthly basis) 7