The document is a semester project report for establishing an international software house called Business Solution Providers. It includes an introduction, objectives, SWOT analysis, cost estimates, proposed 3-year financial statements, ratios and a question/answer section. The objectives are to develop world-class software, provide exceptional support services, and acquire and retain strategic customers. The SWOT analysis identifies strengths such as experienced developers and opportunities like a large untapped market.

1. Semester Project
Financial Management (69621)
Summer-2015
Prepared By:
Muhammad Asif Khan (51271)
MBA (Operations Management)
Evening Program
PAF-KIET (City Campus)

2. Introduction:
After having a careful and thorough analysis
of the increasing demand of the e-solutions
to the business needs, we have been decided
to establish the international standard
software house to address those business
needs.

3. Name of Business:
Business Solution Providers
(A Software Developer Company)

4. Our Vision:
Would like to become an agile organization and
wants to maintain ourselves as second to none.
Our Mission:
We are committed to digitalize the each of every
and every transaction of the organizations
according their nature of business and as per their
needs.

5. Objectives:
• To develop world class software for every
customer.
• To provide extraordinary after sales
services & support.
• Acquisition & retention of customers
and transferring them into strategic
business partner.

6. SWOT Analysis:
Strengths:
Our exceptional software developers.
Our updated software licenses.
Our success on existing projects.
Our exceptional offer of lifetime support &
services to our valued customers.

7. SWOT Analysis:
Weaknesses:
Lack of awareness among entrepreneurs
effectiveness of technological development.
Considering it as cost center rather than
profit center.

8. SWOT Analysis:
Opportunities:
A large potential market is available to serve.
Currently less competitors existing in the
market.
Have an opportunity to capitalize the market
through rendering exceptional services.

9. SWOT Analysis:
Threats:
Entrance of multinational software houses in to
the market.
Introduction of new software technologies other
than our licensors.

10. Costing Estimates:
Acquisition of Office: 21.00 PKR million
Office Furniture, Fixtures
& Equipment: 09.50 PKR million
Purchasing of Software Licenses: 32.50 PKR million
Marketing & Sales Activities: 06.50 PKR million
Purchasing of Office Vehicles: 12.50 PKR million
Office Staff Salaries and Benefits: 04.00 PKR million
Other Office Overheads: 02.00 PKR million
Total 88.00 PKR million

11. Proposed Financial Statements:
Income Statement for the period ended
Year 1 Year 2
Net Sales Revenue 30.00 45.00
Less: Cost of Goods Sold (10.87) (20.00)
Gross Profit 19.13 25.00
Less: Fixed Operating expenses
except depreciation (21.03) (16.00)
Depreciation Expenses (03.02) (03.02)
Earnings before Interest
& Expenses (EBIT) (04.92) 05.98
Less: Interest Expense (00.60) (00.60)
Earnings before taxes (EBT) (05.52) 05.38
Less: Taxes (40 %) (00.00) (02.15)
Net Income/Loss (05.52) 03.23

12. Proposed Financial Statements:
Balance Sheet as on June 30th
ASSETS Year 1 Year 2
Current Assets:
Cash & equivalents 05.00 07.00
Accounts Receivables 15.00 25.00
Total Current Assets 17.00 32.00
Fixed Assets:
Office Building & Equipments 75.50 72.48
Less: Accumulated Depreciation (03.02) (03.02)
Total Fixed Assets 72.48 69.46
Total Assets 89.48 101.46

13. Proposed Financial Statements:
Balance Sheet As on
(Amounts in millions of PKR)
LIABILITIES & EQUITIES Year1 Year2
Current Liabilities:
Account Payables 05.00 13.75
Total Current Liabilities 05.00 13.75
Long term Liabilities:
Banks Loans 60.00 60.00
Total Long Term Liabilities 60.00 60.00
Total Liabilities 65.00 73.75
Owners’ Equity:
Initial Investment 30.00 24.48
Retained Earning (05.52) 03.23
Total Equities 24.48 27.71
Total Liabilities & Equities 89.48 101.46

14. Proposed Financial Statements:
Cash Flow Statement
(Amounts in millions of PKR)
Year1 Year2
Operating Activities
Revenue through Sales 30.00 45.00
Less: Cost of Goods Sold (10.87) (20.00)
Fixed operating expenses (21.03) (16.00)
Interest Charges (00.06) (00.06)
Net cash flow Generated through
operating activities (01.96) 08.94
Net Cash flow (01.96) 08.94

15. Proposed Financial Statements:
Statement of Owner’s Equity
(Amounts in millions of PKR)
Year 1 Year2
Opening Balance 30.00 24.48
Add/Less: Net Profit or Loss (05.52) 03.23
Less: Drawings (00.00) (00.00)
Total Owner’s Equities 24.48 27.71

16. Financial Ratios:
LIQUIDITY RATIOS:
Current Ratios= Current Assets = 32.00
Current Liabilities 13.75
= 2.32 : 1
Working Capital = Current Assets – Current Liabilities
= 32.00- 13.75
= 18.25 PKR Million

17. Financial Ratios:
ACTVITY / TURNOVER RATIOS:
Receivable Turnover= Sales
Average Receivable
= 45.00
20.00
= 2.25 : 1

18. Financial Ratios:
PROFITABILITY RATIOS:
Gross Profit Margin=Gross Profit = 25.00
Sales 55.00
= 0.45: 1
Operating Profit Margin= Operating Profit or EBIT
Sales
= 05.98
45.00
= 0.13 : 1

19. Financial Ratios:
PROFITABILITY RATIOS:
Pre Tax Margins= EBT = 05.38
Sales 45.00
= 0.11 : 1
Net Profit Margin= Net Income
Sales
= 03.23
45.00
= 0.07 : 1

20. Financial Ratios:
LEVERAGE RATIOS:
Debt to Assets Ratio= Debt = 60.00
Total Assets 101.46
= 0.591 : 1
Debt to Equity Ratio= Debt = 60.00
Equity 27.71
= 2.165 : 1

21. Financial Ratios:
LEVERAGE RATIOS:
Times Interest Expenses= EBIT (Operating Income)
Interest Expenses
= 05.98
0.60
= 9.966 : 1

22. QUESTIONS
&
ANSWERS