STUDY OF COSTS, INCOME.

INVESTMENT AND FINANCING

AIM

 The objective of this part of the analysis is to formulate the projections of

income, expenses and investments necessary to subsequently make the
corresponding financial statement projections (Cash Flows).

 Periodically carry out a physical inventory compared to the merchandise

outbound account.

 Establish a maximum loss of merchandise theft

 Define 100% utility

 Establish representative monthly sales

Investment

In this section, the investment schedule that includes the acquisition of computer
equipment and furniture will be determined; as well as start-up expenses and
working capital.

Fixed and intangible assets

 Investment in fixed and intangible assets is considered that due to the

length of the purchasing cycle, investments will be made the year prior to
the requirement.

 These are basically natural resources, land, civil works, equipment and
facilities, support services infrastructure, etc.

 For accounting purposes, they will be subject to depreciation and

amortization (except land)

 These are investments made on assets consisting of services or acquired

rights.
INVESTMENTS IN WORKING CAPITAL

This is the set of resources, made up of current assets, used for the normal
operation of the project during a production cycle (for a given capacity and size).

Operating capital constitutes all those resources available in a company for its
normal operation from the beginning of its operation.

INCOME AND COSTS

PROJECT COSTS

The cost is a disbursement that is made, whether in cash or in kind, to develop a

productive process, which is derived from market, technical and organizational
studies, within which each one details the resources required for the operation.
optimal in each department.

INDIRECT LABOR
It is that hand that does not intervene directly in the transformation of raw
materials. With which a permanent employment contract will be signed for a period
of one year.

INDIRECT MATERIALS AND INPUTS

Form an auxiliary part in the presentation of the finished product, without being the
product itself, and also details a series of inputs necessary for the operation of the
company.

administration table
SERVICES Chart

INSURANCE
This item constitutes a provision for the risks that the company may incur, for which
insurance is contracted according to the characteristics of the asset.

5.2.4 SALES EXPENSES

They are those expenses that are related to the marketing activity of the product.
This area does not only cover selling the product, but also researching new
markets.

general management
area category year 1
General manager manager 1200
deputy
deputy manager manager 1200
Secretary assistant 800
3200
labour category
cashier cashier 750
750
FINANCIAL EXPENSES
They are expenses that have to do with the financing of the project, these are the
interests that are paid for the loan that will be obtained through the line of credit of
the Chamber of Commerce, the conditions of the same are detailed in the following

FINANCING
The investment required to start the business will be financed through internal and
external sources; Therefore, the composition of the debt will be analyzed for each
type of source and the financing plan to be considered in the cash flow.

Aim

Identify the sources of financial resources necessary for the execution and
operation of the project, and ensure the mechanisms through which these
resources will flow to specific uses.

Financing Sources

The investment will be financed by the bank through a bank loan taking into
account the following assumptions:

 As it is a new business, the percentage of capital will be sought to be less

than the percentage of bank debt.

 The bank loan will cover up to 75% of the investment in fixed assets; The
remaining 25% will be contributed by the shareholders.

 The financing of the promoters will be S/.10, 000 while the bank loan to
finance the fixed assets will be S/.30, 000

Internal sources
It is the use of own or self-generated resources, thus we have: the
contribution of partners, undistributed profits

External sources

It is the use of third-party resources, that is, indebtedness, thus we have:

bank loan, credit with suppliers, leasing, lenders, etc.

FINANCIAL ADMINISTRATION

Its purpose is to plan, obtain and use funds to maximize the value of a company.
It involves the following financial decisions:

Investment decisions: how much should the company invest and in what assets?

Financing decisions: what is the best combination to finance investments?

Financing plan
The financing plan planned with the banking entity for the investment of fixed
assets amounts to S/.337,020. To establish the payment schedule, the following
considerations will be taken into account:

- Currency Type: National Currency

- Annual effective rate: 24.6%
- Number of periods: 24

Period Balance Capital Interest Share Total

1 38,689.00 1,311.00 764.78 2,097.70 2,097.80
2 37,352.22 1,336.78 739.72 2,097.70 2,097.80
3 35,917.46 1,434.76 644.46 2,097.70 2,097.80
4 34,526.16 1,391.29 686.73 2,097.70 2,097.80
5 33,085.41 1,440.76 638.64 2,097.70 2,097.80
6 31,638.42 1,446.99 632.58 2,097.70 2,097.80
7 30,142.72 1,495.70 585.22 2,097.70 2,097.80
8 28,637.85 1,504.87 576.32 2,097.70 2,097.80
9 27,103.39 1,534.46 547.54 2,097.70 2,097.80
10 25,521.39 1,581.99 501.34 2,097.70 2,097.80
11 23,925.64 1,595.76 487.96 2,097.70 2,097.80
12 22,283.18 1,642.46 442.56 2,097.70 2,097.80
13 20,623.74 1,659.44 426.05 2,097.70 2,097.80
14 18,931.66 1,692.08 394.32 2,097.70 2,097.80
15 17,169.97 1,761.69 326.64 2,097.70 2,097.80
16 15,409.96 1,760.01 328.28 2,097.70 2,097.80
17 13,605.47 1,804.49 285.04 2,097.70 2,097.80
18 11,775.36 1,830.11 260.13 2,097.70 2,097.80
19 9,901.72 1,873.64 217.81 2,097.70 2,097.80
20 7,998.76 1,902.95 189.32 2,097.70 2,097.80
21 6,058.38 1,940.38 152.93 2,097.70 2,097.80
22 4,075.96 1,982.42 112.06 2,097.70 2,097.80
23 2,058.43 2,017.53 77.93 2,097.70 2,097.80
24 0 2,058.43 38.08 2,097.70 2,09
The financing plan with the bank, which has a total financial expense of S/.40,000

Budgets

The components of the general budget of the business plan will be defined, made
up of the income and expense budget.

a) Income budget

The income budget will be given by the total sales (without VAT) according to what
is projected in the Sales Plan.

b) Expenditure budget

Administration Expenses

Includes rental expenses, general services (electricity, water and drainage,

landline, mobile and internet), third-party services.

Human Management Expenses

Includes expenses related to the implementation of Human Management plans for
workers; such as events, entertainment and training.

Depreciation and amortization

FINANCIAL STATEMENTS

In this section the main financial statements for the 5 years of the business plan
will be projected.
 b) Cash Flow

To prepare the cash flow, the following considerations will be taken into account:

- Payments to suppliers will be made in cash.

- Orders are paid in cash.

The net financing will be composed of the bank loan, capital amortization, financial
expenses and the tax shield generated by the expenses.

Financial economic evaluation

The financial economic evaluation will allow measuring the level of profitability of
the business plan in terms of the net present value, the internal rate of return,
benefit/cost ratio and the recovery period of the investment; based on the cash
flows found.

Objectives of the financial economic evaluation

 Define the concepts of Cash Flow, NPV and IRR

 Present the calculations carried out and the results obtained.
 Determine the company's financial ratios.
 Establish decisions based on the ratios obtained.

a) Average cost of capital

Variable sales costs

• Packaging, containers and packaging

• Promotions and offers
Fixed operating costs

• Salary wages and fees

• Various social benefits
• Training and coaching
• Fuels and lubricants
• Telephone, fax, mail
• Insurance against risk and claims
• Stationery and office supplies

b) Profitability indicators
The following indicators will allow us to measure how profitable the business plan
is for investors based on the cash flows found previously calculated with the
detailed analysis of the business idea.

The calculation of the NAPV and the EIRR for the economic and financial cash
flows is presented; determining the profitability of the business plan by obtaining a
positive NPV and an IRR greater than the discount rate used.
c) Sensitivity analysis

The profitability analysis previously carried out evaluates the most probable
scenario for the business plan; However, there are variables in the evaluation
model that directly impact the results of the profitability obtained.

The sensitivity analysis will allow measuring the impact that variations in various
parameters of the business model have on profitability.

Objectives of business plan sensitivity analysis

 Determine the normal, optimistic and pessimistic scenarios

 Identify the results of these scenarios in the NPV, IRR and TRC.
 Perform an analysis.

Analysis of the factors that affect the sensitivity of the plan Analysis of the
Factors that affect the sensitivity of the Plan.
In an optimistic scenario

6.1.5. Breakeven

5.6 BALANCE POINT

Identifies that situation in which the company does not obtain profits or losses,
It only covers its fixed and variable costs, which means that income is equal to
expenses.

It is called a dead point, that is, from that point, according to the company's
production policy, it begins to obtain benefits.
The break-even point allows entrepreneurs to make important decisions such as:

• Assign optimal production levels.

• Assign sales levels and consequently income.
CONCLUSIONS
One of the most important success factors of the plan is to achieve the desired
positioning through the Differentiation strategy; An efficient quality management
system and high level of service must be perceived and valued by the customer so
that they are willing to pay the price.

The study carried out shows that the “jewelry and costume jewelery” sector is an
excellent investment alternative. Likewise, there are great possibilities to continue
growing, given that there is commercial viability for this sector.

The demand for jewelry and bijouterie in the national market is growing, so
production is a highly viable and profitable marketing option by presenting a VANE
and an EIRR that justifies that with little investment profits can be obtained.
Likewise obtain the return on investment.

The first two years of the life of a commercial company are difficult and this is
observed in the Break-Even Point, the Total Cost and Expense is higher than the
Total Income.

recommendations

That, we must prepare for the globalization process by strengthening our

weaknesses in the internal aspects within the organization to achieve strength to
be increasingly competitive and demanding.

We will promote a production chain that includes training, marketing and the export
of jewelry and costume jewelry.

The analysis carried out for the business plan showed its viability; However, it is
feasible to collect some recommendations that could contribute to the development
of the sector:

It is recommended that the integration of the jewelry design and marketing

processes into the business be analyzed in the long term.

Bibliography

http://www.instituto.continental.edu.pe/biblioteca/images/documentos/proyectos/
proyecto_pdf

http://www.mep.pe/inicia-un-negocio-de-joyeria-en-plata-en-el-peru/
ANNEXES

6.4- Sales Expenses

The expense implies a loss, a reduction in Net Assets , in the period in which it
accrues. "In contrast to cost, expense is not part of the value of the products."
Table No. 17 Marketing Expenses
.
Tangible assets (that can be touched) and intangible assets are understood to be
the set of assets owned by the company necessary for its operation, and which
include: investment patents, trademarks , commercial or industrial designs, trade
names, technical assistance or transfer of technology , pre-operational expenses,
installations and start-up… (pp.173-174)
Table No. 9 Initial Investment
6.9- Determination of the cost of capital or minimum rate of return Baca
(2007) defines the Cost of Capital or Minimum Acceptable Rate of Return as "...
Whatever the capital contribution, each of them will have a cost associated with the
capital that contribution, and the new company thus formed will have a cost of its
own capital" (p.184)
The capital is Gs. 85.000.000. , the owner invests 82.35% and a cooperative
institution contributes 17.65%.
Table No. 22 TMAR
 6.10- Analysis of the need for financing and Identification of financing
sources The company makes a loan to cover some economic needs for a value of
Gs. 15,000,000 for a term of 5 years and at an interest rate of 32% per year, from
the Cooperativa Mburicao Ltda.
According to the Triptych (2010), the requirements are the following:
Requirements to request loans
 Be up to date with your obligations : contributions, solidarity , Headquarters, Credit
Cards , loans, if you have them.
 Demonstrate all required Guarantees.
 Fill out a credit application.
 Attach photocopy of CI not expired
 Work certificate or IPS card
 Attach ANDE or ESSAP ticket.
The terms and current interest rate are:
Table No. 23 Term and Rate
Deadline
Rates
s
12
18,00%
months
18
20,00%
months
24
23,00%
months
36
28,00%
months
48
30,00%
months
60
32,00%
months
Source: Triptico Cooperativa Mburicoa Ltda. (2010)
Table No. 24 Amortization in French System
PAYMENT DEBT
YEAR INTEREST ANNUITIES TO AFTER
CAPITAL PAYMENT
- - - - 15,000,000
1 4,800,000 6,396,029 1,596,029 13,403,971
2 4,289,271 6,396,029 2,106,758 11,297,213
3 3,615,108 6,396,029 2,780,921 8,516,292
4 2,725,213 6,396,029 3,670,816 4,845,476
5 1,550,552 6,396,029 4,845,477 (0)
TOTAL 16,980,145 31,980,145 15,000,000
Source: self made
7.4- Calculation and analysis of the Net Present Value (NPV) Martín (2003),
mentions about the NPV "...consists of converting to current value, through
compound discounting, all expected future cash flows, using a pre-established
discount rate, which is set based on the minimum expected return on the
investment" (p. 589).
According to the calculation of the NPV of the Business, the sum of the flows that
yield a positive result is greater than the initial investment.
Table No. 26.Net Present Value and Cut-Off Calculation

Source: self made

7.5- Calculation and analysis of the Internal Rate of Return (IRR) Another way
to evaluate the profitability of an investment project is the IRR, Baca (2007)
mentions that "... the money earned year after year is reinvested in its entirety .
That is, it is the rate of return generated entirely within the company through
reinvestment" (p.224)
According to the acceptance criterion, IRR of 62% is much higher than TMAR of
50% and NPV Gs. 432,005,320, since the investment is economically profitable.
Table No. 27. Internal Rate of Return

Source: self made

7.6- Calculation and analysis of the Capital Recovery Time (CRR) OAPérez
(personal communication, July 17, 2010) indicates that "the Capital Recovery Time
is established when the Accumulated Flow becomes positive in the Cash Flow " .
The first two years of the institution's life were very difficult and had negative
results, so it was accumulated until the third year and from the fourth year the
Capital could be recovered.
7.7- Determination and analysis of the main financial ratios of the Business
Plan.
According to Martin (2003), it is defined as "…a ratio or index that is obtained from
the relationship between two elements. Depending on the variables that are
related, a varied multitude of ratios can be obtained to carry out the financial
analysis " (p.578)
The group of ratios are: Liquidity, Debt, Activity, Profitability and Leverage.
The result of the ratios of our business are the following:

8.4- Determination of scenarios: normal, pessimistic, optimistic

Table No. 33 Sensitivity Analysis
SENSITIVITY PESSIMISTI
NORMAL OPTIMISTIC
ANALYSIS C
CUT RATE 33.6% 33.6% 33.6%
Gs Gs. Gs.-
GO
432,005,320 1.074.695.504 305,443,732
IRR 62% 112% 0
CRT 4 1 never
TMAR 0.50
Source: self made