USAHAWAN: June 2011

PREFACE

Assalamualaikum.......

Firstly we would thank to our lecturer Professor Madya Hamdan bin Hassan and Madam Hasni binti Abdullah for their help. There are always give advice and information to guide our business project to become more successfully. With their information, it can help us to run our project easily at the same time we can completed at the right time.

Next, we also appreciated to our group member's effort and cooperation. We faced a lot of problems during to run our business project but with our full support by each other, we finally can complete our business efficiently.

Other than that, we would thank to our family by giving their support and advice for us. With their advice and experience, it can teach us how to cooperate the business project become more effective and efficiently.

Lastly, we want to apologize our mistake to everyone during the process of completed our business project. Thank you.

COVER LETTER

Majestic Company,

ETR 300 Students,

Diploma In Banking,

University Technology of MARA (UiTM) Pahang,

Lintasan Semarak,

26400 Bandar Pusat Jengka,

Pahang Darul Makmur.

Prof Madya Hamdan Bin Haji Hassan,

ETR 300 Lecturer,

University Technology of MARA (UiTM),

Lintasan Semarak,

26400 Bandar Pusat Jengka,

Pahang Darul Makmur. 10 March 2011

The submission of Majestic Company

Referring to the above circumstance, we are student from faculty of business management had been assigned to prepared and present our business plan by grouping. The reason of business plan is done to test the knowledge and ability of student in forming a business project and in requirement to meet one of our academic syllabuses for this semester.

2. Our group is performed by four students. All of us had agreed to choose and establish a business project, which will be involved in supplying cookies to the market.

3. All the transaction, items and particular that are in our business plan are based on the procedure and format that is assign to us by our lecturer. This included all the major and minor aspect needed to form a well-organized business plan.

4. If you have any doubt, please inform us and we will response to you as soon as possible.

Thank you.

………………………….. …………………………..

( Nor Azmiliawati Azmi ) ( Nazihah Mutaza )

General Manager Production Manager

…………………………. …………………………..

( Nurul Atiqah Ahmad Khuzaini ) ( Norshariniain Ismail )

Marketing Manager Financial Manager

EXECUTIVE SUMMARY

Majestic Company is a company that has been establish by four establishers. They also act as the managers of the company that contributes effort to develop the business. The headquarter of the company is located at No 17-1, Jalan Musytari Am U5/AM, Section U5, 40150 Shah Alam, Selangor Darul Ehsan.

The company decided to open the headquarter in Shah Alam because Shah Alam is the industrial area. Besides that, Shah Alam also located near to Kuala Lumpur. So, it is easier for the company to do the business there. Shah Alam is an industrial area that has many facilities and infrastructures provided by the government. Moreover, there are a lot of human workforces at urban and industrial area like Shah Alam.

The cookies supply by the company based on varieties of flavors such as chocolate, vanilla, berries, mixed nuts, mixed fruits, and other unique flavors. The production department of the company will always ensure that cookies produce by the company is in the high quality to satisfy the customers. Besides that, the department will also ensure only the best ingredients are used to produce the best quality of cookies. Majestic Co. will also do the research and development process from time to time in order to fulfill the needs and wants of the customers.

INTRODUCTION TO THE INDUSTRY

Cookies is a kind of snack that really popular among Malaysians without considering their age, gender and lifestyle. The cookies' market is a large market but there are a lot of existing companies in this industry. Besides companies, there are also entrepreneur that sell cookies through small business.

There are many types of cookies that can be found in the market. Firstly, there are festive cookies that can only be found during festive season. For example, cookies such as pineapple tart, almond London, London snow and semperit can easily found during Hari Raya. Secondly, there are also cookies for health. For example, the ingredients of the cookies contain less sugar, oat based and hi-fiber. Next, sandwich cookies are also popular in the industry. For example, vanilla flavor, peanut butter flavor, cheese flavor, chocolate flavor and other.

There are a few ways to find cookies in the market. Some of the cookies can be found in hypermarket and groceries. Examples of the cookies are Munchy's and Julies. There are also cookies can only be found only at its own shop such as Famous Amos. Other than that, there are some of the cookies that have to be order first such as festive cookies.

Cookies can be taken at anytime and anywhere. People like to eat cookies when they hungry while waiting for the meal times. Cookies are also suitable to be taken during recreation and leisure time. People also like to eat cookies when watching television, hang out with family and friends. Cookies are suitable to be serving during parties, ceremonies and festive seasons.

Besides serving the cookies as snack, it is also can be used as a gift for a special day such as birthday, wedding and sport day. Cookies are always being packed in a form of hamper to be given as a prize and appreciation. For ceremonies such as wedding and event, cookies can be given as a souvenir to the guest. For example, in wedding ceremonies, usually the guest will get boiled egg as a souvenir but nowadays, there are many varieties of souvenir can be given to the guest such as cookies, chocolate and cake.

As the expansion of the cookies industry in Malaysia, our company, Majestic Co. decided to enter the industry because the large market. Although there are lot of competition in the market, but our company have high confident that we can survive and success in the industry.

OBJECTIVES OF THE ORGANIZATION

Majestic Co. has setup a few objectives to ensure that the company is on the right track. The objectives are;

To gain profit at least 50% mark up from the cost
To produces other types of product besides cookies
To be one of the largest cookies producers in Malaysia
To be a successful Bumiputra company
To export the products to the international market

PURPOSE OF BUSINESS PLAN

Business plan is a written document that serves as blueprint and guide for a propose business project that one intent to undertake. The information that has been gathered regarding to the project is used in the business plan to predict viability forecast success and proposed strategies to the project. It is also known as a working paper, business proposal, project paper or prospectus.

Business plan is prepare by the entrepreneur due to many reasons. One of the reasons for preparing the business plan is to allow the entrepreneur to view and evaluate the propose business venture in the objective. The collapse of many business ventures can be attributed to the decision and planning of the entrepreneurs who rely more on emotions and gut feeling rather than rational considerations. With the business plan, the entrepreneur has solid and well-grounded information to supplement the planning and decision making process. This way, the entrepreneur has more realistic and practical business plan.

Besides that, the reason for preparing the business plan is to study and evaluate the feasibility of the business. The business plan can be as a basic of determining the viability of the business. The information gathering and analysis that is done as part of preparing the business plan can give an early indication as to the viability of the project. Hence, entrepreneur can meet better judgment before investing in the proposed venture.

Business plan also can be used as a communication tool to convince potential investors of the viability of proposed venture. The availability of business plan will boost the confidence of any interested parties in financial institutions, private or individual investors, suppliers and government agencies.

The preparation for the business plan is most important and it cannot be ignored by the entrepreneur. It is a guideline for managing the business and it is one of the reasons for preparing the business plan. In preparing the business plan, the entrepreneur has thought out and laid down the plan strategies for running the venture. When the venture becomes reality, the plan strategy outlined in the business plan will be an important benchmark to help the entrepreneur gauge his progress.

BACKGROUND OF THE BUSINESS

Company name: Majestic Company

Company address: No 17-1, Jalan Musytari Am U5/AM,

Section U5, 40150 Shah Alam,

Selangor Darul Ehsan

Phone no.: 03-56748325

Fax no.: 03-56744324

Form of business: Partnership

Main activity: Produce and selling cookies

Date of commencement of business: 17^th February 2011

Date of registration: 15^th January 2011

Name of bank: Maybank Islamic

Bank account no.: 0000786543289

BACKGROUND OF PARTNERSHIP

Name : Nor Azmiliawati Binti Azmi

Identity Card Number : 810731-06-5719

Telephone : 014-5133358

E-mail : emylia81@yahoo.com

Date of Birth : 31 July 1981

Age : 30 years old

Gender : Female

Marital Status : Married

Academic Qualification : Bachelor of Finance

Diploma in Banking

Skills : English communication and computer skill

Experiences : Assistant Manager

Present Occupation : General Manager

Previous Business Experience: Dealer for Cosmetic Products

BACKGROUND OF PARTNERSHIP

Name : Nazihah bt Mutaza

Identity Card Number : 860803-04-5530

Telephone : 012-2415405

E-mail : nazihah_ghah0308@yahoo.com

Date of Birthday : 3 August 1986

Age : 25 years old

Gender : Female

Marital Status : Single

Academic Qualification : Bachelor of Marketing

Diploma in Banking

Skills : English Communication, Business Communication

Computer Skill

Experiences : Assistant Marketing and Sell Manager

Present Occupation : Production Manager

Previous Business Experience: -

BACKGROUND OF PARTNERSHIP

Name : Nur Atiqah Binti Ahmad Khuzaini

Identity card number : 860813-14-5738

Telephone : 019-2634571

E-mail : areteacar@yahoo.com

Date of birth : 13 August 1986

Age : 25 years old

Gender : Female

Marital Status : Single

Academic Qualification : Bachelor of Retailing

Diploma in Banking

Skills : English communication, computer

Experiences : Assistant Marketing Manager

Present Occupation : Marketing Manager

Previous Business Experience: -

BACKGROUND OF PARTNERSHIP

Name : Norshariniain Binti Ismail

Identity Card Number : 851105-08-6364

Telephone : 017-5441234

E-mail : aieynnia@gmail.com

Date of Birth : 05 November 1985

Age : 26 years old

Gender : Female

Marital Status : Married

Academic Qualification : Bachelor of Finance

: Diploma in Business Studies

Skills : Communication in English

: Computer skills

Experiences : Assistant Financial Manager

Present Occupation : Financial Manager

Previous Business Experience: -

BUSINESS LOGO AND MOTTO

INTERPRETATION OF BUSINESS LOGO:

MAJESTIC: The name of the company

M: Symbol of the name of the company which is Majestic Co.

CROWN SHAPE: Authority (power) that can influence people to buy the company products

INTERPRETATION OF LOGO'S COLOUR:

RED: The courage of the company to involve in the food industry that already has many competitors.

BLUE: To show the company's unity among employees.

YELLOW: Uniqueness and specialty of company and product.

WHITE: The operation of the company based on Shariah and Islamic law which produce halal product.

ALL COLOURS: Symbol of Malaysian product that have high quality.

INTERPRETATION OF BUSINESS MOTTO:

"EVERY BITE IS CRUNCH "

The company's products are very delicious and, the consumer can feel the crunch and the sweetness of the cookies in every bite they take.
The motto also has the meaning the product high quality
The consumer can satisfy with the company's products.

INTRODUCTION TO ADMINISTRATION PLAN

In administration plan, our company needs to know about the management of company which includes organizing people and manage resources in an efficient to achieve the goals and objective of the company.

In this section, it also describes about the important of administration plan which are to manage the entire company department such as marketing, operation, financial and advertising. It is to make sure the all of department staff can give a full commitment to generate income for our company.

In part of company production, administration plan can help our company increase the high quality of our company product according to the government regulation. The high quality of production can give more advantages to our consumer and also to our company because it can satisfy consumer needs and wants.

Administration plan also can make all of our workers give their full cooperation in daily company production. It would make the performance of our company become more successful at the same time can gain a profit. The successful of cooperation can generate a high quality of our product.

Finally, it can increase the economic growth in the cookies industry. At the same time, our company can provide the job opportunities to other people and decrease the rate of unemployment in our country.

LOCATION OF THE COMPANY

OFFICE LAYOUT

ORGANIZATION CHART

GENERAL

MANAGER

NOR AZMILIAWATI

BINTI AZMI

PRODUCTION MARKETING FINANCIAL

MANAGER MANAGER MANAGER

NAZIHAH BINTI NUR ATIQAH NORSHARINIAIN

MUTAZA BINTI AHMAD BINTI ISMAIL

KHUZAINI

LIST OF ADMINISTRATIVE PERSONNEL

NO.	POSITION	NO. OF STAFF
1	General Manager	1
2	Production Manager	1
	Supervisor	1
	Labors	20
3	Marketing Manager	1
	Sales Executives	1
4	Financial Manager	1
5	Clerk	1
6	Driver	2
	TOTAL	29

SCHEDULE OF TASKS AND RESPONSIBILITIES

GENERAL MANAGER

Manage the company operations, resources, material usage and other
Plan the activities of the company
Have to know the duties of all the departments and gives the orders and directions to all of the departments
Accept and make the approval of the proposals
Establish the policies and procedures of the company and ensure that all the managers and subordinates follows it
Ensure all works done by the subordinates follow the timetable and quality of work that have been stated in the policy
Act as the leader of the company and be responsible to coordinate the subordinates
Take care about the welfare and safety of the subordinates
Handle the process of recruiting new employees
Oversees and firms marketing and sales functions
Identifies the new target prospects and set the monthly sales target
Manage the revenue and costs element of the company's financial statement
Approve or reject the budget that have been prepared by the financial manager
Review the financial statement of the company

MARKETING MANAGER

Monitor the activities of the sales, advertisement and promotions
Plan and evaluate a new marketing strategy
Ensure the sales target that have been set by the company can be achieve
Make the survey that related to the customer satisfaction to increase the quality of the products
Determine the uniqueness of the products compare to the competitors' product
Make the research and development
Prepare the marketing budget

PRODUCTION MANAGER

Monitor the activities related to the process and production of the products
Ensure the production target that have been set by the company can be achieve
Look for the suppliers to supply the inventories and raw materials
Look for and buy machines for production process
Ensure the quality of the products can achieve the company quota
Prepare the production budget

FINANCIAL MANAGER

Prepare the financial statement of the company
Monitor the company's flow of cash and financial instruments
Prepare the financial report at the end of each year
Ensure the stabilization of the company financial
Approve or reject the budget from other departments
Prepare the company's yearly budget

LABORS

Prepare the mixture of the cookies
Responsible to packaging, controlling the machine and arrange the stocks

CLERK

Responsible in typing work
Calculate and check the stock

SUPERVISOR

Control the production process
Supervise the labors

SALES EXECUTIVE

Make sales to the prospects
Handle the promotion of the products

DRIVER

Drive the stocks to the wholesalers and retailers

OFFICE HOURS

WORKING HOUR

Monday – Friday: 8.00 a.m. until 6.00 p.m.

Saturday and Sunday: Off day

OFF DAY

Public Holiday
Hari Raya Puasa
Hari Raya Haji
Chinese New Year
Deepavali
Thaipusam
Maulidur Rasul
Hari Keputeraan Sultan Selangor
Hari Keputeraan Yang Dipertuan Agong
National Day
Labor Day

SCHEDULE OF REMUNERATION (SALARY)

POSITION	NO. OF STAFF	MONTHLY SALARY (RM) (A)	EPF 12% (RM) (B)	SOCSO 2.5% (RM) (C)	TOTAL AMOUNT (RM) (A+B+C)
General Manager	1	3 000	360	75	3 435
Marketing Manager	1	2 800	336	70	3 206
Financial Manager	1	2 800	336	70	3 206
Production Manager	1	2 800	336	70	3 206
Clerk	1	800	96	20	916
TOTAL		12 200	1 464	305	13 969

LIST OF OFFICE EQUIPMENTS AND SUPPLIES

NO.	ITEM	QUANTITY	COST PER UNIT (RM)	TOTAL (RM)
1	Computer	5	1 800	9 000
2	Photocopy machine ( printer and scanner)	1	5 000	5 000
3	Telephone	5	150	750
4	Fax machine	1	500	500
5	First aid box	1	100	100
6	Fire extinguisher	1	500	500
7	Dustbin	5	5	25
8	Broom set	1	20	20
9	Air conditioner	2	1 500	3 000
10	Emergency light	4	150	600
11	Exit signboard	1	100	100
12	Smoke censor	4	250	1 000
13	Heater	1	50	50
14	Refrigerator	1	500	500
	TOTAL			21 145

ADMINISTRATION BUDGET

SUBJECT	FIXED ASSET EXPENSES (RM)	MONTHLY EXPENSES (RM)	OTHER EXPENSES (RM)	TOTAL (RM)
Fixed asset expenses
Office equipment	21 145			21 145
Furniture	12 400			12 400
Working capital
Salary General Manager Marketing Manager Production Manager Financial Manager Clerk		3 000 2 800 2 800 2 800 800		3 000 2 800 2 800 2 800 800
EPF		1 464		1 464
SOCSO		305		305
Bills Electricity Telephone Water Internet		500 400 200 250		500 400 200 250
Factory rental		2 000		2 000
Other Expenses			1500	1 500
TOTAL	33 545	17 319	1 500	52 364

INTRODUCTION TO OPERATIONAL PLAN

In operational plan, it describe about the physical necessities of business operation such as business location, facilities and equipment. The process of operational plan depends on what kind of business that we need to do. For Majestic Company, we want to involve in cookies industry. So, our company needs to search a lot of information about inventory requirements and supplier, and description of the manufacturing process in the cookies industry.

It also thinks about operating plan as outline of the capital and expenses requirements to run our business from day to day. Our company needs to know the process of the manufacturing and delivery by producing our product in market. In operational plan consist of two stages which development section and production process section. For development section, it explains about how our product will be made and describe about the problems that may occur in the production process. Production process consist of the detail information how our company produce our cookies product in daily.

Finally, our company needs to fulfill all the above information to make sure the production of our company can achieve the goal.

OPERATION PROCESS

STEP 1: The Operation department of MAJESTIC ENT will deal with the suppliers and placing the order of raw materials

STEP 2: The department will then choose and select the best quality of raw materials

STEP 3: Delivery of raw materials to the factory

STEP 4: After selecting raw materials process, we mixed the ingredients together in the mixer

STEP 5: After fully mixed the ingredients with the selected flavor, shape the dough

STEP 6: Baked the dough within 15 minutes in the oven

STEP 7: The next process is the cooling process of the baked cookies before inspections take place

STEP 8: Do the quality inspection for the cookies to ensure that the cookies supply to the customers is the best quality of cookies

STEP 9: Packaging process take place to ensure the cookies are well stored

STEP 10: Then, packaging inspection will take place to reject any defect packaging of cookies

STEP 11: Store the cookies in the store room and ready to be supply

STEP 12: Delivery of finished products to the retailer and wholesaler

(Time requires is about 1 hour)

OPERATION FLOW CHART

Deal with supplier

Choose the raw materials

Delivery of raw materials

Mixed the ingredients

Shaped the dough

Baked the dough

Cooling the cookies

Quality inspection of cookies

Packaging

Packaging inspection

Store the cookies

Deliver to retailer and wholesaler

MATERIAL REQUIREMENT

(Daily operation)

Type of material	Quantity	Price per unit/kg (RM)	Total (RM)
Flour	250 kg	2.49	622.50
Egg	1 000 units	0.26	260.00
Sugar	75 kg	2.10	157.50
Margarine	100 kg	7.90	790.00
Mixed Nuts	25 kg	25.00	625.00
Chocolate Chip	25 kg	17.00	425.00
Mixed Fruits	25 kg	15.00	375.00
Cocoa Powder	10 kg	40.00	400.00
Soda Bicarbonate	10 units	1.50	15.00
Caster Sugar	25 kg	4.40	110.00
Brown Sugar	150 kg	4.40	660.00
Essence Vanilla	20 units	1.70	34.00
TOTAL			4 474.00

PURCHASE PROJECTION

Purchase forecast is the expected purchase that the company target to have. Majestic Company's expected purchase for the first year is RM 1 112 984. For the second year, the purchase for the company will increase 10% from the first year which is equivalent to RM 1 224 282. For the third year, it is estimated to increase about 15% from the second year which is RM 1 407 924.

MONTH	RM
January	-
February	89 480
March	93 954
April	93 954
May	p93 954
June	98 652
July	98 652
August	103 585
September	103 585
October	108 764
November	108 764
December	119 640
TOTAL	1 112 984

YEAR	AMOUNT (RM)
Total year 1	1 112 984
Total year 2	1 224 282
Total year 3	1 407 924
Increment for year 2 (%)	10
Increment for year 3 (%)	15

LIST OF MACHINE AND EQUIPMENT

No	Type of Machine	Quantity	Price (RM) /unit	Total (RM)
1	Mixer	1	16 555	16 555
2	Cookies Shape Machine	1	25 000	25 000
3	Oven	2	5 900	11 800
4	Packaging Machine	1	35 600	35 600
	TOTAL			88 955

No	Type of Equipment	Quantity	Price (RM) /unit	Total (RM)
1	Shelves	10	76.00	760.00
2	Trolley	5	77.00	385.00
3	Table	20	45.60	912.00
4	Aluminum tray	100	9.90	990.00
5	Uniform set	50	45.00	2250.00
6	Box	1 200	1.20	1 440.00
	TOTAL			6 737.00

FACTORY LAYOUT

SALARY

POSITION	NO OF WORKER	SALARY (RM)	EPF 12% (RM)	SOCSO 2.5% (RM)	TOTAL (RM)
Supervisor	1	1 000	120	25	1 145
Driver	2	800 x 2 = 1 600	96 x 2 = 192	20 x 2 = 40	916 x 2 = 1 832
General worker	20	800 x 20 = 16 000	96 x 20 = 1 920	20 x 20 = 400	916 x 20 = 18 320
TOTAL	23	18 600	2 232	465	21 297

OPERATION BUDGET

ITEMS	PROPERTY BUDGET (RM)	MONTHLY BUDGET (RM)	MISCELLANEOUS BUDGET (RM)	TOTAL (RM)
Fixed asset Machines Equipments Lorry	88 955 6 737 30 000			88 955 6 737 30 000
Salary Staffs EPF (12%) SOCSO (2.5%)		18 600 2 232 465		18 600 2 232 465
Delivery services		2 000		2 000
Bills Electricity Water		3 000 1 500		3 000 1 500
Insurance and Road tax			3 000	3 000
Other expenses			2 000	2 000
TOTAL	125 692	27 797	5 000	158 489

INTRODUCTION TO MARKETING PLAN

The concept of marketing is holds that all the facilities and effort of the firm directed toward the satisfaction of the customer at a profit. The marketing plan is a direct outgrowth of the marketing concept, and both have had a great deal of influence on the sales profession. Our company goals are to attract a new customer and to make a variety of the products. Marketing is one of channel that can make our company close to customer because only in this channel the company may know about what customer needs and wants.

Besides that, the company must do research and development about the industry of this product and about our competitor that produce same flavor of product. The research and development can helps our company as a new entrepreneur to create our own flavor of product differ to our competitor product. Not only that, the customer may know the specialty of our products and it can show our own identity of company compared to another company in the same industry.

In a marketing plan, it studies about the customer needs and wants, the price of products, what is the company target market, product description also the market size.

PROFILE OF PRODUCT

As a new company, Majestic Company offered five flavors of cookies as the trial to the market. They are vanilla, mixed nuts, mixed fruits, caramel and chocolate. The company chooses the flavors as they are the best flavors that the company thinks that may enter the market. The descriptions of the product are:-

Vanilla

The company use essence vanilla to get the flavor. The essence is the best essence from the best brand in the market.
The company gets the aspiration to produce the cookies with this flavor from ice-cream. A lot of people love vanilla ice-cream and the company decide to produce the vanilla cookies.
When people eat the cookies, they can taste the vanilla flavor as they eat the vanilla ice-cream. The company want the consumer to enjoy the taste of vanilla of the cookies as same as they enjoy taste the vanilla flavors of ice-cream.

Mixed Nuts

There are several type of nuts that had been use to produce the cookies with the flavor. There are almond, walnut, hazelnut and peanut.
This flavor is for the people who love nuts. The company had found that, there are a lot of nuts because they are so crunchy, nutritious and
So, the company will produce the cookies that can fulfill the benefit of nuts when people eat the mixed nuts cookies.

Mixed Fruit

There are different type of dried fruit that had been use to produce the mixed fruit flavor. There are raisin, blueberry and raspberry.
Some people just love the sweetness of the fruit that are so unique and original. Besides that, there are some people who love to eat fruit because fruit is rich with vitamin c.
The company produces this flavor for the fruit lovers to enjoy the sweetness of fruits when they eat the company's cookies. They will taste the variety of flavor of the fruits from this cookie.

Caramel

Caramel flavor is the flavor that can be getting from the sweetness of brown sugar. Brown sugar is a type of sugar that has brownish color and sweeter than the sugar.
The company produces the cookies for the people who love sweet food.
Although the cookies are sweet, brown sugar gives less effect to the healthy than sugar. So, people can enjoy the cookies and still care about their health.

Chocolate Chip

Chocolate chip flavor is the forever favorite's flavor of cookies. Chocolate chip cookies love by all people from every age, gender and social class.
People just love the chocolate taste can brought happiness and calmness.
So, company had decided to produce this flavor because the market are large and there a lot of demand.

These five flavors are the beginning of the Majestic Company to enter the market of cookies. If there are good respond from the customer for this product, the company will add the variety of the products offer.

TARGET MARKET

Target market is the groups of people that can be the customers by fulfill their needs and wants. The market of cookies is very large because all people eat and like cookies very much. The Majestic's target market is all people who like to eat cookies. There are several market segments that had been decided by the company.

Geographic

The factory of Majestic Company is located at Shah Alam. So, the company will target the market at Klang Valley and the south of the country.
One of the factor is these areas are near to Shah Alam. So, the transport cost can be reduces
Besides that, the distribution processes to these areas are easier because there are road and highway.
Moreover, there are many supermarkets and hypermarkets. So, the target market is easy to reach.
When the business of company is growing, the geographic segment will be larger.

Demographic

Kids, teenagers and adult like to eat cookies if compare to senior citizen. So, the company had targeted these groups as the target market.
The company had targeted the students and workforces as the target market. These groups like to eat cookies as the snack before the lunch break.
The company also had target families as the target market. People eat cookies as snack when they hang out with their family or during the tea time.

Behavioral

Cookies are suitable to be serving at a lot of occasion like parties, festivals and event. It show cookies are suitable at anytime and anywhere.
There are a lot of benefits when users eat the cookies. The cookies had a very tasty taste, a lot of nutrient, can be bought at a reasonable price and they can eat the cookies without any doubt because the cookies are 'halal'.

By identifying the target market, Majectic Company will be able to satisfy the customer needs and wants. In order to do that, the company must do research and development to produce the best quality of cookies.

MARKET SIZE

Market size is the expected sales from target market. It is also including the competitors that had offer the same line of product and be in the same industry. Majestic Company's target markets are the hypermarket, supermarket and retail store at Klang Valley and south of the country.

Hypermarket
500 boxes = 16 000 units
Sales per month = 16 000 units x RM 5.90 = RM 94 400
Supermarket
300 boxes = 9 600 units
Sales per month = 9 600 units x RM 5.90 = RM 56 640
Retail store
200 boxes = 6 400 units
Sales per month = 6 400 units x RM 5.90 = RM 37 760

Market size = RM 94 400 + RM 56 640 + RM 37 760

= RM 188 800

COMPETITORS

Competitors are the other companies that offer similar products or services in the industry. As an example, in the automotive industry, Proton will compete with other automotive companies that offer same products such as Perodua and Toyota. The other companies also currently have the same target market with our company. The competitors are usually the existing companies that have been in the industry for the long period. In order for Majestic Company to get in the market of the industry, our company must identify the competitors' strengths and weaknesses.

COMPETITORS

STRENGTHS

WEAKNESSES

KRAFT FOODS (1980's)

The biggest company that produces cookies in the industry
Currently have three factories in Malaysia
Best-known brand products
Have lots of promotions and sponsorships to attract customers
Examples of famous products are Chipsmore and Oreo

There are only packaging in big quantity
More focus on the healthy cookies

JULIE'S

(1984)

The ingredients are free from any harmful artificial addictives and calories
Have variety of products
Cheap
Had achieved Industry Excellent Award 2005 for the most quality products
Examples of famous products are Peanut Butter
Sandwich and Julie's Love Letter

Packaging only focus on big quantity
Cannot purchase in small quantity
Sometimes produce weird flavor of cookies such as seaweed

NORAINI COOKIES

(1984)

No. 1 selling cookies in home-made recipe
Confirm 'Halal' local Bumiputra products
One of the products of Bumiputra that is worldwide trading such as to Dubai, Vietnam, Singapore and United Kingdom
Have variety of products
Can be one of the idol for new Bumiputra rising cookies company

Lack of promotion
Difficult to find in small retail shops
More focus to the festival cookies

MUNCHY'S

(1991)

More to fun and games cookies such as Music cookies
Have a lot of promotions to attract customers
Examples of famous products are Wafer Stick and Music

Expensive
Target market more focus to children

MARKET SHARE

Market share is the percentage of the market that had been control of the company. The table show the market size of other competitors before Majestic Company enter the market.

No	Name of Company	Market Size (%)	Estimate Sales every Month (RM)
1	Kraft Food	30	750 000
2	Julie's	20	500 000
3	Noraini's Cookies	10	250 000
4	Munchy's	25	625 000
5	Others	15	375 000
6	TOTAL	100	2 500 000

Below is the pie chart representing the percentage of market size before Majestic Company enters the market.

After the company has analysis the strength and the weaknesses of the competitors, Majestic Company had target to take over % of the market. The table shows the expecting market sizes of Majestic Company and the other competitors.

No	Name of Company	Expecting Market Price (%)	Estimate Sales every Month (RM)
1	Majestic Company	7.5284	188 210
2	Kraft Food	28	700 000
3	Julie's	19	475 000
4	Noraini's Cookies	9	225 000
5	Munchy's	23	575 000
6	Others	13.4716	336 790
7	TOTAL	100	25 000 000

Below is the pie chart representing the percentage of market size after Majestic Company enters the market.

SALES FORECAST

Sales forecast is the expected sales that the company target to achieve. Majestic Company's target sales for the first year is RM 2 473 520. For the second year, we estimate our sales will increase 10% from the first year which is equivalent to RM 2 720 872. For the third year, the expected sales will be increase 15% from the second year which is equivalent to RM 3 129 003.

Months	Sales Forecast (RM)
January	188 210
February	188 210
March	188 210
April	197 621
May	197 621
June	197 621
July	207 502
August	207 502
September	217 877
October	217 877
November	228 771
Decembers	228 771
Total	2 465 793

YEAR	AMOUNT (RM)
Total year 1	2 465 793
Total year 2	2 712 372
Total year 3	3 119 227
Increment for year 2 (%)	10%
Increment for year 3 (%)	15%

MARKETING STRATEGY

Product Strategy
Majestic Company produces our own cookies as a consumer product. There are several types of flavor which are mixed nuts, mixed fruits, chocolate chips, vanilla and caramel cookies. Our company use products attributes and product packaging as our strategy.
1. Products attributes

Products design: Mostly, the design of the cookies is important to make our product become more interesting in terms of shape and thick of the cookies.
Products quality: Quality of our products must be getting a proven by Ministry of Health and also from JAKIM that can give the HALAL logo for our company products. This will make our customer more confident about quality of our products and can contribute them to buy it.
Products features: The raw materials that our company use in production cookies must be high quality to make all types of our products become tastier.

Packaging

The important of packing is to make sure the condition of the products always in good condition and durable of that product. Our company chooses to use plastic and box to packaging our products. The packaging of our products depends on the quantity which is:
- Plastic: For small quantity, our company will pack three cookies in one packet. Then it will repackaging into one box which is one box contain 12 packet of cookies.
- Box: Our company use box in packaging strategy when to make delivery to our dealer and wholesaler in terms of big quantity. It is to make sure the process of delivery becomes easy and avoid any defect of our products.

Place/Distribution Strategy
Place or distribution market means that the channel that our company use to sell our product in the market according to our target market. There are several channels that our company uses which are:

Majestic Company Consumer

First distribution market is Majestic Company sell directly to consumer. Usually, this distribution is suitable for consumer who lives nearby our company area. It was easily to sell directly to consumer without through the retailer and wholesaler because it can save our cost of delivery product.

Majestic Company Retailer Consumer

Next, Majestic Company sells the product through the retailer. Retailer is one of the people who can make our product well known by the consumer. Normally, consumers like to buy their goods from retailer, so this could be one of the ways that our company uses to promote our product to the consumer.

Majestic Company Wholesaler Retailer Consumer

The last distribution that our company uses is selling through the wholesaler. The wholesaler will buy our product in big quantity and sell back to the retailer and consumer. Examples of our wholesaler are Giant, Tesco, Mydin, Hypermarket and Carefour. Many company in Malaysia use these distribution and it become one of the trend to sell company product to the consumer. Without using this distribution, the company product cannot sell their product easily and gain profit.

Promotion Strategy
Promotion strategy is the process of promoting a new product to the consumer based on a several tools. It was important part to make the company sell their product according to their target market. There are many tools that can be use which are advertising, personal selling, sales promotion and publicity.
Majestic Company had decided to use only two tools that suitable for our product which are advertising and sales promotion.
1. Advertising

Our company is one of new entrepreneur in the cookies industry, so our company chooses to use the cheap advertising tools which are banner and brochure. If the sales production increases, our company will advertise the product through the radio and television.

Sales promotion

Our company will gives discount to the wholesalers and retailer that buy our product in big quantity. Besides that, our company will gives extra one box to our customer that buy the product more than five boxes. During festive season, our company also will lower the price of our product depends on the market needed.

Price Strategy
Pricing strategy is an important strategic issue because it is related to product positioning. Thus, Majestic Company had chosen cost-based strategy and value-based strategy in implementing the strategy.
1. Cost-based Strategy
  Cost-based strategy is the strategy on pricing the product based on cost plus a mark-up profit. Mark-up is the profit that we get from selling the products.
  
  Price per unit = Cost + Mark-up

= 3.55 + (66.1972% x 3.55)

` = 3.55 + 2.35

= RM 5.90

Value-based Strategy

Value-based strategy is the strategy on pricing the product that can show the quality of the product. Majestic Company used high quality of raw materials to ensure that our company produces high quality of products that can fulfill the customers' needs and wants.

MARKETING BUDGET

ITEM	PROPERTY BUDGET (RM)	MONTHLY BUDGET (RM)	MISCELLANOUS BUDGET (RM)	TOTAL (RM)
Fixed asset Signboard	3 000			3 000
Salary Sales Executives EPF (12%) SOCSO (2.5%)		1 200 144 30		1 200 144 30
Travelling		500		500
Advertising and promotion Business card Banner and brochure Sample cookies			50 500 100	50 500 100
Other expenses			2000	2000
TOTAL	3 000	1 874	2 650	7 524

INTRODUCTION TO FINANCIAL PLAN

In business planning, financial plan is most important part to determine whether our business idea is viable or not. At the same time it also determined our business performance whether is going to be able to attract any investment in our business idea.

Basically, in this financial plan consist of three financial statements which are income statement, balance sheet and financial cash flow. Our company needs to make analysis for all that item and show how the transaction of that part.

It also included the cost of expenses consist of salary, rent of factory, transportation, raw material, distribution, storage, promotion, utilities, maintenance, telecommunication, utilities and office supplies. Operating expenses are the cost of keeping of our business running.

There are many sources of financial plan that every company can gain to start their business which are loan, hirer purchase, term loan, internal sources, external sources, and equity contribution. For our company, we use our own capital that provided by each of partnership and personal loan to start our business.

PROJECT IMPLEMENTATION COST

The company's project implementation is about RM 220 000. The partners of the company are agree to contribute the capital which is amount RM 57 000.

EQUITY CONTRIBUTION ( CASH )	PERCENTAGE (%)	AMOUNT ( RM )
Nor Azmiliawati Binti Azmi ( General Manager )	40	22 800
Nur Atiqah Binti Ahmad Khuzaini ( Marketing Manager )	20	11 400
Nazihah Binti Mutaza ( Operation Manager )	20	11 400
Norshariniain Binti Ismail ( Finance Manager )	20	11 400
TOTAL	100	57 000

Sources of fund

SOURCES	AMOUNT (RM)
Equity contribution	57 000
Hire purchase	98 000
Term loan	65 000
TOTAL	220 000

NAME OF BUSINESS/COMPANY

MAJESTIC COMPANY

BUSINESS LEGAL ENTITY	2	NATURE OF BUSINESS	1
1 = Private Limited Cpmpany (Sdn. Bhd.)		1 = Manufacturing
2 = Partnership		2 = Trading
3 = Sole Proprietorship		3 = Service

ADMINISTRATIVE BUDGET

Particulars	F.Assets	Monthly Exp.	Others	Total

*Fixed Assets*
Land & Building	-			-
Office equipment	21,145			21,145
Furniture	12,400			12,400
	-			-
	-			-
*Working Capital*
Salaries, EPF & SOCSO		13,969		13,969
Electricity		500		500
Water		200		200
Telephone		400		400
Internet		250		250
Rental		2,000		2,000
		-		-
*Pre-Operations & Other Expenditure*
Other Expenditure			1,500
Deposit (rent, utilities, etc.)			-	-
Business Registration & Licences			-	-
Insurance & Road Tax for Motor Vehicle			-	-
Other Pre-Operations Expenditure			-	-
Total	33,545	17,319	1,500	50,864

FIXED ASSETS	Econ. Life (yrs)	FIXED ASSETS	Econ. Life (yrs)
Office equipment	5		5
Furniture	5		5
-	5	Machines	5
-	5	Equipment	5
Signboard	5	Lorry	5
-	5		5

	DEPRECIATION METHOD (1=straight line, 2=declining balance)					1
MARKETING BUDGET

Particulars		F.Assets	Monthly Exp.	Others	Total


*Fixed Assets*
Signboard		3,000			3,000
		-			-
		-			-
		-			-
*Working Capital*
Salaries, EPF & SOCSO			1,374		1,374
Travelling			500		500
Advertising & promotion			650		650
			-		-
			-		-
			-		-
			-		-
*Pre-Operations & Other Expenditure*
Other Expenditure				2,000
Deposit (rent, utilities, etc.)				-	-
Business Registration & Licences				-	-
Insurance & Road Tax for Motor Vehicle				-	-
Other Pre-Operations Expenditure				-	-
Total		3,000	2,524	2,000	5,524

SALES PROJECTION		PURCHASE PROJECTION
Month 1	188,210	Month 1	-
Month 2	188,210	Month 2	89,480
Month 3	188,210	Month 3	93,954
Month 4	197,621	Month 4	93,954
Month 5	197,621	Month 5	93,954
Month 6	197,621	Month 6	98,652
Month 7	207,502	Month 7	98,652
Month 8	207,502	Month 8	103,585
Month 9	217,877	Month 9	103,585
Month 10	217,877	Month 10	108,764
Month 11	228,771	Month 11	108,764
Month 12	228,771	Month 12	119,640
Total Year 1	2,465,793	Total Year 1	1,112,984
ToTal Year 2	2,712,372	ToTal Year 2	1,224,282
Total Year 3	3,119,227	Total Year 3	1,407,924
			\
COLLECTIONS FOR SALES		PAYMENTS FOR PURCHASES
In the month of sale	50%	In the month of purchase	40%
1 month after sale	30%	1 month after purchase	30%
2 months after sale	20%	2 months after purchase	30%
Total	100%	Total	100%

OPERATIONS BUDGET

Particulars	F.Assets	Monthly Exp.	Others	Total


*Fixed Assets*
Machines	67755			67,755
Equipment	6737			6,737
Lorry	30000			30,000
				-
*Working Capital*
Raw Materials		-		-
Carriage Inward & Duty		-		-
Salaries, EPF & SOCSO		21,297		21,297
Delivery services		2,000		2,000
Electricity		3,000		3,000
Water		1,500		1,500
		-		-
*Pre-Operations & Other Expenditure*
Other Expenditure			2,000
Deposit (rent, utilities, etc.)			-	-
Business Registration & Licences			-	-
Insurance & Road Tax for Motor Vehicle			3,000	3,000
Other Pre-Operations Expenditure			-	-
Total	104,492	27,797	5,000	135,289

INCREASE IN WORKING CAPITAL (%)
Year 2	10%
Year 3	15%

ENDING STOCK OF RAW MATERIALS	RM	ENDING STOCK OF FINISHED GOODS	RM
End of Year 1	2,000	End of Year 1	7,080
End of Year 2	4,000	End of Year 2	7,788
End of Year 3	7,000	End of Year 3	8,956

MAJESTIC COMPANY
PROJECT IMPLEMENTATION COST & SOURCES OF FINANCE
Project Implementation Cost				Sources of Finance
Project Implementation Cost				Sources of Finance
Requirements			Cost	Loan	Hire-Purchase	Own Contribution
Fixed Assets						Cash	Existing F. Assets
Land & Building
Office equipment			21,145	21,145
Furniture			12,400	12,400


Signboard			3,000	3,000



Machines			67,755		67,755
Equipment			6,737	6,737
Lorry			30,000		30,000

Working Capital	1	months
Administrative			17,319			17,319
Marketing			2,524			2,524
Operations			27,797			27,797
Pre-Operations & Other Expenditure			8,500			8,500
Contingencies

TOTAL			197,177	43,282	97,755	56,140

TERMS OF LOAN (if required)
Interest rate	9%
Loan duration	5
Interest payment method*	2
* Method: 1 = flat rate 2 = annual rest

TERMS OF HIRE-PURCHASE (if required)
Interest rate	5%
Hire-purchase duration	10

MAJESTIC COMPANY
DEPRECIATION SCHEDULES

Fixed Asset		Office equipment		Fixed Asset		Furniture
Cost (RM)		21,145		Cost (RM)		12,400
Method		Straight Line		Method		Straight Line
Economic Life (yrs)		5		Economic Life (yrs)		5
	Annual	Accumulated			Annual	Accumulated
Year	Depreciation	Depreciation	Book Value	Year	Depreciation	Depreciation	Book Value
	-	-	21,145		-	-	12,400
1	4,229	4,229	16,916	1	2,480	2,480	9,920
2	4,229	8,458	12,687	2	2,480	4,960	7,440
3	4,229	12,687	8,458	3	2,480	7,440	4,960
4	4,229	16,916	4,229	4	2,480	9,920	2,480
5	4,229	21,145	-	5	2,480	12,400	-
6	0	0	-	6	0	0	-
7	0	0	-	7	0	0	-
8	0	0	-	8	0	0	-
9	0	0	-	9	0	0	-
10	0	0	-	10	0	0	-

Fixed Asset		Signboard		Fixed Asset
Cost (RM)		3,000		Cost (RM)
Method		Straight Line		Method		Straight Line
Economic Life (yrs)		5		Economic Life (yrs)		5
	Annual	Accumulated			Annual	Accumulated
Year	Depreciation	Depreciation	Book Value	Year	Depreciation	Depreciation	Book Value
	-	-	3,000		-	-	-
1	600	600	2,400	1	-	-	-
2	600	1,200	1,800	2	-	-	-
3	600	1,800	1,200	3	-	-	-
4	600	2,400	600	4	-	-	-
5	600	3,000	-	5	-	-	-
6	0	0	-	6	-	-	-
7	0	0	-	7	-	-	-
8	0	0	-	8	-	-	-
9	0	0	-	9	-	-	-
10	0	0	-	10	-	-	-

Fixed Asset		Machines		Fixed Asset		Equipment
Cost (RM)		67,755		Cost (RM)		6,737
Method		Straight Line		Method		Straight Line
Economic Life (yrs)		5		Economic Life (yrs)		5
	Annual	Accumulated			Annual	Accumulated
Year	Depreciation	Depreciation	Book Value	Year	Depreciation	Depreciation	Book Value
	-	-	67,755		-	-	6,737
1	13,551	13,551	54,204	1	1,347	1,347	5,390
2	13,551	27,102	40,653	2	1,347	2,695	4,042
3	13,551	40,653	27,102	3	1,347	4,042	2,695
4	13,551	54,204	13,551	4	1,347	5,390	1,347
5	13,551	67,755	-	5	1,347	6,737	-
6	0	0	-	6	0	0	-
7	0	0	-	7	0	0	-
8	0	0	-	8	0	0	-
9	0	0	-	9	0	0	-
10	0	0	-	10	0	0	-


Fixed Asset		Lorry		Fixed Asset
Cost (RM)		30,000		Cost (RM)
Method		Straight Line		Method		Straight Line
Economic Life (yrs)		5		Economic Life (yrs)		5
	Annual	Accumulated			Annual	Accumulated
Year	Depreciation	Depreciation	Book Value	Year	Depreciation	Depreciation	Book Value
	-	-	30,000		-	-	-
1	6,000	6,000	24,000	1	-	-	-
2	6,000	12,000	18,000	2	-	-	-
3	6,000	18,000	12,000	3	-	-	-
4	6,000	24,000	6,000	4	-	-	-
5	6,000	30,000	-	5	-	-	-
6	0	0	-	6	-	-	-
7	0	0	-	7	-	-	-
8	0	0	-	8	-	-	-
9	0	0	-	9	-	-	-
10	0	0	-	10	-	-	-

MAJESTIC COMPANY
LOAN & HIRE-PURCHASE AMMORTISATION SCHEDULES

LOAN REPAYMENT SCHEDULE					HIRE-PURCHASE REPAYMENT SCHEDULE
Amount		43,282			Amount		97,755
Interest Rate		9%			Interest Rate		5%
Duration (yrs)		5			Duration (yrs)		10
Method		Baki Tahunan
Year	Principal	Interest	Total Payment	Principal Balance	Year	Principal	Interest	Total Payment	Principal Balance
	-	-		43,282		-	-		97,755
1	8,656	3,895	12,552	34,626	1	9,776	4,888	14,663	87,980
2	8,656	3,116	11,773	25,969	2	9,776	4,888	14,663	78,204
3	8,656	2,337	10,994	17,313	3	9,776	4,888	14,663	68,429
4	8,656	1,558	10,215	8,656	4	9,776	4,888	14,663	58,653
5	8,656	779	9,435	-	5	9,776	4,888	14,663	48,878
6	0	0	-	-	6	9,776	4,888	14,663	39,102
7	0	0	-	-	7	9,776	4,888	14,663	29,327
8	0	0	-	-	8	9,776	4,888	14,663	19,551
9	0	0	-	-	9	9,776	4,888	14,663	9,776
10	0	0	-		10	9,776	4,888	14,663	-

MAJESTIC COMPANY
PRO-FORMA PRODUCTION COST STATEMENT

			Year 1	Year 2	Year 3

	Raw Materials
		Opening Stock	0	2,000	4,000
		Current Year Purchases	1,112,984	1,224,282	1,407,924
		Ending Stock	2,000	4,000	7,000
		Raw Materials Used	1,110,984	1,222,282	1,404,924
		Carriage Inward
			1,110,984	1,222,282	1,404,924
	Salaries, EPF & SOCSO		255,564	281,120	323,288
	Factory Overhead
		Depreciation of Fixed assets (Operations)	20,898	20,898	20,898
		Delivery services	24,000	26,400	30,360
		Electricity	36,000	39,600	45,540
		Water	18,000	19,800	22,770

		Total Factory Overhead	98,898	106,698	119,568
	Production Cost		1,465,446	1,610,101	1,847,781

MAJESTIC COMPANY
PRO-FORMA INCOME STATEMENT

		Year 1	Year 2	Year 3
	Sales	2,465,793	2,712,372	3,119,227
	Less: Cost of Sales
	Opening Stock of Finished Goods		7,080	7,788
	Production Cost	1,465,446	1,610,101	1,847,781
	Less: Ending Stock of Finished Goods	7,080	7,788	8,956
		0	0	0
		1,458,366	1,609,393	1,846,613
	Gross Profit	1,007,427	1,102,979	1,272,614

	Less: Enpenditure
	Administrative Expenditure	207,828	228,611	262,902
	Marketing Expenditure	30,288	33,317	38,314
	Other Expenditure	5,500	6,050	6,958
	Business Registration & Licences
	Insurance & Road Tax for Motor Vehicle	3,000	3,000	3,000
	Other Pre-Operations Expenditure
	Interest on Hire-Purchase	4,888	4,888	4,888
	Interest on Loan	3,895	3,116	2,337
	Depreciation of Fixed Assets	7,309	7,309	7,309

	Total Expenditure	262,708	286,291	325,708
	Net Profit Before Tax	744,718	816,689	946,906
	Tax	0	0	0
	Net Profit After Tax	744,718	816,689	946,906
	Accumulated Net Profit	744,718	1,561,407	2,508,313

MAJESTIC COMPANY
PRO-FORMA BALANCE SHEET

		Year 1	Year 2	Year 3
	ASSETS

	Non-Current Assets (Book Value)
	Land & Building
	Office equipment	16,916	12,687	8,458
	Furniture	9,920	7,440	4,960


	Signboard	2,400	1,800	1,200



	Machines	54,204	40,653	27,102
	Equipment	5,390	4,042	2,695
	Lorry	24,000	18,000	12,000

	Other Assets
	Deposit

		112,830	84,622	56,415
	Current Assets
	Stock of Raw Materials	2,000	4,000	7,000
	Stock of Finished Goods	7,080	7,788	8,956
	Accounts Receivable	160,140	158,222	181,955
	Cash Balance	745,827	1,638,280	2,677,246
		915,047	1,808,290	2,875,157

	TOTAL ASSETS	1,027,877	1,892,912	2,931,571

	Owners' Equity
	Capital	56,140	56,140	56,140
	Accumulated Profit	744,718	1,561,407	2,508,313
		800,858	1,617,547	2,564,453
	Long-Term Liabilities
	Loan Balance	34,626	25,969	17,313
	Hire-Purchase Balance	87,980	78,204	68,429
		122,605	104,173	85,741
	Current Liabilities
	Accounts Payable	104,413	171,192	281,377

	TOTAL EQUITY & LIABILITIES	1,027,877	1,892,912	2,931,571

MAJESTIC COMPANY
FINANCIAL RATIO ANALYSIS
		Year 1	Year 2	Year 3
		Year 1	Year 2	Year 3
LIQUIDITY
	Current Ratio	9	11	10
	Quick Ratio (Acid Test)	9	10	10

EFFICIENCY
	Inventory Turnover	161	154	133

PROFITABILITY
	Gross Profit Margin	40.86%	40.66%	40.80%
	Net Profit Margin	30.20%	30.11%	30.36%
	Return on Assets	72.45%	43.14%	32.30%
	Return on Equity	92.99%	50.49%	36.92%

SOLVENCY
	Debt to Equity	28.35%	17.02%	14.32%
	Debt to Assets	22.09%	14.55%	12.52%
	Time Interest Earned	190	261	404

FINANCIAL RATIO ANALYSIS

The financial ratio analysis is divided into four categories which are liquidity ratio, efficiency ratio, profitability ratio and solvency ratio. These ratios are compared from the first year to the third year of the operations. From these comparisons, Majestic Company can understand the financial standing of the company from one year to another year.

Liquidity Ratio

Liquidity ratio indicates the ability of the company to pay its short-term obligations as they come due. Liquidity refers to the solvency of the company's overall financial position in which it will be easy for the company to pay its bills. The two basic measures of the liquidity are current ratio and quick (acid test) ratio.

Current Ratio

Current ratio = Current asset
Current liabilities

The current ratio for Majestic Company for the first year is 9.0 and it is increase in the second year which is 11.0. However, in year 3, it decreases amounted 1.0 to 10.0. It means that Majestic Company has enough cash or liquid asset to pay our monthly bills.

Quick (Acid Test) Ratio

Quick ratio = Current asset – inventory
Current liabilities

The quick ratio for Majestic Company is increase from the first year to the third year which is 9.0 to 10.0. It means that the company has better measure of the overall liquidity when the firm's inventory cannot be converted into cash.

EFFICIENCY RATIO

Efficiency ratio or activity ratio measure the company efficiency in managing and utilizing its assets to generate cash and profit. It is important to look beyond measures of overall liquidity and to assess the activity (liquidity) of the current accounts.
1. Inventory Turnover
  
  Inventory turnover = Cost of goods sold
  Inventory

The inventory turnover for Majestic Company in year 1 is 161 times compared to the second year in which the inventory turnover is decreasing to 154 times. In the third year, the inventory turnover for the company decline to 133 times.

PROFITABILITY RATIO

Profitability ratio measures the profit performance of the company in relation to the sales, resources and costs. The commonly used ratios are gross profit margin, net profit margin, return on assets and return on equity.
1. Gross Profit Margin
  
  Gross profit margin = Sales – Cost of goods sold
  Sales

Gross profit margin for Majestic Company is decreasing from year 1(40.86%) to year 3(40.66%) amounted to 0.2%. However, the margin increase in the third year which is 40.80% and it means that the company are expanding from year to year.

Net Profit Margin

Net profit margin = Net profit
Sales

The net profit margin for Majestic Company at first is declining from 30.20% in year 1 to 30.1% in year 2. This is because, our company is a new company so, and some people still does not believe in the quality our products. However, the margin is increasing in the third year amounted to 30.36%.

Return On Assets

Return on Asset (ROA) = Net profit
Total assets

The ROA for Majestic Company for the first year is 72.45%. It is decreasing in year 2 to 43.14% and in year 3 which is 32.30%. This is mainly because Majestic Company as a new business does not have enough experiences and skill on the management in generating profit with the available assets.

Return On Equity

Return on equity (ROE) = Net profit – Divided for preferred shareholder
Sales

ROE for the Majestic Company for the first year is 92.99%. It is decreasing in year 2 until year 3 which are 50.49% to 36.92%. This is because, as a new entrepreneur our company earns less profit. So, the returns on equity to all of our partnership in company get a small percentage from our company profit.

SOLVENCY RATIO

Under this ratio, our company needs to looks at the capital structure of our firm. The sources of capital are important indicators of our firm financial risk exposure. It shows the ability of our company to pay off our obligation in supporting our operation. The solvency ratio consists of three types of ratio which are debt to equity, debt to asset and time interest earned.
1. Debt To Equity
  
  Debt to equity = Long term debt
  Total equity

Debt to equity ratio for Majestic Company for the first year is 28.35%. It is decreasing to 17.02% in year 2 and continues to decrease in year 3 which is 14.32%. It means that the company use small amount of debt to finance the operation and it shows that the company has lower financial risk.

Debt To Asset ( Debt Ratio )

Debt to asset = Total liabilities
Total assets

Debt ratio for Majestic Company for the first year is 22.09% and it decrease to 14.55% in the second year. In the third year, the debt ratio decrease to 12.52%. It shows that, the company use smaller amount of debt to finance the asset to generate profit.

Times Interest Earned

Times interest earned = Earnings before interest and tax ( EBIT )
` Interest

Times interest earned for Majestic Company is increasing from 190 in year 1 to 261 in year 2. In year 3, it continues to increase to 404. It shows that the company is able to fulfill the interest obligation.

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USAHAWAN

Saturday, 25 June 2011

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