Question

King Kong, a popular fufu joint, operated by Macho, is a customer of L400 Microcredit Ltd. They have requested for a loan to expand their operations. After interviewing him, you (Project Officer) come-up with the following information.

• Ingredients for preparing soup costs $ 200.00 per month. This excludes purchases of fish ($ 200.00 per month), three goats per week at $ 150,00 per goat, and two “”akprantie” per day (six days in a week) at $ 50.00 per “akrantie”.

• Cassava and plantain for preparing the fufu at $ 200.00 per month.

• Sales for the fufu averages $ 500.00 per month.

• They make a minimum gross margin of 35% on the sale of fish, mutton and Akrantie.

• Macho operates the chop bar with four assistants with each earning $ 70.00 per week. Macho is not on a regular wage yet.

• They own a fridge with which they sell both alcoholic and non-alcoholic drinks. Electricity and water bills per month averages $ 100.00 and $50.00 respectively. They also purchase LPG gas once every two weeks for $200.00

• They spend $240.00 per month on the drinks and make a minimum gross margin of 10% on the drinks.

The proposal is to enable King Kong add the sale of Banku and okro soup to the existing business, Macho estimates that they can make a minimum gross margin of 60% on the sale of banku and okro soup. The loan request is to enable him undertake the following:

• Purchase a sack of cassava dou$ at $ 150.00 per month.

• Spend $ 150.00 per month to prepare the okro soup

• Purchase a big cooking pot and other utensils, estimated at $ 350.00 for preparing the banku and okro soup. They will require a new cylinder at a cost of $ 150.00 and LPG purchases will increase by $ 200.00 per month.

• He estimates that the purchase of fish, mutton and akrantie will increase by 50% per month due to the new line of business. In addition, they will purchase dry fish at $ 100.00 per month.

• Miscellaneous expense on the proposed expansion is estimated at 5% per month of the cost of all existing purchases.

A new deep freezer has been paid for at a cost of $1,500.00, from their own resources. This will enable then meet the increase in demand for the drinks. Their suppliers have agreed to provide them with trade credits of 90 days on the estimated increase in the quantity of drinks that may arise from the expanded business. They have requested for a loan for a period of six months, The existing balance on their savings account is $20.00

The formula below was used to calculate sales Sales = Cost of Sales/(1 - Gross Margin) Round up all calculations to one decimal place Determine the projected Net Cash Flow for King Kong for the next four months, based on the interview and the proposal made to the L400 Microcredit Ltd.

Answer 1

A	B	C	D
2	Particulars	Calculations	Amount
3
4	Sales
5	sale of fish, mutton and Akrantie.FUFU	=C23/(1-35%)	34646.1538461538
6	Sale of DRINK	=C25/(1-10%)	1066.66666666667
7	Sales OF BANKU AND OKRO	=C36/(1-60%)	30712.5
8	Total Sales	=SUM(C5:C7)	66425.3205128205
9	Total Cost	=C23+C25+C36	35765
10	Net Cash Flow	=C8-C9	30660.3205128205
11
12	COST
13	Cost Asociated with FUFU
14	Ingredients for preparing soup	=200*4	800
15	Fish	=200*4	800
16	Goat	=3*4*4*150	7200
17	Akprantie	=2*6*4*4*50	9600
18	Cassava and plantain	=200*4	800
19	Chop bar four assistants	=70*4*4	1120
20	Electricity bills	=100*4	400
21	water bills	=50*4	200
22	LPG gas	=200*4/2*4	1600
23	COGS OF FUFU	=SUM(C14:C22)	22520
24
25	COGS OF Drinks	=240*4	960
26
27	Cost Asociated with Banku and Okro
28	sack of cassava	=150*4	600
29	okro soup	=150*4	600
30	big cooking pot and other utensils	350	350
31	new cylinder	150	150
32	LPG gas	=200*4	800
33	fish, mutton and akrantie	=(C15+C16+C17)*50%	8800
34	DRY FISH	=100*4	400
35	Miscellaneous expense	=SUM(C28:C34)*5%	585
36	COGS OF BANKU AND OKRO	=SUM(C28:C35)	12285