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Umar Farooq Ahmed submitted an assignment to Dr. Bushra containing financial statements for Easy Composite Ltd. The capital costs to start the company totaled Rs. 10.8 million which was funded through owner equity, asset sales, bank loans, and an investor. The company focuses on aerospace composites like aircraft wings. Revenue comes from orders for 7 composite wings per month at Rs. 300,000 each, generating Rs. 2.1 million monthly. Expenses total Rs. 1.65 million monthly, resulting in a Rs. 450,000 profit. The initial investment will be paid back in 2 years and 7 months, showing the project is financially sustainable long term as the composite industry grows

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59 views4 pages

Ms 7777

Umar Farooq Ahmed submitted an assignment to Dr. Bushra containing financial statements for Easy Composite Ltd. The capital costs to start the company totaled Rs. 10.8 million which was funded through owner equity, asset sales, bank loans, and an investor. The company focuses on aerospace composites like aircraft wings. Revenue comes from orders for 7 composite wings per month at Rs. 300,000 each, generating Rs. 2.1 million monthly. Expenses total Rs. 1.65 million monthly, resulting in a Rs. 450,000 profit. The initial investment will be paid back in 2 years and 7 months, showing the project is financially sustainable long term as the composite industry grows

Uploaded by

Huzi Malix
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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MS-447

ACCOUNTING AND FINANCE


ASSIGNMENT

Name: Umar Farooq Ahmed


Registration Number: 2018487
Submitted To: Dr Bushra
Financial statement of Easy Composite. Ltd
Introduction

A composite material is a combination of two materials with different physical and chemical properties.
When they are combined, they create a material which is specialized to do a certain job, for instance to
become stronger, lighter or resistant to electricity. They can also improve strength and stiffness. The
reason for their use of traditional materials is because they improve the properties of their base
materials and are applicable in many situations.

Composite industry:

Consumer composites include products (that require a cosmetic finish) like boats, recreational vehicles,
bathroom fixtures and sporting goods. In many cases, the cosmetic finish is an in-mold coating.
Composites are used in industrial applications where corrosion resistance and performance (in adverse
environments) are critical. Generally, premium resins such as isophthalic or vinyl ester are required to
meet corrosion-resistance specifications. Other specialty resins may be used depending on the chemical
resistance properties required. Fiberglass is almost always used as the reinforcing fiber. In this segment
of the industry, performance trumps cosmetic finishes. Industrial composite products include
underground storage tanks, scrubbers, piping, fume hoods, water treatment components, and pressure
vessels.

Advance industrial composites:

Composites industry related to aerospace industry requires high-performance resin systems and high-
strength, ultra-stiff fiber reinforcement. The aerospace industry, including military and commercial
aircraft, is the major customer for advanced composites. Stealth aircraft and Unmanned Aerial Vehicles
(drones) take advantage of composites’ radar transparency. Advanced composites are also used for
blast and ballistic protection. Additionally, they have been adapted to use in sports equipment to make
it lighter and stronger. A few exotic resins and fibers are used in advanced composites, but epoxy resin
and aramid or carbon fibers are most common. The core focus of our company, Easy Composite, is
related to aerospace industry (fabrication and analysis of aircraft wing on smaller scale).

Capital Cost

Capital Cost Amount (in Rupees)


Renovations 1,000,000
Machinary and Equipment 7,500,000
Furniture 500,000
Office Equipment 300,000
Pre-Operating Cost 1,500,000
Total Capital Cost 10,800,000
Working Cost

Working Cost Amount (in Rupees)


Equipment Spare 500,000
Raw Material 5,00,000
Salary 300,000
Utilities 350,000
Total Working Capital 1,650,000

Sources of Funding

Funding Source Amount


Owner Equity 2,500,000
Sale of Assert 2,000,000
Bank Loan (Mortgage) 5,000,000
investor 3,000,000
Total Amount 12,500,000

Revenue

In starting the no. of orders per month of hybrid composite wing for aircraft and drones = 7

Number of days required to make one wing = 3

Total days required to make 7 wings = 7x3=21

Average price of one aircraft wing = 300000 Rs

Total amount required to make 7 wings = 7x300000 = 2100000

Expanses

If the expanse of one month is 1,650,000 then the net income will be 4,50,000 Rs.

Total Expanse per month = 16,50,000 Rs

Profit = 2,100,000 – 1,650,000

= 450,000 Rs per month

PayBack Period

The time in which the initial investment will return will be 2 years and 7 months.

Payback Period = 12,450,000/450,000


27.5= 28 months

Financial Sustainability

The project will be sustainable as the initial investment will be returned in 2.5 year time. As the
composite industry is growing in Pakistan, so the risk of failing is very limited. With time the business will
grow and will be a profitable venture.

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