BUSINESS PLAN

By:

WENDIUM SHURE DEBELE

Addis Ababa

OCTOBER, 2023

0
1. Introduction
Ethiopian economy had been consistently growing by over 10% in the past
until it was disrupted by the civil war in the country. The unprecedented
economic development that was registered has resulted in change in the
people’s life style, consumptions, work culture, and the overall life style.

This growth in demand was mainly supplied by the import of goods. But after
the war the country’s foreign reserve has depleted and the import business
was severely hurt. On top of this the government gave priorities for
manufacturing locally and imposes high tax on imported good causing a high
price on imported goods.

This creates a good opportunity for the local business, which has created
fertile ground for business. Besides, the government’s unabated effort in
establishing conducive business environment, its effort to provide efficient
public service and build development infrastructures are major factors that
affirms availability of brighter future for trade and investment in the country.

In Ethiopia, there are a number of textile trading companies who operate at

different capacities. The amount of investment in the sector is increasing and it
is still deemed to increase both in quantity and in quality. Yet, the country is
still importing textile fabrics that reach over 38 thousands metric tons
annually investing about ETB 2 billion in foreign currency. Considering the
value of domestic production of ETB 1.1 billion, the country is almost covering
some 50-60% of its demand from import. Moreover, following the growing
economy, the country’s per capital garment and textile consumption is
expected to grow from less than one kg per annum (which is too low as
compared to the African Average of 3.2 kg and world average of 8.7 kg) that
increase the volume of import unless the domestic production grows rapidly.

On the other hand, domestic firms are said to operate below their capacity and
are regarded as inefficient owing to lack of market for local products among
others. Close evaluation to the sector however shows that the factories can
1
produce better quality that is readily consumed by the local market and even
that can be exported if they apply supply chain management concept that
requires coordination and collaboration among the supply chain actors.

Coordination and collaboration is required for the sector since some factories
have high quality machinery but lack capacity to access quality raw material
while others have these raw materials but produce poor quality products owing
to lack of skill and technology. If the factory with quality raw material shares
the finishing work with the factory with advanced technology in the area both
factories will yield quality product. The other factor for the poor performances
of the factories is lack of specialization and striving to do all things under a roof
almost starting from ginning to finishing. Although this strategy is to seek for
economies of scale, the factories however eventually found themselves
inefficient, as they couldn’t specialize in any of the process. For instance,
factories that have end-to-end process specializing in cotton cannot flexibly
shift to polyester at least some of their processes as the factories are designed
for cotton and not to interchangeably work. Even some of such factories find
themselves in difficulty to finish semi processed raw materials by other
factories unless the raw materials are processes as per their specification.

The distribution business is also less coordinated as the factories manufacture

and supply to the few wholesalers in Merkato that hold the products and
charge high margin to retailers. The factories also produce similar type of
products in bulk that narrows option for customers and discourage
consumption of domestic products. Therefore, the distribution system is
inefficient in that it fails to supply variety of products in small quantities.

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1.2 Background of the company

Wendium Shure Debele was established to engage in Wholesale trade in

cotton and textile clothes business. The entity has received Principal
registration No. AA/AK/W4/1/0000660/2005, Business license No.
AA/AK/08/3/14/671/2458766/2012 from Addis Ababa Trade Bureau Addis
Ketema sub city as at 2005 EC and with paid up capital of birr 5,000,000. It is
registered in Addis Ketema sub city and House No G-16. It also received Tax
Payers Registration Certificate No. 0004997742.

The Company is owned and managed by Wendium Shure Debele who are
highly professional with commendable business experience in the sector and
the company location is suitable for the business found in Addis Ketema Sub
city which high population business area found

The Company’s business is Wholesale trade in cotton and textile clothes and
distributing of high quality garments. The Company has good knowledge of the
Ethiopian textile sector, well established business relation with manufacturers
and retailers. In order to exploit this relationship and to capitalize on the
sector’s weakness of inability to supply quality garment as demanded by
retailers both with respect to specification and quantity, the Company
established a Wholesale trade in cotton and textile clothes and distributing of
high quality garments.

Therefore, its business model is receiving orders from retailers and delivers it
as per the specification and design of the customer. 50,258,741.00

The Company’s short-term plan is to Wholesale trade in cotton and textile

clothes and distribute garments that worth ETB 50,258,741 annually and
increase by 20% average for the coming years. The plan indicated that the
Company needs to invest a total of ETB 20 million of which ETB 20 million on
working capital for purchase of materials, selling and administrative expense in
the first year in order to attain the planned volume business and the company

3
needs additional renovation, expand and diversification to update the existing
business and increase the profitability of the business at the beginning of 2016
E.C fiscal year. This investment helps the company to achieve the planned
volume of operation.

Part of the fund, ETB 20 millions expected to be obtained from banks

Hence, this business plan is prepared to clearly show to the bank; the
Company’s back ground and future plan so as to clearly demonstrate the
business’s viability and the promoters’ credit worthiness as follows:

2. Mission Statement

Our Mission and Vision Statement

 Our mission is to become the preferred supply partner to all of our

customers across the country and achieve sustained growth, through
consistent delivery of up-to-date, customer centric, world class quality
products.
 Our vision is to be the preferred textile retailer company in Ethiopia
through our supply of quality products as well as offering the best prices
for this product to our customers. We also hope to be a leading brand in
the industry by the year 2016.
 In order to achieve our vision, we intend to ensure that we liaise with
only trusted textile retailer companies.

3. Business Objectives
The primary objectives of the business plan are presented as below:

 Obtain start-up funding.

 To supply customer with product on demand and ensure utmost
satisfaction.
 Achieve strong annual revenue within the first year.
 Providing an easily accessible location for customers.

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  Offering clients a wide range of products in one setting, and extended
business hours.

3.1 Core Competencies of the Company

The company strong competitive edge is its knowledge of the textile and
garment trading in the country including their capacity, quality and
management system as well as their sales and distribution system. The
Company has also considerable experience in sourcing production to
different companies so as to manufacture products at own specifications and
quality. By working with the international brand companies, especially
Chinese, it has obtained substantial experiences in designing of products
and management of product sourcing. Now, the Company has obtained good
understanding regarding the distributors and garment trading in the country
specially those who are based locally.
On top of these the company has strong management and leadership quality,
The Company has also strong business relation with the many suppliers and
traders locally and outside the country.

4. Guiding principles
i. Being mindful of our customers and our staff
Coinciding with our Company values, we will treat both our customers
and staff in a manner in which we ourselves would want to be treated (or
better!)
ii. Gratitude

“An attitude of gratitude” shown to our customers, employees and

vendors – because without their input, service, labor and time, our
business would not be here without them!
iii. Our Service
Provide the reliable, warm and friendly service expected from Customers
creating an informal, comfortable environment which will make the
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 customers satisfied and want to repurchase and consume again and
again.

5. Keys to Success
 Repeat business. Every customer who comes and contact us once should
want to return, and recommend us. Word–of–mouth marketing is a
powerful supporter.

 For the businesses and other services we provided we hire skilled

employees and offer training to keep the employees on top of his/her
game, and pay competitive wages to ensure they stay with us.

 We hiring the most known and skilled professionals and pay the top
wages to them.

 Provide and supply up-to-date Products.

 Location. The convenience of location is essential to our business; we

need to be close to our market because we are not trying to get people to
travel to reach us.

 Expanding customer base through expansion into other geographic areas

to retain a sufficient level of profitability.
 A variety of offerings system will be developed for each business
customers.

6. Brief profile of the owners and the business

The Company is owned and managed by Wendium Shure Debele who are
highly professional with commendable business experience in the sector
and the company location is suitable for the business found in Addis
Ketema Sub city which high population business area found.

The Company’s business is Wholesale trade in cotton and textile clothes

and distributing of high quality garments. The Company has good

6
 knowledge of the Ethiopian textile sector, well established business relation
with manufacturers and retailers. In order to exploit this relationship and
to capitalize on the sector’s weakness of inability to supply quality garment
as demanded by retailers both with respect to specification and quantity,
the Company established a Wholesale trade in cotton and textile clothes
and distributing of high quality garments.

7. Company Profile

Company’s Legal Name:- Wendium Shure Debele

Business Registration Number: AA/AK/W4/1/0000660/2005

Business License Number: AA/AK/08/3/14/671/2458766/2012

Business Type:- Wholesale trade in cotton and textile clothes

Year of Registration: 2005 E.C

TIN Number: 0004997742

Location;- Addis Ketema sub city Woreda 08, house no G-16

Type of Organization: Sole Proprietorship.

7.1 Establishment
Wendium Shure Debele established since 2005 EC, with an initial investment
capital ETB 5,000,000.

7.2 Legal Form

The above stated company Wendium Shure Debele organized as a Sole
Proprietorship and legally registered and operating in Ethiopia.

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7.3 Location and Addressed

Name of the company City Woreda Hou.No

Wendium Shure Debele
Addis 08 house no-
Ketema G-16

ContactAddress:-
General Manager (Owner)-Mr Wendium
Shure Debele +251911232632

8. Our Products and Business Model

Wholesale trade of cotton and textile garments involves several stages including
trading and distribution. The goal of a cotton and linen wholesaler is to buy
high quality products at reasonable prices and sell them at a profit. In order to
achieve this, they must continuously improve and invest in equipment and
technologies to increase efficiency and reduce waste by providing quality
products to the consumer. In addition, their products must be up-to-date with
market trends and customer needs to remain competitive in the marketplace.

Successful textile apparel wholesalers prioritize safety and environmental

sustainability, taking steps to reduce their impact on the environment and
protect the health and safety of their employees and customers.

Our aim is to be able to supply both branded and quality cotton textile material
and other to all our customers here in Addis Ababa Ethiopia and in locations
around the state as well.

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We are also established to make profit and in order to ensure that we generate
enough revenue to make profit; we intend to create multiple sources of income,
by offering other services as well as creating a franchise for those who intend to
use our product distribution model when starting up rather than start from the
scratch. All our sources of income will be under all the legal and permissible
laws of the Ethiopia government.

Now we have set up a shop in Addis Ababa and we are selling more than 100
textile garments per day. The company is supplying its products to the domestic
market. The products we are currently selling are men's jeans, women's jeans, denim
jackets and children's clothing.

We are planning to expand its sales capacity by getting a loan from the bank. After
getting a bank loan, we will increase our daily income by selling 800 products per day
to generate an average turnover amount per day which estimated birr 100,000

Therefore, some of the products which we intend to offer our customers are;

UNIT
S.N TYPE OF ITEM MEASURMENT
1 BODY TOP PCS
2 CHILDEREM TROUSER PCS
3 CHILDEREN IMMITATION JACKET PCS
4 CHILDERN TOP PCS
5 LADY DRESS PCS
6 SUMMER DRESS PCS
7 TRUCK T-SHIRT PCS
8 MEN TROUSER PCS
9 IMMITATION BELT PCS

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9. Price

Penetration Pricing will be the pricing strategy for our business, as our
business is at the high street of Addis Ababa where competition is huge, so we
try to give good quality at low price to penetrate in the market and try to
achieve higher sales volume to set low price and better quality strategy. Once
we achieve this objective then try to charge higher price for our customized
service for value addition.

10. Promotion and Advertising:

Every business that is established to generate revenue and make profit does so
in addition to be able to favourably compete with its other competitors either in
the same environment or in other strategic locations that would have an
impact on its own business. Drafting publicity and advertising strategies is
very important for any business that intends to survive in the business
environment.

Advertising:

1. above the Line:

 Internet
 Radio
 Magazines
 Newspapers
2. below the Line:

 Flyers
 Coupons..etc

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11. Competitors
The market is very competitive because they offer the same products and
services, but has different physical attributes to the Product and different
costs, which buyers have choices to choose from. Companies want to provide
the best products and services to attract buyers by lowering cost and
improving products, which makes the industry very competitive.

However, Companies want to provide the best products and services to attract
buyers by lowering cost and improving products and the owners is well
experienced in business sector more than 15 Years. Thus, this experience
makes it competitive and able it to win the battle. Moreover, the owners are
focusing on skilled personnel and customer centric approaches to easily win
the rivalry competitors in the business sector.

12. Suppliers
Because of its years of business experience combined with its existing
capabilities, the company has established relationships with qualified suppliers
for its products. The suppliers can provide at reasonable prices each product
and also delivered according to the schedule. Each business unit has its own
supplier.

13. Management profile has

It is evident that for the proper and continuous profitable of the business, due
consideration has to be given to the organization and management.

The owner, being accountable to the business, will manage all activity of the
business, market information and customer needs and wants as well as
providing new and quality products that satisfy customer needs. The owners
will manage all financial aspects the business.

The company currently has four staff members which are permanent
employees, and three other members are employees on contract basis of the
company.

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 List of management team as follows.

No Employer Name Position Montly

Salary

1 Wendimu Shure General Manager 30,000

2 Abayenesh Toleds Marketing Manager 15,000

3 Sadik Hade Sales 10,000

4 Hana Taksen Accountant 15,000

Total 70,0000

14. Marketing strategy:

The main business strategy of the company is customer driven approach and
focused to address the need and want of their valuable customers.

The Company’s strategy is therefore to supply products required by retailers at

the quality and quantity level they demanded. The Company can also compete
on prices besides the flexibility and quality factors as it will only trading on
demand and hence can significantly reduce the stock carrying costs.

14.1 SWOT Analysis

 Strength
 Huge Service Line with variations.
 Business will have longer hours and better prices as
compared to competitors.
 Discounts are available for customer.
 Expertise in getting new service to the market quickly.
 Expertise in providing good customer service.
 Customization available for individual customers.

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  Weakness:
 New in business as compare to rivals.
 Huge capital required to start business as credit is not easily
available from supplier in start.
 Marketing expense in the start will be huge, to establish brand
name required lot of advertising.
 Threats
 Competition is high and big chains Incorporation introduced their
product shops in the city and penetrating in market.
 People are more conscious for pricing due to recession and going
for discounts

15. Operational Plan

This operational plan is prepared based on the Company’s strategic goals
and strategic business model broadly discussed above.

The company’s operational plan is to wholesale trading and distribute

quality cotton and textile products to the local market

The Company’s operational plan for the 1st year is to build the increase
sales volume capacity, achieves the quality requirement and financial
strength that the local market requires.

16. Financial Plan

16.1. Financing Requirement

As indicated earlier, the Company is expected to invest a total of ETB 20
million for purchase of materials, selling and administrative expense in
the first year in order to attain the planned volume business.

Considering Working capital requirement-estimation

Estimated working
Description capital
Cost of Purchase 17,520,000.00
Selling and Administration
Expenses 2,480,000.00

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 Total Working capital
Requirement ETB 20,000,000

16.2 Operating and Administrative Expenses

The Company’s operating and administrative expenses are estimated as follows:

● Salary expense- it is computed taking the following assumptions regarding the

required number of staff, basic salary, pension scheme and staff benefits;

Table 1- Staff Salary and benefits expenses-plan

No Employer Name Position Montly Annual

Salary Salary
1 Wendimu Shure General Manager 30,000 360,000
2 Abayenesh Toleds Marketing Manager 15,000 180,000
3 Sadik Hade Sales 10,000 120,000
3 Sadik Hade Sales 10,000 120,000
4 Hana Taksen Accountant 15,000 180,000
Total 70,000 960,000

● This shows that the Company’s annual salary and benefit

expense will be Birr 960,000 offering competitive salary and

employing adequate staff.

● Rent Expenses- the company will pay office and store rent which

is presented as follows

Rent expenses-plan
Description Rent Per Rent Per
Month Annum
Shop rent Expense 33,913 406,957
Ware House rent Expense 9,187 110,245
Total 43,100 517,202

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 ● Selling expenses- Selling expenses comprise sales commissions

and related expenses. The Company will pay attractive commissions

for sales men to penetrate the market. Total selling expenses is
estimated to be 1% of the annual; revenue.

● Loading un-loading- it will be significant cost element and it is

expected to cost 1% of the total cost of purchase.

● Administrative expenses- comprises stationery and printing,

professional fees, license and legal fees, travel and postage, per
diem, telephone, electricity, water, bank charges, etc. It is expected
that administrative expenses amounts to 1% of annual sales.

● Interest Expenses: - It is planned that (based on the working

capital requirement determined below) the Company will obtain

bank term loan of ETB 20 million to be repaid in 5 years as shown
in the table below. The loans are expected to be obtained at annual
interest rate of 15.5%.

Loan Amortization Schedule

Loan summary
Scheduled payment 1455392.14
Scheduled number of payments 20
Actual number of payments 20
Total early payments -

Total interest $9,107,842.88

Enter values
Loan amount 20,000,000.00
Annual interest rate 15.5%
Loan period in years 5.00
Number of payments per 4.00
year
Start date of loan 11/01/2023

15
 P
mt. Scheduled
No. Beginning Payment Extra Total Principal Interest Cumulativ
Payment Balance Paymen Payment Ending e Interest
Date t Balance

1 02/01/202 20,000,000. 1,455,39 $- 1,455,392. 680,392. 775,000. 775,00

4 00 2.14 14 14 00 19,319,607.8 0.00
6
2 05/01/202 19,319,607. 1,455,39 $- 1,455,392. 706,757. 748,634. 1,523,63
4 86 2.14 14 34 80 18,612,850.5 4.80
2
3 08/01/202 18,612,850. 1,455,39 $- 1,455,392. 734,144. 721,247. 2,244,88
4 52 2.14 14 19 96 17,878,706.3 2.76
3
4 11/01/202 17,878,706. 1,455,39 $- 1,455,392. 762,592. 692,799. 2,937,68
4 33 2.14 14 27 87 17,116,114.0 2.63
6
5 02/01/202 17,116,114. 1,455,39 $- 1,455,392. 792,142. 663,249. 3,600,93
5 06 2.14 14 72 42 16,323,971.3 2.05
3
6 05/01/202 16,323,971. 1,455,39 $- 1,455,392. 822,838. 632,553. 4,233,48
5 33 2.14 14 25 89 15,501,133.0 5.94
8
7 08/01/202 15,501,133. 1,455,39 $- 1,455,392. 854,723. 600,668. 4,834,15
5 08 2.14 14 24 91 14,646,409.8 4.85
4
8 11/01/202 14,646,409. 1,455,39 $- 1,455,392. 887,843. 567,548. 5,401,70
5 84 2.14 14 76 38 13,758,566.0 3.23
8
9 02/01/202 13,758,566. 1,455,39 $- 1,455,392. 922,247. 533,144. 5,934,84
6 08 2.14 14 71 44 12,836,318.3 7.66
7
10 05/01/202 12,836,318. 1,455,39 $- 1,455,392. 957,984. 497,407. 6,432,25
6 37 2.14 14 81 34 11,878,333.5 5.00
6
12 11/01/202 10,883,226. 1,455,39 1,455,392. 1,033,667. 421,725. 7,314,26
6 84 2.14 14 10 04 9,849,559.74 5.47
13 02/01/202 9,849,559. 1,455,39 $- 1,455,392. 1,073,721. 381,670. 7,695,93
7 74 2.14 14 70 44 8,775,838.03 5.91
14 05/01/202 8,775,838. 1,455,39 $- 1,455,392. 1,115,328. 340,063. 8,035,99
7 03 2.14 14 42 72 7,660,509.61 9.63
15 08/01/202 7,660,509. 1,455,39 $- 1,455,392. 1,158,547. 296,844. 8,332,84
7 61 2.14 14 40 75 6,501,962.22 4.38
16 11/01/202 6,501,962. 1,455,39 $- 1,455,392. 1,203,441. 251,951. 8,584,79
7 22 2.14 14 11 04 5,298,521.11 5.41
17 02/01/202 5,298,521. 1,455,39 $- 1,455,392. 1,250,074. 205,317. 8,790,11
8 11 2.14 14 45 69 4,048,446.66 3.11
18 05/01/202 4,048,446. 1,455,39 $- 1,455,392. 1,298,514. 156,877. 8,946,99
8 66 2.14 14 84 31 2,749,931.82 0.42
19 08/01/202 2,749,931. 1,455,39 $- 1,455,392. 1,348,832. 106,559. 9,053,55
8 82 2.14 14 29 86 1,401,099.54 0.27
20 11/01/202 1,401,099. 1,455,39 $- 1,401,099. 1,346,806. 54,292. $- 9,107,84
8 54 2.14 54 93 61 2.88

Profit tax- Annual profit tax is computed assuming effective tax rate of 35%.
Income tax liability of a fiscal year is assumed to be paid in the same year

16
 16.3, Sources of Finance

The working capital is expected to be financed by Bank loans.

17. Financial Analysis

17.1 Expected income projection from the next four Consecutive

year
I Expected income projection
Profit and Loss Projection Total
Year 2016 2017 2018 2019
Revenue 50,258,741.00 60,310,489.20 72,372,587.04 86,847,104.45 269,788,921.69
Total revenue 50,258,741.00 60,310,489.20 72,372,587.04 86,847,104.45 269,788,921.69

Cost of Service
Cost of Sales 39,704,405.39 47,645,286.47 57,174,343.76 68,609,212.51 213,133,248.13
Total Cost of Sales 39,704,405.39 47,645,286.47 57,174,343.76 68,609,212.51 213,133,248.13
-
Gross Profit 10,554,335.61 12,665,202.73 15,198,243.28 18,237,891.93 56,655,673.55
-
Administration Expense -
Salary and Benefits 960,000.00 1,104,000.00 1,269,600.00 1,460,040.00 4,793,640.00
Printing and stationery 5,500.00 6,325.00 7,273.75 8,364.81 27,463.56
Communication 25,000.00 28,750.00 33,062.50 38,021.88 124,834.38
Professional fee 20,000.00 23,000.00 26,450.00 30,417.50 99,867.50
Office & Store rent 517,202.00 594,782.30 683,999.65 786,599.59 2,582,583.54
License and registration 1,320.00 1,518.00 1,745.70 2,007.56 6,591.26
Transportation 3,300.00 3,795.00 4,364.25 5,018.89 16,478.14
Depreciation 754.93 868.17 998.39 1,148.15 3,769.65
Interest expense 2,937,682.62 3,378,335.01 3,885,085.26 4,467,848.05 14,668,950.95
Total Expense 4,470,759.55 5,141,373.48 5,912,579.50 6,799,466.43 22,324,178.97
Net Profit/Loss Before Tax 6,083,576.06 7,523,829.25 9,285,663.77 11,438,425.50 34,331,494.59

17.2 Underlying Assumption

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The financial analyses of the companies are based on the data provided in the
preceding sections and the following assumptions.

The Company’s sales volume is forecasted based on the following

assumptions:

● The Company will sale 82% of its annual product in the same year

and the rest will be held as a minimum stock level in inventory for the
next period sales;

● The Company expects 21% gross profit margin on all costs it incurred

on merchandise. Such costs include purchase, transport, ordering

cost, and other purchase related fees.

II The projected Cash Flow

The cash flow projection is made assuming that:

● The Company will obtain ETB 20,000,000 loan finance at the beginning of

operation,

● All purchases are on cash basis.

● 18% of the annual sales of the company will be collected in the consecutive

year,

● Profit tax of the fiscal year will be paid in the same year.

Overall, the projected cash flow shows that the Company will generate series of
surplus cash flows after covering all operational and financial commitments that
confirms its liquidity.

2016 2017 2018 2019

Year
60,310,489.2
Cash Inflow 50,258,741.00 0 72,372,587.04 86,847,104.45
52,786,659.9
Cash outflow 44,175,164.94 5 63,086,923.27 75,408,678.94

18
 11,438,425.5
Net Cash Flow 6,083,576.06 7,523,829.25 9,285,663.77 0

(III). Projected Balance Sheet

WENDIMU SHURE
STATEMENT OF PROJECTED BALANCE SHEET

Beginning of
the Year Year, 1
ASSETS
Current assets
Cash and cash equivalent 132,237 145,460
Account Receivable 0 0
Prepayments - 0
Inventories 978,130 8,624,769
Other current assets 5,884,145 6,472,560

Total current assets 6,994,512 15,242,789

Non-current assets

Property, plant and equipment 2,365 2,365

2,365 2,365

Total non-current Assets 2,365 2,365

Total assets 6,996,877 15,245,154

Liabilities and equity

Current liabilities
Accounts payable 990,866 1,238,583
Tax payable 212,267 2,129,252
Other current liabilities - -
Total current liabilities 1,203,133 3,367,834

Non-current liabilities

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 Bank Loan - -
Total non-current liability - -

Total liabilities 1,203,133 3,367,834

Equity
Capital 5,000,000 5,000,000
Owners 0
Retained Earning 793,744 6,877,320
Total equity 5,793,744 11,877,320
Total equity and liabilities 6,996,877 15,245,154

17.3. Financial Ratios

A financial ratio is used to calculate a company’s financial status or production

against other firms. It is a tool used by investors to analyze and gain
information about the finance of a company’s history or the entire business
sector. To calculate financial ration, numbers are taken from the balance
sheet, income statement, and cash flow statement. The financial ratio is not a
calculation but an explanation of the economic status of a company, in terms
of profit, liquidity, leverage, and market valuation. A ratio may serve as an
indicator, red flag or clue for various issues.

Return on Equity = Net Profit before tax 6,083,576.06 0.512201

Net Equity 11,877,320.06

Current ratio = Current asset 15,242,789.21 4.525992

Current Liability 3,367,834.15

Quick ratio = Current asset- Inventory 6,618,019.93 1.965067

Current Liability 3,367,834.15

Debit to Equity = Total Liability 3,367,834.15 0.283552

Net Equity 11,877,320.06

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18. Conclusion and Recommendations
It is found out that business environment for garment and related sector is
conducive and the demand for textile is growing in the country. The Company is
envisioned to establish a commendable firm which aims at substituting the import
of textile and apparels. The Company is owned and overseen by experienced
professionals. The Company applies modern management and business model of
sourcing products and services to supply the final product.

According to the plan, the Company’s profitability and liquidity will be highly
improved and the Company’s net worth will swiftly grow. During the plan period,
the Company can generate adequate equity to repay.

However, the company requires working capital of ETB 20,000,000 and need to
additional working capital. As per the plan ETB 20,000,000 is covered by bank
loan.

Overall, it can be evidently concluded that the business is financially feasible and
worth financing

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