Rift Valley University

MBA Program
Harar campus
INDIVIDUAL ASSIGNMENT ON ENTERPRINIUERSHIP FOR SMART POULTARY
FARM IN HARAMAYA TOWN

BY BEDRI MUKTAR AHMED

SEPTEMBER 2020

RIRT VALLEY UNIVERSITY, HARAR

 Table of Contents
1.EXECUTIVE SUMMARY............................................................................................................................0
1.1. Background.....................................................................................................................................1
1.2 Objectives........................................................................................................................................2
1.3 Mission.............................................................................................................................................2
1.4 Company Summary..........................................................................................................................2
1.5 Company ownership........................................................................................................................3
1.6 Company History..................................................................................................................................3
2.Company location and facilities..............................................................................................................5
2.1 Company Location............................................................................................................................5
2.2 Company Facilities...........................................................................................................................5
2.2.1 Site Selection.............................................................................................................................5
2.2.2 Shape and Size..........................................................................................................................6
2.2.3 Poultry Expertise.......................................................................................................................6
2.2.4 Acquisition of Materials............................................................................................................6
2.2.5 Marketing and distribution.......................................................................................................6
2.2.6 Preparation and Disinfection of shed........................................................................................6
2.2.7 Litter Management...................................................................................................................7
2.2.8 Brooding and Rearing................................................................................................................7
2.2.9 Lighting Management...............................................................................................................7
3.Products..................................................................................................................................................7
3.1 Product Description.........................................................................................................................7
3.2 Important product features and competitive comparison...............................................................7
3.3 Customer service/follow up service.................................................................................................8
4.Market Analysis......................................................................................................................................8
4.1 Industrial Analysis............................................................................................................................8
4.2 Market forecast/target market........................................................................................................9
4.3 Key to Success................................................................................................................................10
4.4 Business strategy and implementation..........................................................................................10
4.5 Advertising.....................................................................................................................................10

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 4.6 Market Strategies...........................................................................................................................11
4.7 Sales Plan.......................................................................................................................................11
4.8 Strategic Alliance............................................................................................................................12
4.9 Organization...................................................................................................................................12
5.Management Team...............................................................................................................................12
5.1 Management Team Gaps...............................................................................................................13
5.2 Other Management Team Considerations.....................................................................................13
6.Financial Analysis..................................................................................................................................13
6.1 Financial plan.................................................................................................................................13
6.2Start-up costs and capitalization.....................................................................................................14
7.Financial Statement..............................................................................................................................15
7.1 Income Statement/Projected Profit and Losses.............................................................................15
7.2 Balance sheet for the business.......................................................................................................17

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 1.EXECUTIVE SUMMARY

Poultry farming is the raising of domesticated birds such as chickens, ducks, turkeys and geese
for the purpose of farming meat or eggs for foods. Poultry are farmed in great numbers with
chickens being the most numerous. Chickens raised for the meat are often called broilers while
chickens raised for eggs are usually called layers. Meat chickens, commonly called broilers, are
floor raised on litter such as wood shavings, peanut shells, and rice hulls, indoors in climate-
controlled housing.
1.1. Background
Poultry farming has got a huge potential in Ethiopia. Putting all the various factors into
considerations, we decided to capitalize this opportunity to serve the people and to make the
country self-dependent in the poultry products. The name of the company is called Smart
poultry farm.

The farm’s production site would be located in Haramaya town which has plenty open space,
cheap labors, road connection, water availability and immediate access to the huge market of
our product that is hotels, individuals, slaughter and other market with the initial investment of
birr 1,000,000 that would be spent on buying chickens, building cage house, stocking the
pellets, hiring the experts and other miscellaneous tasks. The farm expects to make 80% gross
margin within 6 months of its operation withholding the chances of any accidental or
unexpected incidence.

The objective of the farm is becoming the “best and most hygienic poultry producer in the area”
complying by the national standards for food, turn in profits from the first month of operations,
maintain an 80% gross margin ratio and winning the hearts and tastes of our beloved consumers
and establishing a brand image of the company through heavy marketing campaigns in the first
one year with the mission of delivering the best of its product to the end users by providing
quality product that would not be challenged either inside or outside the country. This
confidence would be earned by unparalleled excellence in the poultry farm and the nutritious
and protein rich product from our farm would always be the first choice of our consumers.

Smart poultry farm would be a limited liability company, producing chickens, eggs, and litter as
a byproduct in its state of art poultry farm units. An area of about 10,000 sq. feet would be
occupied by the farm and a house with 3 rooms would be rented for the storage of pellets and
other equipment as well as for the employees to reside and guard the farm.

The produce of the business will be chickens for meat and eggs. The primary target market
strategy of Smart poultry farm is attracting or announcing customers either from the area or
other parts of the country through providing quality chickens and eggs at fair market price in
order to achieve the long-term objective of the business. The potential customers/purchasers of
our products are hotels, individuals, slaughter house and others.

1
The farm faces certain risks inherent to food in general and meat and egg products in particular
like financial, legislative and operational risk. Feeds costs are assumed at 80% of the total cost
incurred on each chicken. The management team consists of the energetic and able managers
who are responsible for better functioning of the business through running and owning it in
well-organized manner. The Smart poultry farm will capitalize on the strong demand for high
quality and nutritious poultry products with strong financial position.

1.2 Objectives
 Becoming the “Best and most hygienic poultry producer in the area” complying by the
national standards for food.
 Turn in profits from the first month of operations.
 Maintain an 80% gross margin ratio.
 Winning the hearts and tastes of our beloved consumers and establishing a brand image
of the company through heavy marketing campaigns in the first one year.

1.3 Mission
Smart poultry farm will make its best effort to live up to the consumers’ expectations by
delivering the best of its product to the end users. The quality of our product would not be
challenged either inside or outside the country. This confidence would be earned by
unparalleled excellence in the poultry farm. The nutritious and protein rich product from our
farm would always be the first choice of our consumers.

1.4 Company Summary

Smart poultry farm would be a limited liability company, producing chickens, eggs, and litter as
a byproduct in its state of art poultry farm units. The farm will start the activity of producing
chickens and eggs in the year of 2016 and will run over time period of about three years (i.e.
2016-2018). It will be organized by adults and educated partners. The farm’s production site
would be located in Haramaya town which has plenty open space, cheap labors, road
connection, water availability and immediate access to the huge market of our product that is
hotels, individuals, slaughter and other market.

An area of about 10,000 sq feet would be occupied by the farm and a house with 3 rooms would
be rented for the storage of pellets and other equipment’s as well as for the employees to reside

2
and guard the farm. The land has been taken into lease for five years with the options of
extension and feasibility study by the experts has shown positive results.

Initial investment would be birr 1,000,000 that would be spent on buying chickens, building
cage house, stocking the pellets, hiring the experts and other miscellaneous tasks. The
aforementioned fund has been collected from ourselves and partly funded by developmental
bank. Birr 600,000 would be from our side and the rest birr 400,000 would be obtained through
loan. The company expects to repay the loan within 3 years and obtain the breakeven point
within 2 years.

1.5 Company ownership

The company would be jointly owned by eight group person association; It would be a
partnership enterprise with each of the owners holding 50-50% of the share.

A. Mr. Tamiru Shiferraw

B. Mr. Said Arragew
C. Mr. Said Kasim
D. Mr.Sisaw Meskela
E. Mr. Terekegn Negatu
F. Mr. Yasin Adem
G. Mrs. Yismalem Ayichile
H. Mr. Shaban Duri

1.6 Company History

In egg-producing farms, birds are typically housed in rows of battery cages. Environmental
conditions are automatically controlled, including light durations, which mimics summer day
length. This stimulates the birds to continue to lay eggs all year round. Normally, significant
egg production occurs in the warmer months. Critics argue that year-round egg production
stresses the birds more than normal seasonal production.

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Meat chickens, commonly called broilers, are floor-raised on litter such as wood shavings or
rice hulls, indoors climate-controlled housing. Poultry producers routinely use nationally
approved medications, such as antibiotics in feed and or drinking water to treat disease or to
prevent disease outbreaks arising from overcrowded or unsanitary conditions.

In egg producing farms, cages allow for more birds per unit area and this allows for greater
productivity and lower space and food costs, with more efforts put into egg laying. In common
practice, the current recommendation is 67 in2 to 86 in2 (430 cm2 to 560 cm2) per bird, which is
about 9 inches to 9 inches.

Modern poultry farming is very efficient and allows meat and eggs to be available to the
consumer in all seasons at a lower cost than free range production, and the poultry have no
exposure to predators. The cage environment of egg producing does not permit birds to roam.
The closeness of chickens to one another frequently causes cannibalism. Cannibalism is
controlled by debeaking (removing a portion the bird’s beak with a hot blade so the birds cannot
effectively peck).

Under intensive farming methods, a meat chickens will live less than six weeks before
slaughter. This is half the time it would take traditionally. This compares with free-range
chickens which will usually be slaughtered at 8 weeks and organic ones at around 12 weeks.

In intensive broiler sheds, the air becomes highly polluted with ammonia from the droppings.
This can damage the chickens’ eyes and respiratory systems and can cause painful burns on
their legs (called hock burns) and feet. Chickens bred for fast growth have a high rate of kg
deformities because they cannot support their increased body weight. Because they cannot move
easily, the chickens are not able to adjust their environment to avoid heat, cold or dirt as they
would in natural conditions.

The demand of poultry meat and eggs is increasing at the annual rate of 25% and 10%
respectively in urban areas (DALS, 1991). The annual increment was more than 10% feeds,
meat, eggs and other related items in late half of the past decades (Bhattaria et al 2004).

Increased demand for animal proteins, shift in consumer preference for egg and broiler meat,
access to commercial poultry production technologies and services, and quick returns to the

4
investment seem more of the major attracting forces for such investment. Materials and
Requirements of poultry farming

2.Company location and facilities

2.1 Company Location

Poultry farming has got a huge potential in Ethiopia. Putting all the various factors into
considerations, we decided to capitalize this opportunity to serve the people and to make the
country self-dependent in the poultry products.

We decided to name the company as Smart poultry farm. Preliminary research has indicated that
1000 chickens would be optimum for the initial operation of the business. The farm’s
production site would be located in Haramaya town which has plenty open space, cheap labors,
road connection, water availability and immediate access to the huge market of our product that
is hotels, individuals, slaughter and other market. An area of about 10,000 sq feet would be
occupied by the farm and a house with 3 rooms would be rented for the storage of pellets and
other equipment as well as for the employees to reside and guard the farm. The land has been
taken into lease for five years with the options of extension and feasibility study by the experts
has shown positive results.

Initial investment would be birr 1,000,000 that would be spent on buying chickens, building
cage house, stocking the pellets, hiring the experts and other miscellaneous tasks. The farm
expects to make 80% gross margin within 6 months of its operation withholding the chances of
any accidental or unexpected incidence. The aforementioned fund has been collected from
ourselves and partly funded by developmental bank. Birr 600,000 would be from our side and
the rest birr 400,000 would be obtained through loan. The company expects to repay the loan
within 3 years and obtain the breakeven point within 2 years.

5
2.2 Company Facilities

2.2.1 Site Selection

Before establishing a farm, location plays an important role in business and it should be selected
based on its access to road, abundant water supply, 24-hour electricity and all-round
communication facility.

2.2.2 Shape and Size

Poultry farming is such a business which can be started with any amount of fund and
infrastructures. Even chicken will be brought up in households feeding the spillover food and
other wastes. But to run it in the commercial scale, optimum number of chickens and equivalent
size of the farm with abundant supply of pellets should be made first considering the present
demand and tastes of the consumers.

2.2.3 Poultry Expertise

A specialist on the field of poultry with the knowledge of diseases and medications should
always be in constant contact and regular inspection of the farm by veterinary doctors should be
made. The paid workers and entrepreneur should also have some knowledge of handling the
chickens and identification of some diseases.

2.2.4 Acquisition of Materials

Raw materials needed for the farm should be always available and stock should be plenty in the
time of shortages as chickens cannot survive much time without any foods. Pellets bought in big
lots also give economies of scale. Protein rich supplements, antibiotics and vitamins should also
be given in regular basis. Required amount of feed and day-old broiler bird will be purchased
from local market.

2.2.5 Marketing and distribution

Poultry farms, especially with the broilers will not make profits if the finished products like
hens are not taken to the market after specified time which is normally 6 weeks. After 6 weeks
the hens will not convert the feed into flesh and so it would be unproductive to hold them any
longer or to let them to stay.

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2.2.6 Preparation and Disinfection of shed
The movable equipment such as feeders and water available in the container will be removed
from the poultry shed for cleaning and disinfection. Floors, interior of the walls and roof will be
scribbled and previous litters will be removed from poultry house. After litters, dust from
poultry house pens will be washed with fresh water. Farm house pens will be disinfected using
5% phenol solution, followed by spraying of 3% solution of disinfectant inside and outside of
the shade.

To maintain health of poultry, timely vaccination and medication by veterinarian will be done.

2.2.7 Litter Management

Grain husk will be used as litter by maintaining 5 cm thick on floor. The litter will be stirred
twice in a week to prevent watery. Wet litter will be replaced by dry one. Before placing the
litter in poultry house, dust lime will be used as disinfectant.

2.2.8 Brooding and Rearing

After receiving of chicks, they will be put in well heated brooder which has run 24 hours before
the arrival of chocks with proper temperature and adequate dry litter.

2.2.9 Lighting Management

Brooder house will be provided with 24-hour light throughout the growing period with one
60-watt bulb for each 200 square feet of floor space and floor space of 1 square feet per bird
will be provided.

3.Products
The produce of the business will be chickens for meat and eggs. In the first phase of the
operation, the poultry farm will entirely produce mature broiler hens for the purpose of meat.
This can be achieved by using highly nutritious pellet ingredients and will maintain high level
of hygiene. The battery cage units will accommodate maximum possible number of chickens in
the allocated space. And the marketing activities will be focused on maximizing the sales of
higher hens. The price list would be verified according to the latest market trend and optimum
mix for the demand and supply would be maintained.

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3.1 Product Description
 Primary beneficiaries will be poultry rising/ the owner of the business
 Secondary beneficiaries will be business man, industrialist and consumers.

The tertiary beneficiaries will be students and researchers, government and non-government
organization.

3.2 Important product features and competitive comparison

The following important feature will express the capacity for future success of the business:

 A healthy economy that supports moderate growth and market share in our market.
 Least cost of operational expenses to popularize the business centers in the nearby
future, especially in the areas of purchasing feed materials that could be given to the
poultry and other material usage during the provision of feed and water for them.
 High follow up of poultry during the production period, particularly health of the
poultry through the provision of veterinary services.

3.3 Customer service/follow up service

The following parameters will be measured during the following period:-

Initial weight Daily water consumption

Weekly live weight Weekly live weight gain
Weekly feed consumption Average daily feed intake
Average weekly feed intake Average daily gain
Average daily gain Economics of production

4.Market Analysis

4.1 Industrial Analysis

The primary target market strategy of Smart poultry farm is attracting or announcing customers
either from the area or other parts of the country through providing quality chickens and eggs at
fair market price in order to achieve the long-term objective of the business. The target markets

8
of the business, customers are the local demanders of the chickens and eggs like hotels,
individuals for home consumption, slaughter in the slaughter house and others.

The market strategy of this business is to provide quality products for the general public to fill
the shortage of the poultry. So, this marketing strategy based on an excellent performance in the
following areas:

 Customer product extension

 Customer loyalty Fair and affordable market price
 Positivity to the external society

The potential customers/purchasers of our products are hotels, individuals, slaughter house and
others. Their potential growth within the business period is given below in the table.

Table: Market Analysis

Year 1 Year 2 Year 3

Potential Growth CAGR
customers
Slaughter 0.53% 149000 159000 179000 0.53%
house
Hotels 10% 750000 800000 900000 10%
Individuals 3.78% 510000 540000 612000 3.78%
Other 0.5% 90000 96000 108000 0.5%
Total 3.45% 1500000 1600000 1800000 3.45%

4.2 Market forecast/target market

Feeds costs are assumed at 80% of the total cost incurred on each chicken. Seasonal consumer
preferences and the probable uncertainties of outbreak of market rumors for the outbreak of
avian flu will dictate certain sales seasonally with revenues slightly decreasing during this
period. The table below outlines our projected sales forecast for the next three years.

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Table: market Forecast

Market Forecast

Sales Year 1 Year 2 Year 3

Chickens Birr 1300000 Birr 1400000 Birr 1500000
Eggs Birr 200000 Birr 200000 Birr 300000

Total sales Birr 1500000 Birr 1600000 Birr 1800000

Direct cost of sales Year 1 Year 2 Year 3

Chickens Birr 7,80,000 Birr 8,40,000 Birr 9,00,000
Eggs Birr 104,000 Birr 104,000 Birr 2,10,000

Total direct cost Birr 884000 Birr 944000 Birr 1110,000

4.3 Key to Success

The Smart poultry farm will make the following points as primary activities for its success.

 State of art cage framework accommodating optimum number of chickens with

mitigated possible hazards.
 Diverse market network, market chain management, optimum inventory level and
“consumer is king policy.”
 Regular visits by medical workers and hygienic poultry house environment.
 Providing high quality chickens and eggs for the customers
 Satisfying customers through treating them in a polite and attractive manner and make
them purchase

4.4 Business strategy and implementation

Smart poultry farm will leverage their competitive edge in order to gain significant market
share.

Their competitive edge is their ability to consistently produce poultry with high active smart
percentage as well as high ratio of healthy poultry. The Marketing strategy will have the
objective of rising awareness and visibility of their industry leading percentage of active smart.

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4.5 Advertising
The company will position itself as unique poultry farm where it produces not only meat but
also enjoy the best of its kind you can ever achieve. Hygienic poultry environment in which
chicks are fed with nutritious and chickens friendly pellets differentiates itself from existing
competitors. It will be one of the most quality and easily affordable chickens and eggs provider
in the business area having its very loyal and honest members as well as other employed regular
or daily laborers to serve its customers. So, the customers will find the business center
conducive and easy to work with.

 Repeatedly (increase frequency of purchasing)

 Differentiating our products from those provided by smallholder households through
different value adding activities.
 Providing products according to the needs of our customers based on appropriate price
following the market forces and Making announcement through advertisement for more
customer attraction throughout the society as well as the country at large.

4.6 Market Strategies

The business will focus its marketing activities on reaching the hotels and individuals which are
the main supplier of meat to the various classes of wide ranged customers. Our target groups
would be the high-end customers varying for the best possible chickens either locally available
or in abroad market. We are highly confident to supply our quality products to the developed
market by producing competitive and quality products.

Customers of our products have different geographic and demographic features including those
in the area where the business is to be carried out. The immediate geographic market is
Haramaya and the areas around the town even though the exact figure of the customers is not
determined currently. The business will also believe that more or less all the mentioned areas
will purchase the products it provides in the next six years, as it will become the well-known
business center by its product and different treatment activities to its customers. The target
market of the business is hotels, individuals for home consumption, slaughter in the slaughter
house and others who purchase chickens for different purposes including for the production of
poultry.

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4.7 Sales Plan
Months’ work schedule

January 15th day-shed preparation January 25th day-buying of chickens

January 20th day-disinfection of shed February 1st day-ration feeding: live weight

March what is done in February calendar is continued

April Selling in market and consumption

The weekly weight gain and feed efficiency will be known

Growth performance of broilers will be identified

Carcass characteristics and nutrient digestibility will be identified.

4.8 Strategic Alliance

Strategy will communicate with the fact of the smart poultry farm will yield a significantly
higher amount of poultry. The sales strategy in addition to handles with co-marketing, co-
development and cooperative arrangements are seek to qualify leads by concentrating on smart
poultry farm ability to perform reliability on long term contract.

4.9 Organization
The organization of the company which indicates the number of employees and management
personal within their company has five departments with twenty-nine employers these are:

 poultry supply department

 Planning, monitoring and evaluation department
 Audit department
 Saving and credit department and
 Poultry farm departments

5.Management Team
The management team consists of the energetic and able managers who are responsible for
better functioning of the business through running and owning it in well-organized manner. Mr.

12
Tamiru is the general manager of the business and also responsible to look after the sales,
marketing and operation department and Mr. Said is responsible for the human resource,
finance and public relation department. Also Mr. Said Kasim is the business advisory
personnel/experts who give advice as the situation changes. Members running or under taking
the business will overlook and under take all the activities to be done during the business life
time based on an agreement. Moreover, some regular employers will also be hired to monitor
daily laborers.

5.1 Management Team Gaps

It provides Legal related with Our participation in the health care arena presents unique

 Malpractice and other related liability

 State regulations on quarantine, insurance and the practice of medicine.
 Storage, transmission and disclosure firm’s information and hygiene records

5.2 Other Management Team Considerations

To attract and retain users to the business products, we must continue to provide quality and
hygienic content. This confers certain affect including the failure to:

 Anticipate and respond to consumer preferences for content, preferences and service
 Attract, excite and retain a large audience of consumers to the company products
 Create and maintain successful strategic alliances with high quality partners
 Deliver high quality, customer service and adequate information
 Build the company brand rapidly and substantially
 Compete effectively against better established poultry farm companies
 Avail the required feed
 Avail a budget timely
 Create favorable environment for the growth of poultry
 Unknown outbreak of bird flu.

6.Financial Analysis
Our quarterly revenues and operating results are difficult to predict and may fluctuate
significantly from quarter to quarter as a result of a variety of factors. Among these factors
some are the following:

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 Changes in our own or competitor’s pricing policies
Fluctuations in expected revenues from advertisers, sponsors and strategic relationships.
Timing of costs related to acquisitions or payments

6.1 Financial plan

The Smart poultry farm will capitalize on the strong demand for high quality and nutritious
poultry products. The owners have provided the company with sufficient startup capital. With
successful management aimed at establishing and growing royal customer base, the company
will see its net worth doubling in two years. It will maintain a healthy 80% gross margin, which
combined with reasonable operating expenses, will provide enough cash for further growth.

Important Assumptions:

Table: Important assumptions

Plan Year 1 Year 2 Year 3

Plan month 1 month 2 month 3

Current interest rate 10.00% 10.00% 10.00%

Long-term Interest Rate 10.00% 10.00% 10.00%

Tax Rate 25.42% 25.00% 25.42%

Other 0 0 0

6.2Start-up costs and capitalization

The start-up expenses (Birr 96,000) includes: -

 Expenses for hiring advisors and technical experts birr 10,000

 Marketing promotion expenses for the brand imaging of Smart poultry farm trademark
in the amounts of birr 5,500 and as well as brochures and pamphlets (3,000 pieces at birr
1 per copy) for the total amount of birr 5,700.
 Insurance (general liability, workers compensation, and chicken’s casualty) coverage at
a total premium of birr 4,000

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  Pre-paid rent expenses for six months at birr 1 per square feet in the total amount of birr
60,000
 Battery style cage structures build up expenses of birr 12,000

Other startup expenses including transportation birr 2000 and phone and utility deposits birr
2000

 Stationeries and office supplies birr 300

The required start up assets of birr 904,000 include: -

 Operating capital in the total amount of birr of birr 45,000, which includes salary of two
unskilled labors (4,000 per person) and technician’s salary of birr 7,000 for the first
month and cash reserves for the first three months of operation (approximately birr
10,000 per month)
 Bank balance birr 3,82,000
 Startup inventory of birr 95,000 which includes:

Broiler chicks (1000 heads at birr 30 per head) – birr 30,000

Pellet balls (30 quintals at birr 3000 per quintal) – birr 90,000

Protein supplements, vitamins and antibiotic – birr 5,000

 Equipment’s and machineries:

Nets, baskets, tillers, and other equipment – birr 17,000

Heating, lighting system and pellet machine – birr 40,000

Farm house building-birr 200,000

7.Financial Statement

7.1 Income Statement/Projected Profit and Losses

The total sales or revenues and total expenses of the business are as follows. Annual projected
sales of Birr 584,000 in 2018 translate into birr 150.00 of sales per square foot, which is in line
with the industry averages for this size of poultry farm. Overall, as the company gets established
15
in the local market, its net profitability increases from 17.00% in 2018 to 17.63% in 2020. The
table below outlines the projected profit and loss statement for the year 2018-2020

Table: Income statement or projected/pro forma profit and loss

Year 1 Year 2 Year 3

Sales Birr 584,000 Birr642,400 Birr706,640
Direct cost of sales Birr 204,400 Birr224,840 Birr247,324
Other Birr 0 Birr 0 Birr 0

Total cost of sales Birr 204,400 Birr224,840 Birr247,324

Gross margin Birr 379,600 Birr417,560 Birr459,316

Gross margin % 65.00% 65.00% 65.00%

Expenses
Payroll Birr 124,600 Birr143,800 Birr155,144
Sales and marketing
and other expenses Birr 25,800 Birr 27,600 Birr 31,000
Depreciation Birr 5,400 Birr 5,500 Birr 5,500
Rent Birr 48,400 Birr 52,800 Birr 52,800
Rent Birr 6,000 Birr 6000 Birr 6000
Maintenance Birr 5,840 Birr 6,424 Birr 7,066
Utilities/phone Birr 9,000 Birr 9,500 Birr 10,000
Payroll taxes Birr 18,690 Birr 21,570 Birr 23,272
Other Birr 0 Birr 0 Birr 0
Total Operating
Expenses Birr 243,730 Birr273,194 Birr290,782
Profit Before Interest
and Taxes Birr 135,870 Birr144,366 Birr168,534
EBITDA Birr 141,270 Birr149,866 Birr174,034
Interest Expense Birr 2,821 Birr 2,326 Birr 1,618
Taxes incurred Birr 33,740 Birr 35,510 Birr 42,424

Net Profit Birr 99,308 Birr106,530 Birr124,491

Net Profit/sales 17.00% 16.58% 17.00%

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 7.2 Balance sheet for the business
Balance sheet shows the financial position of a given business in a given period of operation.
The net worth of this poultry farm business is expected to increase from approximately Birr
212,000 by the end of the year 2016 to approximately Birr 443,000 in 2020.The table below
summarizes the projected balance sheets for this period.

Table: Projected balance sheet

Balance Sheet
year 1 year 2 year 3
Assets
Current assets
Cash Birr195,358 Birr296,358 Birr 417,648
Inventory Birr 21,175 Birr 23,293 Birr 25,622
Another current asset Birr 0 Birr 0 Birr 0
Birr216,53 Birr319,65 Birr443,270
Total current asset 3 1
Long term Assets
Long term Assets Birr 59,170 Birr 61,170 Birr 63,170
Accumulated Depreciation Birr 5,400 Birr 10,900 Birr 16,400
Total long-term
assets Birr 53,770 Birr 50,270 Birr 46,770
Birr270,30 Birr369,92
Total Assets 3 1 Birr490,040

Liabilities and capital Year 1 Year 2 Year 3

Current liabilities
Account Payable Birr 31,974 Birr 31,947 Birr 34,836
Current borrowing/loa Birr 6,700 Birr 3,400 Birr 100
Other current
liabilities Birr 0 Birr 0 Birr 0
Subtotal Current Liabilities Birr 38,674 Birr 35,347 Birr 34,936
Long term Liabilities Birr 20,000 Birr 16,415 Birr 12,454

Total Liabilities Birr 58,674 Birr 51,762 Birr 47,390

Birr Birr
Paid in capital 140,000 140,000 Birr 140,000
Related Earnings Birr 27,680 Birr 71,628 Birr 178,159
Earnings Birr 99,308 Birr Birr 124,491

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 106,530
Birr Birr
Total Capital 211,628 318,159 Birr 442,650
Birr270,30 Birr369,92
Total Liabilities and capital 3 1 Birr490,040
Birr211,62 Birr318,15
Net Worth/Equity/Capital 8 9 Birr442,650

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