Financial analysis of small-scale mango chips processing in Ghana

Figures & data

Figure 1. Map of lower Manya Krobo municipal.

Table 1. Capital expenditure of mango chip processing plants

Items	Quantity	Unit Cost (GH₵)	Total Cost (GH₵)
Dehydration Machine	1	1500	1500
Chair	3	40	120
Table	3	50	150
Room for processing (Store)	1	3000	3000
Rubber Sealer	1	130	130
Creates	3	40	120
Knife	2	20	40
Chopping Board	1	20	20
Air Tight Container	2	12	24
Tray	1	12	12
Bowl	2	5	10
Sub-total	-	-	5,126
Contingency allowance (10%)	-	-	512.6
Total	-	-	5,638.60

Official exchange: USSD1 = Gh₵5.0

Table 2. Annual operating costs

Items	Quantity	Unit Cost (Gh₵)	Total Cost Per Year (Gh₵)
Labor	3	1,500	4,500
Water	7,200 L	0.0167	120
Electricity	2400 kg	0.333	850
Transportation of fresh mangoes to firm	2400 kg	0.067	160
Gloves	100 pairs	0.5	50
Packaging	3,200 rubber materials	0.3	960
Maintenance	5 months	50	250
Distribution of mango chips	3,200 kg	0.025	80
Rent of land for year	12 months	20	240
Mango Fruits	2400 kg	1.6	3,840
Sub-total			11,000
Contingency allowance (10%)			1100
Total			12,100

Official exchange: USSD1 = gh₵5.0

Table 3. Projected operating cost for entire mango chip investment

ITEMS	YEAR 0	YEAR 1	YEAR 2	YEARS 3	YEAR 4	YEAR 5
	GH₵	GH₵	GH₵	GH₵	GH₵	GH₵
Labor	0	4,500	4950	5445	5989.5	6588.45
Water	0	120	120	120	126	126
Electricity	0	800	840	882	926.1	972.41
Transportation to the firm	0	160	176	193.6	212.96	234.26
Gloves	0	50	54.5	59.41	64.75	70.58
Packaging	0	960	1046.4	1140.58	1243.23	1355.12
Maintenance	0	250	272.5	297.025	323.757	352.895
Distribution	0	80	88	96.8	106.48	117.13
Rent of land	0	240	264	290.4	319.44	351.38
Mango Fruits	0	3,840	4032	4233.6	4445.28	4668.06
Sub-total	0	11,000	11,843.4	12,758.41	13,757.50	14,835.76
Contingency allowance (10%)	0	1100	1184.34	1275.84	1375.75	1483.58
Total	0	12,100	13,027.74	14,034.25	15,133.25	16,319.34

Official exchange: USSD1 = Gh₵5.0

Table 4. Revenue projections

REVENUE	Year 0	Year 1	Year 2	Year 3	Year 4	Year 5
Quantity of packages (50 g)	-	3200	3200	3200	3200	3200
Unit Price (GH₵/50g)	-	5	5.5	6.05	6.66	7.32
Revenue/Sales (GH₵)	-	16,000	17,600	19,360	21,312	23,424

Official exchange: USSD1 = Gh₵5.0

Table 5. Undiscounted and discounted cash outflows, inflows and financial analytical results

Items	Year 0	Year 1	Year 2	Year 3	Year 4	Year 5	Total
Cash inflows	0	16,000	17,600	19,360	21,312	23,424	97,696
Cash outflows	5638.6	12,100	13,027.74	14,034.25	15,133.25	16,319.34	76,253.18
Net cash flows	−5638.6	3900	4572.26	5325.75	6178.75	7104.66	21,442.82
Discount factor	1	0.787	0.620	0.488	0.384	0.3026784
Discounted cash inflows	0	12,598.42	10,912.02	9451.36	8192.37	7089.94	48,244.11
Discounted cash outflows	5,638.60	9527.56	8077.21	6851.38	5817.24	4939.51	40,851.51
Discounted net cash flows	−5638.60	3070.87	2834.81	2599.98	2375.12	2150.43	7392.60
NPV	7,392.60
BCR	1.18
IRR	77%
Payback period 1 year 5 months

Official exchange: USSD1 = Gh₵5.0

Table 6. Sensitivity analysis of mango chips processing

Stimulus	NPV (Gh₵)	BCR	IRR (%)	Payback period
10% decrease in revenue	2,568.19	1.06	46%	2 years 2 months
10% increase in operating costs	3,871.31	1.09	54%	1 year 11 months
10% increase in opportunity cost	4,941.44	1.14	77%	1 year 5 months

Table 7. SWOT analysis of mango chips processing

SWOT variables	Ranks
Strengths
High quality mango chips products.	1^st
Availability of dehydration equipment.	2^nd
Weaknesses
Limited capacity of dehydrator equipment	1^st
Opportunities
Minimal competition.	1^st
High quality mango fruits for processing
Increasing demand of mango chips in the local market.	2^nd
Favourable government policies to support industrialization (e.g. One-district-one-factory policy).	3^rd
Threats
Inconsistent supply of mango fruits due to seasonality.	1^st
Inconsistent power supply.	2^nd
Difficulty in getting spare parts of equipment.	3^rd
Difficulty in acquiring certification for agro-processed products.	4^th