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Ateneo de Davao University

Jacinto Street, Davao City

PROJECT FEASIBILITY STUDY:


Kids City
In partial fulfilment of the requirements of the course
ACCOUNTANCY

Submitted to:
Rhea Jane Carpio
Submitted by:
Lorraine Caete
Dan Derrick Giducos
Dexter Vaughn Mancao
Maria Leonora Sabandal
Berma Taga-amo

Bachelor of Science in Accountancy 5D|TTH / 5:55 7:25 / T502

Table of Contents
ACKNOWLEDGEMENT ........................................................................................................................... 5
CHAPTER I - SUMMARY of the PROJECT................................................................................................ 6
A. Name of the Project ........................................................................................................................... 6
B. Location .............................................................................................................................................. 6
C. Descriptive Definition of the Project................................................................................................ 6
D. Projects Long Range Objectives ..................................................................................................... 7
E. Feasibility Criteria ............................................................................................................................. 7
1. Market Feasibility ........................................................................................................................... 7
2. Technical Feasibility ...................................................................................................................... 7
3. Financial Feasibility ....................................................................................................................... 7
4. Socioeconomic Feasibility ............................................................................................................. 7
5. Organization and Management Feasibility .................................................................................. 8
F. Highlights off the Project .................................................................................................................. 8
History .................................................................................................................................................. 8
Nature of the industry ......................................................................................................................... 8
Mode of Financing .............................................................................................................................. 9
CHAPTER II MARKET STUDY ............................................................................................................ 11
A. Service Description .......................................................................................................................... 11
B. Market Description ........................................................................................................................... 12
Geographic .............................................................................................................................................. 12
Demographic ........................................................................................................................................... 12
Behavioral (Benefits Sought) ....................................................................................................................... 13
Psychographic .......................................................................................................................................... 13
Geographical Areas of Dispersion................................................................................................................ 14
C. Demand ............................................................................................................................................. 15
Historical Demand ................................................................................................................................... 15
Projected Demand .................................................................................................................................... 16
D. Supply ................................................................................................................................................ 19

Major competitors ............................................................................................................................. 20

Historical Supply ............................................................................................................................. 20

Projected Supply ............................................................................................................................... 22

E. Demand-Supply Analysis ................................................................................................................. 25


2

F. Price Study ......................................................................................................................................... 26


G. Marketing Program .......................................................................................................................... 28

Target market ................................................................................................................................. 28

Promotion ....................................................................................................................................... 28

CHAPTER III TECHNICAL FEASIBILITY .......................................................................................... 30


A. The Service ....................................................................................................................................... 30
B. Toys and Equipment ....................................................................................................................... 30
C. Plant Location ................................................................................................................................... 41
D. Plant Layout...................................................................................................................................... 42
E. Building and Facilities ..................................................................................................................... 43
F. Utilities............................................................................................................................................... 43
G. Waste Disposal ................................................................................................................................. 45
H. Labor Requirements ........................................................................................................................ 45
CHAPTER IV FINANCIAL FEASIBILITY ........................................................................................... 48
A. Major Assumptions ........................................................................................................................... 48
B. Total Project Costs ........................................................................................................................... 50
C. Initial Working Capital ..................................................................................................................... 50
E. Sources of Financing this Project .................................................................................................... 51
F. Pro-Forma Financial Statements ..................................................................................................... 56

Projected Yearly Balance Sheet ........................................................................................................ 56


Projected Monthly Balance Sheet for 2015 ....................................................................................... 57
Projected Yearly Income Statement ................................................................................................. 60
Projected Monthly Income Statement for 2015 ............................................................................... 61
Projected Yearly Cash Flow .............................................................................................................. 64
Projected Monthly Cash Flow .......................................................................................................... 65
Projected Yearly Statement of Changes in Equity .......................................................................... 68
Projected Monthly Statement of Changes in Equity....................................................................... 69
Notes to Financial Statements.......................................................................................................... 72
G. Financial Analyses ............................................................................................................................ 86
1.

Current ratio = Current Assets/Current Liability ................................................................... 86

2. Gross Margin = Revenue-Cost of Goods Sold/Revenue ........................................................... 87


3. Working Capital = Current Assets Current Liabilities............................................................. 88
4. Acid Test Ratio = Cash + Marketable Securities/ Current Liabilities ...................................... 88
3

5. Net Profit Margin = Net Income Sales x 100 ........................................................................... 89


6. Operating Cash flow to Current Liabilities = Operating Cash Flow/ Current Liabilities ....... 89
7. Cash Balance to Total Liabilities = Cash Balance/ Total Liabilities........................................ 90
Capital Budgeting.............................................................................................................................. 91
Horizontal Analysis Yearly Income Statement ............................................................................... 92
Horizontal Analysis Yearly Balance Sheet ....................................................................................... 96
HORIZONTAL ANALYSIS .......................................................................................................... 100
Vertical Analysis Yearly Income Statement ................................................................................... 101
Vertical Analysis Yearly Balance Sheet .......................................................................................... 105
VERTICAL ANALYSIS .................................................................................................................. 109
H. Accounting and Control Plan ........................................................................................................ 110

Accounting Policies ......................................................................................................................... 110

Control Policies .............................................................................................................................. 110

RECOMMENDATION ..................................................................................................................... 111


CHAPTER V- SOCIO-ECONOMIC STUDY.......................................................................................... 112
CHAPTER VI - ORGANIZATION AND MANAGEMENT STUDY ................................................... 113
A. Basic Consideration in forming the Organization ....................................................................... 113
B. Form of Ownership........................................................................................................................ 113
C. Organizational Chart ..................................................................................................................... 114
D. Officers and Key Personnel .......................................................................................................... 114
E. Project Schedule ............................................................................................................................ 115
APPENDIX A....................................................................................................................................... 117
APPENDIX B ....................................................................................................................................... 120
APPENDIX C ....................................................................................................................................... 126
APPENDIX D ...................................................................................................................................... 132
BIBLIOGRAPHY: ................................................................................................................................ 138

ACKNOWLEDGEMENT

The proponents of this study would like to express their heartfelt gratitude to the people
who made this study possible. For without their help, this study would not be realized.
The proponents would thank our creator, for without his love and grace this would not be
possible.
To our parents, for the financial and moral support and for being considerate for the late
nights that we have given to this study.
To Ms. Rhea Carpio, CPA, for her patience in reading and revising this study, and also for
her unparalleled support in making sure that this study is on the right path.
To Mrs. Josephine Giducos, CPA, for her assistance in the completion of the financial
portion of this study.
To Mrs. Gloria Caete,CPA, for helping us in collecting the necessary information for this
study.
To Mrs. Auroro S. Diaz, for allowing us to stay in her home during the late nights that we
have spent in making this study.
To Steely Dhan Caballero, for his assistance in making the floor plan of the business.
To the respondents, for being so generous with their time in answering our survey questions.

CHAPTER I - SUMMARY of the PROJECT


A. Name of the Project
- The business name would be KIDS CITY.
- The above name has been chosen because in line with the day cares interior which
involves different divisions, each with its own theme, like a hospital, a pet shop, a
grocery, making it a mini city where kids could pretend to be a doctor, a nurse, a
pet owner or a cashier.
B. Location
- The main site of the business where it would operate is at Abreeza Mall, located at
Bajada, Davao City.
-Abreeza Mall is the most desirable choice because it is located near residential and
commercial areas, it will be very accessible to families and individuals, thus making it
a more convenient choice when choosing for a day care center.
-A location inside the mall would make it near the grocery such that parents may
have a place to leave their children whenever they would go fetch supplies. Since it
would be located in the ground floor, evacuation would be easier in cases of
emergencies.
C. Descriptive Definition of the Project
-A day care center was chosen as an investment opportunity because there is a
market and this has not yet been taken full advantage of.

In addition, the

establishment of this day care center would encourage play among children that has
been said to be an important activity for children by Pediatrics, the official journal of
the American Academy of Pediatrics.

D. Projects Long Range Objectives


- After ten years, it would be expected that there would be expansions by means of
branching out to different locations or malls. Branches would have larger capacity
where they could accommodate more children.

Since there would be more

branches, there would then be a need to employ more people to man the operations,
thus, it would help the economy by presenting job opportunities and in turn
contribute to the reduction of unemployment in the country.

E. Feasibility Criteria
1. Market Feasibility
The location of the day care is accessible to the target market. There are few
competitors at the selected establishment where the day care is located. The demand
for this kind of service is great enough to sustain the profitability of the project.
2. Technical Feasibility
The facilities and toys of the day care are of high quality and safe for
children. The environment in the day care is secured and the children are on the
hands of trusted personnel. The services are rendered at a high quality level with
minimum cost.
3. Financial Feasibility
There are adequate financial resources to cover the project cost. The
profitability of the project can be assured. There are available sources of financing
(banks).
4. Socioeconomic Feasibility
The day care provides convenience to the people who would avail our
services. The project provides jobs to the unemployed. There are programs that
create opportunities for learning, growth, and good values.

5. Organization and Management Feasibility


There is a management structure appropriate for the project. The day care
employees are properly trained. The responsibilities and duties are clearly defined.

F. Highlights off the Project


History
Significant amounts of time of the members of the families are devoted to
going to malls for leisure and shopping. Some parents who could not leave their
children at home while they have to do their errands look for a place that which they
could leave their children. Parents prefer that this place be at least within or near the
premises of the mall.
Day care centers give parents the comfort of not having to deal with the
unpredictable behaviour of their children while they are in the mall. The company,
therefore, decided to establish a day care center inside a mall to give parents a worryfree shopping experience.
Nature of the industry
Kids City belongs to the industry of Child Care Services. This industry is
fast-growing since majority of the number of parents nowadays prefer to work,
forcing them to leave their children at home or to someone they can trust.
The two main types of child care options for employed parents needing
childcare are center-based care (including crches, day care, and preschools) and
home-based care (also known as nanny or family day care). Parents may also choose
to find their own caregiver or arrange childcare exchanges or swaps with another
family.

Many problems could also arise in this type of industry. One of these
problems could be the dependence of the parents in the service, which could lead to
failure of doing parental responsibilities. Another problem could be the spread of
diseases in the facility. Many children are not necessarily concerned with proper
hygiene, and if not given enough attention, this could cause the environment of the
children to be unsanitary, thus could become an avenue for spreading diseases.
For many, the use of paid childcare is a matter of choice with arguments on
both sides about whether this is beneficial or harmful to children. A parent fears for
the safety and security of his/her child. They need to be able trust the person or
facility they choose as a provider for childcare. Whether these people are family,
friends, center based, young, old, well educated, or barely trained, the parents want to
feel comfortable leaving their children with them. To have trust in the caregiver, the
parents want to know what kind of effects the type of service they provide will have
on the development of their children. The development of a child has many factors,
but it is most directly influenced by the type and quality of care that is most regularly
provided to the child.
Mode of Financing
The source of funds shall come from own savings or family loans. Since
there would be five (5) partners, it would require a relatively less contribution from
each one. A percentage of the net income every month shall be set aside for the
purpose of paying back the partners investment in the venture. This shall continue
even after the borrowed capital has been paid.
This financing term is more preferred since getting loan from the bank could
really be difficult, especially for people who are just starting to venture in the
business world. Moreover, establishing a day care business is unlike other businesses
like restaurants and food chains, wherein daily expenses are required to meet the
demand of the market. In day cares, the major expenses occur in the starting and
succeeding expenses are devoted for rent, maintenance, utilities, and employees.

Investment Costs

Each partner shall contribute 300,000Php, adding up to around


1,500,000Php. This amount is necessary to start and make the project operational.
Start-up Capital

1,500,000

Renovation cost

(307,745)

Rental Fee (1 month)

(138,000)

Security Deposit

(600,000)

Petty Cash

(5,000)

Toys

(71,059)

Equipment

(45,693)

Ad & Promo Fee

(15,000)

Other Asset (Input Vat)

(73,151)

Purchases of Supplies
Insurance
Taxes and Licenses
Balance

(3,000)
(30,000)
(5,227)
206,125

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CHAPTER II MARKET STUDY


A. Service Description
Kids City day care center will be offering child care/development for kids of
ages 3 to 9 years old. The day care center will provide innovative learning activities
and services that would promote and enhance the welfare of children.
Kids City services are the following:
Play Activities
All types of play are essential for children's development and early learning.
Play helps children to develop and improve their gross and fine motor skills,
coordination and concentration. When children are engaged in play, they are
presented with various situations, interactions, and challenges. Moreover, children
would know how to work cooperatively and collaboratively, use all their senses to
discover and explore their environment, and develop their imagination and creative
thinking. Such play activities would include: puzzles, ball pits, slides, monkey bars,
dollhouse, trampoline and many more.

Fun Learning Activities


Activities are a wonderful way to show kids that learning can be fun. The
kids can do fun activities indoors all- year round. Kids City also has different areas
in its place classified each as hospitals, entertainment center, zoo, beauty parlor, and
playground to offer variety of fun choices and tastes of fun which would interest
them even more.
The Kids City day care center would also be having a small waiting area
where parents can enjoy a book, newspaper, or a friends conversation over a cup of
coffee while their kids are occupied.

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B. Market Description
Kids' City is a day care center that will be established in Abreeza Mall. It is
strategically situated in a shopping mall where residential areas and schools are near
and there are still few competitors. The business would cater the parents who need a
place to leave their children in a day care center so that they can conveniently work,
shop, or do some errands. It would also be a place where children would have a great
time playing with other kids in an educational and fun way. The major patron of the
service offered will be those individuals who live in nearby residential areas that have
children from ages three to nine years old.
Kids City day care center is a business that has become necessary in todays
fast paced generation. There are an increasing amount of families who have many
children, and parents who have become too busy to take care of their children,
which has created the necessity of the child care industry. Child care services like this
business have continually grown and been accepted by the market. More and more
parents leave their kids in these centers to let their children experience a fun
environment and help them mingle with other children as well. There will definitely
be a room in the market for a high quality child care facility.
Geographic
Abreeza Ayala Malls is the place where Kids City day care center will be
situated. It is located in Region XI along J.P. Laurel Avenue, Davao City. It can be
easily accessed by private vehicles and public vehicles like taxi cabs, jeepneys, and
tricycles. While for the nearby residence it would take just a few minutes to reach our
day care center.
Demographic
Our service is available to children who are three to nine years old in good
physical condition. Within the age range of three to nine years old, the children can
already be able to mingle and play with other kids. The Kids City day care center will
welcome either Filipino or kids with other nationality.

12

Behavioral (Benefits Sought)


Kids' City provides benefits to the parents by giving them time and
convenience. Our business also offers high quality services and the security of the
children are assured. Other than that, Kids' City can also offer a safe and nurturing
environment for children where they can learn and have fun at the same time.
Psychographic
Children from medium to high income families are the target of the Kids
City day care center. As to the lifestyle, Kids City will also be intended for families
that enjoy spending time in the shopping mall, parents that are working or busy and
parents that loves to expose their children in a place where they can learn, have fun,
and socialize with other children.
Based on survey results the factors that will affect the customers decision in choosing a day care center are as follows:
Factors considered in choosing a day
care center

Number of
vote

Rank

Safe Environment

59

Security

51

High Quality Service

47

Facilities

44

Nurturing Environment

39

Convenience of location

32

Size of day care center

21

13

Geographical Areas of Dispersion


The following is the map of Abreeza which is located along J.P. Laurel Street.

14

C. Demand
The result of the survey showed that there is a high demand for day care
centers in the area. There are sixty two respondents who are willing to pay for the
services of a day care center which covers approximately eighty nine percent of the
sample population. The increasing number of children in the country coupled with
busy working parents is the main reason for high demand in day care services in the
shopping malls.
Historical Demand
The historical data of demand for day care centers would be taken from the
percentage of parents that goes to the mall with their children and the number of
children in Davao City based on the regions annual population growth of 1.97%.
Davao City's children population based on census:
Age

Year 1

Year 2

Year 3

Year 4

Year 5

2010

2011

2012

2013

2014

Under 5 years old

160,812

163,980

167,210

170,504

173,863

5-9 years old

149,404

152,347

155,348

158,408

161,529

Total

310,216

316,327

322,558

328,912

335,392

Presented below is a table showing the number of interested parents that goes to the mall with their children based on
the percentage of parents willingness:

Year
1
2
3
4
5

Children Population
310,216
316,327
322,558
328,912
335,392

Willingness of Number of interested


Parents to go to parents to go to mall
mall in a week
29%
89,963
29%
91,735
29%
93,542
29%
95,384
29%
97264

15

Presented below is the graph showing the relative increase in children population for the past five years:

Children Population

Number of parents that goes to mall with


their children
98,000.00
96,000.00
94,000.00
92,000.00
90,000.00
88,000.00
86,000.00

Number of parents
that goes to mall
with their children

Year 1

Year 2

Year 3

Year 4

Year 5

Historical Year

It is clearly shown in the graph that there is an acceleration of the lines pertaining to
the children population in Davao City. Therefore, the total demand for day care center
services is increasing and is continuously growing as an industry.
Projected Demand
The projected consumption or demand for day care centers service would be
based on children population in Davao City and the percentage of survey
respondents that are willing to pay for our services.
The projected children population based on census:
Age

Year 1

Year 2

Year 3

Year 4

Year 5

2015

2016

2017

2018

2019

Under 5 years old

177,288

180,781

184,342

187,974

191,677

5-9 years old

164,711

167,956

171,265

174,639

178,079

Total

341,999

348,737

355,607

362,613

378,759

16

Presented below is the graph showing the relative increase in children population for the next five years:

Children Population in Davao Ciy

400,000
350,000
300,000
250,000
Under 5 years old

200,000

5-9 years old

150,000

Total Chidren population


100,000
50,000
0
Year 1

Year 2

Year 3

Year 4

Year 5

Projected Year

The total projected consumption for the next five years is computed as follows:

Total Projected Demand = Number of interested parents to go to mall % of Projected Demand


% of Projected Demand = 89% (% of respondents voted day care centers are very important
50%) + ( %of respondents voted day care centers are somewhat important 20%)

%of respondents voted day care centers are very important = 26/70= 37% 100% = 0.37
% of respondents voted day care centers are somewhat important = 40/70=57% 50%=
0.285
Total % of respondents vote = 0.37 + 0.285 =0.655
% of projected demand = 89% 0.655 = 0.583 ~ 58%
62 respondents go to mall twice a week, so 2/7= 28.57%~ 29%

17

Presented below is a table showing the number of interested parents that goes to the mall with their children based on
the percentage of parents willingness:
Year

Current Years Children


Population

1
2
3
4
5

341,999
348,737
355,607
362,613
378,759

Willingness of
Parents to go to
mall in a week
29%
29%
29%
29%
29%

Number of interested
parents to go to mall
99,180
101,134
103,126
105,158
109,840

Presented below is a table showing the projected demand for the next five years:
Year
1
2
3
4
5

Number if interested parents


to go to mall
99,180
101,134
103,126
105,158
109,840

% of Projected Demand
58%
58%
58%
58%
58%

Total Projected
Demand
57,524
58,658
59,755
60,991
63,707

The total projected demand was derived from the projected number of parents that
are interested to go to the mall and the percentage of projected demand which is computed
as shown in the previous tables.

18

Presented below is a graph showing the increase in projected consumption for the next five years:
400,000
370,000

Children Population in Davao City

340,000
310,000
280,000
250,000
220,000

Current Years Children


Population

190,000

Total Projected Demand

160,000
130,000
100,000
70,000
40,000
Year 1

Year 2

Year 3

Year 4

Year 5

Total Projected Demand

For the next five years, it is projected that the total demand will increase by which is
shown from the computations made in page 16. Based on the graph shown in the figure
above, the trend for the demand on day care center services for the next five years will
relatively increase in number as the population of the children ages 3-9 years old.
D. Supply
There are many different competitors in the child day care center businesses.
Some direct competitors would include established and franchised child care centers
who serviced a quite large number of children. There are also small, home based day
care centers whose quality ranges considerably. Other competitors would be those
companies who have typically owned facilities.

19

Major competitors:
Competitors

Capacity

Daves Funhouse

Maximum of 75

(Direct Competitor)

children per day

Timezone

Maximum of 75

(Indirect Competitor)

children per day

Service Quality

Location

Serves as a playhouse for Third floor near the


kids with variety of food court
choices on toys, and play
activities.
Serves as a wonderland First floor on the
for kids where they are malls atrium
offered various toys to
buy games to play.

Historical Supply
The historical supply was based on the capacity of the existing competitors in
the market. In the establishment where our day care center is proposed there are
two existing competitors one is a direct competitor while the other is an indirect
competitor.
The historical supply of a day care center is computed as follows:

Total capacity of Day Care Center per Year = Capacity of day care center per day Number of business days

Presented below is a table showing the supply of day care center per year:

Existing
Suppliers
Daves
Funhouse
Timezone

Day Care Center

Number of Business

Capacity

Days

Total Capacity per year

75

365

27,375

75

365

27,375

20

Presented below is a chart showing the capacity of day care centers for the last three years:

Children Capacity of Day Care Center

30,000
25,000
20,000
15,000
TotalCapacity per Year
10,000
5,000
0
Dave's Funhouse

Timeone

Existing Suppliers

The chart shows us that the two existing suppliers of the service for day care centers
have the same capacity. For conservative propose it is presumed that even though one of
the competitors is considered indirect, it has still the same capacity and effect in the market.
Presented below is a table of historical supply for the past three years:
Year

Daves Funhouse

Timezone

Total Supply

27,375

27,375

54,750

27,375

27,375

54,750

27,375

27,375

54,750

The table only shows the historical supply of day care center service for the past
three years because the Abreeza Mall where our proposed business is to be established has
only started operating since May 12, 2011.

21

Presented below is the graph of historical supply:

Children Capacity of Day Care Center

60,000
50,000
40,000
Daves Funhouse

30,000

Timezone
20,000

Total Supply

10,000
0
Year 1

Year 2

Year 3

Historical Year

Projected Supply
The supply for the next five years will be based on the existing supply of the
competitors and the additional supply that our day care center would provide. The
maximum capacity of our day care center is seventy five children per day, which is
based on the area of our day care center and also to the capacity of our existing
competitors.

The projected supply of a day care center is computed as follows:


Total capacity of Day Care Center per Year = Capacity of day care center per day Number of business days

22

Presented below is a table showing the total capacity of day care centers per year:

Projected
Suppliers

Day Care Center


Capacity

Number of Business
Days

Total Capacity per year

Daves Funhouse

75

365

27,375

Timezone

75

365

27,375

Kids City

75

365

27,375

Presented below is a chart showing the capacity of day care centers:

Children Capacity of Day Care Center

30,000

25,000

20,000

15,000
Total Capacity per year
10,000

5,000

0
Daves Funhouse

Timezone

Kids City

Projected Suppliers

23

Presented below is a table of projected supply for the next five years:
Year

Daves

Timezone

Kids' City

Total Supply

Funhouse
1

27,375

27,375

27,375

82,125

27,375

27,375

27,375

82,125

27,375

27,375

27,375

82,125

27,375

27,375

27,375

82,125

27,375

27,375

27,375

82,125

The projected supply for the next five years is constant because we presume that
there are no additional competitors that would provide day care center services for the years
to come. This trend is clearly depicted in the following linear graph.

Children Capacity of Day Care Center

Presented below is the graph of projected supply for the next five years:

90000
80000
70000
60000
50000

Daves Funhouse

40000

Timezone

30000

Kids' City

20000

Total Supply

10000
0
Year 1

Year 2

Year 3

Year 4

Year 5

Projected Year

24

E. Demand-Supply Analysis
90,000

Children Population in Daao City

80,000
70,000
60,000

Demand
Supply

50,000
40,000
30,000
Year 1

Year 2

Year 3

Year 4

Year 5

Projected Year

The demand is lower than the supply because day care center services in the
mall are not yet known to many and there are two current competitors in the said
establishment. With the supply greater than the demand the business can still be
profitable. The market share of the business is 33% of the projected demand
considering the existence of two competitors in the market. The percentage of
market share can be computed by dividing 100% into three, which constitute the
three day care centers in Abreeza Mall. The assumption is that the day care centers in
the said establishment have equal percentage of market share. However, we cannot
assure the accuracy of this assumption due to lack of information. Hence, the market
share of Kids City is expected to increase in the following years with the advertising
campaigns and the great service that the business can offer.

25

F. Price Study
The proponents gathered the prices of its competitors within the vicinity of
the mall. The prices for day care services would vary depending on many factors like
the competition with other day care centers that enable to reduce, maintain and raise
its prices in such a way they can protect the market share of the firm. Another factor
is the quality of the services in which the market will judge quality by price that
consequently affects the competition. Other factor to consider affecting price would
be the demand of our potential consumers and income of the firm. When the
income is high, the price becomes irrelevant as compared to quality. On the other
hand, when income is low, price becomes the most important marketing variable.
Thus, more choices mean more competition for business.
Generally, consumers are willing to buy a product at a lower price than of a
higher price. If the price is low, this may lead to a rise in demand. But, if the price is
high, the expected response of the consumers regarding the demand will decrease. In
case of a day care center business, it is important that the needs of families with kids
is identified and addressed accordingly.
In pricing the service that Kids City provide, the proponents took the
highest consideration on the competitive environment in which the company
operates. From a competitive point of view, Kids City must take into account the
price of its direct competitor, the Daves funhouse. Daves funhouse offers a price of
Php155 per hour and they tend to vary during weekends, holidays or peak seasons.
However, Kids City offers a price of Php150 per hour which is constant because
regardless of whether its a weekend or a holiday, the price stays the same. The
proponents based their price on the price of the direct competitor. The proponents
believed that this would give them an edge among its competitors whether direct or
indirect because their price is relatively lower than that of its competitor yet still
offers high quality services to its customers.

26

Presented below is a table showing the competitors and Kids City price range:
Name
Daves Funhouse

Particulars

Rate/ Price

Weekdays:
First 30 minutes
One hour
30 minutes extension
Unlimited

85
155
70
305

Weekends/Holidays:
First 30 minutes
One hour
30 minutes extension
Unlimited
Timezone
Kids CIty

Carousel
One Token
One hour

95
175
80
355
30
10
150

27

G. Marketing Program
Marketing Plan:

Target market
The Kids City will be targeting families or single parents with kids who,
because of their work obligations or any other priorities and concerns, do not have
the time during the day to care for their child or for any other reason that they
cannot have much time to spend with their child. The Kids City will also be
targeting families that are interested in something more than simply baby-sitting
facilities, they would like their children to have a great learning experience that offers
development of many different skills while at the same time having fun and quality
time with friends and family.

Promotion
Engaging in targeted profile raising activities to promote child care service
will ensure day care centers vacancy levels to a minimum and will help build support
and recognition in Kids Citys geographical area of operation.
Parents across Davao City have great awareness about child care and some
expectations about the standards of service they will receive. In this increasingly
competitive environment, it is important to ensure the day care center stands out.
Promotional activities that the Kids City day care center would provide are the
following:

Advertising
To help promote awareness, Kids City will engage in advertising taking into
consideration community run and niche publications which are more likely to be
read by the target audience such as:

28

Local newspapers

Publications dedicated to family and children's services

Telephone and internet directories

Websites dedicated to family


Part of the advertising campaign would be investing in professional design to

ensure that the ad looks great and includes all the necessary information.

Special Events
Open days and fund raising events can be an excellent way of connecting
with the local community, promoting Kids City day care center service and give
children and families the opportunity to check the service out before they commit
and avail of the services. An effective and well implemented special event like a kids
party can be an excellent way of increasing business and raising awareness and
understanding about the range of services offered at the day care center. It can also
help build loyalty within the existing customer base, ensure service is in demand with
a well-padded waiting list and improve ability to compete with other services in the
area.

Brochures and Information Kits


Kids City day care center will produce a logo for the service and applying it
to brochures, business cards, staff uniforms to improve the image of the service and
will further enhance brand awareness. The brochure will include pictures and will
have a simple, uncluttered layout that makes it easy to read.

29

CHAPTER III TECHNICAL FEASIBILITY


A. The Service
The company will offer people the convenience of touring and doing their
usual business in Abreeza without having to drag and carry their children along. The
company will serve as a day care center; parents will leave their children in the
business establishment while they will be doing their affairs.
B. Toys and Equipment
TOYS:

HOSPITAL

Name(with picture)

Description

Price

Quantity

Total

Fully equipped with a lab coat an


d facemask, a stethoscope with s
ound effects, a reflex hammer, a
Melissa & Doug Medi
cal Doctor Role Play

1,310.26

6,551.32

873.36

1,746.73

n ear scope, a syringe, and a nam


e tag for personalizing.

Includes pretend stethoscope, ot


oscope, syringe, medicine jar, ba
nd aid and more; all contained in
Caillou 10-Piece Medi a nice handy carry case.
cal Kit

30

Name (with picture)

Description

Price

Quantity

Total

Includes a stethoscope, ear therm


ometer, blood pressure pump, me
dicine bottle, 4 bandages, ID card
Baby Alive Get Well

873.36

2,620.08

1,091.81

1,091.81

873.36

873.36

349.08

349.08

349.08

349.08

15

17,076.22

, prescription pad, carrying case

Medical Kit
Chunky tools made from durable,
soft plastic are perfect for encour
aging early imaginative play
New Sprouts Cure It!
Soft fabric body and hands, velvet
y outfit, and sweet vinyl face and
hands
Madame Alexander
A 13-inch doll dressed in a cute pi
nk outfit with a sunhat, blonde pi
gtails are tied with pink bows, soft
and cuddly plush.
Toys R Us 13 inch dol
l Hannah (Blonde)
A 13-inch doll dressed in a cute pi
nk outfit with a sunhat, brunette
pigtails tied with pink bows, and s
oft and cuddly plush
Toys R Us 13 inch dol
l Hannah (Brunette)

31

ZOO

Name (with picture)

Description

Price

Quantity

Total

The perfect bedtime friend for


baby! Soft and cuddly giraffe re
sponds to a gentle hug or squee
ze with a soft light glow and up
to 15 minutes of soothing lulla

567.53

567.53

436.90

436.90

567.53

567.53

by music. Then, the light dims..


Fisher-Price Soothe &
Glow Giraffe, Pink

.the music fades...sweet dreams


, baby!

The Animal Alley 9 inch Standi


ng Hippo is a huggable and abs
olutely adorable animal that is g
uaranteed to bring a smile to yo
Babies R Us Plush 9-in ur child's face. 100% polyester.
ch Standing Hippo
Spot clean with a moist cloth.

The perfect bedtime friend for


baby! Soft and cuddly giraffe re
sponds to a gentle hug or squee
Fisher-Price Soothe & ze with a soft light glow and up
Glow Giraffe - Yellow

to 15 minutes of soothing lulla


by music. Then, the light dims..
.the music fades...sweet dreams
, baby!

32

Name (with picture)

Description

Price

Quantity

Total

This plush developmental frien


d introduces baby to music and
instruments. Just squeeze hand
s and feet to hear 4 different m
usical instruments play. Then s
queeze again to hear a sympho
ny using those instruments. Ins
Baby Einstein Press &
Play Pals - Turtle

654.91

654.91

654.91

654.91

436.46

436.46

567.53

567.53

trument sounds include saxoph


one, drums, violin and xylopho
ne. Features on/off switch and
volume control. Collect all thre
e: turtle, panda, and lion.
The Gund Curious George 12
Inch Plush Doll is dressed in hi
s classic red shirt. This Curious

Gund Curious George George is 12 inches tall and ext


12 Inch Plush

ra soft & huggable!


Little turtle friends will adore t
his fluffy, cuddly and cute Toys
R Us Plush 10 inch green sea t
urtle. Its luxuriously soft polyes

Toys R Us Plush Sea Li


fe - Turtle

ter fur should be surface washe


d only.
This late bloomer is super excit
ed about making up for lost ti
me, so help them work off all t
hat energy by letting them bou

Webkinz Flower Frog

nce on their Lily Pad Trampoli


ne!

33

Name (with picture)

Description

Price

Quantity

Total

10 inch English Horse Horse


bay has articulated legs, poseabl
e ears and a mouth that can be
Paradise Horses 10

1,091.81

1,091.81

654.91

1,309.83

436.46

436.46

873.36

873.36

opened. Accessories include a


bridle, saddle, saddle pad, 4 leg
wraps, carrot, brush
The perfect companion, this 15
.5 inch floppy Toys R Us Plush
Plush Monkey is sweet and ado
rable. A luxuriously soft polyes

Toys R Us Plush 15.5 i


nch - Monkey

ter coat makes him great for hu


gging and he can double as a c
omfy, cuddly pillow.
The FAO Schwarz 15-inch Pan
da is as friendly as he is cute! H
is black ears are perked up as h
e gets ready to eat. The softnes

FAO Schwarz 15 inch


Panda - Black and Whit
e

s of his black and white fur and


brown paws ensures that your l
ittle one will be snuggling up fo
r a long time to come.
The Toys R Us Plush Jumbo Pl
ush Penguin - 18 Inch is a swee
tly designed baby penguin that
is jumbo in size and huggability

Toys R Us Plush Jumb


o Penguin - 18 Inch

. It is made of super soft fabric


s and measures 18 inches in siz
e when sitting. This item makes
great room decor.

34

Name (with picture)

Description

Price

Quantity

Total

Beautifully detailed, realistic plu


sh animals brought to you by T
oys R Us in support of the Wo
rld Wildlife Fund. Each 6 inch

436.46

436.46

567.53

567.53

654.91

654.91

2,184.06

2,184.06

Toys R Us Plush WWF friend is made from soft, high


6 inch Stuffed Animal - quality materials for a exceptio
WhiteOwl

nal look and feel.

Seal the deal for a new Webkin


z Pet by picking up a Webkinz
Sparkle Harp Seal.
Webkinz Sparkle Harp
Seal
The Toys'R'Us Plush Alligator
has no scales -- his 19-inch flee
cy-soft body is perfect for playt
ime and snuggles. Just look at t
Toys R Us Plush 19 In hat friendly smile that even liza
ch Alli gator - Green
rds can love!
You will love to cuddle with thi
s beautiful and soft 28 inch Ju
mbo Cuddlekins Giraffe. Each
Jumbo Cuddlekins Giraffe com
Cuddlekins Jumbo Gira
ffe 28 inch

es with highly detailed design a


nd lifelike facial features. With i
ts ultra-plush stuffing, this Gira
ffe is perfect for everybody to c
uddle with.

35

Name (with picture)

Description

Price

Quantity

Total

The FAO Schwarz 18 inch Lio


n - Tan features: Includes 1 stu
ffed lion; Lion has tan fur, a br
own and tan mane, a floppy tail
FAO Schwarz 18 inch
Lion - Tan

and gold plastic eyes; Polyester

1,091.81

1,091.81

17

12,532

construction with plastic pellets


in the rear and feet; Surface wa
sh to clean; Length (excluding t
ail): 18 inches

Total
BEAUTY PARLOR
Name (with
picture)

Description

Price

Quantity

Total

Features more than 10


accessories, including two skirts,
combs, jewelry and shoes for
each sister. Girls can clip the
two dolls (sold separately) to the
sides of the case for adventures
on-the-go. It's fashion fun and
storytelling play in one deluxe
closet! Dolls not included. Ages
3 and older.

1,616.09

1,616.09

Use the pretend colorist brush,


foils and clips to make believe
you're applying hair color. Then
roll the dryer stand behind the
chair to complete the job. The
dryer top can be adjusted up or
down and makes realistic dryer
The Dream Dazzlers sounds. It's all so real, the only
Stylin' Salon Chair
thing you might be missing is a
Set
tip.

1,853.20

12,972.40

Disney Frozen Dual


Vanity Playset

36

Name (with picture)

Dream Dazzlers Ooh


La La Sassy Salon

Minnie's Bow dazzling


Vanity

Description

Price

Quantity

Total

Includes a vanity, stool,


sprayer, accessory holder, 4
hair clips, mixing bowl, play
bottle, comb and color
brush, perfect for any makebelieve hair stylist, sprayer
shoots water and mirror
lights up for a totally realistic
experience, vanity features a
drawer for extra storage,
made of durable plastic and
decorated in black and pink

3,363.69

3,363.69

This charming set features a


magical twinkling bow with
assorted Minnie phrases,
large mirror and sculpted
Minnie face. Includes a
matching stool, play brush,
play perfume bottle, pretend
compact, 2 barrettes- even
pictures of Minnie and
friends that you can place in
the built in picture frame!
Batteries not included.

1,747.19

1,747.19

A sliding drawer offers


storage space where your
little girl can conveniently
put all of her fashion
accessories, such as the
included hand mirror,brush
and comb.

3,188.93

3,188.93

11

22,888.30

Step2 Fantasy Vanity


Total

37

PLAYGROUND
Name
Description
(with picture)
It doesn't require an expensive
power source that needs
constant replacement. No
batteries, no power-cells, no
liquid fuel-just the occasional
cookie or two. It's quiet toothe only sound you'll hear is
the sound of its wheels. It
provides kids with plenty of
exercise, more so than most
Lil' Rider Blue
toys. And the Lil' Rider
Wiggle Ride-on Car Wiggle car is engineered to be
absolutely safe when used
appropriately.

Little Tikes Slam


Dunk Big Ball Pit
Total

The Little Tikes Slam Dunk


Big Ball Pit features:
-20 Soft Air-filled Balls
-An Inflatable Basketball
-It is Phthalate Free
-Size: 56 in. x 55 in.

Price

Quantity

Total

1,965.61

9,828.07

2,620.96

5,241.93

15,070

ENTERTAINMENT CENTER:
Name (with picture)

Blue's Clues: Room Little Blue Riding Hood


DVD

Description

One of Nickelodeon's most


popular
characters,
the
inquisitive but silent pup from
BLUES CLUES, finally speaks
in her own spinoff series,
BLUE'S ROOM.

Price

480.15

Quantity

Total

480.15

38

Name (with picture)

Description

Doc McStuffins is on call 24/7


to help everyone discover the
importance of taking care of
themselves and others. Treat
your little one to five fun-filled
episodes packed with laughter,
Doc McStuffins:
music and adventure that prove
Friendship is the Best
Medicine DVD + Digital Friendship is the Best Medicine!
Copy

Price

Quantity

Total

654.91

654.91

Smurfs Christmas Carol DVD

305.39

305.39

Blues Clues ABCs, 123s And


More DVD Collection. DVD is
a cartoons and animation DVD
from Paramount. Released on
Oct 26, 2004 and rated UNR.

873.36

873.36

Mickey's Christmas Carol 30th

873.36

873.36

Smurfs Christmas Carol


DVD

Blues Clues ABCs, 123s


And More DVD
Collection DVD

Mickey's Christmas
Carol 30th Anniversary
Special Edition DVD
(DVD/Digital Copy)

39

Name (with picture)

Barney/Best Manners
Dvd

Description

Barney/Best Manners is a
Children's
Dvd
from
Lyons/Hits Entertainment. It is
unrated and has a run time of 50
minutes.

Price

305.39

Quantity

Total

Total

305.39

3,492.56

Equipment:
Name (with picture)

32 inch W700B
BRAVIA Internet LED
backlight TV

Sony HDMI DVD


Player

Description
Look forward to mesmerizing
colour, clarity and detail with the
BRAVIA W700B. Featuring a
wide sound range and built-in
WiFi for streaming connectivity,
redefine entertainment and
access a multitude of online
content for the enjoyment of
everyone at home.

The perfect choice for those


with a great DVD collection or
movies. This player cleverly
upscales Standard Definition
movie content for a more
immersive viewing experience.
The result is smoother picture
and near HD quality.

Price

Quantity

Total

26,999.00

26,999.00

1,699.00

1,699.00

40

Name (with picture)

Description

CCTV package with FULL HD


output at 1080P. 700TVlines
camera.

Price

16,995.00

Quantity

Total

16,995.00

45,693.00

CCTV Package by
GEER Technologies
Total

C. Plant Location
The main site of the business is at Abreeza Mall, J.P. Laurel Ave. Davao City.

41

D. Plant Layout

10.00m

up

10.00m

p l a y a r ea

p l a y a r ea

@Gr ound Fl r

m
0
0
.5
1

@mezza nine

m
0
0
.5
1

d wn

c ount er

f ir s t f l oo r p l a n

s ee b el ow

mezza nine f l oor p l a n


42

E. Building and Facilities


Kids City will be leasing at Abreeza Mall, situated at J.P. Laurel Ave. Davao
City. It will have a total space of 150sq. meter. The initial investment to make the
area operational for business is P 1, 500, 000.

F. Utilities
All utility charges during construction such as light and power and water
during the entire duration of construction phase shall be charged to the lessee based
on actual consumption.
The air-conditioner charge shall be P100.00 per sqm per month for use of
the chilled water supplied by the centralized aircon system, plus applicable VAT,
upon rental commencement or start of operations, whichever comes first. There is
additional charge for those extending beyond regular mall hours, subject to increase
in the event that the utility or service agency increases its charges.

The following figures are conservative estimates of consumption for utilities:


Renovation Period
UTILITIES

Water

Electricity

Sources

DCWD

DLPC

Cost for 2 months (half


of cost on operation)

P 81.00

P 7,663.70

Total

P 7,744.70

Operational Period
UTILITIES

Water

Electricity

Telephone

Sources

DCWD

DLPC

PLDT

Cost per MONTH

P 162.00*

15,327.39**

P 700.00

16,189.39

P 1944.00

P 183,928.68

P 8,400.00

P 194,272.68

Cost per
YEAR

Total

43

*Water Rates Data


Minimum Charge
137.30

11-20
m3

21-30
m3

14.40

41-50
31-40 m
m3
3

18.60

24.70

36.00

51-up
m3

Cost
per 20
m3

36.00

Cost
per 30
m3

281.30

Date
Effective

467.30

1/1/2013

Electricity
Rates Data

Appliance

DVD Player
TV
Lights

Power
Usage

No. of
units (a)
1

1
8

No. of
hours

(a)*(b)

(b)

Average
Rate
(c)

One day
One month
consumption consumption

.006

0.396

8.1880

3.2

.069

0.414

8.1880

3.3898

.048

11

0.528

8.1880

4.3233

Total

96

101.69
129.70
327.39

Air-conditioner charges:
Charge per sqm

Size of location

Total

P 100.00

150 sqm

15,000

**Total electricity charges (inclusive of air conditioner charges per month): 327.39 + 15,000 =
15,327.39

44

G. Waste Disposal
Trashes and garbage would be removed from all occupied spaces of the child
care area every day. Garbage would be removed from storage and taken to a disposal
center at least twice a week. Moreover, the use of garbage containers lined with a
plastic bag since liner reduces the contamination of the container of the container
itself and the need to wash the containers.

Diaper Containers
Label each diaper container to show its intended contents. Clean these

containers daily to keep them free form build-up of soil and odor.

H. Labor Requirements
The workers needed for the project to operate are 1 cashier and 5 attendants.
From Mondays to Fridays, only 4 attendants would be present, the other one left
would be having his/her day-off. On Saturdays and Sundays, since these days are
considered to be the peak days, all of them will be present. As for the cashier, he/she
will be present from Mondays until Saturdays, his/her day-off would be every
Sunday. As replacement, one of the partners/owners will be the cashier for that day.

45

ATTENDANTS SCHEDULE
TIME

SUN

MON

10:00A1,A2
A1,A2,A3,A4,A5
11:30AM
A3, A4

11:3112:00PM

12:311:00PM

1:016:30PM

6:317:00PM

7:017:30PM

7:319:00 PM

TUE

WED

THU

FRI

SAT

A2 A3,
A4, A5

A1,A3,
A4, A5

A1,A2
A4, A5

A1,A2
A3, A5

A1, A2,
A3, A4,
A5

A2, A3

A1, A2, A3

A1, A2

(BREAK A4
and A5)

(BREAK (BREAK (BREAK (BREAK (BREAK (BREAK


A3, A4) A4, A5) A4, A5) A4, A5) A3, A5) A4 and
A5)
A4, A5

A1, A3

A4 and
A3, A5 A5

A3, A4

(BREAK A1,
A2, A3)

(BREAK (BREAK (BREAK (BREAK (BREAK (BREAK


A1, A2) A2, A3) A1, A3) A1, A2) A1, A2) A1, A2,
A3)

A1, A2, A3, A4,


A5

A1, A2,
A3, A4

A2 A3,
A4, A5

A1,A3,
A4, A5

A1,A2
A4, A5

A1,A2
A3, A5

A1, A2,
A3, A4,
A5

A1, A2, A3

A1, A2

A2, A3

A1, A3

A1, A2

A1, A2

A1, A2,
A3

(BREAK A4
A5)

(BREAK (BREAK (BREAK (BREAK (BREAK


(BREAK
A3, A4) A4, A5) A4, A5) A4, A5) A3, A5)
A4 A5)
A3, A4

(BREAK A1,
A2, A3)

(BREAK (BREAK (BREAK (BREAK (BREAK (BREAK


A1, A2) A2, A3) A1, A3) A1, A2) A1, A2) A1, A2,
A3)

A1, A2, A3, A4,


A5

A1,A2,
A3, A4

A1,A3,
A4, A5

A4, A5

A1,A2
A4, A5

A3, A5

A4 and
A5

A4 and A5

A2 A3,
A4, A5

A4, A5

A4, A5

A1, A2

A4 and A5

A4, A5

A4, A5

A1, A2

A1, A2,
A3

A1,A2
A3, A5

A1, A2,
A3, A4,
A5

46

Below are the following qualifications of each position:


POSITION

QUALIFICATIONS

DIRECT

Child
Supervisor

Cashier

At least 18 years old

At least a high school graduate

Must be willing to undergo trainings

Must possess good interpersonal skills and must be hardworking

Must be service oriented and willing to learn

At least 20 years old

At least a high school graduate

Must be willing to undergo trainings

Must possess good interpersonal skills and must be hardworking

Must be service oriented and willing to learn

Must be flexible in terms of working

Must be reliable and responsible

Must be honest and trustworthy

The attendants and cashier will be subject to minimum wage of P312 per day and the
business will have less than 10 workers.

47

CHAPTER IV FINANCIAL FEASIBILITY


A. Major Assumptions

Assets
- There will be no accounts receivables, since the company operates in a cash basis.
- Petty cash fund will be established and will have a maintaining balance of P
5,000.00 every year and this will be maintained through an imprest fund system.
- Space rental is Php800.00 per square meter or 150 square meters x Php800.00
equals Php120,000.00 payable monthly plus common usage area (CUSA) of
Php18,000.00 per month with a total of Php138,000.00 per month plus applicable
VAT.
- Toys and other stuff used by the kids inside the day care center is expected to have
a useful life of two years and will be disposed of by the end of their useful lives
unless deemed still usable and safe for the kids to use. These items will be replaced
by new items and will be not repaired. In determining whether the toys are still fit to
be used by the children, its condition will be evaluated if it is still safe to use.

Liabilities and Equity


- Partners will withdraw every year. Their withdrawal is equal to 10% of the whole
years net income. Withdrawal will only be done at the end of the accounting
period.
- The company would not source out its funds from external sources. The company
would like to maintain good liquidity measurement ratios. However, a credit line
would be maintained for contingency purposes.

Revenues
- The day care center will charge Php150.00 per hour and will operate nine (9) hours
a day. The computation of the revenue will assume that from January, February,
March and June to November (9 months) are not peak seasons, therefore, during
weekdays it is presumed that 20 children avail the services and each child will stay
for 2 hours. While during Saturdays and Sundays of the months mentioned above,
it is estimated that 30 children will avail the services of the day care center and each
child will stay for 3 hours. For the months of April, May and December, which are
expected to be peak months, it is estimated that 50 children a day will avail the
services of the day care center and each child will stay for 3 hours.

48

Revenue
Jan-Mar, June-Nov
Weekdays( 5 days)
Weekends(2 days)

Computation

Total

20 children x 2 hrs x Php150


x 201 days
30 children x 3 hrs x Php
150 x 72 days

Php
1,206,000
Php 972,000

April,
May
and
December
Mon-Sun (7 days)

50 children x 3 hrs x Php


150 x 92days
Total Estimated Revenues for the year

Php
2,070,000
P 4,248,000

- There is an expected ten percent (10%) increase each year of the revenues based
on prior years revenues.

Expenses
- Working overtime will not be allowed.
- There will be no hiring and resignation of any of the employees for five years.
- Rent expense will increase by 10% every year.
- Utilities expenses such light, power and water are estimated to have an annual
increase of five (5) percent based on the total incurred from the preceding year.
- Office supplies expense is estimated to be P3, 000.00 in Year 1 and shall increase
5% annually.
- Employees will have a basic salary that is equivalent to the minimum wage. Salaries
of employees are expected to increase by ten percent (10%) annually as authorized
in the labor law. Therefore, if it is the minimum wage as mandated by the DOLE it
is tax exempt.
- Maintenance expenses will include repairs of day care center furniture and
equipment, air conditioning units and janitorial supplies which will amount to P25,
000.00 annually.
- There will be no extending of operating hours beyond regular mall hours
- Equipment will depreciate using the straight-line method of depreciation over
their useful life of five (5) years without salvage value
- Leasehold Improvements are expected to last for ten (10) years and will be
repaired or replaced as deemed necessary by the management.
- Advertising expense will be 15,000 plus applicable VAT annually.

49

B. Total Project Costs


COST
Renovation cost

307,745

Rental Fee (1 month)

138,000

Security Deposit

600,000

Petty Cash

5,000

OtherAsset (Input Vat)

73,151

Toys

71, 059

Equipment

45,693

Ad & Promo Fee

15,000

Purchases of Supplies (1 month)


Insurance

3,000
30,000

Taxes and Licenses

5,227

Total

P 1,293,875

C. Initial Working Capital

Working Capital Policy


The company aims to always have a positive working capital, since it is just
starting.

Cash and Marketable Securities


The day care center will have a single bank account that would serve as its
drawing and depositing account. This would also serve as a means of paying
supplies.

Credit Policy and Receivable Management


The company will have no accounts receivables, since the company will
operate at cash basis. The company will have accounts payable from
suppliers.

50

D. Alternative Sources of Financing considered if any

External Financing
The company will not borrow any amount from financial institutions as
initial investment to the business.

Internal Financing
Owners of the business will contribute funds to start up the business. This is
the sole source of funding the business.

E. Sources of Financing this Project


The funds that will be used for this project will all be from the contributions
made by the owners.

CHART OF ACCOUNTS

ASSETS ACCOUNTS

CURRENT
ASSETS
Petty Cash

Cash in
Bank

Security
Deposit

DESCRIPTION
A small fund of cash kept
on hand for purchases or
reimbursements too small
to be worth submitting to
the more rigorous purchase
and reimbursement
procedures of the day care
center.
The sum of all coins, and
currencies that have been
placed on deposit with the
bank.
A monetary deposit given
to the landlord (Abreeza
Mall Davao) as proof of
intent.

NONCURRENT
ASSETS
Leasehold
Improvements

Accumulated
Depreciation
Leasehold
Improvements
Equipment

DESCRIPTION
A physical
improvement made to
facility by a lessee that
enhances the value of
the facility.

Total depreciation on
leasehold
improvements
accumulated up to a
specified date.
Tangible property
(other than toys) that
is used in the
operations of the day
care center.

51

CURRENT
ASSETS
Deferred Tax
Asset

Other Asset

Prepaid
Advertising
Prepaid Rent

Prepaid
Insurance
Prepaid Taxes
& Licenses

Office Supplies

DESCRIPTION
An asset on the day care
centers balance sheet
that may be used to
reduce any subsequent
period's income tax
expense.
An account that contains
minor assets that do not
naturally fit into any of
the main asset categories.

NONCURRENT
ASSETS
Accumulated
Depreciation Equipment

Toys

A current asset that


Accumulated
reports the amount paid Depreciation for advertising that has
Toys
not yet taken place.
An account that reports
the amount of future
rent expense that was
paid in advance of the
rental period.
An asset which indicates
the cost of the insurance
contract that have been
paid in advance.
An advanced payment
for the fees paid to the
government for the
privilege of being
licensed to establish a
day care center.
Materials that are
consumed in the day care
center during normal
business operations.

DESCRIPTION
Total depreciation on
equipment
accumulated up to a
specified date.
Tangible property
(other than
equipment) that is
used in the operations
of the day care center.
Total depreciation on
toys accumulated up
to a specified date.

52

LIABILITY ACCOUNTS
CURRENT
LIABILITIES
Accrued SSS,
PhilHealth,
Pag-IBIG
employers
share
Accrued SSS,
PhilHealth,
Pag-IBIG
employees
share
Withholding
Tax-Expanded
VAT Payable
Income Tax
Payable

DESCRIPTION

NON-CURRENT
LIABILITIES

Employers share of withholding tax that is


still to be remitted to the tax authorities.

The portion of an employers wage that is


still to be remitted to the tax authorities.

A kind of withholding tax which is


prescribed on certain income payments
(rent payments).
A tax levied on customers that must be
remitted by the day care center to tax
authorities.
Unpaid income tax expense at the end of
the year.

EQUITY ACCOUNTS
Partner A,
Capital
Account
Partner A,
Drawing
Account
Partner B,
Capital
Account
Partner B,
Drawing
Account
Partner C,
Capital
Account
Partner C,
Drawing
Account

Partner As investment plus net income


from the day care centers operations, less
net losses (if any) from operations, less
withdrawals of funds by Partner A for
personal use.
An account reflecting Partner As
withdrawals of funds for the period.
Partner Bs investment plus net income
from the day care centers operations, less
net losses (if any) from operations, less
withdrawals of funds by Partner B for
personal use.
An account reflecting Partner Bs
withdrawals of funds for the period.
Partner Cs investment plus net income
from the day care centers operations, less
net losses (if any) from operations, less
withdrawals of funds by Partner C for
personal use.
An account reflecting Partner Cs
withdrawals of funds for the period.

53

EQUITY ACCOUNTS
Partner D,
Capital
Account
Partner D,
Drawing
Account
Partner E,
Capital
Account
Partner E,
Drawing
Account

Partner Ds investment plus net income


from the day care centers operations, less
net losses (if any) from operations, less
withdrawals of funds by Partner D for
personal use.
An account reflecting Partner Ds
withdrawals of funds for the period.
Partner Es investment plus net income
from the day care centers operations, less
net losses (if any) from operations, less
withdrawals of funds by Partner E for
personal use.
An account reflecting Partner Es
withdrawals of funds for the period.

REVENUE ACCOUNTS
Revenue

The income generated from sale of


services.

EXPENSE ACCOUNT
Rent Expense
Salaries and
Wages (Regular
Employee)
SSS, PhilHealth,
Pag-IBIG
Bookkeeping
Fee
Office Supplies
Expense
Maintenance
Expense
Insurance
Expense
Advertising
Expense
Communication
Expense
Depreciation
Expense
Leasehold
Improvement

Payment for rental fees.


Salaries and wages paid for regular
employees.
Payments for withholding taxes.
Payments for services rendered by
bookkeeper.
Payments made for purchase of office
supplies.
Payments made for maintenance fees.
Amount of insurance incurred/used up/
expired during the period.
Amount of advertising fees incurred/
used up/ expired during the period.
Payments made for communication
expenses.
Depreciation incurred for the period for
leasehold improvement.

54

EXPENSE ACCOUNT
Depreciation
Expense Equipment
Depreciation
Expense - Toys
Taxes and
Licenses
Utilities Expense
Taxes

Depreciation incurred for the period for


equipment.
Depreciation incurred for the period for
toys.
Payments made for taxes and licenses.
Expenses incurred for usage of utilities.
Payments made for taxes.

55

F. Pro-Forma Financial Statements

Projected Yearly Balance Sheet


KIDS' CITY
Yearly Projected Balance Sheet
NOTES
2015
2016
Assets
Current Assets:
Cash in Bank
Security Deposit
Other Asset (Input Vat)
Prepaid Advertising
Prepaid Rent
Prepaid Insurance
Prepaid Taxes & Licenses
Office Supplies
Total Current Assets
Non-current Assets:
Property, Plant and Equipment
Total Non-current Assets
Total Assets

2018

2019

2,212,765
138,000
2,350,765

3,207,117
151,800
3,358,917

4,256,785
166,980
4,423,765

5,523,539
183,678
5,707,217

6,873,264
202,046
7,075,310

349,054
349,054
2,699,819

273,612
273,612
3,632,529

270,828
270,828
4,694,593

193,787
193,787
5,901,004

192,673
192,673
7,267,983

4
5
6
7
8

4,796
2,944
6,900
56,438
364,110
435,188

5,017
3,053
7,590
62,177
416,149
493,985

5,238
3,162
8,349
68,494
474,454
559,697

5,534
3,346
9,184
75,448
539,547
633,059

5,534
3,346
10,102
83,101
612,243
714,327

Partners' Equity
Partner A, Capital Account
Partner B, Capital Account
Partner C, Capital Account
Partner D, Capital Account
Partner E, Capital Account
Total Partners' Equity

452,926
452,926
452,926
452,926
452,926
2,264,631

627,709
627,709
627,709
627,709
627,709
3,138,543

826,979
826,979
826,979
826,979
826,979
4,134,896

1,053,589
1,053,589
1,053,589
1,053,589
1,053,589
5,267,946

1,310,731
1,310,731
1,310,731
1,310,731
1,310,731
6,553,657

Total Liabilities and Partner's Equity

2,699,819

3,632,529

4,694,593

5,901,004

7,267,983

Liabilities and Partner's Equity


Current Liabilities
Accrued SSS/PHIC/HDMF employer's share
Accrued SSS/PHIC/HDMF employee's share
Withholding tax-Expanded
VAT payable
Income Tax Payable
Total Liabilities

2017

56

Projected Monthly Balance Sheet for 2015


2015
Assets
Current Assets:
Cash in Bank
Security Deposit
Other Asset (Input Vat)
Prepaid Advertising
Prepaid Rent
Prepaid Insurance
Prepaid Taxes & Licenses
Office Supplies
Total Current Assets
Non-current Assets:
Property, Plant and Equipment
Defered Tax Asset
Total Non-current Assets

Jan

Feb

Mar

218,025
600,000
73,151
15,000
138,000
30,000
5,227
3,000
1,082,403

249,263
600,000
65,089
13,750
138,000
27,500
4,791
2,750
1,101,143

854,762
58,955
12,500
138,000
25,000
4,356
2,500
1,096,073

878,260
50,892
11,250
138,000
22,500
3,920
2,250
1,107,072

1,330,759
10,000
138,000
20,000
3,485
2,000
1,504,244

424,497
424,497

418,210
418,210

411,923
1,993
413,916

405,636
579
406,215

399,349
399,349

1,506,900

1,519,353

1,509,989

1,513,288

1,903,593

6,900
6,900

4,796
2,944
6,900
1,414
16,054

4,796
2,944
6,900
14,640

4,796
2,944
6,900
14,640

4,796
2,944
6,900
3,135
115,745
133,520

Partners' Equity
Partner A, Capital Account
Partner B, Capital Account
Partner C, Capital Account
Partner D, Capital Account
Partner E, Capital Account
Total Partners' Equity

300,000
300,000
300,000
300,000
300,000
1,500,000

300,660
300,660
300,660
300,660
300,660
1,503,299

299,070
299,070
299,070
299,070
299,070
1,495,349

299,730
299,730
299,730
299,730
299,730
1,498,648

354,015
354,015
354,015
354,015
354,015
1,770,073

Total Liabilities and Partner's Equity

1,506,900

1,519,353

1,509,989

1,513,288

1,903,593

Total Assets
Liabilities and Partner's Equity
Current Liabilities
Accrued SSS/PHIC/HDMF employer's share
Accrued SSS/PHIC/HDMF employee's share
Withholding tax-Expanded
VAT payable
Income Tax Payable
Total Liabilities

As of Jan 1, 2015

Apr

57

2015

May

June

July

Aug

Assets
Current Assets:
Cash in Bank
Security Deposit
Other Asset (Input Vat)
Prepaid Advertising
Prepaid Rent
Prepaid Insurance
Prepaid Taxes & Licenses
Office Supplies
Total Current Assets
Non-current Assets:
Property, Plant and Equipment
Defered Tax Asset
Total Non-current Assets

1,802,623
8,750
138,000
17,500
3,049
1,750
1,971,672
393,062
393,062

1,763,684
7,500
138,000
15,000
2,614
1,500
1,928,298
386,776
386,776

1,779,762
6,250
138,000
12,500
2,178
1,250
1,939,940
380,489
380,489

1,795,199
5,000
138,000
10,000
1,742
1,000
1,950,941
374,202
374,202

Total Assets

2,364,734

2,315,073

2,320,429

2,325,143

4,796
2,944
6,900
56,438
238,097
309,175

4,796
2,944
6,900
7,420
237,904
259,964

4,796
2,944
6,900
8,063
239,318
262,021

4,796
2,944
6,900
8,063
240,732
263,435

411,112
411,112
411,112
411,112
411,112
2,055,560
2,364,734

411,022
411,022
411,022
411,022
411,022
2,055,109
2,315,073

411,682
411,682
411,682
411,682
411,682
2,058,409
2,320,429

412,342
412,342
412,342
412,342
412,342
2,061,708
2,325,143

Liabilities and Partner's Equity


Current Liabilities
Accrued SSS/PHIC/HDMF employer's share
Accrued SSS/PHIC/HDMF employee's share
Withholding tax-Expanded
VAT payable
Income Tax Payable
Total Liabilities
Partners' Equity
Partner A, Capital Account
Partner B, Capital Account
Partner C, Capital Account
Partner D, Capital Account
Partner E, Capital Account
Total Partners' Equity
Total Liabilities and Partner's Equity

58

2015

Sept

Oct

Nov

Dec

Assets
Current Assets:
Cash in Bank
Security Deposit
Other Asset (Input Vat)
Prepaid Advertising
Prepaid Rent
Prepaid Insurance
Prepaid Taxes & Licenses
Office Supplies
Total Current Assets
Non-current Assets:
Property, Plant and Equipment
Defered Tax Asset
Total Non-current Assets

1,804,634
3,750
138,000
7,500
1,307
750
1,955,941
367,915
367,915

1,820,713
2,500
138,000
5,000
871
500
1,967,584
361,628
361,628

1,830,149
1,250
138,000
2,500
436
250
1,972,585
355,341
355,341

2,212,765
138,000
2,350,765
349,054
349,054

Total Assets

2,323,856

2,329,212

2,327,926

2,699,819

4,796
2,944
6,900
7,420
240,539
262,599

4,796
2,944
6,900
8,063
241,953
264,655

4,796
2,944
6,900
7,420
241,760
263,820

4,796
2,944
6,900
56,438
364,110
435,188

412,251
412,251
412,251
412,251
412,251
2,061,257

412,911
412,911
412,911
412,911
412,911
2,064,557

412,821
412,821
412,821
412,821
412,821
2,064,106

452,926
452,926
452,926
452,926
452,926
2,264,631

Liabilities and Partner's Equity


Current Liabilities
Accrued SSS/PHIC/HDMF employer's share
Accrued SSS/PHIC/HDMF employee's share
Withholding tax-Expanded
VAT payable
Income Tax Payable
Total Liabilities
Partners' Equity
Partner A, Capital Account
Partner B, Capital Account
Partner C, Capital Account
Partner D, Capital Account
Partner E, Capital Account
Total Partners' Equity

59

Total Liabilities and Partner's Equity

2,323,856

2,329,212

2,327,926

2,699,819

Projected Yearly Income Statement


KIDS' CITY
Income Statement

Revenue
less Cost of Services:
Rent Expense
Salaries & Wages ( Child Supervisors)
SSS, PhilHealth, Pag- IBIG ( Employer Share
of Child Supervisors)
Total

NOTES
9

2015
3,792,857

2016
4,172,143

2017
4,589,357

2018
5,048,293

2019
5,553,122

10
11

1,656,000
527,280

1,821,600
551,005

2,003,760
575,796

2,204,136
601,705

2,424,550
628,784

12

47,964
2,231,244

50,172
2,422,777

52,380
2,631,936

55,344
2,861,185

55,344
3,108,678

1,561,613

1,749,366

1,957,421

2,187,108

2,444,445

13

105,456

110,201

115,154

120,341

125,762

14
15
16
17

9,588
126,399
3,000
25,000
30,000
15,000
30,745
9,139
35,530
5,227
194,273
347,913
1,213,701
364,110
849,590

10,032
132,093
3,292
26,125
30,000
15,675
30,745
9,139
35,530
8,685
203,015
362,204
1,387,162
416,149
971,013

10,476
138,021
3,612
27,301
30,000
16,380
30,745
9,139
37,128
9,453
212,151
375,908
1,581,513
474,454
1,107,059

11,064
144,534
3,963
28,529
30,000
17,117
30,745
9,139
37,128
10,298
221,697
388,617
1,798,491
539,547
1,258,944

11,064
150,644
4,349
29,813
30,000
17,888
30,745
9,139
38,799
11,228
231,674
403,634
2,040,811
612,243
1,428,568

Gross Profit
Operating Expenses:
Salaries & Wages (Cashier)
SSS, PhilHealth, Pag-IBIG (Employer Share of
Cashier)
Bookkeeping Fee
Office Supplies
Maintenance
Insurance
Advertising
Depreciation Expense- Leasehold
Depreciation Expense- Equipment
Depreciation Expense- Toys
Taxes and Licenses
Utilities
Total
Net Income (Loss)
less: provision for Income Tax
Net Income after tax

18

19
20

60

Projected Monthly Income Statement for 2015


2015
Revenue
Cost of Services:
Rent Expense
Salaries & Wages (Child Supervisors)
SSS, PhilHealth, Pag- IBIG ( Employer Share of
Child Supervisor)
Total
Gross Profit
Operating Expenses:
Salaries & Wages (Cashier)
SSS, PhilHealth, Pag-IBIG (Employer Share of
Child Supervisor)
Bookkeeping Fee
Office Supplies
Maintenance
Insurance
Advertising
Depreciation Expense- Leasehold Improvements
Depreciation Expense- Equipment
Depreciation Expense- Toys
Taxes and Licenses
Utilities
Total
Net Income (Loss)
less: Provision for Income Tax
Net Income After Tax

Jan
219,643

Feb
203,571

Mar
219,643

Apr
602,679

138,000
43,940

138,000
43,940

138,000
43,940

138,000
43,940

3,997
185,937

3,997
185,937

3,997
185,937

3,997
185,937

33,706

17,634

33,706

416,742

8,788

8,788

8,788

8,788

799
10,533
250
2,083
2,500
1,250
2,562
762
2,961
436
16,189
28,992
4,713
1,414
3,299

799
10,533
250
2,083
2,500
1,250
2,562
762
2,961
436
16,189
28,992
(11,358)
(3,407)
(7,951)

799
10,533
250
2,083
2,500
1,250
2,562
762
2,961
436
16,189
28,992
4,713
1,414
3,299

799
10,533
250
2,083
2,500
1,250
2,562
762
2,961
436
16,189
28,992
387,749
116,325
271,424
61

2015
Revenue
Cost of Services:
Rent Expense
Salaries & Wages (Child Supervisors)
SSS, PhilHealth, Pag- IBIG ( Employer Share of
Child Supervisor)
Total
Gross Profit
Operating Expenses:
Salaries & Wages (Cashier)
SSS, PhilHealth, Pag-IBIG (Employer Share of
Child Supervisor)
Bookkeeping Fee
Office Supplies
Maintenance
Insurance
Advertising
Depreciation Expense- Leasehold Improvements
Depreciation Expense- Equipment
Depreciation Expense- Toys
Taxes and Licenses
Utilities
Total
Net Income (Loss)
less: Provision for Income Tax
Net Income After Tax

May
622,768

Jun
214,286

Jul
219,643

Aug
219,643

138,000
43,940

138,000
43,940

138,000
43,940

138,000
43,940

3,997
185,937

3,997
185,937

3,997
185,937

3,997
185,937

436,831

28,349

33,706

33,706

8,788

8,788

8,788

8,788

799
10,533
250
2,083
2,500
1,250
2,562
762
2,961
436
16,189
28,992
407,838
122,352
285,487

799
10,533
250
2,083
2,500
1,250
2,562
762
2,961
436
16,189
28,992
(644)
(193)
(451)

799
10,533
250
2,083
2,500
1,250
2,562
762
2,961
436
16,189
28,992
4,713
1,414
3,299

799
10,533
250
2,083
2,500
1,250
2,562
762
2,961
436
16,189
28,992
4,713
1,414
3,299

62

2015
Revenue
Cost of Services:
Rent Expense
Salaries & Wages (Child Supervisors)
SSS, PhilHealth, Pag- IBIG ( Employer Share of
Child Supervisor)
Total
Gross Profit
Operating Expenses:
Salaries & Wages (Cashier)
SSS, PhilHealth, Pag-IBIG (Employer Share of
Child Supervisor)
Bookkeeping Fee
Office Supplies
Maintenance
Insurance
Advertising
Depreciation Expense- Leasehold Improvements
Depreciation Expense- Equipment
Depreciation Expense- Toys
Taxes and Licenses
Utilities
Total
Net Income (Loss)
less: Provision for Income Tax
Net Income After Tax

Sept
214286

Oct
219643

Nov
214286

Dec
622768

Total
3792857

138000
43940

138000
43940

138000
43940

138000
43940

1656000
527280

3997
185937

3997
185937

3997
185937

3997
185937

47964
2231244

28349

33706

28349

436831

1561613

8788

8788

8788

8788

105456

799
10533
250
2083
2500
1250
2562
762
2961
436
16189
28992
(644)
(193)
(451)

799
10533
250
2083
2500
1250
2562
762
2961
436
16189
28992
4713
1414
3299

799
10533
250
2083
2500
1250
2562
762
2961
436
16189
28992
(644)
(193)
(451)

799
10533
250
2087
2500
1250
2562
762
2961
436
16189
28996
407834
122350
285484

9588
126399
3000
25000
30000
15000
30745
9139
35530
5227
194273
347913
1213701
364110
849590

63

Projected Yearly Cash Flow


2015
Operating Activities
Net Income
Security Deposit
Other Asset (Input VAT)
Prepaid Advertisement
Prepaid Rent
Prepaid Insurance
Prepaid Taxes and Licenses
Office Supplies
VAT Payable
Income Tax Payable
Accrued SSS/PHIC/HDMF employer's share
Accrued SSS/PHIC/HDMF employee's share
Withholding tax-Expanded
Depreciation
Net Cash Provided/Used by Operating Activities

2016

2017

2018

2019

849,590
(138,000)
56,438
364,110
4,796
2,944
6,900
75,443
1,222,221

971,013
(13,800)
5,739
52,039
221
109
690
75,443
1,091,454

1,107,059
(15,180)
6,317
58,305
221
109
759
77,041
1,234,632

1,258,944
(16,698)
6,954
65,093
296
184
835
77,041
1,392,649

1,428,568
(18,368)
7,653
72,696
918
78,712
1,570,179

(424,497)
(424,497)

(74,257)
(74,257)

(77,598)
(77,598)

Financing Activities
Increase/Decrease in Partners Investment
Partner A
Partner B
Partner C
Partner D
Partner E
Net Cash Provided by Financing Activities

283,008
283,008
283,008
283,008
283,008
1,415,041

(19,420)
(19,420)
(19,420)
(19,420)
(19,420)
(97,101)

(22,141)
(22,141)
(22,141)
(22,141)
(22,141)
(110,706)

(25,179)
(25,179)
(25,179)
(25,179)
(25,179)
(125,894)

(28,571)
(28,571)
(28,571)
(28,571)
(28,571)
(142,857)

Increase/Decrease in Cash
Cash Balance Beginning
Cash Balance End

2,212,764
2,212,765

994,353
2,212,765
3,207,117

1,049,669
3,207,117
4,256,785

1,266,755
4,256,785
5,523,539

1,349,724
5,523,539
6,873,264

Investing Activities
Property, Plant and Equipment
Net Cash Used by Investing Activities

64

Projected Monthly Cash Flow


2015
Operating Activities
Net Income
Security Deposit
Other Asset (Input VAT)
Prepaid Advertisement
Prepaid Rent
Prepaid Insurance
Prepaid Taxes and Licenses
Office Supplies
Deferred Tax Asset
Accrued SSS/PHIC/HDMF employer's share
Accrued SSS/PHIC/HDMF employee's share
Withholding tax-Expanded
VAT Payable
Income Tax Payable
Depreciation
Net Cash Provided/Used by Operating Activities
Investing Activities
Property, Plant and Equipment
Net Cash Used by Investing Activities
Financing Activities
Increase/Decrease in Partners Investment
Partner A
Partner B
Partner C
Partner D
Partner E
Net Cash Provided by Financing Activities
Increase/Decrease in Cash
Cash Balance Beginning
Cash Balance End

January

February

March

April

3,299
(600,000)
(65,089)
(13,750)
(138,000)
(27,500)
(4,791)
(2,750)
4,796
2,944
6,900
1,414
6,287
(826,240)

(7,951)
600,000
6,134
1,250
2,500
436
250
(1,993)
(1,414)
6,287
605,499

3,299
8,063
1,250
2,500
436
250
1,414
6,287
23,499

271,424
50,892
1,250
2,500
436
250
579
3,135
115,745
6,287
452,498

(424,497)
(424,497)

300,000
300,000
300,000
300,000
300,000
1,500,000

249,263
249,263

605,499
249,263
854,762

23,499
854,762
878,260

452,498
878,260
1,330,759

65

2015
Operating Activities
Net Income
Security Deposit
Other Asset (Input VAT)
Prepaid Advertisement
Prepaid Rent
Prepaid Insurance
Prepaid Taxes and Licenses
Office Supplies
Deferred Tax Asset
Accrued SSS/PHIC/HDMF employer's share
Accrued SSS/PHIC/HDMF employee's share
Withholding tax-Expanded
VAT Payable
Income Tax Payable
Depreciation
Net Cash Provided/Used by Operating Activities

May

June

July

August

285,486.93
1,250.00
2,500.00
435.58
250.00
53,303.00
122,352.00
6,286.88
471,864.40

(450.57)
1,250.00
2,500.00
435.58
250.00
(49,018.00)
(193.00)
6,286.88
(38,939.10)

3,299.43
1,250.00
2,500.00
435.58
250.00
643.00
1,414.00
6,286.88
16,078.90

3,299.43
1,250.00
2,500.00
435.58
250.00
1,414.00
6,286.88
15,435.90

Investing Activities
Property, Plant and Equipment
Net Cash Used by Investing Activities

Financing Activities
Increase/Decrease in Partners Investment
Partner A
Partner B
Partner C
Partner D
Partner E
Net Cash Provided by Financing Activities

Increase/Decrease in Cash
Cash Balance Beginning
Cash Balance End

471,864.40
1,330,759.00
1,802,623.00

(38,939.10)
1,802,623.00
1,763,684.00

16,078.90
1,763,684.00
1,779,762.00

15,435.90
1,779,762.00
1,795,199.00

66

2015
Operating Activities
Net Income
Security Deposit
Other Asset (Input VAT)
Prepaid Advertisement
Prepaid Rent
Prepaid Insurance
Prepaid Taxes and Licenses
Office Supplies
Deferred Tax Asset
Accrued SSS/PHIC/HDMF employer's share
Accrued SSS/PHIC/HDMF employee's share
Withholding tax-Expanded
VAT Payable
Income Tax Payable
Depreciation
Net Cash Provided/Used by Operating Activities

September

October

November

December

(451)
1,250
2,500
436
250
(643)
(193)
6,287
9,436

3,299
1,250
2,500
436
250
643
1,414
6,287
16,079

(451)
1,250
2,500
436
250
(643)
(193)
6,287
9,436

285,484
1,250
2,500
436
250
49,018
122,350
6,287
467,575

Investing Activities
Property, Plant and Equipment
Net Cash Used by Investing Activities

Financing Activities
Increase/Decrease in Partners Investment
Partner A
Partner B
Partner C
Partner D
Partner E
Net Cash Provided by Financing Activities

(16,991.90)
(16,991.90)
(16,991.90)
(16,991.90)
(16,991.90)
(84,960)

9,436
1,795,199
1,804,634

16,079
1,804,634
1,820,713

9,436
1,820,713
1,830,149

382,615
1,830,149
2,212,765

Increase/Decrease in Cash
Cash Balance Beginning
Cash Balance End

67

Projected Yearly Statement of Changes in Equity


Statement of Changes in Equity

2015
Partner's Capital, January 1,2015
Add/less: Net Income/(loss) for the year 2015
Total
Less: Withdrawal (10% of Net Income )
Partner's Capital, Dec 31,2015

TOTAL
1,500,000.00
849,590.41
2,349,590.41
(84,959.04)
2,264,631.37

Partner A
300,000.00
169,918.08
469,918.08
(16,991.81)
452,926.27

Partner B
300,000.00
169,918.08
469,918.08
(16,991.81)
452,926.27

Partner C
300,000.00
169,918.08
469,918.08
(16,991.81)
452,926.27

Partner D
300,000.00
169,918.08
469,918.08
(16,991.81)
452,926.27

Partner E
300,000.00
169,918.08
469,918.08
(16,991.81)
452,926.27

2016
Partner's Capital, January 1,2016
Add/less: Net Income/ (loss) for the year 2016
Total
Less: Withdrawal (10% of Net Income)
Partner's Capital, December 31,2016

TOTAL
2,264,631.37
971,013.22
3,235,644.58
(97,101.32)
3,138,543.26

Partner A
452,926.27
194,202.64
647,128.92
(19,420.26)
627,708.65

Partner B
452,926.27
194,202.64
647,128.92
(19,420.26)
627,708.65

Partner C
452,926.27
194,202.64
647,128.92
(19,420.26)
627,708.65

Partner D
452,926.27
194,202.64
647,128.92
(19,420.26)
627,708.65

Partner E
452,926.27
194,202.64
647,128.92
(19,420.26)
627,708.65

2017
Partner's Capital, January 1,2017
Add/less: Net Income/ (loss) for the year 2017
Total
Less: Withdrawal (10% of Net Income)
Partner's Capital, December 31,2017

TOTAL
3,138,543.26
1,107,059.10
4,245,602.37
(110,705.91)
4,134,896.46

Partner A
627,708.65
221,411.82
849,120.47
(22,141.18)
826,979.29

Partner B
627,708.65
221,411.82
849,120.47
(22,141.18)
826,979.29

Partner C
627,708.65
221,411.82
849,120.47
(22,141.18)
826,979.29

Partner D
627,708.65
221,411.82
849,120.47
(22,141.18)
826,979.29

Partner E
627,708.65
221,411.82
849,120.47
(22,141.18)
826,979.29

2018
Partner's Capital, January 1,2018
Add/less: Net Income/ (loss) for the year 2018
Total
Less: Withdrawal (10% of Net Income)
Partner's Capital, December 31,2018

TOTAL
4,134,896.46
1,258,943.52
5,393,839.98
(125,894.35)
5,267,945.63

Partner A
826,979.29
251,788.70
1,078,768.00
(25,178.87)
1,053,589.13

Partner B
826,979.29
251,788.70
1,078,768.00
(25,178.87)
1,053,589.13

Partner C
826,979.29
251,788.70
1,078,768.00
(25,178.87)
1,053,589.13

Partner D
826,979.29
251,788.70
1,078,768.00
(25,178.87)
1,053,589.13

Partner E
826,979.29
251,788.70
1,078,768.00
(25,178.87)
1,053,589.13

2019
Partner's Capital, January 1,2019
Add/less: Net Income/ (loss) for the year 2019
Total
Less: Withdrawal (10% of Net Income)
Partner's Capital, December 31,2019

TOTAL
5,267,945.63
1,428,567.65
6,696,513.28
(142,856.77)
6,553,656.51

Partner A
1,053,589.13
285,713.53
1,339,302.66
(28,571.35)
1,310,731.30

Partner B
1,053,589.13
285,713.53
1,339,302.66
(28,571.35)
1,310,731.30

Partner C
1,053,589.13
285,713.53
1,339,302.66
(28,571.35)
1,310,731.30

Partner D
1,053,589.13
285,713.53
1,339,302.66
(28,571.35)
1,310,731.30

Partner E
1,053,589.13
285,713.53
1,339,302.66
(28,571.35)
1,310,731.30

68

Projected Monthly Statement of Changes in Equity

JANUARY
TOTAL
Partner's Capital, January 1,2015
1,500,000.00
Add/less: Net Income/(loss) for the month of January 3,299.43
Total
1,503,299.43
Less: Withdrawal
Partner's Capital, January 31,2015
1,503,299.43

Statement of Changes in Equity


Partner A
Partner B
Partner C
300,000.00
300,000.00
300,000.00
659.89
659.89
659.89
300,659.89
300,659.89
300,659.89
300,659.89
300,659.89
300,659.89

Partner D
300,000.00
659.89
300,659.89
300,659.89

Partner E
300,000.00
659.89
300,659.89
300,659.89

FEBRUARY
TOTAL
Partner's Capital, February 1,2015
1,503,299.43
Add/less: Net Income/(loss) for the month of February (7,950.57)
Total
1,495,348.87
Less: Withdrawal
Partner's Capital, February 28,2015
1,495,348.87

Partner A
300,659.89
(1,590.11)
299,069.77
299,069.77

Partner B
300,659.89
(1,590.11)
299,069.77
299,069.77

Partner C
300,659.89
(1,590.11)
299,069.77
299,069.77

Partner D
300,659.89
(1,590.11)
299,069.77
299,069.77

Partner E
300,659.89
(1,590.11)
299,069.77
299,069.77

MARCH
TOTAL
Partner's Capital, March 1,2015
1,495,348.87
Add/less: Net Income/(loss) for the month of March 3,299.43
Total
1,498,648.30
Less: Withdrawal
Partner's Capital, March 31,2015
1,498,648.30

Partner A
299,069.77
659.89
299,729.66
299,729.66

Partner B
299,069.77
659.89
299,729.66
299,729.66

Partner C
299,069.77
659.89
299,729.66
299,729.66

Partner D
299,069.77
659.89
299,729.66
299,729.66

Partner E
299,069.77
659.89
299,729.66
299,729.66

APRIL
Partner's Capital, April 1,2015
Add/less: Net Income/(loss) for the month of April
Total
Less: Withdrawal
Partner's Capital, April 30,2015

Partner A
299,729.66
54,284.89
354,014.55
354,014.55

Partner B
299,729.66
54,284.89
354,014.55
354,014.55

Partner C
299,729.66
54,284.89
354,014.55
354,014.55

Partner D
299,729.66
54,284.89
354,014.55
354,014.55

Partner E
299,729.66
54,284.89
354,014.55
354,014.55

TOTAL
1,498,648.30
271,424.43
1,770,072.74
1,770,072.74

69

MAY
Partner's Capital, May 1,2015
Add/less: Net Income/(loss) for the month of May
Total
Less: Withdrawal
Partner's Capital, May 31,2015

TOTAL
1,770,072.74
285,486.93
2,055,559.67
2,055,559.67

Partner A
354,014.55
57,097.39
411,111.93
411,111.93

Partner B
354,014.55
57,097.39
411,111.93
411,111.93

Partner C
354,014.55
57,097.39
411,111.93
411,111.93

Partner D
354,014.55
57,097.39
411,111.93
411,111.93

Partner E
354,014.55
57,097.39
411,111.93
411,111.93

JUNE
Partner's Capital, June 1,2015
Add/less: Net Income/(loss) for the month of June
Total
Less: Withdrawal
Partner's Capital, June 31,2015

TOTAL
2,055,559.67
(450.57)
2,055,109.10
2,055,109.10

Partner A
411,111.93
(90.11)
411,021.82
411,021.82

Partner B
411,111.93
(90.11)
411,021.82
411,021.82

Partner C
411,111.93
(90.11)
411,021.82
411,021.82

Partner D
411,111.93
(90.11)
411,021.82
411,021.82

Partner E
411,111.93
(90.11)
411,021.82
411,021.82

JULY
Partner's Capital, July 1,2015
Add/less: Net Income/(loss) for the month of July
Total
Less: Withdrawal
Partner's Capital, July 31,2015

TOTAL
2,055,109.10
3,299.43
2,058,408.54
2,058,408.54

Partner A
411,021.82
659.89
411,681.71
411,681.71

Partner B
411,021.82
659.89
411,681.71
411,681.71

Partner C
411,021.82
659.89
411,681.71
411,681.71

Partner D
411,021.82
659.89
411,681.71
411,681.71

Partner E
411,021.82
659.89
411,681.71
411,681.71

AUGUST
TOTAL
Partner's Capital, August 1,2015
2,058,408.54
Add/less: Net Income/(loss) for the month of August 3,299.43
Total
2,061,707.97
Less: Withdrawal
Partner's Capital, August 31,2015
2,061,707.97

Partner A
411,681.71
659.89
412,341.59
412,341.59

Partner B
411,681.71
659.89
412,341.59
412,341.59

Partner C
411,681.71
659.89
412,341.59
412,341.59

Partner D
411,681.71
659.89
412,341.59
412,341.59

Partner E
411,681.71
659.89
412,341.59
412,341.59

70

SEPTEMBER
TOTAL
Partner's Capital, September 1,2015
2,061,707.97
Add/less: Net Income/(loss) for the month of September (450.57)
Total
2,061,257.41
Less: Withdrawal
Partner's Capital, September 31,2015
2,061,257.41

Partner A
412,341.59
(90.11)
412,251.48
412,251.48

Partner B
412,341.59
(90.11)
412,251.48
412,251.48

Partner C
412,341.59
(90.11)
412,251.48
412,251.48

Partner D
412,341.59
(90.11)
412,251.48
412,251.48

Partner E
412,341.59
(90.11)
412,251.48
412,251.48

OCTOBER
TOTAL
Partner's Capital, October 1,2015
2,061,257.41
Add/less: Net Income/(loss) for the month of October 3,299.43
Total
2,064,556.84
Less: Withdrawal
Partner's Capital, October 31,2015
2,064,556.84

Partner A
412,251.48
659.89
412,911.37
412,911.37

Partner B
412,251.48
659.89
412,911.37
412,911.37

Partner C
412,251.48
659.89
412,911.37
412,911.37

Partner D
412,251.48
659.89
412,911.37
412,911.37

Partner E
412,251.48
659.89
412,911.37
412,911.37

NOVEMBER
TOTAL
Partner's Capital, November 1,2015
2,064,556.84
Add/less: Net Income/(loss) for the month of November (450.57)
Total
2,064,106.27
Less: Withdrawal
Partner's Capital, November 31,2015
2,064,106.27

Partner A
412,911.37
(90.11)
412,821.25
412,821.25

Partner B
412,911.37
(90.11)
412,821.25
412,821.25

Partner C
412,911.37
(90.11)
412,821.25
412,821.25

Partner D
412,911.37
(90.11)
412,821.25
412,821.25

Partner E
412,911.37
(90.11)
412,821.25
412,821.25

DECEMBER
TOTAL
Partner's Capital, December 1,2015
2,064,106.27
Add/less: Net Income/(loss) for the month of December
285,484.13
Total
2,349,590.41
Less: Withdrawal (10% of Net Income of year 1)
(84,959.50)
Partner's Capital, December 31,2015
2,264,630.91

Partner A
412,821.25
57,096.83
469,918.08
(16,991.90)
452,926.18

Partner B
412,821.25
57,096.83
469,918.08
(16,991.90)
452,926.18

Partner C
412,821.25
57,096.83
469,918.08
(16,991.90)
452,926.18

Partner D
412,821.25
57,096.83
469,918.08
(16,991.90)
452,926.18

Partner E
412,821.25
57,096.83
469,918.08
(16,991.90)
452,926.18

71

Notes to Financial Statements


1. The amounts are composed of the balance of the petty cash fund amounting to P 5 ,000.00 and the resulting balances from the yearly
statement of cash flows.
2. The amounts are increased by 10% base from the previous year.
3. Lapsing Schedule for Property, Plant and Equipment

2015

Leasehold Equipment

Toys

Total

Cost
Beginning
Additions
Disposal
End

307,745
307,745

45,693
45,693

71,059
71,059

424,497
424,497

Beginning
Additions
Disposal
End

30,774
30,774
276,970

9,139
9,139
36,554

35,530
35,530
35,530

75,443
75,443
349,054

Accumulated Depreciation

Net Book Value


2016

Leasehold Equipment

Toys

Total

Cost
Beginning
Additions
Disposal
End

307,745
307,745

45,693
45,693

71,059
71,059

424,497
424,497

Beginning
Additions
Disposal
End

30,774
30,774
61,549
246,196

9,139
9,139
18,277
27,416

35,530
35,530
71,059
-

75,443
75,443
150,885
273,612

Accumulated Depreciation

Net Book Value

72

2017

Leasehold Equipment

Toys

Total

Cost
Beginning
Additions
Disposal
End

307,745
307,745

45,693
45,693

74,257
74,257

353,438
74,257
427,694

Beginning
Additions
Disposal
End

61,549
30,774
92,323
215,421

18,277
9,139
27,416
18,277

37,128
37,128
37,128

79,826
77,041
156,868
270,828

Accumulated Depreciation

Net Book Value

2018

Leasehold Equipment

Toys

Total

Cost
Beginning
Additions
Disposal
End

307,745
307,745

45,693
45,693

74,257
74,257

427,694
427,694

Beginning
Additions
Disposal
End

92,323
30,774
123,098
184,647

27,416
9,139
36,554
9,139

37,128
37,128
74,257
-

156,868
77,041
233,909
193,787

Accumulated Depreciation

Net Book Value

73

2019

Leasehold Equipment

Toys

Total

Cost
Beginning
Additions
Disposal
End

307,745
307,745

45,693
45,693

77,598
77,598

431,036
431,036

Beginning
Additions
Disposal
End

123,098
30,774
153,872
153,872

36,554
9,139
45,693
-

38,799
38,799
38,799

159,652
78,712
238,364
192,673

Accumulated Depreciation

Net Book Value

4. Accrued SSS/PHIC/HDMF employers share


2015

Total Wages
40,560
8,112
48,672

SSS
2,997
599
3,596

PhilHealth
500
100
600

Pag-IBIG
Total Contribution
500
3,997
100
799
600
4,796

2016
Total Wages

SSS
42,385
8,477
50,862

3,181
636
3,817

PhilHealth
500
100
600

Pag-IBIG
Total Contribution
500
4,181
100
836
600
5,017

74

2017

Total Wages

SSS
44,292
8,858
53,151

3,365
673
4,038

PhilHealth
500
100
600

Pag-IBIG Total Contribution


500
4,365
100
873
600
5,238

PhilHealth
563
113
675

Pag-IBIG Total Contribution


500
4,612
100
922
600
5,534

2018

Total Wages
46,285
9,257
55,542

SSS
3,549
710
4,259

2019
Total Wages

SSS
48,368
9,674
58,041

3,549
710
4,259

PhilHealth
563
113
675

Pag-IBIG Total Contribution


500
4,612
100
922
600
5,534

5. Accrued SSS/PHIC/HDMF employee's share


2015

Total Wages
40,560
8,112
48,672

SSS
1,454
291
1,744

PhilHealth
500
100
600

Pag-IBIG
500
100
600

Total Deduction
2,454
491
2,944

Pag-IBIG
500
100
600

Total Deduction
2,544
509
3,053

2016
Total Wages

SSS
42,385
8,477
50,862

1,544
309
1,853

PhilHealth
500
100
600

75

2017

Total Wages

SSS
44,292
8,858
53,151

1,635
327
1,962

PhilHealth
500
100
600

Pag-IBIG
500
100
600

Total Deduction
2,635
527
3,162

PhilHealth
563
113
675

Pag-IBIG
500
100
600

Total Deduction
2,789
558
3,346

2018

Total Wages
46,285
9,257
55,542

SSS
1,726
345
2,071

2019
Total Wages

SSS
48,368
9,674
58,041

1,726
345
2,071

PhilHealth
563
113
675

Pag-IBIG
500
100
600

Total Deduction
2,789
558
3,346

6. Withholding tax expanded


2015
Prepaid Rent
138,000
Withholding tax expanded rate 5%
Withholding tax expanded
6,900

2016
151,800
5%
7,590

2017
166,980
5%
8,349

2018
183,678
5%
9,184

2019
202,046
5%
10,102

76

7. Vat Payable

Particulars
Annual Gross Reciepts

2015
697,500
1.12
622,768
12%
74,732

2016
767,250
1.12
685,045
12%
82,205

2017
843,975
1.12
753,549
12%
90,426

2018
928,373
1.12
828,904
12%
99,468

2019
1,021,210
1.12
911,794
12%
109,415

Vatable Disbursements
Vat Rate
Input Vat for Utilities

138,000
138,000
12%
16,560
16,189
112%
14,455
12%
1,735

151,800
151,800
12%
18,216
16,918
112%
15,105
12%
1,813

166,980
166,980
12%
20,038
17,679
112%
15,785
12%
1,894

183,678
183,678
12%
22,041
18,475
112%
16,495
12%
1,979

202,046
202,046
12%
24,245
19,306
112%
17,238
12%
2,069

Input Vat
Output Vat
Other Asset/ (Vat Payable)

18,295
74,732
(56,438)

20,029
82,205
(62,177)

21,932
90,426
(68,494)

24,021
99,468
(75,448)

26,314
109,415
(83,101)

Vatable Reciepts
VAT Rate
Output Vat

Particulars
Input Vat
Prepaid Rent
Total
Vat Rate
Input Vat
Add: Utilities (Electricity and Internet)

77

8. The computation of the Income Tax Payable is found in the Income Statement which is 30% of the Net Income.
9. The Sales is increased by 10% base from the previous year.

Particulars
Sales
Output
Sales Vat Inclusive

2015
4,248,000
1.12
3,792,857

2016
4,672,800
1.12
4,172,143

2017
5,140,080
1.12
4,589,357

2018
5,654,088
1.12
5,048,293

2019
6,219,497
1.12
5,553,122

10. The Rent expense is increased by 10% escalation rate base from the previous year.
11. Salaries Expense (Child Supervisor)
The 527,280 is computed as follows:
2015
Position
Child Supervisor
13th month pay

Class
Regular

No. of employees
5

Working days

Rate
312

26

Total Wages
40,560

Jan-Dec
12 months

Total
486,720
40,560
527,280

The 551,005 is computed as follows:


2016
Position
Child Supervisor
13th month pay

Class
Regular

No. of employees
5

Working days
26

Rate
326

Total Wages
42,385

Jan-Dec
12 months

Total
508,620
42,385
551,005

Jan-Dec
12 months

Total
531,504

The 575,796 is computed as follows:


2017
Position
Child Supervisor
13th month pay

Class
Regular

No. of employees

Working days
5

26

Rate
341

Total Wages
44,292

44,292
575,796

78

The 601,705 is computed as follows:


2018
Position
Child Supervisor
13th month pay

Class
Regular

No. of employees

Working days
5

Rate
26

Total Wages
356

46,285

Jan-Dec
12 months

Total
555,420

46,285
601,705

The 628,784 is computed as follows:


2019
Position
Child Supervisor
13th month pay

Class
Regular

No. of employees
5

Working days
26

Rate
372

Total Wages
48,368

Jan-Dec
12 months

Total
580,416

48,368
628,784

12. SSS, PhilHealth, Pag- IBIG ( Employer Share of Child Supervisors)


The amounts are computed as follows:
2015

Total Wages
40,560

SSS
2,997

PhilHealth
500

Pag-IBIG
Total Contribution
500
3,997

3,997 x 12= 47964


2016
Total Wages

SSS
42,385

3,181

PhilHealth
500

Pag-IBIG
Total Contribution
500
4,181

4,181 x 12= 50,172

79

2017

Total Wages

SSS
44,292

PhilHealth
500

Pag-IBIG Total Contribution


500
4,365

PhilHealth
563

Pag-IBIG Total Contribution


500
4,612

3,365

4,365 x 12= 52380


2018

Total Wages
46,285

SSS
3,549

4,612 x 12= 55,344


2019
Total Wages

SSS
48,368

3,549

PhilHealth
563

Pag-IBIG Total Contribution


500
4,612

4,612 x 12= 55,344


13. Salaries & Wages (Cashier)
The amount 105,456 is computed as follows:
2015
Position
Cashier
13th month

Class
Regular

No. of employees Working days/month


1
26

Rate
312

Monthly Wages per employee


Jan- Dec
8,112 12 months

Total
97,344

8,112
105,456

The amount 110,201 is computed as follows:


2016
Position
Cashier
13th month

Class
Regular

No. of employees Working days/month


1
26

Rate
326

Monthly Wages per employee


Jan- Dec
8,477 12 months

Total
101,724

8,477
110,201

80

The amount 115,154 is computed as follows:


2017
Position
Cashier
13th month

Class
Regular

No. of employees
1

Working days/month
26

Rate
Monthly Wages per employee
Jan- Dec
341
8,858 12 months

Total
106,296

8,858
115,154

The amount 120,341 is computed as follows:


2018
Position
Cashier
13th month

Class
Regular

No. of employees
1

Working days/month
26

Rate
356

Monthly Wages per employee


Jan- Dec
9,257 12 months

Total
111,084

9,257
120,341

The amount 125,762 is computed as follows:


2019
Position
Cashier
13th month

Class
Regular

No. of employees
1

Working days/month
26

Rate
372

Monthly Wages per employee


Jan- Dec
9,674 12 months

Total
116,088

9,674
125,762

14. SSS, PhilHealth, Pag-IBIG (Employer Share of Cashier)


The amounts are computed as follows:
2015
Total Wages

SSS
8,112

PhilHealth
599

Pag-IBIG
100

100

Total Contribution
799

799 x 12= 9,588

81

2016
Total Wages

SSS
8,477

PhilHealth
636

Pag-IBIG

100

Total Contribution

100

836

836 x 12= 10,032


2017

Total Wages

SSS

PhilHealth

8,858

673

Pag-IBIG

100

Total Contribution

100

873

873 x 12= 10,476


2018
Total Wages

SSS

PhilHealth

9,257

710

Pag-IBIG
113

Total Contribution
100
922

922 x 12= 11,064


2019
Total Wages

SSS
9,674

710

PhilHealth
113

Pag-IBIG
100

Total Contribution
922

922 x 12= 11,064


15. Bookkeeping Fee
The amount 126,399 is computed as follows:
2015
2015
Bookkeeper
13th month
Total

312

No. days working


26

Amount
8,112

ER
599

Pag-IBIG
100

PHDC
10% of BS (Profit)
100
811

Total
9,723

Jan-Dec
12 months

Total
116,676
9,723
126,399

82

The amount 132,093 is computed as follows:


2016
Rate
Bookkeeper
13th month
Total

326

No. days working Amount


26

ER
8,477

Pag-IBIG

PHDC

636

100

100

10% of BS
848

Total
10,161

Jan-Dec
12 months

Total
121,932
10,161
132,093

The amount 138,021 is computed as follows:


2017
Rate

No. days working

Bookkeeper
13th month
Total

341

Amount

ER

26

8,858

Pag-IBIG
673

PHDC
100

100

10% of BS
886

Total
10,617

Jan-Dec
12 months

Total
127,404
10,617
138,021

The amount 144,534 is computed as follows:


2018
No. days working
Bookkeeper
13th month
Total

356

Amount
26

ER
9,257

Pag-IBIG

PHDC

710

100

125

10% of BS
926

Total
11,118

Jan-Dec
12 months

Total
133,416
11,118
144,534

138

10% of BS
967

Total
11,588

Jan-Dec
12 months

Total
139,056
11,588
150,644

The amount 150,644 is computed as follows:


2019
Bookkeeper
13th month
Total

372

No. days working Amount


26

ER
9,674

Pag-IBIG
710

PHDC
100

16. The amount of Office Supplies is increased by 5% then inflation rate (4.5%) yearly.
17. The Maintenance Expense is increased by the inflation rate (4.5%) yearly.
18. The Advertising Expense is increased by the inflation rate (4.5%) yearly.
19. Taxes and Licenses
The amounts are computed as follows:
83

2015

2015
Mayor's Permit
BIR Registration
Community Tax
Total

Year Revenue Rate


Amount
Gross Reciepts
3,000,000
0.001408973204
4,227
500
500
5,227

2016
2016
Year Revenue
Amount
Mayor's Permit
Gross Reciepts
4,248,000
0.001408973204
5,985
Community Tax
500
Additional Community Tax
4,248,000 4248000/5000*2
1,699.20
BIR Registration
500
Total
8,685

2017
2017
Year Revenue
Amount
Mayor's Permit
Gross Reciepts
4,672,800
0.001408973204
6,584
Community Tax
500
Additional Community Tax
4,672,800 4672800/5000*2
1,869.12
BIR Registration
500
Total
9,453

2018

2018
Year Revenue
Amount
Mayor's Permit
Gross Reciepts
5,140,080
0.001408973204
7,242
Community Tax
500
Additional Community Tax
5,140,080 5140080/5000*2
2,056.03
BIR Registration
500
Total
10,298

84

2019
2019
Year Revenue
Amount
Mayor's Permit
Gross Reciepts
5,654,088
0.001408973204
7,966
Community Tax
500
Additional Community Tax
5,654,088 5654088/5000*2
2,261.64
BIR Registration
500
Total
11,228

20. The Utilities Expense is increased by the inflation rate (4.5%) yearly.

85

G. Financial Analyses
1. Current ratio = Current Assets/Current Liability
An indication of Kids citys ability to meet short-term debt obligations; the higher the ratio,
the more liquid the company is. If the current assets of a company are more than twice the current
liabilities, then that company is generally considered to have good short-term financial strength. If
current liabilities exceed current assets, then the company may have problems meeting its short-term
obligations.
The current ratio of Kids City in the year 2015 is 5.40, which continued to increase in the
following years. The current ratio of Kids City as shown below, suggests that the company is more
capable in paying its obligations. This indicates good short-term financial strength for the company.
Current Ratio

2015

2016

2017

2018

Current Assets

2,350,765

3,358,917

4,423,765

5,707,217

7,075,310

435,188
5.40

493,985
6.80

559,697
7.38

633,059
9.02

714,327
9.90

Current
Liabilities
Current Ratio

2019

8,000,000
7,000,000
6,000,000
5,000,000
Current Liabilities

4,000,000

Current Assets

3,000,000
2,000,000
1,000,000
0
2015

2016

2017

2018

2019

86

2. Gross Margin = Revenue-Cost of Goods Sold/Revenue


Kids Citys total sales revenue minus its cost of goods sold, divided by the total sales
revenue, expressed as a percentage. The gross margin represents the percent of total sales revenue
that the company retains after incurring the direct costs associated with producing the goods and
services sold by a company. The higher the percentage, the more the company retains on each peso
of sales to service its other costs and obligations.
The computation for Kids Citys gross margin shown below suggests an increase every year
of operation. Gross margin of Kids City is 41%, 42%, 43%, 43%, and 44% respectively. This
indicates that Kids City can use their money from their gross profit to expand. The good gross
profit margin of Kids City gives the company the liquidity and flexibility to innovate, enter new
markets and grow aggressively.
Gross Margin

2015

2016

2017

2018

2019

Gross Profit

1,561,613

1,749,366

1,957,421

2,187,108

2,444,445

Revenue
Gross Margin

3,792,857
0.41

4,172,143
0.42

4,589,357
0.43

5,048,293
0.43

5,553,122
0.44

8,000,000
7,000,000
6,000,000
5,000,000
Revenue

4,000,000

Gross Profit

3,000,000
2,000,000
1,000,000
2015

2016

2017

2018

2019

87

3. Working Capital = Current Assets Current Liabilities


Working capital of Kids City would measure how much in liquid assets a company has
available to build its business. The number can be positive or negative, depending on how much
debt the company is carrying. In general, companies that have a lot of working capital will be more
successful since they can expand and improve their operations. Companies with negative working
capital may lack the funds necessary for growth.
The working capital of Kids City is increasing annually. The table below is apparently
showing that the current asset of the company exceeds its current liabilities. This implies that the
company would be able to pay its debts and obligations.
Working
Capital
Current Assets
Current
Liabilities
Working
Capital

2015

2016

2017

2018

2019

2,350,765

3,358,917

4,423,765

5,707,217

7,075,310

435,188

493,985

559,697

633,059

714,327

1,915,577

2,864,932

3,864,068

5,074,158

6,360,983

4. Acid Test Ratio = Cash + Marketable Securities/ Current Liabilities


This measures current (short term) liquidity and position of the company. If the value of the
acid-term ratio is less than 1, then it is said that such a company is not stable and may face difficulty
in paying off their debts (short term).
Kids City has a good acid test ratio and this clearly implies that the company is stable over
time. Kids City will have enough assets to cover its immediate liabilities because its acid test ratio is
5.08, 6.49, 7.61, 8.73, and 9,62 respectively.
Acid Test
Ratio

2015

2016

2017

2018

5,000.00

5,000.00

5,000.00

5,000.00

5,000.00

Cash In Bank

2,207,765

3,202,117

4,251,785

5,518,539

6,868,264

Total
Current
Liabilities
Acid Test
Ratio

2,212,765

3,207,117

4,256,785

5,523,539

6,873,264

435,188

493,985

559,697

633,059

714,327

5.08

6.49

7.61

8.73

9.62

Petty Cash

2019

88

5. Net Profit Margin = Net Income Sales x 100


Net profit margin would indicate the Kids City about what percentage of a companys sales
revenue would remain after all costs have been taken into account. This is best compared with other
companies in the same industry and analyzed over time, considering that variations from year to year
may be due to abnormal conditions.
Kids City has also a good net profit margin, and it is increasing annually as shown in the
table below. This indicates that the company is efficient and that it controls its costs well. The net
profit margin of Kids City is 22.40%, 23.27%, 24.12%, 24.94% and 25.73% respectively for the first
five years. The higher the margin is, the more effective the company is in converting revenue into
actual profit.

Net Profit
Margin

2015

2016

2017

2018

2019

Net Profit

849,590

971,013

1,107,059

1,258,944

1,428,568

Sales
Net Profit
Margin

3,792,857

4,172,143

4,589,357

5,048,293

5,553,122

22.40%

23.27%

24.12%

24.94%

25.73%

6. Operating Cash flow to Current Liabilities = Operating Cash Flow/ Current Liabilities
Operating cash flow to current liabilities pertains to the cash generated from the operations
of Kids City (revenues less all operating expenses, plus depreciation), in relation to short-term debt
obligations. Operating cash flow is a more accurate measure of a companys profitability than net
income because it only deducts actual cash expenses and therefore demonstrates the strength of a
companys operations. Consistently negative operating cash flow implies a business is going
backwards in relation to the cost to conduct ordinary operations.
Kids City had a positive OCFCL ratio for the first five years of operation and this would
suggest that the company can really support ongoing operations. The table below suggests a more
than 1 OCFCL ratio for every year of business operation and this implies that the company has
generated less cash in the period than it needs to pay off its short-term liabilities. This may signal a
need for more capital. Thus, investors and analysts typically prefer higher operating cash flow ratios.
89

Operating cash flow to


current liabilities
Operating cash flow
Current Liabilities
Operating cash flow to
current liabilities

2015

2016

2017

2018

2019

1,222,221

1,091,454

1,234,632

1,392,649

1,570,179

435,188

493,985

559,697

633,059

714,327

2.81

2.21

2.21

2.20

2.20

2,500,000
2,000,000
1,500,000

Current Liabilities
Operating cash flow

1,000,000
500,000
2015

2016

2017

2018

2019

7. Cash Balance to Total Liabilities = Cash Balance/ Total Liabilities


This ratio shows Kids City their cash balance in relation to its total liabilities. Cash is the
most liquid asset a business has. A negative cash balance raises a warning signal and failure to
address such an issue will likely result in liquidity problems. Lower risk firms typically have a higher
value CBTL, because they have more cash that can be used to pay suppliers, banks or any other
party that has provided the company with a product or service. Higher risk companies typically have
a lower value CBTL, which means the companys ability to meet its debt obligations is significantly
hampered.
Referring to the computation of cash balance to total liabilities ratio in the table below, Kids
City has a significant result indicating a good ratio for the company. The ratios for five years are
more than 1 and would suggest a good implication to the company. A ratio above 1 means that all
the current liabilities of Kids City can be paid with cash and equivalents.

90

Year
2015
2016
2017
2018
2019

Annual Cash Inflow


1,222,221
1,091,454
1,234,632
1,392,649
1,570,179

PV Factor (12%)
0.893
0.797
0.712
0.636
0.567

1,091,269
870,100
878,786
885,054
890,962

PV of cash inflows
Cash outflow (Initial Investment)
Net Present Value
Cash balance to
total liabilities
2015

2016

2017

2,212,765

3,207,117

4,256,785

5,523,539

6,873,264

435,188

493,985

559,697

633,059

714,327

5.08

6.49

7.61

8.73

9.62

Cash Balance
Total Liabilities
Cash balance to
total liabilities

4,616,170.71
(1,500,000)
3,116,171
2018

2019

Capital Budgeting
Since the project has a positive net present value, then it is expected to produce more income than
what could be gained by earning the discount rate, which means establishing the day care center shall be
pursued.

Year
2015
2016
2017
2018
2019

Investment
1,500,000
74,257

Cash Flow
1,222,221
1,091,454
1,234,632
1,392,649
1,570,179

Unrecovered Investment
Payback Period
277,779
1.25 years
(813,675)
(1,974,049)
(3,366,698)
(4,936,877)

The investment costs shall be recovered after 1.25 years.

91

Horizontal Analysis Yearly Income Statement


Increase (Decrese)
Amount
Percent
379,286
10.00%

Horizontal Analysis
Revenue
Cost of Services:
Rent Expense
Salaries & Wages ( Child Supervisors)
SSS, PhilHealth, Pag- IBIG ( Employer Share of
Child Supervisors)
Total

2015
3,792,857

2016
4,172,143

1,656,000
527,280

1,821,600
551,005

165,600
23,725

10.00%
4.50%

47,964
2,231,244

50,172
2,422,777

2,208
191,533

4.60%
8.58%

Gross Profit

1,561,613

1,749,366

187,753

12.02%

Operating Expenses:
Salaries & Wages (Cashier)
SSS, PhilHealth, Pag-IBIG (Employer Share of
Bookkeeping Fee
Office Supplies
Maintenance
Insurance
Advertising
Depreciation Expense- Leasehold Improvements
Depreciation Expense- Equipment
Depreciation Expense- Toys
Taxes and Licenses
Utilities
Total
Net Income (Loss)
less: provision for Income Tax
Net Income after tax

105,456
9,588
126,399
3,000
25,000
30,000
15,000
30,745
9,139
35,530
5,227
194,273
347,913
1,213,701
364,110
849,590

110,201
10,032
132,093
3,292
26,125
30,000
15,675
30,745
9,139
35,530
8,685
203,015
362,204
1,387,162
416,149
971,013

4,745
444
5,694
292
1,125
675
3,458
8,742
14,292
173,461
52,038
121,423

4.50%
4.63%
4.50%
9.73%
4.50%
0.00%
4.50%
0.00%
0.00%
0.00%
66.15%
4.50%
4.11%
14.29%
14.29%
14.29%

92

Increase (Decrese)
Amount
Percent
417,214
10.00%

Horizontal Analysis
Revenue
Cost of Services:
Rent Expense
Salaries & Wages ( Child Supervisors)
SSS, PhilHealth, Pag- IBIG ( Employer Share of
Child Supervisors)
Total

2016
4,172,143

2017
4,589,357

1,821,600
551,005

2,003,760
575,796

182,160
24,791

10.00%
4.50%

50,172
2,422,777

52,380
2,631,936

2,208
209,159

4.40%
8.63%

Gross Profit

1,749,366

1,957,421

208,055

11.89%

Operating Expenses:
Salaries & Wages (Cashier)
SSS, PhilHealth, Pag-IBIG (Employer Share of
Bookkeeping Fee
Office Supplies
Maintenance
Insurance
Advertising
Depreciation Expense- Leasehold Improvements
Depreciation Expense- Equipment
Depreciation Expense- Toys
Taxes and Licenses
Utilities
Total
Net Income (Loss)
less: provision for Income Tax
Net Income after tax

110,201
10,032
132,093
3,292
26,125
30,000
15,675
30,745
9,139
35,530
8,685
203,015
362,204
1,387,162
416,149
971,013

115,154
10,476
138,021
3,612
27,301
30,000
16,380
30,745
9,139
37,128
9,453
212,151
375,908
1,581,513
474,454
1,107,059

4,953
444
5,928
320
1,176
705
1,599
768
9,136
13,704
194,351
58,305
136,046

4.49%
4.43%
4.49%
9.72%
4.50%
0.00%
4.50%
0.00%
0.00%
4.50%
8.85%
4.50%
3.78%
14.01%
14.01%
14.01%

93

Increase (Decrese)
Amount
Percent
458,936
10.00%

Horizontal Analysis
Revenue
Cost of Services:
Rent Expense
Salaries & Wages ( Child Supervisors)
SSS, PhilHealth, Pag- IBIG ( Employer Share of
Child Supervisors)
Total

2017
4,589,357

2018
5,048,293

2,003,760
575,796

2,204,136
601,705

200,376
25,909

10.00%
4.50%

52,380
2,631,936

55,344
2,861,185

2,964
229,249

5.66%
8.71%

Gross Profit

1,957,421

2,187,108

229,687

11.73%

Operating Expenses:
Salaries & Wages (Cashier)
SSS, PhilHealth, Pag-IBIG (Employer Share of
Bookkeeping Fee
Office Supplies
Maintenance
Insurance
Advertising
Depreciation Expense- Leasehold Improvements
Depreciation Expense- Equipment
Depreciation Expense- Toys
Taxes and Licenses
Utilities
Total
Net Income (Loss)
less: provision for Income Tax
Net Income after tax

115,154
10,476
138,021
3,612
27,301
30,000
16,380
30,745
9,139
37,128
9,453
212,151
375,908
1,581,513
474,454
1,107,059

120,341
11,064
144,534
3,963
28,529
30,000
17,117
30,745
9,139
37,128
10,298
221,697
388,617
1,798,491
539,547
1,258,944

5,187
588
6,513
351
1,229
737
845
9,547
12,709
216,978
65,093
151,884

4.50%
5.61%
4.72%
9.72%
4.50%
0.00%
4.50%
0.00%
0.00%
0.00%
8.94%
4.50%
3.38%
13.72%
13.72%
13.72%

94

Increase (Decrese)
Amount
Percent
504,829
10.00%

Horizontal Analysis
Revenue
Cost of Services:
Rent Expense
Salaries & Wages ( Child Supervisors)
SSS, PhilHealth, Pag- IBIG ( Employer Share of
Child Supervisors)
Total

2018
5,048,293

2019
5,553,122

2,204,136
601,705

2,424,550
628,784

220,414
27,079

10.00%
4.50%

55,344
2,861,185

55,344
3,108,678

247,493

0.00%
8.65%

Gross Profit

2,187,108

2,444,445

257,337

11.77%

Operating Expenses:
Salaries & Wages (Cashier)
SSS, PhilHealth, Pag-IBIG (Employer Share of
Bookkeeping Fee
Office Supplies
Maintenance
Insurance
Advertising
Depreciation Expense- Leasehold Improvements
Depreciation Expense- Equipment
Depreciation Expense- Toys
Taxes and Licenses
Utilities
Total
Net Income (Loss)
less: provision for Income Tax
Net Income after tax

120,341
11,064
144,534
3,963
28,529
30,000
17,117
30,745
9,139
37,128
10,298
221,697
388,617
1,798,491
539,547
1,258,944

125,762
11,064
150,644
4,349
29,813
30,000
17,888
30,745
9,139
38,799
11,228
231,674
403,634
2,040,811
612,243
1,428,568

5,421
6,110
385
1,284
770
1,671
930
9,976
15,017
242,320
72,696
169,624

4.50%
0.00%
4.23%
9.73%
4.50%
0.00%
4.50%
0.00%
0.00%
4.50%
9.03%
4.50%
3.86%
13.47%
13.47%
13.47%

95

Horizontal Analysis Yearly Balance Sheet


Horizontal Analysis
2015
Assets
Current Assets:
Cash in Bank
Security Deposit
Other Asset (Input Vat)
Prepaid Advertising
Prepaid Rent
Prepaid Insurance
Prepaid Taxes & Licenses
Office Supplies
Total Current Assets
Non-current Assets:
Property, Plant and Equipment
Total Non-current Assets
Total Assets

2016

Increase (Decrese)
Amount
Percent

2,212,765
138,000
2,350,765
4,701,530

3,207,117
151,800
3,358,917
6,717,834

994,352
13,800
1,008,152
2,016,304

44.94%
0.00%
0.00%
0.00%
10.00%
0.00%
0.00%
42.89%
42.89%

349,054
349,054
2,699,819

273,612
273,612
3,632,529

(75,442)
(75,442)
932,710

-21.61%
-21.61%
34.55%

4,796
2,944
6,900
56,438
364,110
435,188

5,017
3,053
7,590
62,177
416,149
493,985

221
109
690
5,739
52,038
58,798

4.62%
3.69%
10.00%
10.17%
14.29%
13.51%

Partners' Equity
Partner A, Capital Account
Partner B, Capital Account
Partner C, Capital Account
Partner D, Capital Account
Partner E, Capital Account
Total Partners' Equity

452,926
452,926
452,926
452,926
452,926
2,264,631

627,709
627,709
627,709
627,709
627,709
3,138,543

174,782
174,782
174,782
174,782
174,782
873,912

38.59%
38.59%
38.59%
38.59%
38.59%
38.59%

Total Liabilities and Partner's Equity

2,699,819

3,632,529

932,709

34.55%

Liabilities and Partner's Equity


Current Liabilities
Accrued SSS/PHIC/HDMF employer's share
Accrued SSS/PHIC/HDMF employee's share
Withholding tax-Expanded
VAT payable
Income Tax Payable
Total Liabilities

96

Horizontal Analysis
2017

Increase (Decrese)
Amount
Percent

3,207,117
151,800
3,358,917
6,717,834

4,256,785
166,980
4,423,765

1,049,668
15,180
(3,358,917)
(2,294,069)

32.73%
0.00%
0.00%
0.00%
10.00%
0.00%
0.00%
0.00%
-34.15%

273,612
273,612
3,632,529

270,828
270,828
4,694,593

(2,784)
1,062,064

-1.02%
29.24%

5,017
3,053
7,590
62,177
416,149
493,985

5,238
3,162
8,349
68,494
474,454
559,697

221
109
759
6,317
58,305
65,712

4.40%
3.58%
10.00%
10.16%
14.01%
13.30%

Partners' Equity
Partner A, Capital Account
Partner B, Capital Account
Partner C, Capital Account
Partner D, Capital Account
Partner E, Capital Account
Total Partners' Equity

627,709
627,709
627,709
627,709
627,709
3,138,543

826,979
826,979
826,979
826,979
826,979
4,134,896

199,271
199,271
199,271
199,271
199,271
996,353

31.75%
31.75%
31.75%
31.75%
31.75%
31.75%

Total Liabilities and Partner's Equity

3,632,529

4,694,593

1,062,065

29.24%

2016
Assets
Current Assets:
Cash in Bank
Security Deposit
Other Asset (Input Vat)
Prepaid Advertising
Prepaid Rent
Prepaid Insurance
Prepaid Taxes & Licenses
Office Supplies
Total Current Assets
Non-current Assets:
Property, Plant and Equipment
Total Non-current Assets
Total Assets
Liabilities and Partner's Equity
Current Liabilities
Accrued SSS/PHIC/HDMF employer's share
Accrued SSS/PHIC/HDMF employee's share
Withholding tax-Expanded
VAT payable
Income Tax Payable
Total Liabilities

97

Horizontal Analysis
2017
Assets
Current Assets:
Cash in Bank
Security Deposit
Other Asset (Input Vat)
Prepaid Advertising
Prepaid Rent
Prepaid Insurance
Prepaid Taxes & Licenses
Office Supplies
Total Current Assets
Non-current Assets:
Property, Plant and Equipment
Total Non-current Assets
Total Assets

2018

Increase (Decrese)
Amount
Percent

4,256,785
166,980
4,423,765

5,523,539
183,678
5,707,217

1,266,754
16,698
1,283,452

29.76%
0.00%
0.00%
0.00%
10.00%
0.00%
0.00%
0.00%
29.01%

270,828
270,828
4,694,593

193,787
193,787
5,901,004

(77,041)
1,206,411

-28.45%
25.70%

5,238
3,162
8,349
68,494
474,454
559,697

5,534
3,346
9,184
75,448
539,547
633,059

296
184
835
6,954
65,093
73,362

5.65%
5.83%
10.00%
10.15%
13.72%
13.11%

Partners' Equity
Partner A, Capital Account
Partner B, Capital Account
Partner C, Capital Account
Partner D, Capital Account
Partner E, Capital Account
Total Partners' Equity

826,979
826,979
826,979
826,979
826,979
4,134,896

1,053,589
1,053,589
1,053,589
1,053,589
1,053,589
5,267,946

226,610
226,610
226,610
226,610
226,610
1,133,049

27.40%
27.40%
27.40%
27.40%
27.40%
27.40%

Total Liabilities and Partner's Equity

4,694,593

5,901,004

1,206,411

25.70%

Liabilities and Partner's Equity


Current Liabilities
Accrued SSS/PHIC/HDMF employer's share
Accrued SSS/PHIC/HDMF employee's share
Withholding tax-Expanded
VAT payable
Income Tax Payable
Total Liabilities

98

Horizontal Analysis
2018
Assets
Current Assets:
Cash in Bank
Security Deposit
Other Asset (Input Vat)
Prepaid Advertising
Prepaid Rent
Prepaid Insurance
Prepaid Taxes & Licenses
Office Supplies
Total Current Assets
Non-current Assets:
Property, Plant and Equipment
Total Non-current Assets
Total Assets

2019

Increase (Decrese)
Amount
Percent

5,523,539
183,678
5,707,217

6,873,264
202,046
7,075,310

1,349,725
18,368
1,368,093

24.44%
0.00%
0.00%
0.00%
10.00%
0.00%
0.00%
0.00%
23.97%

193,787
193,787
5,901,004

192,673
192,673
7,267,983

(1,114)
1,366,979

-0.57%
23.17%

5,534
3,346
9,184
75,448
539,547
633,059

5,534
3,346
10,102
83,101
612,243
714,327

918
7,654
72,696
81,268

0.00%
0.00%
10.00%
10.14%
13.47%
12.84%

Partners' Equity
Partner A, Capital Account
Partner B, Capital Account
Partner C, Capital Account
Partner D, Capital Account
Partner E, Capital Account
Total Partners' Equity

1,053,589
1,053,589
1,053,589
1,053,589
1,053,589
5,267,946

1,310,731
1,310,731
1,310,731
1,310,731
1,310,731
6,553,657

257,142
257,142
257,142
257,142
257,142
1,285,711

24.41%
24.41%
24.41%
24.41%
24.41%
24.41%

Total Liabilities and Partner's Equity

5,901,004

7,267,983

1,366,979

23.17%

Liabilities and Partner's Equity


Current Liabilities
Accrued SSS/PHIC/HDMF employer's share
Accrued SSS/PHIC/HDMF employee's share
Withholding tax-Expanded
VAT payable
Income Tax Payable
Total Liabilities

99

HORIZONTAL ANALYSIS
The horizontal analysis is prepared to enable the financial statement users to analyze the data and
significant information in order to make business decisions. This analysis focuses on trends and changes in
financial statement items over time. This could also help a financial statement user to see relative changes
over time and identify positive or negative trends. It also indicates the behavior of revenues, expenses, and
other line items of financial statements over the course of time.

BALANCE SHEET
For the first five (5) years of operation, there is a percentage decrease on the total current assets
over the course of time. The non-current assets decreased over time. The total liabilities have increased
significantly from the first year to the second year of operation, due to the increase of income, leading to
the increase in Income Tax Payable. The total partners equity decreased over multiple years, due to the 10%
withdrawal based on net income every year.

INCOME STATEMENT
There is a constant increase in the percentage of revenue every year for the first five (5) years. The
cost of services also increases over time. Apparently, there is a minimal percentage decrease on the gross
profit as years goes by because the increase in revenue is constant while the percentage increase in the cost
of services is increasing. Total operating expenses is decreasing every year except on the last year of
operation where there is a minimal percentage increase. The net income is decreasing every year.

100

Vertical Analysis Yearly Income Statement

Vertical Analysis
Revenue
Cost of Services:
Rent Expense
Salaries & Wages ( Child Supervisors)
SSS, PhilHealth, Pag- IBIG ( Employer Share of
Child Supervisors)
Total

2015
3,792,857

Common-Size Percentages
2016
2015
2016
4,172,143
100.00%
100.00%

1,656,000
527,280

1,821,600
551,005

43.66%
13.90%

43.66%
13.21%

47,964
2,231,244

50,172
2,422,777

1.26%
58.83%

1.20%
58.07%

Gross Profit

1,561,613

1,749,366

41.17%

41.93%

105,456

110,201

2.78%

2.64%

9,588
126,399
3,000
25,000
30,000
15,000
30,745
9,139
35,530
5,227
194,273
347,913
1,213,701
364,110
849,590

10,032
132,093
3,292
26,125
30,000
15,675
30,745
9,139
35,530
8,685
203,015
362,204
1,387,162
416,149
971,013

0.25%
3.33%
0.08%
0.66%
0.79%
0.40%
0.81%
0.24%
0.94%
0.14%
5.12%
9.17%
32.00%
9.60%
22.40%

0.24%
3.17%
0.08%
0.63%
0.72%
0.38%
0.74%
0.22%
0.85%
0.21%
4.87%
8.68%
33.25%
9.97%
23.27%

Operating Expenses:
Salaries & Wages (Cashier)
SSS, PhilHealth, Pag-IBIG (Employer Share of
Cashier)
Bookkeeping Fee
Office Supplies
Maintenance
Insurance
Advertising
Depreciation Expense- Leasehold Improvements
Depreciation Expense- Equipment
Depreciation Expense- Toys
Taxes and Licenses
Utilities
Total
Net Income (Loss)
less: provision for Income Tax
Net Income after tax

101

Vertical Analysis
Revenue
Cost of Services:
Rent Expense
Salaries & Wages ( Child Supervisors)
SSS, PhilHealth, Pag- IBIG ( Employer Share of
Child Supervisors)
Total

2016
4,172,143

Common-Size Percentages
2017
2016
2017
4,589,357
100.00%
100.00%

1,821,600
551,005

2,003,760
575,796

43.66%
13.21%

43.66%
12.55%

50,172
2,422,777

52,380
2,631,936

1.20%
58.07%

1.14%
57.35%

Gross Profit

1,749,366

1,957,421

41.93%

42.65%

110,201

115,154

2.64%

2.51%

10,032
132,093
3,292
26,125
30,000
15,675
30,745
9,139
35,530
8,685
203,015
362,204
1,387,162
416,149
971,013

10,476
138,021
3,612
27,301
30,000
16,380
30,745
9,139
37,128
9,453
212,151
375,908
1,581,513
474,454
1,107,059

0.24%
3.17%
0.08%
0.63%
0.72%
0.38%
0.74%
0.22%
0.85%
0.21%
4.87%
8.68%
33.25%
9.97%
23.27%

0.23%
3.01%
0.08%
0.59%
0.65%
0.36%
0.67%
0.20%
0.81%
0.21%
4.62%
8.19%
34.46%
10.34%
24.12%

Operating Expenses:
Salaries & Wages (Cashier)
SSS, PhilHealth, Pag-IBIG (Employer Share of
Cashier)
Bookkeeping Fee
Office Supplies
Maintenance
Insurance
Advertising
Depreciation Expense- Leasehold Improvements
Depreciation Expense- Equipment
Depreciation Expense- Toys
Taxes and Licenses
Utilities
Total
Net Income (Loss)
less: provision for Income Tax
Net Income after tax

102

Vertical Analysis
Revenue
Cost of Services:
Rent Expense
Salaries & Wages ( Child Supervisors)
SSS, PhilHealth, Pag- IBIG ( Employer Share of
Child Supervisors)
Total

2017
4,589,357

Common-Size Percentages
2018
2017
2018
5,048,293
100.00%
100.00%

2,003,760
575,796

2,204,136
601,705

43.66%
12.55%

43.66%
11.92%

52,380
2,631,936

55,344
2,861,185

1.14%
57.35%

1.10%
56.68%

Gross Profit

1,957,421

2,187,108

42.65%

43.32%

115,154

120,341

2.51%

2.38%

10,476
138,021
3,612
27,301
30,000
16,380
30,745
9,139
37,128
9,453
212,151
375,908
1,581,513
474,454
1,107,059

11,064
144,534
3,963
28,529
30,000
17,117
30,745
9,139
37,128
10,298
221,697
388,617
1,798,491
539,547
1,258,944

0.23%
3.01%
0.08%
0.59%
0.65%
0.36%
0.67%
0.20%
0.81%
0.21%
4.62%
8.19%
34.46%
10.34%
24.12%

0.22%
2.86%
0.08%
0.57%
0.59%
0.34%
0.61%
0.18%
0.74%
0.20%
4.39%
7.70%
35.63%
10.69%
24.94%

Operating Expenses:
Salaries & Wages (Cashier)
SSS, PhilHealth, Pag-IBIG (Employer Share of
Cashier)
Bookkeeping Fee
Office Supplies
Maintenance
Insurance
Advertising
Depreciation Expense- Leasehold Improvements
Depreciation Expense- Equipment
Depreciation Expense- Toys
Taxes and Licenses
Utilities
Total
Net Income (Loss)
less: provision for Income Tax
Net Income after tax

103

Vertical Analysis
Revenue
Cost of Services:
Rent Expense
Salaries & Wages ( Child Supervisors)
SSS, PhilHealth, Pag- IBIG ( Employer Share of
Child Supervisors)
Total

2018
5,048,293

Common-Size Percentages
2019
2018
2019
5,553,122
100.00%
100.00%

2,204,136
601,705

2,424,550
628,784

43.66%
11.92%

43.66%
11.32%

55,344
2,861,185

55,344
3,108,678

1.10%
56.68%

1.00%
55.98%

Gross Profit

2,187,108

2,444,445

43.32%

44.02%

120,341

125,762

2.38%

2.26%

11,064
144,534
3,963
28,529
30,000
17,117
30,745
9,139
37,128
10,298
221,697
388,617
1,798,491
539,547
1,258,944

11,064
150,644
4,349
29,813
30,000
17,888
30,745
9,139
38,799
11,228
231,674
403,634
2,040,811
612,243
1,428,568

0.22%
2.86%
0.08%
0.57%
0.59%
0.34%
0.61%
0.18%
0.74%
0.20%
4.39%
7.70%
35.63%
10.69%
24.94%

0.20%
2.71%
0.08%
0.54%
0.54%
0.32%
0.55%
0.16%
0.70%
0.20%
4.17%
7.27%
36.75%
11.03%
25.73%

Operating Expenses:
Salaries & Wages (Cashier)
SSS, PhilHealth, Pag-IBIG (Employer Share of
Cashier)
Bookkeeping Fee
Office Supplies
Maintenance
Insurance
Advertising
Depreciation Expense- Leasehold Improvements
Depreciation Expense- Equipment
Depreciation Expense- Toys
Taxes and Licenses
Utilities
Total
Net Income (Loss)
less: provision for Income Tax
Net Income after tax

104

Vertical Analysis Yearly Balance Sheet


Vertical Analysis
Assets
Current Assets:
Cash in Bank
Security Deposit
Other Asset (Input Vat)
Prepaid Advertising
Prepaid Rent
Prepaid Insurance
Prepaid Taxes & Licenses
Office Supplies
Total Current Assets
Non-current Assets:
Property, Plant and Equipment
Total Non-current Assets
Total Assets

2015

2016

Common-Size Percentages
2015
2016

2,212,765
138,000
2,350,765

3,207,117
151,800
3,358,917

81.96%
0.00%
0.00%
0.00%
5.11%
0.00%
0.00%
0.00%
87.07%

88.29%
0.00%
0.00%
0.00%
4.18%
0.00%
0.00%
0.00%
92.47%

349,054
349,054
2,699,819

273,612
273,612
3,632,529

12.93%
12.93%
100.00%

7.53%
7.53%
100.00%

Liabilities and Partner's Equity


Current Liabilities
Accrued SSS/PHIC/HDMF employer's share 4,796
Accrued SSS/PHIC/HDMF employee's share 2,944
Withholding tax-Expanded
6,900
VAT payable
56,438
Income Tax Payable
364,110
Total Liabilities
435,188

5,017
3,053
7,590
62,177
416,149
493,985

0.18%
0.11%
0.26%
2.09%
13.49%
16.12%

0.14%
0.08%
0.21%
1.71%
11.46%
13.60%

Partners' Equity
Partner A, Capital Account
Partner B, Capital Account
Partner C, Capital Account
Partner D, Capital Account
Partner E, Capital Account
Total Partners' Equity

452,926
452,926
452,926
452,926
452,926
2,264,631

627,709
627,709
627,709
627,709
627,709
3,138,543

16.78%
16.78%
16.78%
16.78%
16.78%
83.88%

17.28%
17.28%
17.28%
17.28%
17.28%
86.40%

Total Liabilities and Partner's Equity

2,699,819

3,632,529

100.00%

100.00%

105

Vertical Analysis
Assets
Current Assets:
Cash in Bank
Security Deposit
Other Asset (Input Vat)
Prepaid Advertising
Prepaid Rent
Prepaid Insurance
Prepaid Taxes & Licenses
Office Supplies
Total Current Assets
Non-current Assets:
Property, Plant and Equipment
Total Non-current Assets
Total Assets

2016

2017

Common-Size Percentages
2016
2017

3,207,117
151,800
3,358,917

4,256,785
166,980
4,423,765

88.29%
0.00%
0.00%
0.00%
4.18%
0.00%
0.00%
0.00%
92.47%

90.67%
0.00%
0.00%
0.00%
3.56%
0.00%
0.00%
0.00%
94.23%

273,612
273,612
3,632,529

270,828
270,828
4,694,593

7.53%
7.53%
100.00%

5.77%
5.77%
100.00%

Liabilities and Partner's Equity


Current Liabilities
Accrued SSS/PHIC/HDMF employer's share 5,017
Accrued SSS/PHIC/HDMF employee's share 3,053
Withholding tax-Expanded
7,590
VAT payable
62,177
Income Tax Payable
416,149
Total Liabilities
493,985

5,238
3,162
8,349
68,494
474,454
559,697

0.14%
0.08%
0.21%
1.71%
11.46%
13.60%

0.11%
0.07%
0.18%
1.46%
10.11%
11.92%

826,979
826,979
826,979
826,979
826,979
4,134,896

17.28%
17.28%
17.28%
17.28%
17.28%
86.40%

17.62%
17.62%
17.62%
17.62%
17.62%
88.08%

4,694,593

100.00%

100.00%

Partners' Equity
Partner A, Capital Account
Partner B, Capital Account
Partner C, Capital Account
Partner D, Capital Account
Partner E, Capital Account
Total Partners' Equity
Total Liabilities and Partner's Equity

627,709
627,709
627,709
627,709
627,709
3,138,543
3,632,529

106

Vertical Analysis
Assets
Current Assets:
Cash in Bank
Security Deposit
Other Asset (Input Vat)
Prepaid Advertising
Prepaid Rent
Prepaid Insurance
Prepaid Taxes & Licenses
Office Supplies
Total Current Assets
Non-current Assets:
Property, Plant and Equipment
Total Non-current Assets
Total Assets
Liabilities and Partner's Equity
Current Liabilities
Accrued SSS/PHIC/HDMF employer's share
Accrued SSS/PHIC/HDMF employee's share
Withholding tax-Expanded
VAT payable
Income Tax Payable
Total Liabilities
Partners' Equity
Partner A, Capital Account
Partner B, Capital Account
Partner C, Capital Account
Partner D, Capital Account
Partner E, Capital Account
Total Partners' Equity
Total Liabilities and Partner's Equity

2017

2018

Common-Size Percentages
2017
2018

4,256,785
166,980
4,423,765

5,523,539
183,678
5,707,217

90.67%
0.00%
0.00%
0.00%
3.56%
0.00%
0.00%
0.00%
94.23%

93.60%
0.00%
0.00%
0.00%
3.11%
0.00%
0.00%
0.00%
96.72%

270,828
270,828
4,694,593

193,787
193,787
5,901,004

5.77%
5.77%
100.00%

3.28%
3.28%
100.00%

5,238
3,162
8,349
68,494
474,454
559,697

5,534
3,346
9,184
75,448
539,547
633,059

0.11%
0.07%
0.18%
1.46%
10.11%
11.92%

0.09%
0.06%
0.16%
1.28%
9.14%
10.73%

826,979
826,979
826,979
826,979
826,979
4,134,896
4,694,593

1,053,589
1,053,589
1,053,589
1,053,589
1,053,589
5,267,946

17.62%
17.62%
17.62%
17.62%
17.62%
88.08%

17.85%
17.85%
17.85%
17.85%
17.85%
89.27%

5,901,004

100.00%

100.00%

107

Vertical Analysis
Assets
Current Assets:
Cash in Bank
Security Deposit
Other Asset (Input Vat)
Prepaid Advertising
Prepaid Rent
Prepaid Insurance
Prepaid Taxes & Licenses
Office Supplies
Total Current Assets
Non-current Assets:
Property, Plant and Equipment
Total Non-current Assets
Total Assets
Liabilities and Partner's Equity
Current Liabilities
Accrued SSS/PHIC/HDMF employer's share
Accrued SSS/PHIC/HDMF employee's share
Withholding tax-Expanded
VAT payable
Income Tax Payable
Total Liabilities
Partners' Equity
Partner A, Capital Account
Partner B, Capital Account
Partner C, Capital Account
Partner D, Capital Account
Partner E, Capital Account
Total Partners' Equity
Total Liabilities and Partner's Equity

2018

2019

Common-Size Percentages
2018
2019

5,523,539
183,678
5,707,217

6,873,264
202,046
7,075,310

93.60%
0.00%
0.00%
0.00%
3.11%
0.00%
0.00%
0.00%
96.72%

94.57%
0.00%
0.00%
0.00%
2.78%
0.00%
0.00%
0.00%
97.35%

193,787
193,787
5,901,004

192,673
192,673
7,267,983

3.28%
3.28%
100.00%

2.65%
2.65%
100.00%

5,534
3,346
9,184
75,448
539,547
633,059

5,534
3,346
10,102
83,101
612,243
714,327

0.09%
0.06%
0.16%
1.28%
9.14%
10.73%

0.08%
0.05%
0.14%
1.14%
8.42%
9.83%

1,053,589
1,053,589
1,053,589
1,053,589
1,053,589
5,267,946
5,901,004

1,310,731
1,310,731
1,310,731
1,310,731
1,310,731
6,553,657

17.85%
17.85%
17.85%
17.85%
17.85%
89.27%

18.03%
18.03%
18.03%
18.03%
18.03%
90.17%

7,267,983

100.00%

100.00%

108

VERTICAL ANALYSIS
Vertical analysis of an income statement results in every income statement amount being presented as a
percentage of sales. Vertical analysis of financial statements is a technique in which the relationship between items
in the same financial statement is identified by expressing all amounts as a percentage a total amount. This method
would compare different items to a single item in the same accounting period. This analysis would also be a great
help in the company to measure their effectiveness through the years it has operated.

BALANCE SHEET
Total current assets in relation to the total assets increase every year. In the fifth year, total current assets

already make up the 97.28% of the total assets. A corresponding decrease in the total non-current assets is also
observable by the end of five (5) years. This increase in total current assets is caused by the increase in revenue and
increase in prepaid rent. The decrease in total non-current assets with respect to the total assets is due to the
decrease in Leasehold Improvements that is in turn caused by the depreciation every year.
Total liabilities in relation to the total liabilities and partners equity increased significantly by the second year
due to the increase in revenue.

INCOME STATEMENT

The total cost of services decreases every year in relation to revenue due to the significant increase of
revenue that causes the gross profit to increase. Total operating expenses also decreases due to the corresponding
increase in revenue.

109

H. Accounting and Control Plan

Accounting Policies

Basis of Measurement
The financial statements have been prepared on historical costs basis.

Cash
The cash account includes cash in bank and petty cash fund.

Office Equipment
Equipment acquired that do not exceed P20, 000 will be outright expensed.

Revenue Recognition
Revenue is recognized when services are rendered up to the extent that it is probable that
the economic benefits will flow to the enterprise and the revenue can be reliably measured.

Judgments and Estimates


The enterprise estimates the useful life of its other assets is 2 years while the useful life of its
equipment is 5 years.

Control Policies

There will be segregation of duties. The owner or the appointed managing partner will be the
only one to authorize purchases and cash disbursements and will be supervising the operations
of the business. The cashier will be responsible for the receipt of cash from the customers; the
amount collected would be remitted to the owner or appointed managing partner at the end of
each day. The attendant will be responsible for ensuring that the children are safe and wellattended.

Petty cash will be maintained for daily transaction needs. This will be maintained through the use
of an imprest fund system.

Bookkeeping will be outsourced.

Security cameras will be installed inside the business.

Cash in excess of the petty cash is deposited to the bank account of the business.

110

RECOMMENDATION
Based on the data gathered and analysis done by the proponents, the market study determined the
demand for the day care center service through a thorough research. The study conducted revealed the demand for the
service and enabled the group to come up with an efficient marketing program that will support the viability of the business in
its first stages of operation and expected to last in the long-run.
Generally, Kids City is seen to be feasible upon studying its location, market demand and the factors affecting the
market. It is recommended that an extensive study for other aspects of the business feasibility is conducted and the execution
of the marketing program developed accords to what really satisfies the market.

111

CHAPTER V- SOCIO-ECONOMIC STUDY


The establishment of this project would positively affect its employees, the government and
a part of the population of children in Davao.
To begin with, the establishment of the day care center would provide jobs to people it will
employ. It would also provide them with a stable source of income. This too would help them avail
of the benefits from SSS, PhilHeath and Pag-IBIG, since their employment would mean that they
will be contributing, together with the employers contributions to these agencies, as it is directed by
law.
Secondly, since the company aims to make an income from its operations, it would in turn
pay taxes. This taxes would financially help the government its existence, its operations and its
projects.
Lastly, it would benefit a portion of the population of children in Davao City. By putting up
a place that is conducive to childrens play, it promotes their growth and learning. As Pediatrics, the
official journal of the American Academy of Pediatrics, would put it, Play is essential to
development because it contributes to the cognitive, physical, social, and emotional well-being of
children and youth.
This project would not only benefit individuals but also the community that surrounds it and
the government.

112

CHAPTER VI - ORGANIZATION AND MANAGEMENT STUDY


This part of the study shows the management strategy and how the business was formed,
the form of ownership, the people who are involved in the operation and for its improvement to
achieve the goals and objectives of the business.
A. Basic Consideration in forming the Organization
In establishing a business, there are many aspects that should be considered which will
include:
- Determining what kind of business and objectives should be established
- Evaluate the residents and the place if the business is feasible in the area
- Study the place regarding safety and economic status of the area in the mall if it could attract the
target market
- Find out the competitive advantages of the business against the competitors

B. Form of Ownership
The business is a partnership composed of five persons who bind themselves to manage the
business and are equally responsible for the companys profits or losses, and its liabilities.
Ownership sharing is important to the status of a partner in the organization, in monetary
projections, and role in decision making. It is less of a burden to the partners since they are equally
allotted of profits and losses in agreed proportions. Further, more capital investment is available.
A general partnership has an unlimited liability for all the partners and they are individually
liable for all the debts that incurred in the business. Every partner of this day care business has its
own capital account. The capital account of the partners shows their contribution, profits, less
losses and their distribution. The partners would also share their knowledge, skills, and expertise in
operating the business especially in decision making.

113

As a day care center business, child attendants are needed as part of the business operations. The
day care center exists in order to give services that is appropriate and necessary for child's growth and
welfare. The employees should be given salaries and other benefits that they deserve for the job or task that
they will perform. Marketing strategies for the business should encompass the present and future plans.
The partners of the business should also be given the knowledge about the project and the customer's
awareness and response to the project. Contingency plans should also be available. The life of the
partnership depends upon the partners and the ownership may not be transferred without the consent of
other partners.
C. Organizational Chart
The organizational chart portrays the company's structure and relationships of the business. It
provides information about the organization and the interaction of its key personnel. It illustrates how the
responsibility and authority are dispersed in the organization.

Management/Owners

5 Child Supervisors

1 Cashier

D. Officers and Key Personnel


1.) Management/Owners- are responsible for all the decision-making activities and implementing
them within the organization.
2.) Child Supervisor- receives the customers before and after playing inside the center. He or she
must be child-friendly and accordingly attends to the needs of the children inside the day care
center.

114

3.) Cashier- is the one responsible for the collection of payments and ID deposits, and checks the
logging time of customers. He or she is expected to someone that can be trusted in dealing with
money.
E. Project Schedule
Task Description

Start Date

Duration

Finish Date

A. Research for the Business

8/5/14

50 days

9/23/14

B. Budget plans and Agreement of the

9/24/14

5 days

9/29/14

C. Registering the business name in SEC

9/30/14

3 days

10/3/14

D. Licensing (BIR)

10/4/14

30 days

11/3/14

11/4/14

7 days

11/11/14

11/12/14

90 days

1/12/15

G. Hiring employees

11/18/14

15 days

12/3/14

H. Purchasing of supplies, equipment, and

11/12/14

5 days

11/17/14

12/12/14

30 days

1/12/15

Partners

E. Submit a Letter of Intent for space rental


purposes and other requirements to the mall
for evaluation and approval.
F. Preparation and construction on the
commercial space in the mall where the day
care center will be situated

toys.
I. Advertising
J. Opening of the business

115

The first activity is to do research or feasibility study for the business. The research will take
50 days to finish. It will involve conducting survey, a thorough research, and evaluation of the
business. The purpose of this activity is to know the feasibility of the project technically and
financially. After the research study activity is the budget plans and the agreement of the partners.
Based on the Articles of Partnership, the partners must constitute an agreement, either orally or in
form of writing. The proponents agreed that their business name would be Kids City. It is a day
care center located inside Abreeza mall. Each partner agreed to contribute Php300, 000. 00 each
and there will be an equal distribution of profits and losses. All of the agreements were done in
duration of approximately 5 days and will be followed by the activity to register its business name in
SEC because the business is a partnership type. Licensing activity is done after the registration.
Licensing involves visiting the Municipal Hall and other offices that requires certificate for
registering and licensing of the business.
The partners will register the business in the BIR and fill up the BIR application for
registration form. All the licensing activities will approximately be completed within 30 days. Then,
the partners will submit the necessary requirements needed for the rental of a commercial space
inside the Abreeza mall. The evaluation of the requirements will be completed by 7 days. After the
approval of the mall, the owners of the business will now be allowed to rent a commercial space for
the commencement of their business. Then again, it will be followed by the purchase of the
necessary supplies, equipment, furniture and fixtures, and inventory that will be used by the day care
center business. The next activity is the screening and evaluating applicants who will be applying as
attendants and cashier which would take 15 days to complete. Next task is the advertisement and
promotion of the business and will take 30 days to achieve its purpose to be known to people
especially the target market. After all these activities to be accomplished, the owners will be ready to
put all the things in order and prepare everything for its opening.

116

APPENDIX A
Contribution Tables:

SSS Contribution Table

117

PHILHEATH Contribution Table

118

Pag-IBIG Contribution Table

The maximum monthly compensation used in computing the employee contributions is


currently set at P5,000. This means that the maximum member contribution and employer
counterpart per month are both currently P100.

119

APPENDIX B
Partnership Registration Requirements
The following are the requirements needed in order to register the partnership:
A. SEC REGISTRATION REQUIREMENTS
1. Name Verification Slip;
2. Articles of Partnership; and
3. Joint affidavit of two partners undertaking to change partnership name, provided in its Articles
of Partnership or as amended thereafter, immediately upon receipt of notice or directive from
the Securities and Exchange Commission that another corporation, partnership, or person has
acquired a prior right to the use of that name or that name has been declared misleading,
deceptive, confusingly, similar to a registered name, or contrary to public morals, good customs,
or public policy (not required if Articles of Partnership has provision on this commitment).
B. BIR REGISTRATION REQUIREMENTS

Tax Form
BIR Form 1903 - Application for Registration for Corporations/ Partnerships (Taxable/Non-Taxable)

Documentary Requirements
For Corporations/Partnerships:
Copy of SEC Registration and Articles of Incorporation/Articles of Partnerships, as the case may be;
Copy of Mayors Business Permit or duly received Application for Mayors Business Permit, if the
former is still in process with the LGU

Other documents for submission only if applicable:


a) Contract of Lease;
b) Certificate of Authority if Barangay Micro Business Enterprises (BMBE) registered entity;
c) Franchise Agreement;
d) License to do Business in the Philippines, in case of resident foreign corporation;
e) Proof of Registration/Permit to Operate with BOI, SBMA, BCDA, PEZA.

120

C. SSS REGISTRATION REQUIREMENTS


Any of the partners of a partnership firm should accomplish SSS Forms R-1 (Employer
Registration) and (R-1A (Employment Report) and submit these forms together with a photocopy of the
Articles of Partnership. The original copy of the Articles of partnership must be presented to the SSS for
Authentication purposes.

D. PHILHEALTH REGISTRATION REQUIREMENTS AND PROCEDURES


1. Submit the following at any PhilHealth Office:

Employer Data Record or ER1 Form (in duplicate)

Business permit/license to operate and/or Securities and Exchange Commission (SEC)


Registration

2. After processing, the employer will be issued the following:

PhilHealth Employer Number (PEN) and the Certificate of Registration

PhilHealth Identification Number (PIN) and Member Data Record (MDR) of registered
employees

4. Employers are required to display the Certificate of Registration in conspicuous area of their
offices.
E. PAG-IBIG REGISTRATION REQUIREMENTS
1. Employers Data Form
2. Specimen Signature Form
3.Valid ID
4. SSS Certification (if already registered with SSS)
5. Certified True Copy of Proof of Business Existence

121

For Partnership/Corporation/Foreign-Owned Corporation


- Securities and Exchange Commission (SEC)
Certificate of Partnership/Incorporation
- Approved Articles of Partnership/Incorporation and By-Laws
- Business Permit/Mayors Permit

Online registration system for Pag-IBIG, the following are the required information that must be provided:
A. Business Name (SEC Registration)
B. Branch Name (if applicable)
C. Business Address
D. Business E-mail Address
E. Employer Classification
F. Start Date of Business Operation
G. Nature of Business
H. At least one (1) Contact Information
I. At least one (1) Authorized Signatory with designation
More info here: https://www.pagibigfundservices.com/EmployerRegistration_Public/

122

F. REGISTRATION FORMS

BIR Form 1903

123

SSS Forms R-1 (Employer Registration)

124

R-1A (Employment Report)

Employer Data Record or ER1 Form

125

APPENDIX C
Survey Questionnaire
This survey questions will be used in our feasibility study for our Management Consultancy subject. Your answers will help us
assess the potential of the proposed play house in this establishment/mall. Thank you for your time and cooperation. God
bless.
Day care center- (definition) a day care center is a place that provides supervision of and care for children that is provided
during the day by a person or organization.
Please put a check mark on the blank before your choice.
Name (optional): _________________________
Age: ___
Gender: __ Male __ Female
Civil Status: __ Single __ Married __ Widowed
1. Do you have child/children between the ages 3-9?
__ Yes __ No
2. If yes, how many? __
3. How often do you bring your child/ children to the malls?
__ 1-2 times a week __3-4 times a week __ 5-7 times a week
4. Are you aware of established day care centers in malls?
__Yes __ No
5. Will you be willing to avail of the services of a day care center?
__ Yes __ No
6. If yes, how long do you most prefer to keep your child/children inside the day care center?
__ Less than an hour

__ 1-2 hours __ More than 2 hours

7. How much are you willing to pay for our service (day care center)?
__ Php40 60 per hour __ Php 80 100 per hour __ More than Php100
8. What toys or gadgets are you looking for in a day care center? (You can check more than one.)
__ Puzzle __ Ball pit __ Slides __ Monkey Bars __ Trampoline __ TV __ Dollhouse
__ Educational books __ Playstation __ Computer
__ Others (please specify):____________________
9.

When you decide to send your child/children to the day care center, please check the factors that will affect your
decision: (You can check more than one.)
__ Convenience of location __ Safe environment __ Nurturing environment __High Quality Service
__ Security __ Playhouse size __ Facilities
__Others (please specify): ____________________________

10. How important is a day care center to you?


__ Very important __ Somewhat important

__ Not at all important

11. How are you informed of these services? (You can check more than one.) __the internet/social media networks
__newspapers __magazines __leaflets __word of mouth __others (please specify.)_______________

126

Survey Results and Interpretation:


1.) The company surveyed a total of 70 respondents. Out of 70 respondents, 18 or 25% were males and 52 or
75% were females.

2.) Out of the 70 respondents, 76% have one child, 19% have two children, 3% have three children, and the
remaining 2% have no child at all.

127

3.) Out of the 70 respondents, 89% have child or children and 11% have no child.

4.) Out of the 70 respondents, 83% said they were aware of day care centers inside the malls, while 17% said
they were not aware yet.

128

5.) Out of the 70 respondents, 89% are willing to avail of the day care services, while the others are not.

6.) Thirty six percent (36%) of the respondents prefer to avail day care services for less than an hour, and then,
fourty seven (47%) prefer 1-2 hours, while the remaining respondents prefer to avail for more than 2 hours.

129

7.) The respondents were asked to choose as many toys as they want to be found in a day care.

8.) The respondents were also asked to choose some factors that would affect their decisions when it comes to
sending their child or children in a day care center.

130

9.) Out of the 70 respondents, thirty seven percent (37%) said day care centers are very important, sixty three
percent (63%) said its somewhat important.

131

APPENDIX D

Schedule of Leasehold Improvement Estimated Life and Depreciation:


Particulars
Leasehold Improvents
Leasehold-Utilities
Total Leasehold
Improvements

Unit
Cost

Estimated
Useful Life

Annual
Depreciation

300,000

10

30,000

7,745

10

774

307,745

30,774

Schedule of Equipment Estimated Life and Depreciation:


Equipment

Unit Cost

Estimated Useful
Life

Annual
Depreciation

Television

26,999

5,400

Dvd player

1,699

340

Closed Circuit Television Cameras (CCTV)

16,995

3,399

Total

45,693

9,139

Schedule of Toys Estimated Life and Depreciation:


Items
Melissa & Doug Medical Doctor Role
Play

Caillou 10-Piece Medical Kit


Baby Alive Get Well Medical Kit
New Sprouts Cure It!
Madame Alexander
Toys R Us 13 inch doll Hannah
(Blonde)
Toys R Us 13 inch doll Hannah
(Brunette)
Toys R Us Plush Sea Life - Turtle
Gund Curious George 12 Inch Plush
Fisher-Price Soothe & Glow Giraffe
Babies R Us Plush 9-inch Standing
Hippo
Fisher-Price Soothe & Glow Giraffe

Cost per
Item

Quantity

Total

6,551.32

873.36
873.36
1,091.81
873.36

5
2
3
1
1

349.08

1,310.26

Estimated
Useful
Life

Annual
Depreciation

2,620.08
1,091.81
873.36

2
2
2
2
2

3,275.66
873.37
1,310.04
545.91
436.68

349.08

174.54

349.08
436.46
654.91
567.53

1
1
1
1

349.08
436.46
654.91
567.53

2
2
2
2

174.54
218.23
327.46
283.77

436.9
567.53

1
1

436.9
567.53

2
2

218.45
283.77

1,746.73

132

- Yellow
Webkinz Flower Frog
567.53
Baby Einstein Press & Play Pals Turtle
654.91
1,091.81
Paradise Horses 10 10 inch
Toys R Us Plush 15.5 inch - Monkey
654.91
FAO Schwarz 15 inch Panda - Black
and White
436.46
Toys R Us Plush Jumbo Penguin - 18
Inch
873.36
Toys R Us Plush WWF 6 inch
Stuffed Animal - WhiteOwl
436.46
Webkinz Sparkle Harp Seal
567.53
Toys R Us Plush 19 Inch Alli gator Green
654.91
Cuddlekins Jumbo Giraffe 28 inch
2,184.06
FAO Schwarz 18 inch Lion - Tan
1,091.81
Doc McStuffins: Friendship is the
654.91
Best Medicine DVD + Digital Copy
Blue's Clues: Room - Little Blue
Riding Hood DVD
480.15
Blues Clues ABCs, 123s And More
DVD Collection DVD
873.36
Mickey's Christmas Carol 30th
Anniversary Special Edition DVD
(DVD/Digital Copy)
873.36
Barney/Best Manners Dvd
305.39
305.39
Smurfs Christmas Carol DVD
3,188.93
Step2 Fantasy Vanity
Lil' Rider Blue Wiggle Ride-on Car
1,965.61
Little Tikes Slam Dunk Big Ball Pit
2,620.96
Doc McStuffins Deluxe Get Better
Check-Up Center
3,494.76
1,616.09
Disney Frozen Dual Vanity Playset
The Dream Dazzlers Stylin' Salon
Chair Set
1,853.20
Dream Dazzlers Ooh La La Sassy
Salon
3,363.69
Minnie's Bowdazzling Vanity
1,747.19
Total
40,940.38

567.53

283.77

1
1
2

654.91
1,091.81
1,309.83

2
2
2

327.46
545.91
654.92

436.46

218.23

873.36

436.68

1
1

436.46
567.53

2
2

218.23
283.77

1
1
1

654.91

2
2
2

327.46
1,092.03
545.91

327.46

2184.06

1,091.81
654.91

480.15

240.08

873.36

436.68

1
1
1
1
5
2

873.36
305.39
305.39
3,188.93
9,828.07
5,241.93

2
2
2
2
2
2

436.68
152.70
152.70
1,594.47
4,914.04
2,620.97

1
1

3,494.76
1,616.09

2
2

1,747.38
808.05

7 12,972.40

6,486.20

3,363.69
1
1
1,747.19
56.00 71,059.08

2
2

1,681.85
873.60
35,529.54

133

Property, Plant and Equipment Monthly Lapsing Schedule:

January
Cost:

Leasehold
Improvements

Begining
Accumulated Depreciation:

307,745

Depreiciation per month


Net Book Value

February
Cost:

Equipment

Toys

45,693 71,059

2,565 762

2,961

Total

424,497

6,287

305,180

44,931

68,098

418,210

Leasehold
Improvements

Equipment

Toys

Total

Begining
Accumulated Depreciation:

307,745

45,693 71,059

424,497

Begining

2,565 762

2,961

6,287

Depreiciation per month

2,565 762

2,961

6,287

Ending

5,129

1,523 5,922

12,574

Net Book Value

March
Cost:

302,616

44,170

65,137

411,923

Leasehold
Improvements

Equipment

Toys

Total

Begining
Accumulated Depreciation:

307,745

Begining

5,129

Depreiciation per month

2,565 762

Ending

7,694

Net Book Value

315,438

45,693 71,059

424,497

1,523 5,922

12,574

2,961

6,287

2,285 8,882

18,861

47,978 79,941

443,357

134

April
Cost:

Leasehold
Improvements

Begining
Accumulated Depreciation:

Equipment

307,745

Begining

7,694

Depreiciation per month

2,565 762

Ending
Net Book Value

May
Cost:

Begining
Depreiciation per month

Begining
Accumulated Depreciation:
Begining
Depreiciation per month
Ending
Net Book Value

424,497

2,285 8,882

18,861

2,961

6,287

3,046 11,843

25,148

297,487

42,647 59,216

399,349

Equipment

Toys

Total

307,745

45,693 71,059

424,497

10,258

3,046 11,843

25,148

12,823

Net Book Value

June
Cost:

45,693 71,059

2,565 762

Ending

Total

10,258

Leasehold
Improvements

Begining
Accumulated Depreciation:

Toys

2,961
3,808 14,804

294,922 41,885
Leasehold
Improvements

Equipment

56,255

Toys

6,287
31,434
393,062

Total

307,745

45,693 71,059

424,497

12,823

3,808 14,804

31,434

2,565 762
15,387

2,961
4,569 17,765

292,357 41,124

53,294

6,287
37,721
386,775

135

July
Cost:

Leasehold
Improvements

Begining
Accumulated Depreciation:
Begining
Depreiciation per month

Net Book Value

Begining
Depreiciation per month

Begining
Accumulated Depreciation:
Begining
Depreiciation per month
Ending
Net Book Value

15,387

4,569 17,765

37,721

2,961

6,287

17,952

5,331 20,726

44,008

289,793

40,362 50,334

380,489

Equipment

Toys

Total

307,745

45,693 71,059

424,497

17,952

5,331 20,726

44,008

20,516

Net Book Value

September
Cost:

424,497

2,565 762

Ending

Total

45,693 71,059

Leasehold
Improvements

Begining
Accumulated Depreciation:

Toys

307,745

2,565 762

Ending

August
Cost:

Equipment

2,961
6,092 23,686

287,228 39,601
Leasehold
Improvements

Equipment

47,373

Toys

6,287
50,295
374,202

Total

307,745

45,693 71,059

424,497

20,516

6,092 23,686

50,295

2,565 762

2,961

23,081

6,854 26,647

284,664

38,839 44,412

6,287
56,582
367,915

136

October
Cost:

Leasehold
Improvements

Begining
Accumulated Depreciation:
Begining
Depreiciation per month

Net Book Value

Begining
Depreiciation per month

Begining
Accumulated Depreciation:
Begining
Depreiciation per month
Ending
Net Book Value

23,081

6,854 26,647

56,582

2,961

25,645

7,616 29,608

282,099

38,078 41,451

Equipment

Toys

6,287
62,869
361,628

Total

307,745

45,693 71,059

424,497

25,645

7,616 29,608

62,869

28,210

Net Book Value

December
Cost:

424,497

2,565 762

Ending

Total

45,693 71,059

Leasehold
Improvements

Begining
Accumulated Depreciation:

Toys

307,745

2,565 762

Ending

November
Cost:

Equipment

2,961
8,377 32,569

279,535 37,316
Leasehold
Improvements

Equipment

6,287
69,156

38,490

355,341

Toys

Total

307,745

45,693 71,059

424,497

28,210

8,377 32,569

69,156

2,565 762

2,961

6,287

30,774

9,139 35,530

75,443

276,970

36,554 35,530

349,054

137

BIBLIOGRAPHY:
Valencia and Roxas, Income Taxation, Philippines: 6th edition, 2013-2014.
Block, S., Hirt, G., and Danielsen, B., Foundations of Financial Management: 13th edition
Valix, C., Financial Accounting, Volume 2, Philippines: 2014 edition.
Garrison, R., Managerial Accounting, 14th edition: McGraw-Hill, 2011.
http://www.netmba.com/finance/financial/ratios/
http://www.mybizact.com/what-is-net-operating-loss-carry-over-nolco/
http://www.accountingtools.com/questions-and-answers/what-is-a-horizontal-balance-sheet.html
http://playhouse.phobewankenobi.com/industry_competition.html
http://www.playhousemarket.com/
www.philhealth.gov.ph
www.pag-ibigfund.gov.ph
www.sss.gov.ph
www.sec.gov.ph
http://www.philippinesinsider.com/legal/how-to-register-a-business-in-the-philippines
www.census.gov.ph
www.nro11.neda.gov.ph/nedaxi/davao-region/davao-city/
www.toysrus.com.ph

138

Curriculum Vitae

DAN DERRICK R. GIDUCOS


809 Zone 2 Buhangin,
Hillside Subdivision, Davao City
09228693324
dangiducos@yahoo.com
Motto in life: Just keep moving forward
Favorite Accounting Subject: Basic Accounting
Favorite Accounting Teacher: Sir Mark Russell Perez, CPA, MBA
Favorite study place: My house.

139

DEXTER VAUGHN T. MANCAO


Purok 9 J.P. Laurel St.,
Poblacion, Compostela, Compostela Valley
09327512032
dextervaughnm@gmail.com
Motto in life: Success comes in CANs, not in CANTs
Favorite Accounting Subject: Managerial Accounting
Favorite Accounting Teacher: Sir Mark Russell Perez, CPA, MBA
Favorite study place: Anywhere that serves expensive coffee.

140

MARIA LEONORA M. SABANDAL


18 Lilac St., Countryville Executive Homes,
Cabantian, Davao City
09328720319
leonora.sabandal@gmail.com
Motto in life: It does not matter how slow you go, as long as you keep going.
Favorite Accounting Subject: Managerial Accounting
Favorite Accounting Teacher: Maam Rhea Carpio, CPA
Favorite study place: Anywhere that is cold, has a comfy chair, and has a great lighting.

141

BERMA P. TAGA-AMO
Crossing Cuevas Trento, Agusan del Sur
09094170487
berma_15@yahoo.com
Motto in life: If you can dream it, you can do it.
Favorite Accounting Subject: Auditing Theory
Favorite Accounting Teacher: Sir Pol Medina, CPA, MBA
Favorite study place: Bahay lang.

142

LORRAINE FATIMA A. CAETE


Km. 12 Blk. 1 Lot 10 SPDA Village,
Happiness St., Catalunan Pequeno, Davao City
09072471676
aynah_lors@yahoo.com
Motto in life: Success is getting what you want; happiness is wanting what you get.
Favorite Accounting Subject: Auditing Problems
Favorite Accounting Teacher: Maam Rhea Carpio, CPA
Favorite study place: Bahay.

143