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A FEASIBILITY STUDY ON THE ESTABLISHMENT OF KAWAYAN

SPAGHETTI
Title Page

KAMARUDDEN P. AMGUIAD
ABDULSALAM P. MAMADLA
NORHAN A. SHARIFFUSMAN

SUBMITTED TO THE FACULTY OF THE COLLEGE OF BUSINESS


ADMINISTRATION STI COLLEGE OF TACURONG
IN PARTIAL FULFILLMENT OF THE
REQURIEMENTS FOR THE
DEGREE

BACHELOR OF SCIENCE IN BUSINESS ADMINISTRATION


(Major in Production and Operation Management)

SEPTEMBER 2017
CHAPTER I

INTRODUCTION

Nowadays, many fast foods, cafe, and restaurants are serving the same

kind of food, although different taste and style but what attracts them most is the

uniqueness of the food. Filipinos are wise when it comes to food that they eat

and mostly they are very ideal in looking for a place where they can be

comfortable for eating.

Spaghetti is a very usual and common dish of a Filipino people. It is a

famous Filipino cuisine that uses many version of sauce with lots of meat

ingredients. It is often served during kids birthday parties and even in any kind of

parties. We Filipino had variety style in making spaghetti dish. Spaghetti are

usually done with pasta and spaghetti sauce. Tambo is kindly different with

spaghetti pasta. Spaghetti Tambo is made up of bamboo shoots and similarly

field with tomato sauce with lots of meat ingredients.

Spaghetti Tambo is very unique and unpopular that it is made up of

bamboo shoot which is considered as healthy way of losing weight. The benefits

came from the bamboo shoots are two times effectively controls cholesterol

compared to the original pasta and thats whats more interesting for this food.

Spaghetti Tambo is good for health and can sustain your energy. We often

know that kids are hard to get when it comes to eating vegetables and this kind

of food suits these children and even adults which serves as a healthy diet. This

type of spaghetti dish is very easy to cook and what more exiting is its unique

delicious taste.
Over the past couple of years, people becoming more conscious of

healthy eating habits. From vegan-friendly restaurants to organic grocery

deliveries down to healthier restaurant offerings and everything plant based and

gluten free almost everyone has tried out healthy food fads. There were also a

lot of wellness centers that have started offering juice cleansing retreats and

healthy detoxing with organic table menus.

The rise of healthy offerings in restaurants has become a norm as more

and more people usually ask for healthy options when dining, and business

owners are catching on the trend and have started to put up healthy fast food

joints. In Manila, there are so many healthy fast food restaurants popping up in

almost every corner, making the fast food competition a little tougher for your

usual burger or fries joint. (http://thestandard.com.ph/lifestyle/wellbeing)

According to Kantar Worldpanel, which tracks the shopping behavior of

3,000 Filipino homes in urban and rural areas across the country for a period of

two years, food categories strongly associated with healthier food choice

registered notable growth.

Though gradual and slow, there are already some notable shifts in the

food and beverage preferences of some Filipino consumers, Lourdes

Deocareza, Kantar Worldpanel New Business Development Head said.

Our findings indicate a change in the lifestyle of Filipinos towards health

and wellness, which is a key insight that brands, can leverage and focus

marketing efforts on when introducing their food and beverage products. With

summer just around the corner and the fitness trend booming, brands that can
contribute to the health goals and complement the healthy lifestyles of this

emerging market will have a higher chance of getting into their shopping

baskets, she added.

A healthy diet, which is part of a healthy lifestyle, is the foundation of good

health. It is a diet that is able to satisfy ones energy and nutrient needs for

proper body functions, growth and development, daily activities and maintenance

of health, keeping well within ones caloric needs. Hence, it takes into

consideration both quality and quantity of food consumed by a person.

According to the Food and Agriculture Organization (FAO) of the United

Nations, a healthy diet: a. includes a variety of foods from different food groups;

b. meets the individual needs for calories and nutrients; c. is safe, with no risk

from toxins, bacteria, mold or chemicals; d. is enjoyable and culturally

acceptable; and e. is available and sufficient each day and all year round.

Moreover, according to the World Health Organization (WHO), a healthy

diet emphasizes vegetables, fruits, whole grains, root crops, fat-free or low fat

milk, lean meats, poultry, fish, egg, beans and nuts. It is also low in saturated

fats, trans-fats, cholesterol, sodium and added sugars. A healthy diet is also

consistent with the following principles in nutrition: a. Balance - refers to

consuming foods from different food groups in proportion to each other. b.

Variety - refers to eating different kinds of food from the different food groups

every day. No single food provides all the nutrients in proper amounts needed by

the body; therefore, a wide selection of food is vital to obtaining a healthy diet

and achieving good nutrition. c. Moderation- refers to eating the right proportions
of food that is, not consuming too much or too little as compared with what the

body needs. Extremes in food consumption may lead to various repercussions.

For example, a certain amount of fiber is good for digestion, but too little intake of

fiber may increase the risk for constipation, heart disease and weight gain. On

the other hand, too much fiber may lead to certain nutrient losses. A healthy diet

also provides just enough amounts of energy needed for ones daily activities

without going beyond ones caloric needs so as to maintain a healthy body

weight. Energy requirements differ from person to person and energy provided

by a healthy diet should be in balance with ones energy expenditure.

An unhealthy diet is composed of foods that are energy-dense yet nutrient

poor and are high in saturated fats, trans fats, refined carbohydrates or sodium.

A diet low in fruits and vegetables or fiber is also characteristic of an unhealthy

diet. An unhealthy diet leads to poor nutrition and is one of the major risk factors

for a range of chronic diseases, including cardiovascular diseases, certain

cancers, diabetes and other conditions linked to obesity.

The following are common unhealthy diet practices and their

corresponding impacts on health: a. Low fruit and vegetable consumption. Low

fruit and vegetable intake is among the top 10 risk factors contributing to

mortality, according to evidence presented in the 2003 World Health Report. The

WHO estimates that 1.7 million deaths worldwide are attributable to low fruit and

vegetable consumption. Insufficient intake of fruits and vegetables is estimated to

cause around 14% of gastrointestinal cancer deaths, about 11% of ischemic

heart disease deaths and about 9% of stroke deaths worldwide. b. High sodium
and low potassium consumption. Sodium found in food is either naturally present

or added during processing or cooking. It can be found in table salt, baking soda

or baking powder, monosodium glutamate, cured meat, soy sauce and other

miscellaneous food items and processed foods. High sodium consumption can

be defined as consuming more than two grams of sodium per day, which is

equivalent to 5 grams or 1 teaspoon of salt per day. Together with insufficient

potassium intake (less than 3.5 grams per day), this contributes to high blood

pressure and increases the risk of heart disease and stroke. High sodium intake

also increases calcium excretion resulting in reduced bone density.

In addition, excessive intake of salt preserved food is associated with

increased risk of stomach and nasopharyngeal cancers. c. High consumption of

trans fatty acids and saturated fats. Fats, in general, are concentrated sources of

energy and excessive consumption of fats may lead to obesity. However, not all

fats are the same, and there is increasing evidence that the type of fat in the diet

has important effects on health and may be more important to health than the

total amount of fat in the diet. High consumption of saturated fats and trans fatty

acids increases risk for heart disease by raising low density lipoprotein (LDL)

cholesterol in the blood. Trans-fatty acids, which are commercially called

partially hydrogenated oils, may also contribute to other health problems, such

as diabetes. Saturated fats occur naturally in many foods, the majority of which

come mainly from animal sources like meat and dairy products.

On the other hand, trans fats are present in margarine, shortening, other

solid fats and in commercially fried and baked foods, such as biscuits, cakes,
donuts and chips. d. High free sugar intake. Free sugars include those added to

foods and beverages by the manufacturer, cook or consumer as well as sugars

naturally present in honey, syrups, fruit juices and fruit juice concentrates. There

is increasing concern that free sugar intake, particularly in the form of sugar

sweetened beverages, increases overall energy intake and may even reduce the

intake of foods containing more nutritionally adequate calories. This can lead to

an unhealthy diet, weight gain and increased risk to NCDs. Another concern is

the association between intake of free sugars and dental caries. Dental diseases

are the most prevalent NCDs globally and cause pain, anxiety, functional

limitation, including poor school attendance and performance in children.

(www.nnc.gov.ph)
CHAPTER II

THE INDUSTRY

There has been a shift in the dietary pattern of Filipinos in terms of quality

and quantity over the years as seen in the succeeding table. The typical diet

consists mainly of cereals which are sources of carbohydrates. The consumption

of meats and eggs has also increased. However, the consumption of vegetables

and fruits has continued to decline. Per capita consumption of fruits and

vegetables is only 41 grams and 114 grams per capita per day, respectively, or a

total of 155 grams per day. The World Health Organization recommends the

consumption of 400 grams of fruits and vegetables per day.

In terms of adequacy, 7 in 10 Filipino households do not meet their dietary

energy requirement and that only a small proportion of households met the

Estimated Average Requirement (EAR) for certain nutrients such as vitamin A,

riboflavin, vitamin C and thiamin. The Global School-based Student Health

Survey conducted in the Philippines in 2011 showed that among students aged

13-15 who participated in the survey, 42% usually drank carbonated soft drinks

one or more times per day during the past 30 days. The Nielsen Shopper Trends
Report in 2014 showed that there was a 13% decline in the monthly grocery

spending of Filipinos compared to 2012. The decrease in grocery spending was

accompanied by the increase of Filipinos eating out, with 25% of consumers

eating at fast food restaurants at least once a week. Convenience stores are also

encouraging Filipinos to dine away from home by offering prepared meals,

catering to the increasing demand for convenience. In the 2016 Global Ingredient

and Out-of-Home Dining Trends Report of Nielsen, it was noted that ice cream

and salty snack sales were growing in the Philippines.

Pedro, Benavides and Barba (2006) reported that the changes in the

dietary patterns of Filipinos may be attributed to (a) increasing urbanization with

association to increasing Westernized food habits such as high fat diets,

processed foods and consumption of refined carbohydrates; (b) globalization

which increased trade liberalization, making available a wide variety of processed

and fast foods; (c) increased frequency of eating away from home; (d) use of

computers and computer games; and (e) influence of mass media.

Health attributes strongly influence the foods consumers buy, but not all

attributes are equally important across the globe. There are notable differences

in both the absolute importance of attributes (the percentage who said it is very

important) and the relative importance (the order of importance within the region)

in purchasing decisions. In Asia-Pacific, the importance of food attributes largely

mirrors the global averages, with a few exceptions. The desire for sustainably

sourced ingredients (43%) is higher in Asia-Pacific than in any other region


except Latin America (tie), and it is the second most important attribute for

respondents in the region.

Given the high interest in getting healthier, good-for-you products are

strongly positioned for growth. Forty percent of global respondents say they plan

to buy more fruit (41%) and vegetables (39%) in the next six months. In addition,

one-quarter plan to buy more fish and seafood (25%), yogurt (24%) and water

(23%), and one-fifth plan to buy more nuts and seeds (22%), cereal (20%), juices

(20%) and meat and poultry (18%).

Sixty-four percent of respondents say they shop for foods at specialty

retailers that sell a wide variety of health foods. The percentage is even higher in

health-conscious developing markets - 73% in Asia-Pacific at specialty stores.

Younger consumers are also more likely to shop at specialty retailers. 69% of

Generation Z and 70% of millennial respondents report doing so, compared to

51% of Baby Boomer and 43% of Silent Generation respondents. As consumers

turn to new outlets, manufacturers must ensure their products are available to

consumers no matter where they shop. Likewise, retailers should provide

guidance for consumers aspiring to healthier lives, offering healthy eating ideas

and meal-planning assistance and showcasing their healthy offerings, particularly

fresh products, in store with signage, displays and demonstrations.

(www.nielsen.com)

The increasing consumer trends toward health provide food processors

with an opportunity to take advantage of the growing healthy food market.


Effective messaging is critical in reaching the target audience. These factors are

important in the design of the marketing activity, the composition and

implementation of the marketing approach and the consumer response to the

messaging. Knowledge of these factors can help companies who market healthy

food products to reach their target market.

Data and Knowledge. Knowledge can either be scientific nutritional

evidence justifying nutrition or health claims, or market and consumer behavior

insights. These success factors were called nutritional evidence and consumer

insights. This type of data is typically pursued by conducting research. Superior

knowledge could also be more intuitive knowledge and awareness.

Emotions. Success from a communication approach where

complementation of the factual information was largely focused on emotions.

Some of the characteristics that were emotionally appealing to consumers

include simplicity, naturalness and back to nature.

Endorsement. Endorsements were used to create trust and credibility. In

several cases, the endorsement is granted by respected or well-known

celebrities, role models or heroes on a commercial basis.

Community. This could mean that the underlying message addresses or

appeals to general social values, interests and responsibilities and evokes a

sense of common ground in consumers that encourages them to follow the

campaign. A more direct version of the appeal to social communities involves

triggering active participation.


CHAPTER III

COMPETITIVE ANALYSIS

Competitors Analysis

The table 1 shows the four major competitors of Kawayan Spaghetti which

are the Ice and Fries Caf Bar, Beaux Meals n Snacks, Food Stuff, and Goldy

Foods. These four major players are the indirect competitors of Kawayan

Spaghetti that offers original Spaghetti pasta cuisine.

Table 1. Competitors Analysis


Company Product Price Location Facilities Strengths Weaknesses Strategy
Ice & Food Premium Bonifacio The facilities Unique Offers Differentiated
Fries street are well products premium restaurant
Caf Bar systematized and price
services
Beaux Food Standard Lapu- The facilities Affordable Slow Quality food
Meals n lapu are put in price services and services
Snacks Street order compared compared
to its major to its major
competitors competitors
Food Food Standard Lapu- The facilities Quality Crowded Quality food
Stuff lapu are well ambiance area and services
street systematized and
services
Goldy Food Standard General The facilities Affordable Hidden area Quality food
Foods Lim are put in price and services
Street order compared
to its major
competitors
Competitive Advantage

The entity shall employ a differentiation strategy. Kawayan Spaghetti is a

new way of introducing a well-known cuisine for Filipinos. With the current shift of

customers preference towards a healthier food and Kawayan Spaghetti will be

able to catch these customers. Also one of the edges of Kawayan Spaghetti is

that it offers consumers with a cheap way of achieving health lifestyle.

SWOT Analysis

Strengths

Offers natural healthy food

Having abundant supply in the area

More distribution channels

Weaknesses

Weak in internal control.

Not much flavors to sell.

Opportunities

Demand for health products.

Emerging markets.

Threats

Changes in dietary trends and in taste preferences of the

customer.
Uncertainty of acceptance in the market.

The target market of the business will be the people of Tacurong City.

Refreshments those are willing to buy healthy spaghetti as to have it as one of

their products and the households are the main target of Kawayan Spaghetti.

Demand Analysis

Table 2. Historical Demand

Product

YEAR Per Plate

2012 1,885,200

2013 2,036,016

2014 2,137,817

2015 2,266,086

2016 2,402,051

Table 2 shows the annual historical demand of spaghetti in Tacurong City,

Sultan Kudarat. The researchers gathered information from the Philippine

Statistics Authority about the total population of Tacurong City. The researchers

came up with the computations by the data gathered from the respondents in

Tacurong City, Sultan Kudarat through a survey questionnaire.


Table 3. Projected Demand

Product

YEAR Per Plate

2017 2,524,566

2018 2,650,943

2019 2,777,320

2020 2,903,697

2021 3,030,074

Table 3 shows the projected demand of spaghetti in Tacurong City, Sultan

Kudarat. The researchers came up with the projected demand computations

based on the resulted historical demand computed using Statistical Straight Line

Method.

Supply Analysis

Table 4. Historical Supply

Product Variance

YEAR Per Plate

1,131,120
2012
1,323,410
2013

2014 1,453,716

2015 1,540,938
2016 1,633,394
Table 4 shows that historical supply of spaghetti in Tacurong City, Sultan

Kudarat. The data was given by the three competitor base on their annual sales.

Table 5. Projected Supply


YEAR Per Plate
2017 1,689,344
2018 1,765,130
2019 1,840,916
2020 1,916,702
2021 1,992,488

Supply can be changed in many factors, such as price, costs of

production, technology and price of other products. Table 4 shows that projected

supply of spaghetti in Tacurong City, Sultan Kudarat. It was computed through

the data given by the three competitors by using Statistical Straight Line Method.
Market Gap

Table 6. Market Gap

Per Plate

MARKET TARGET MARKET


YEAR DEMAND SUPPLY
GAP MARKET SHARE
2017 2,524,566 1,689,344 835,222 33% 9%

2018 2,650,943 1,765,130 885,813 33% 9%

2019 2,777,320 1,840,916 936,404 34% 10%

2020 2,903,697 1,916,702 986,995 34% 10%

2021 3,030,074 1,992,488 1,037,586 34% 10%

The researchers came up with the market gap by deducting the projected

supply from projected demand. The percentage of target market was computed

by dividing the market gap from the projected demand.

Analyzing the Market Share

6% 4%
Ice and Fries
33%
Beaux Meals 'n
Snacks
Food Stuff
35% Goldy Foods
Unserved Demand

22%

Figure 1. Analysing the Market Share in Per Plate


The researchers come up with the market gap by deducting the projected

supply from projected demand. The percentage of target market in per plate

which is 33% was computed by dividing the market gap by the historical demand.

Ice and Fries got 6%, Beaux Meals n Snacks has a market share of 4%,

Food Stuff got 35% and Goldy Foods has 22%.

Thus, researchers believe that out of 33% marketable demand, 9% supply

is the target market Kawayan Spaghetti in the year 2017.


CHAPTER IV

MARKETING PLAN

Product

Bamboos in addition to their multiple applications have another important

usage in utilizing their juvenile shoots as popular food items. The presence of

high content of protein, amino acids, minerals, fibre, carbohydrates, and low fat

makes the bamboo shoot one of the widely acclaimed nutrient rich food items.

Also the presence of phytosterols in young shoots provides youthful feeling,

athletic energy, and longevity to regular consumers. Bamboos shoots are popular

in Asiatic countries and form a major component of their traditional cuisines. (P.

Nongdam and Leimapokpam Tikendra

Department of Biotechnology, Manipur University, Canchipur, Imphal, Manipur

795003, India)

Kawayan Spaghetti is a new way of introducing a healthy food on the

menu. It is still the same spaghetti that Filipinos are used to yet the pasta is

made up of bamboo shoots. The benefits from the bamboo shoots will be

enjoyed by every Filipinos in the form of spaghetti. The procedures in preparing

normal spaghetti are employed in making the product. The only difference is the

pasta which is made up of bamboo shoots.

Target Market

Kawayan Spaghetti can be considered as a medicinal food, thus this

product intends to provide healthy food to people who aims to be healthy.

Kawayan spaghetti targets ages 7 years old and above specially those obese
people one that want to lose weights and at the same time satisfying their

stomach.

Logo

Exhibit I. Logo

The Kawayan spaghetti logo shows a picture of bamboo reeds to

fascinate the eye of customers who love to eat unique recipes of food. The reeds

of bamboo also show the resiliency of the entity in facing the consequences in

entering the market. Being new in the industry the logo wants to entice

consumers to try the newest image of Filipino spaghetti. Must try the unique

style is also included in the logo to provide consumers inkling about what does

the entity has to offer.


Brand Name

The entity shall be known as Kawayan Spaghetti to clearly state that the

entity is offering spaghetti made up of kawayan or bamboo. The name itself

signifies the unique way of promoting healthy food yet in a delicious way.

Spaghetti is the most beloved food of Filipinos thus it is only just to provide it a

chance to go mainstream through Kawayan Spaghetti.

Product Positioning

Kawayan Spaghetti shall be positioned in the market as a healthy food.

It will be located in front of STI College of Tacurong in Buenaflor, Tacurong City.

The location is suitable for the entity since it is accessible to main roads making it

easier for distribution. The area is well ventilated and the sanitation can be easily

maintained. As an entity who shall be providing food it is only just to find location

which is clean and free from contaminants and pollutants.


Pricing Strategy

The entity shall employ cost plus markup strategy to determine the

price of the product. Table 5 shows the cost of producing 12 plates of Kawayan

Spagehtti.

Table 7. Cost of Production


Kawayan Spaghetti Qty Unit of Actual Unit of Unit Cost
Measure Market Price Measure

Direct Materials
Bamboo Shoots 3 Pck 25.00 pck 75.00
Beef 0.25 Kg 180.00 kg 45.00
Spaghetti sauce 0.5 Pck 58.00 kg 29.00
Milk (Condense) 1 Pck 42.00 pck 42.00
Cheese 1 Pck 48.00 pck 48.00
Mayonnaise 0.25 Kg 150.00 kg 37.50
Hotdog 0.5 Pcs 20.00 pck 10.00
Carrots 0.3 Pcs 40.00 kg 12.00
Onions 0.06 G 50.00 kg 3.00
Garlic 0.04 G 120.00 kg 6.00
Cooking oil 0.03 G 60.00 kg 1.80
Salt 0.01 G 10.00 kg 0.1
Total Direct Materials 309.4
Manufacturing OH 0.00

Total Product Cost/Unit 309.4

Thus from the above table we can compute for the cost per plate which is

Php 25.78. The entity wants to attain a contribution margin of more than 40%,

therefore we can say that the entity can set the selling price at Php 45.00.
Distribution Strategy

Kawayan Spaghetti will be distributed through different channels by

delivering the products to different refreshments stores in the market. The entity

shall forge contracts to this distribution channels to assure sustainability. This

strategy is useful for the entity since it is the only entity in the area which

provides specialty food Kawayan Spaghetti.

Marketing Budget

Table 8. Marketing Budget


Promotional Activities Materials Budget Details
Methods

Qty Unit Unit Total


Price
Social The product will be Pocket Wi- 1 Pc 999 P 999
Networking promoted through Fi
Sites Facebook and etc.

Flyers Flyers will be Bond paper 50 Pc 8 400


distributed in public printer, ink
place
Tarpaulin Tarpaulins will be Tarpaulin 3 Pc 450 P 1350
installed in front of
the company to
promote the product
Self- The owners
Promotion relatives and
owners will make
action through sales
talk

Total P2,749

Table 8 shows the monthly marketing budget. The first column shows the shows

the promotional methods, the second row shows the activities, the third row
shows the materials used by the company to market the product. The methods

used are Social Networking Site, flyers, tarpaulins and self-promotion. The total

cost of Marketing budget for the first month is worth P2,749.00 containing Pocket

Wi-Fi which is worth P999.00 and 50 pieces of flyers that cost P400.00 and 3

pieces of Tarpaulin that cost P450.00.


CHAPTER IV

ORGANIZATIONAL PLAN

Form of Ownership

The form of the proposed business is a partnership. It is a type of

business organization in which two or more individual pool money, skills and

other resources. It is an arrangement in which two or more individuals shares the

profits and liabilities of a business venture. Partnership is more advantageous

compared to corporation in terms of management due to mutual agency. Owners

also known as partners may enter into agreements without the presence of other

partners so long that it is for the welfare of the entity. Compared to sole

proprietorship, partnership has the greater capability of acquiring more capital.

The three owners are Kamarudden P. Amguiad, Abdulsalam P. Mamadla,

and Norhan A. Shariffusman. They will be sharing their capital equally and all

profits and losses shall be shared equally among them.


Organizational Structure

PARTNERS

MANAGER

HELPERS SECURITY GUARD

Figure 2. Organization Structure

This figure shows the line of command in the entity. The manager shall

directly report to the partners who own the entity. The cashier and security guard

shall be reporting to their immediate superior who is the manager.

Hiring Process

The first step is the posting and announcing of vacancies for employment.

Next is to review job applications. Application review means reading each

application that is received to determine whether the applicant possesses the

skills, education, experience or other qualifications needed for the job. Separate

those applicants into who will be interviewed and who will be retained on file for a

period of time. Testing applicants will be the next step and generally involves

testing applicants for job skills or knowledge to determine whether they are

qualified for the position. The fourth process is to interview the selected

applicants. Interview is a meeting between the job seeker and the employer to

evaluate whether the candidate has the right qualifications for the job. Once the
interviews have been completed, applicants will be selected on the basis of the

results of the testing and the interview. A set of pre-determined criteria is

developed and may include skills, knowledge, experience and education.

Choosing an applicant is done by comparing the applicant's qualifications to a

pre-determined list of qualifications or criteria necessary to perform the job. Once

the qualified applicant is chosen, background checks and reference checks are

necessary. Performing background checks generally involves checking an

applicant's credit score, criminal record, education record and military record.

And the last step is to send hired applicants for orientation and training.
Step 1: Publication/
Announcement of
Vacancies

Step 2: Review Job


Applications

Step 3: Test Applicants

Step 4: Interview
Selected Applicants

Step 5: Choose
Applicants based on
Pre-determined
Selection Criteria

Step 6: Perform
Background and
Reference Check

Step 7: Send Hired


Applicants for
Orientation and Training

Figure 3. Flow Chart


Table 9. Personnel Qualifications, Job Description, Compensation and Mandatory Remuneration

POSITION QUALIFICATION JOB DESCRIPTION COMPENSATION MANDATORY


BENEFITS
PHILHEALTH SSS
Manager 23-30 years old Maintains quality service P10,000/month P100/month P746.70
(Male/Female) by enforcing quality and /month
College customer service
Graduate of any standards
Business Course Records daily sales and
2-3 years work expenses
experience
Helpers (2) 20-30 years old Responsible for preparing P3,000/month P100/month P452.00
(Male/ Female) the products. /month
College
Graduate or
High School
Graduate

Security 18-30 years old Responsible in assuring P5,000/month P100/month P378.30


Guard (1) (Male/ Female) safety of the area /month
College Level
2 3 years of
experience
Chapter VI
OPERATIONAL & TECHNICAL ASPECT

Technical Description Product

The Kawayan Spaghetti is a new image for the most loved pasta cuisine of every

Filipino. It is mainly made up of bamboo shoot, which is considered as one of the most

widely used crops in the Philippines. This product will not only provide customers with a

new variety of pasta cuisine but also a healthy way of enjoying spaghetti. Most of the

food establishments in the area do not provide healthy choices of food, and if there is it

is very expensive. Kawayan Spaghetti is a new product in the market that will provide

customers with cheap and healthy food. Also it will also use local crop bamboo

shoots, thus rebranding it as not only for viand but also as a fine cuisine. The business

has this product not only to make its customers happy but also to inculcate health

awareness.

The color of Kawayan Spaghetti is the same with pasta based spaghetti since the

entity will not use any coloring the pasta (bamboo shoots) is most likely to provide a

creamy white appearance. The texture is al dente just how other pasta is being cooked.

It smells and tastes sweet which appeals the Filipino taste buds. Kawayan Spaghetti

helps control bad cholesterol and strengthens the immune system, also based on

studies it is considered as a medicinal crop since it can reduce the risk of cancer.
Purchasing Workflow

Figure 4 shows the purchasing workflow of the entity. The Raw Materials which

are the bamboo shoots will be acquired from the local market. The acquired suppliers

from the local market shall regularly deliver freshly picked bamboo shoots to the entity.

The entity will have the raw materials from the market because it is abundant and to

assure that there will be a sustainable source of raw materials, the entity shall forge 5

year contract among the suppliers in the market.

Figure 4. Purchase Order

SUPPLIERS KAWAYAN SPAGHETTI

Service Workflow

The Figure 5 shows the distribution of the products. Customers and contracted

retailers shall place their orders in the cashier who shall be taking the orders and

payments. To avoid too much production the cook shall only process the number of

ordered spaghetti in the cooking station. The cooked spaghetti shall be forwarded to the

preparation area where it shall be packed according to orders. Then it shall be delivered

to respective customers or be prepared for pick up.

Figure 5. Service Workflow

Cashier Cooking Preparing Delivery/Pick Up


Location

Kawayan Spaghetti will be loacted at Barangay Buenaflor, Tacurong City. It is

strategically located at the center of the city near schools, and other establishments this

is to assure that there will be influx of customers. Since the entity shall be dealing with

food, the entity shall be situated in area which is not polluted.

Vicinity Map of Kawayan Spaghetti


Machineries and Equipment

Table 10 shows the list of machineries and equipment that will be used for

production. The needed machineries that will be used by entity are electric fan,

generator, LPG tank with burner and freezer. The equipment will be kitchen scale, and

gas stoves. The total cost for machineries is Php 24, 585.00 and for the equipment is

Php. 14, 260.10. The total amount budgeted for Machineries and equipment is Php. 38,

845.10

Table 10. Machineries and Equipment

Particular Quantity Unit Cost / Unit Total


In Php In Php
Machineries
Generator 1 Unit 3, 885 3, 885
Electric Fan 3 Unit 1,700 5, 100
LPG Tank With 1 Unit 2,500 2,500
Burner
Freezer 1 Unit 13,100 13, 100
Subtotal 24, 585
Equipment
Kitchen Scale 1 Unit 494.15 494.15
Stove 3 Unit 4,588.65 13, 765.95
Subtotal 14, 260.10
Total 38, 845.10
Kitchen Tools and Utensils
This table shows the list of kitchen and utensils that will be utilized by the entity.

The total amount to be incurred by the entity for the kitchen tools is Php 41,310.15 and

the amount for kitchen utensils is Php 2,714.75. The total amount is for kitchen and

utensil is Php 44,024.90.

Table 11. Kitchen Tools and Utensils

Particulars Quantity Unit Cost/Unit Total


In Php In Php
Kitchen Tools
Cooking Pan (wok) 3 Pcs 731.05 2, 193.15

Chopping Knife 3 Pcs 113.50 340.50


Measuring Cup 2 Pcs 73.25 146.50
Working Table 5 Pcs 7,542.9 37, 714.50
Chopping Board 4 Pcs 178.50 714

Kitchen Scissors 2 Pcs 100.75 201.50


Subtotal 41, 310.15
Kitchen Utensils
Food Tongs 5 Pcs 35.35 177.50
Ladle 1 Set 102.75 102.75
Food Tray 30 Pcs 81.15 2, 434.50
Subtotal 2, 714.75
Total 44, 024.90
Depreciation

As per definition depreciation is the systematic allocation of depreciable amount

of an asset over its useful life. The objective of depreciation is to have each period

benefiting from the use of the asset bear an equitable share of the asset cost.

The method used in solving the depreciation is the straight-line method where

economic benefits from the assets are allocated evenly over the useful life of the assets.

Table 12 shows the depreciation of machineries and equipment acquired by the

entity. The total cost of machineries is Php 24, 585 and the total cost of equipment Php

14, 260.10. The total depreciation for machineries from year 1 to 3 is Php 5,791.25 and

on its 4th and 5th year it will be Php 4,091.25 abd Php 3,120 respectively. On the other

hand equipments depreciation for the 1st year to 4th year is Php. 2,786.73 and Php.

2,753.19 on its 5th year.

Table 13 shows the schedule for depreciation of kitchen tools and utensils. The

total cost of kitchen tools and utensils is Php 41,310.15 and Php 2,714.75 respectively.

The amount of depreciation for tools is Php 8,262.03 from 1 st to 5th year and for utensils

is Php 542.95 from year 1 to year 5.


Table 12. Depreciation for Machineries and Equipment

Particulars Total Cost Estima Depreciation Expense


ted Year 1 Year 2 Year 3 Year 4 Year 5
Life
Span
Machineries

Generator 3, 885 4 971.25 971.25 971.25 971.25 -


Electric Fan 5, 100 3 1,700 1,700 1,700 - -
LPG Tank 2,500 5 500 500 500 500 500
With Burner
Freezer 13, 100 5 2,620 2,620 2,620 2,620 2,620
Subtotal 24, 585 5,791.25 5,791.25 5,791.25 4,091.25 3,120
Equipment
Kitchen 494.15 4 123.54 123.54 123.54 123.53 -
Scale
Stove 13, 765.95 5 2,753.19 2,753.19 2,753.19 2,753.19 2,753.19
Subtotal 14, 260.10 2,876.73 2,876.73 2,876.73 2,876.73 2,753.19
Total 38, 845.10 8,667.98 8,667.98 8,667.98 6,967.98 5,873.19
Table 13. Depreciation for Kitchen Tools and Utensils
Particulars Total Cost Estim Depreciation Expense
ated
Life
Span
Kitchen Year 1 Year 2 Year 3 Year 4 Year 5
Tools
Cooking Pan 2, 193.15 5 438.63 438.63 438.63 438.63 438.63
(wok)
Chopping 340.50 5 68.1 68.1 68.1 68.1 68.1
Knife
Measuring 146.50 5 29.3 29.3 29.3 29.3 29.3
Cup
Working 37, 714.50 5 7,542.9 7,542.9 7,542.9 7,542.9 7,542.9
Table
Chopping 714 5 142.8 142.8 142.8 142.8 142.8
Board
Kitchen 201.50 5 40.3 40.3 40.3 40.3 40.3
Scissors
Subtotal 41, 310.15 8,262.03 8,262.03 8,262.03 8,262.03 8,262.03
Kitchen
Utensils
Food Tongs 177.50 5 35.5 35.5 35.5 35.5 35.5
Ladle 102.75 5 20.55 20.55 20.55 20.55 20.55

Food Tray 2, 434.50 5 486.9 486.9 486.9 486.9 486.9

Subtotal 2, 714.75 542.95 542.95 542.95 542.95 542.95

Total 44, 024.90 8,804.98 8,804.98 8,804.98 8,804.98 8,804.98


Supplies

Table 14 shows the schedule for monthly supplies that will be purchased by

entity for its operations. The kitchen supply amounts to Php 585 and office supplies

amounts to Php 261.

Table 14. Supplies

Particulars Quantity Unit Cost/Unit Total


In Php In Php
Kitchen Supplies
Dishwashing 5 Bottle 45 225
Liquid
Sponge 8 Set 30 240
Steel Wool 8 Set 15 120
Subtotal 585
Office Supplies
Pens 1 Box 59.75 59.75
Receipts 5 Pad 16.25 81.25
Journals 2 Pcs 22.50 45
Logbook 1 Pcs 75 75
Subtotal 261
Total 846
Annual Budget for Supply

Table 15 shows the annual budget for supplies. It is budgeted to have an equal monthly supplies, thus from

January to December the entity shall be incurring Php 846 of supplies. This is an equivalent of Php 10,152 every year.

Table 15. Annual Budget for Supplies

Particulars Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Total
Kitchen
Supplies
Dishwashing 225 225 225 225 225 225 225 225 225 225 225 225 2,700
Liquid
Sponge 240 240 240 240 240 240 240 240 240 240 240 240 2,880
Steel Wool 120 120 120 120 120 120 120 120 120 120 120 120 1,440
Subtotal 585 585 585 585 585 585 585 585 585 585 585 585 7,020
Office
Supplies
Pens 59.75 59.75 59.75 59.75 59.75 59.75 59.75 59.75 59.75 59.75 59.75 59.75 717
Receipts 81.25 81.25 81.25 81.25 81.25 81.25 81.25 81.25 81.25 81.25 81.25 81.25 975
Journals 45 45 45 45 45 45 45 45 45 45 45 45 540
Logbook 75 75 75 75 75 75 75 75 75 75 75 75 900
Subtotal 261 261 261 261 261 261 261 261 261 261 261 261 3,132
Total 846 846 846 846 846 846 846 846 846 846 846 846 10,152
Inventory

Table 16 shows the list of inventories of different ingredients and their

corresponding quantities and costs. The monthly budget for inventory is Php 7,167.

Table 16. Inventories

Particulars Quantity Unit Cost/Unit Total


In Php In Php
Bamboo 60 Pck 25 1,500
Shoots
Beef 5 Kg 180 900
Spaghetti 10 Pck 58 580
Sauce
Milk 20 Pck 42 840
(Condense)
Cheese 20 Pck 48 960
Mayonnaise 5 Kg 150 750
Hotdog 10 Pck 120 1,200
Carrots 6 Kg 40 240
Onions 1.2 Kg 50 60
Garlic 0.8 Kg 120 96
Cooking Oil 0.6 Kg 60 36
Salt 0.5 Kg 10 5
Total 7,167
Annual Budget for Inventories

Table 17 shows the annual budget for inventories. It is assumed that there will be no peak season for Kawayan

Spaghetti thus the annual budget is estimated to be Php 86,004.

Table 17. Annual Budget for Inventories

Particulars Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Total
Bamboo 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 18,000
Shoots
Beef 900 900 900 900 900 900 900 900 900 900 900 900 10,800
Spaghetti 580 580 580 580 580 580 580 580 580 580 580 580 6,960
Sauce
Milk 840 840 840 840 840 840 840 840 840 840 840 840 10,080
(Condense)
Cheese 960 960 960 960 960 960 960 960 960 960 960 960 11,520
Mayonnaise 750 750 750 750 750 750 750 750 750 750 750 750 9,000
Hotdog 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 14,400
Carrots 240 240 240 240 240 240 240 240 240 240 240 240 2,880
Onions 60 60 60 60 60 60 60 60 60 60 60 60 720
Garlic 96 96 96 96 96 96 96 96 96 96 96 96 1,152
Cooking Oil 36 36 36 36 36 36 36 36 36 36 36 36 432
Salt 5 5 5 5 5 5 5 5 5 5 5 5 60
Total 7,167 7,167 7,167 7,167 7,167 7,167 7,167 7,167 7,167 7,167 7,167 7,167 86,004
Installation of Water & Electricity

Table 18 shows the cost for installation of water and electricity. As per provided

by the respective implementing agencies, the installation of electricity is estimated to be

Php 7,250 and for water installation amounts to Php 4,900. Thus the total cost incurred

for installation of water and electricity is Php 12,150.

Table 18. Cost of Installation of Water & Electricity (in Php)


Particulars Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Total

Electricity 7,250 - - - - - - - - - - - 7,250


Water 1,500 1,500 1,500 - - - - - - - - - 4,500
Total 8,750 1,500 1,500 - - - - - - - - - 11,750

Transportation Cost

There will be no transportation cost to be incurred for purchasing of raw materials

since the entity already forged contracts with the suppliers. The suppliers will be

delivering these materials to the entity periodically based on the practice of the entity

Utility

Table 19 illustrates the monthly costs for water and electricity of the entity which

amounts to Php 3,950 and an annual cost of Php 47,400.

Table 19. Utility (in Php)


Particulars Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Total

Electricity 2,350 2,350 2,350 2,350 2,350 2,350 2,350 2,350 2,350 2,350 2,350 2,350 28,200
Water 1,600 1,600 1,600 1,600 1,600 1,600 1,600 1,600 1,600 1,600 1,600 1,600 19,200
Total 3,950 3,950 3,950 3,950 3,950 3,950 3,950 3,950 3,950 3,950 3,950 3,950 47,400
Repair and Maintenance

Table 20 shows the cost for monthly repairs and maintenance of the entity. For

the first quarter of operation it is estimated that the entity will incur Php 250 per month

and for the succeeding quarters it will be Php 300 per month.

Table 20. Annual Repair and Maintenance (in Php)


Particulars Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Total

Repairs 250 250 250 300 300 300 300 300 300 300 300 300 3,450
Total 250 250 250 300 300 300 300 300 300 300 300 300 3,450

Waste Disposal

Table 21 shows the schedule of cost for waste disposal which amounts to Php

45 per month as per provided by the local government. The annual cost for waste

disposal is Php 540.

Table 21. Waste Disposal (in Php)

Particulars Cost/Month
In Php
January 45
February 45
March 45
April 45
May 45
June 45
July 45
August 45
September 45
October 45
November 45
December 45
Total 540
Sales Forecast

Table 22 shows the projected sales forecast for the Kawayan Spaghetti with a

selling price of Php 40.00 per pack.

Table 22. Sales Forecast (in Php)


Particula Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
r t
Kawayan
Spaghett
i
Selling 45 45 45 45 45 45 45 45 45 45 45 45
Price
Number 640 640 640 640 640 640 640 640 640 640 640 640 76,800
of Units 0 0 0 0 0 0 0 0 0 0 0 0
Total 288, 288, 288, 288, 288, 288, 288, 288, 288, 288, 288, 288, 3,456,000
Sales 000 000 000 000 000 000 000 000 000 000 000 000

Cost of Sales

Table 23 shows the monthly cost per unit amounting Php 27.78 per pack.
Particula Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
r t
Kawayan
Spaghett
i
Cost per 27.7 27.7 27.7 27.7 27.7 27.7 27.7 27.7 27.7 27.7 27.7 27.7
Unit 8 8 8 8 8 8 8 8 8 8 8 8
Number 640 640 640 640 640 640 640 640 640 640 640 640 76,800
of Units 0 0 0 0 0 0 0 0 0 0 0 0
Total 177, 177, 177, 177, 177, 177, 177, 177, 177, 177, 177, 177, 2,133,504
Cost of 792 792 792 792 792 792 792 792 792 792 792 792
Sales
Chapter VII

FINANCIAL PLAN

Sources of Financing

Due to limited capital requirement the needed capital shall be financed directly by

the partners. They shall be investing equal amounts as follows;

Amguiad, Kamarudden Php 50,000


Mamadla, Abdulsalam Php 50,000
Shariffusman, Norhan Php 50,000

Project Cost

Kawayan Spaghetti
Project Cost (in Php)

Working Capital
Inventory 7,167
Salaries and wages 21,000
Machineries and Equipment 38,845.10
Kitchen Supplies 585
Tools and
Utensils 44,024.90
Office Supplies 261
Permits and Licenses 13,950
Prepaid Advertising 2,749
Rent 5,000
Utilities 3,950
Total Working Capital 137,532
Total 132,532
Contingency (5%) 6,876.6
Total Project Cost P 144,408.6
Summary of Basic Financial Assumptions

a. The contingency is computed at 5% of the total project cost.

b. 100% of the total project cost will be coming from personal investment of

partners.

c. Partners agrees not to withdraw cash from the entity until the end of 5 years.

d. The depreciation method that the business will use is straight line method.

e. The useful life of the machinery and equipment is 3-5 years with no salvage

value.

f. The sales price as well as the cost per unit of the raw materials increases by 2%

every years.

g. Salaries and wages, advertising expense, office supplies, kitchen supplies

expenses, utilities, permits and licenses will increase by 2% every year.

h. Employee benefits will increase depending on the salary rates given by DOLE

every year.

i. All finished goods inventory are sold out.

j. All sales and purchases transactions are cash basis.


Projected Financial Statements

Projected Statements of Financial Position

The statements of financial position of Kawayan Spaghetti show that the

total assets for 2017 to 2021 are P735,515.56 P1,343,467.71 ,P1,964,082.91,

P2,597,626.57 and P3,244,353.18 respectively, which has an increasing trend.

All assets are financed by the partners through their personal funds. Also the

entity is operating on a cash basis thus there are no liabilities incurred. The total

owners equity for the year 2017 to 2021 are the same with the assets, it also

shows an increasing trend.


Assets
Current Assets Pre - Operation 2017 2018 2019 2020 2021
Cash Php59,117.00 Php658,685.76 Php1,280,687.11 Php1,915,359.51 Php2,562,956.37 Php3,223,736.18
Inventory Php7,167.00 Php7,167.00 Php7,167.00 Php7,167.00 Php7,167.00 Php7,167.00
Supplies Php846.00 Php846.00 Php846.00 Php846.00 Php846.00 Php846.00
Total Current Assets Php67,130.00 Php666,698.76 Php1,288,700.11 Php1,923,372.51 Php2,570,969.37 Php3,231,749.18
Non-Current Assets
Machineries and Equipment Php38,845.10 Php38,845.10 Php38,845.10 Php38,845.10 Php38,845.10 Php38,845.10
Acc.Dep-Machineries and Equipment Php5,791.20 Php11,582.40 Php17,373.60 Php23,164.80 Php28,956.00
Kitchen Tools and Utensils Php44,024.90 Php44,024.90 Php44,024.90 Php44,024.90 Php44,024.90 Php44,024.90
Acc.Dep-Kitchen Tools and Utensils Php8,262.00 Php16,524.00 Php24,786.00 Php33,048.00 Php41,310.00
Total Non-Current Assets Php82,870.00 Php68,816.80 Php54,763.60 Php40,710.40 Php26,657.20 Php12,604.00
Total Assets Php150,000.00 Php735,515.56 Php1,343,463.71 Php1,964,082.91 Php2,597,626.57 Php3,244,353.18

Liabilities
Current Liabilities
Accounts Payable
Total Current Liabilities
Non-Current Liabilities
Notes Payable
Total Non-Current Liabilities
Partner's Equity
Kamarudden, A Php50,000.00 Php245,171.85 Php447,821.24 Php654,694.30 Php865,875.52 Php1,081,451.06
Mamadla, A Php50,000.00 Php245,171.85 Php447,821.24 Php654,694.30 Php865,875.52 Php1,081,451.06
Shariffusman, N Php50,000.00 Php245,171.85 Php447,821.24 Php654,694.30 Php865,875.52 Php1,081,451.06
Total Partner's Equity Php150,000.00 Php735,515.56 Php1,343,463.71 Php1,964,082.91 Php2,597,626.57 Php3,244,353.18
Total Liabilities and Partner's Equity Php150,000.00 Php735,515.56 Php1,343,463.71 Php1,964,082.91 Php2,597,626.57 Php3,244,353.18
Projected Statements of Financial Performance and Distribution of Profit

In the statements of financial performance of Kawayan Spaghetti, the

sales are in increasing trend as well as the gross profit for the five years of

operation. The sales for 2017 to 2021 are P3,456,000 , P3,525,120 ,

P3,595,624.4 , P53,667,534.85 , P3,740,885.55 respectively. The gross profit for

the five year operations are P1,055,808, P1,076,094.1 , P1,098,462.64 ,

P1,120,431.90 and P1,142,840.53 for 2017, 2018, 2019, 2020, and 2021

respectively. The net profit for the five year operations are P585,515.56,

P607,948.15, P620,619.20, P633,543.66, P646,726.61 for 2017, 2018, 2019,

2020, and 2021 respectively. Kawayan Spahetti generated profit in an increasing

trend. It shows that the business operates well


Product 2017 2018 2019 2020 2021
Php3,456,000.0 Php3,525,120.0 Php3,595,622.4 Php3,667,534.8 Php3,740,885.5
Sales 0 0 0 5 4
Php2,400,192.0 Php2,448,195.8 Php2,497,159.7 Php2,547,102.9 Php2,598,045.0
Less: Cost of Sales 0 4 6 5 1
Php1,055,808.0 Php1,076,924.1 Php1,098,462.6 Php1,120,431.9 Php1,142,840.5
Gross Profit Margin 0 6 4 0 3
Less: Operating Exp
Salaries and Marketing Exp.
Internet Php11,988.00 Php12,227.76 Php12,472.32 Php12,721.76 Php12,976.20
Flyers Php1,200.00
Tarpaulin Php1,350.00
Total Sales and Marketing Exp. Php14,538.00 Php12,227.76 Php12,472.32 Php12,721.76 Php12,976.20
General Administrative Exp.
Salaries and Wages Php21,000.00 Php21,420.00 Php21,848.40 Php22,285.37 Php22,731.08
Fringe Benefits Php22,524.00 Php22,524.00 Php22,524.00 Php22,524.00 Php22,524.00
Permit and Licenses Php13,950.00 Php14,229.00 Php14,513.58 Php14,803.85 Php15,099.93
Supplies Php10,152.00 Php10,355.04 Php10,562.14 Php10,773.38 Php10,988.85
Rent Expense Php60,000.00 Php61,200.00 Php62,424.00 Php63,672.48 Php64,945.93
Utilities Php47,400.00 Php48,348.00 Php49,314.96 Php50,301.26 Php51,307.28
Repair and Maintenance Php3,450.00 Php3,519.00 Php3,589.38 Php3,661.17 Php3,734.39
Waste Disposal Php540.00 Php550.80 Php561.82 Php573.05 Php584.51
Installation of Water & Electricity Php11,750.00
Depreciation Expense Php14,053.20 Php14,053.20 Php14,053.20 Php14,053.20 Php14,053.20
Total General and Administrative Exp. Php204,819.20 Php196,199.04 Php199,391.48 Php202,647.76 Php205,969.17
Total Operating Exp. Php219,357.20 Php208,426.80 Php211,863.79 Php215,369.52 Php218,945.37
Operating Income Php836,450.80 Php868,497.36 Php886,598.85 Php905,062.37 Php923,895.16
Income Taxes (30%) Php250,935.24 Php260,549.21 Php265,979.66 Php271,518.71 Php277,168.55
Net Profit (Loss) Php585,515.56 Php607,948.15 Php620,619.20 Php633,543.66 Php646,726.61
Division of Profit & Loss
Kamarudden, A Php195,171.85 Php202,649.38 Php206,873.07 Php211,181.22 Php215,575.54
Mamadla, A Php195,171.85 Php202,649.38 Php206,873.07 Php211,181.22 Php215,575.54
Shariffusman, N Php195,171.85 Php202,649.38 Php206,873.07 Php211,181.22 Php215,575.54
Total Distributed Profit (added to Partners
Equity) Php585,515.56 Php607,948.15 Php620,619.20 Php633,543.66 Php646,726.61
Projected Statements of Cash Flow

The statements of cash flow of Kawayan Spaghetti show that from the

year 2017-2021 the total cash are, P658,685.76, P1,280,687.11, P1,915,359.51,

P2,562,956.37 and P3,233,736.18 respectively. Due to the increasing trend of

the sales, it helps increase the net cash of the business. The purchase of the

property, plant and equipment is only in the year 2017 and for the next four years

there are no other acquisition for the property, plant and equipment.
Cash Flow 2017 2018 2019 2020 2021

Cash Beginning Php59,117.00 Php658,685.76 Php1,280,687.11 Php1,915,359.51 Php2,562,956.37

Cash Receipts
Sales Php3,456,000.00 Php3,525,120.00 Php3,595,622.40 Php3,667,534.85 Php3,740,885.54

Cash Disbursement
Cost of Goods Sold Php2,400,192.00 Php2,448,195.84 Php2,497,159.76 Php2,547,102.95 Php2,598,045.01
Internet Php11,988.00 Php12,227.76 Php12,472.32 Php12,721.76 Php12,976.20
Flyers Php1,200.00
Tarpaulin Php1,350.00
Salaries and Wages Php21,000.00 Php21,420.00 Php21,848.40 Php22,285.37 Php22,731.08
Fringe Benefits Php22,524.00 Php22,524.00 Php22,524.00 Php22,524.00 Php22,524.00
Permit and Licenses Php13,950.00 Php14,229.00 Php14,513.58 Php14,803.85 Php15,099.93
Supplies Php10,152.00 Php10,355.04 Php10,562.14 Php10,773.38 Php10,988.85
Rent Expense Php60,000.00 Php61,200.00 Php62,424.00 Php63,672.48 Php64,945.93
Utilities Php47,400.00 Php48,348.00 Php49,314.96 Php50,301.26 Php51,307.28
Repair and Maintenance Php3,450.00 Php3,519.00 Php3,589.38 Php3,661.17 Php3,734.39
Waste Disposal Php540.00 Php550.80 Php561.82 Php573.05 Php584.51
Installation of Water & Electricity Php11,750.00 Php0.00 Php0.00
Income Taxes (30%) Php250,935.24 Php260,549.21 Php265,979.66 Php271,518.71 Php277,168.55
Cash Ending Php658,685.76 Php1,280,687.11 Php1,915,359.51 Php2,562,956.37 Php3,223,736.18
Financial Statement Analyses

Analysis of Liquidity

A. Working Capital

Working Capital is a liquid resource that the management will control in the short

term. The working capital for the year 2017, 2018, 2019, 2020 and 2021 are P438,231,

P666,692.76, P1,288,700.11, P1,923,372.51, P2,570, 969.37, and P3,231,749.18

respectively. The entity's working capital is constantly increasing which means that it

was able to manage its short term resources well.

B. Current Ratio and Acid-Test Ratio

These two ratios are used to determine the capacity of an entity to meet its

current obligations. Since the entity has no liabilities then there is no need to present

these ratios. The assets are increasing constantly, if the entity shall acquire liabilities in

its future operations it can still manage to pay these liabilities.

Analysis of Solvency

A. Equity Ratio

Equity ratio reflects financial strength and caution to creditors. The equity ratio for

the year 2017, 2018, 2019, 2020 and 2021 remained at 100% respectively. The higher

the equity ratio the better since all of the assets is financed by the owner that reduces

the risk of no payment of the debt that will lead to bankruptcy.


Analysis of Profitability

A. Gross Profit Ratio

Gross profit ratio is used to assess a companys financial health and business

model by revealing the proportion of money left over from revenues after accounting for

the cost of goods sold. Meaning in 2017, 2018, 2019, 2020 and 2021 there are .31

centavos of gross profit in every peso generated by the entity on net sales.

B. Cost of Goods Sold Ratio

The cost of goods sold ratio indicates the ability of the entity to control its cost of

goods sold to increase its profit. The cost of goods sold for the year 2017, 2018, 2019,

2020 and 2021 is constant at 0.61. In the year 2017, in every peso of net sales, 61% is

the cost of goods sold. The constant trend shows that the entity is doing well to maintain

its cost of goods sold without sacrificing the quality of the products offered.

C. Net Income Ratio

The net income ratio measures profitability after considering all sales and

expenses, including the interest, and non-operating items. Kawayan Spaghettis net

profit ratio is at increasing trend which is good since it is a positive sign of profitability.

The net profit ratio for the year 2017, 2018, 20919, 2020 and 2021 is 0.17:1.
Other Performance Analysis

A. Payback Period

The payback period indicates the number of years and days to fully recover its

investment. Kawayan Spaghetti Manufacturing has 82 days to recover the cash being

used to start the business.