Financial Plan. Docs 1

Westmead International School
School of Economics, Business and Accountancy
FINANCIAL STUDY
The financial study discusses the financial aspects of the study, in order
for a business plan to understand it needs money to start. To determine whether
the future industry will remain profitable through the existence of competitors and
unfavourable economic condition. In addition, it serves as a guide for the
researchers to know if the transaction within five months is increasing.
Objectives of the Study
1. To have enough information about the financial account of the business.
2. To assure that the business is profitable and feasible.
3. To calculate the expenses of the business.
Source of Financing
Financing is needed to start a business and ramp it up to profitability.
There are several sources to consider when looking for start-up financing. But
first it’s needed to consider how much money need and when will it need. The
financial needs of a business will vary according to the type and size of the
business. The funds are personal loans of the partners from their family and
relatives. They intended to have personal borrowings to exempt the partnership
Laundrix: Multi-Purpose Themed Laundry Hamper

from paying interest. The results they gathered e them appraisal of the goods
opportunities of their investments in the business.
Table
Initial Capital Requirements
Name of the partners Contribution

Dalisay, Blessie Joy P. 3,000.00
Ilagan, Helen I. 3,000.00
Palmones, Jayhan Grace 3,000.00
Rodriguez, Hazel B. 3,000.00
Total 12,000.00
Total Projected Cost
Particulars Contribution
Direct Materials 1,935.20
Tools and Equipment 75.00
Utilities 850.00
Selling Expense 3,500.00
Total Working Capital 6,360.20
Cash on hand 5,639.80
Total 12,000.00
This table shows the total projected cost for the company’s operation. The
raw materials cover a whole month operation, tools and supplies covers the
whole operation, and the rest covers weekly consumption.

Financial Assumption
In order to come up with financial projections, the following are assumed
in the preparation of financial statements and supporting schedules:
1. The business will have a starting capital Php 20,000.00 to meet the
capital requirement.
2. The business will operate for only four (4) months.
3. The business expects to produce 20 pcs on monthly basis
4. The product price for consumers will be P300.00 per piece
5. The production will increase each month depending on the inventory

and purchasing power of the consumer.
6. The company will pay utilities of Php 150.00 monthly for water, Php
150.00 monthly for electricity and Php 500.00 monthly for internet usage.
7. All purchases during the operation will be made on cash basis.
8. The profit and loss will be distributed equally to the partners.
Financial Statement
Financial Statement is a collection of reports about an organization's
financial results, financial condition, and cash flows. The objective of financial
statements is to provide information about the financial position, performance
and changes in financial position of an enterprise that is useful to a wide range of

users in making economic decisions. Financial statement should be
understandable, relevant, reliable and comparable. It contains useful information
regarding the four basic financial statements such as statement of financial
position, statement of changes in equity, income statement and cash flow
statement. The four financial statements for five months are in the following
tables:
Statement of the Financial Position
It provides a picture of the business financial position at a specific period
time. It is used in evaluating the company’s liquidity, solvency, financial structure
and capacity for adaptation.
Table No.
Projected Statement of the Financial Position
Month 1 2 3 4
ASSETS
Cash & Other 13,693.80 16,114.80 19,302.00 23,255.4
0
Assets
PARTNERS EQUITY
Blessie Joy Dalisay 3,423.45 4,028.70 4,825.50 5,813.85
Helen Ilagan 3,423.45 4,028.70 4,825.50 5,813.85
Jayhan Grace 3,423.45 4,028.70 4,825.50 5,813.85
Palmones
Hazel Rodriguez 3,423.45 4,028.70 4,825.50 5,813.85
Total liabilities and 13,693.80 16,114.80 19,302.00 2 3,225.40
Partners equity

Income Statement
It presents the result of the company’s operation or performance for a
given time. This statement consists of expense and revenue.
Table No
Projected Income Statement
Month 1 2 3 4
Gross Sales 6,000.00 7,500.00 9,000.00 10,500.00
Cost of 1,935.20 2,419.00 2,908.80 3,386.60
Goods
Sold
Gross Profit 4,064.80 5,081.00 6,091.20 7,113.40
Tools and 325.00 310.00 310.00 310.00
Supplies
Operating 2,100.00 2,350 .00 2,600.00 2,850.00

Expense
Net Income 1,639.80 2,421.00 3,181.20 3,953.40
Statement of Partner’s Equity
It is the financial report that shows the changes in total partners’ capital
accounts during an accounting period.

Table No
Projected Statement of Partner’s Equity
Month 1 2 3 4
Dalisay Capital 2,500.00 2,923.45 3,528.70 4,325.50
Beginning
Add: Share in net Income 423.45 605.25 796.80 988.35
Dalisay Capital,
Ending 2,923.45 3,528.70 4,325.50 5,313.85
Ilagan Capital 2,500.00 2,923.45 3,528.70 4,325.50

Beginning
Ilagan Capital,
Ending 2,923.45 3,528.70 4,325.50 5,313.85
Palmones Capital 2,500.00 2,923.45 3,528.70 4,325.50

Beginning
Palmones Capital,
Ending 2,923.45 3,528.70 4,325.50 5,313.85
Rodriguez Capital 2,500.00 2,923.45 3,528.70 4,325.50

Beginning
Rodriguez Capital,
Ending 2,923.45 3,528.70 4,325.50 5,313.85

Statement of Cash Flow
It presents the summary of the operating, investing and financing activities
of the company. It reconciles the beginning and ending balances of cash and
cash equivalents in the SFP.
Table no.
Projected Cash Flow Statement
Month 1 2 3 4
Net Cash Flow
from Operating
Activities
Net Income 1,639.80 2,421.00 3,181.20 3,953.40

Net Cash Flow 1,639.80 2,421.00 3,181.20 3,953.40
from Operating
Activities
Investments by 12,000.00
Partners
Net Cash Flows - - - -
from Financing
Activities
Net Increase in 13,639.80 2,421.00 3,181.20 3,953.40
Cash
Total Cash Flows 2,421.00 3,181.20 3,953.40
Cash Balance, 13,693.80 13,693.80 16,114.80 19,302.00
beginning
Cash Balance, 13,693.80 16,114.80 19,302.00 23,255.40
ending
Gross Sales. The grand total of all sale transactions reported in a period,
without any deductions included within the figure.
Cost per unit. It is commonly derived when a company produces a large
number of identical products. The cost is derived from the variable costs and

fixed costs incurred by a production process, divided by the number of units
produced.
Cost of Goods Sold. It is the accumulated total of all costs used to create
a product or service, which has been sold. These costs fall into the general sub-
categories of direct labor, materials, and overhead.
Financial Statement Analysis. Financial Statement Analysis is the
process of extracting information from financial statements to better understand a
company’s current and future performance and financial condition.
Gross Profit Margin. Gross Profit Margin shows the relationship between
sales and the cost of products sold, measures the ability of a company both to
control costs and inventories or manufacturing of products and to pass along
price increases through sales to customers.
Table No
Gross Profit Margin
Month 1 2 3 4
Gross 4,064.80 5,081.00 6,091.20 7,113.40

profit
Net sales 6,000.00 7,500.00 9,000.00 10,500.00
Ratio 0.68 0.68 0.68 0.68
The table above shows the computation of the return on sales ratio of the
company. It shows company’s’ more profit on the following months to come.

Return on Sales
The operating profit margin measures the overall operating efficiency and
incorporates of all expenses associated by ordinary or normal business activities.
In other words, it measures a company’s performance by analyzing what
percentage of total company revenues are actually converted into company
profits.
Return on Sales= Net Income/Net Sales
Table No
Return on sales
Month 1 2 3 4
Net Income 1,639.80 2,421.00 3,181.20 3,953.40
Net Sales 6,000.00 7,500.00 9,000.00 10,500.00
Ratio 0.28 0.32 0.35 0.38
The table above shows the computation of the return on sales ratio of the
company. It shows company’s’ more profit on the following months to come.
Return on Equity
Return on Equity is especially used for comparing the performance of
companies in the same industry. As with return on capital, a ROE is a measure of
management's ability to generate income from the equity available to it. ROE is
equal to a fiscal year net income (after preferred stock dividends, before common
stock dividends), divided by total equity (excluding preferred shares), expressed
as a percentage.

Table No
Return on Equity
Month 1 2 3 4
Net Income 1,639.80 2,421.00 3,181.20 3,953.40
Average
Equity 13,693.80 16,114.80 19,302.00 23,255.40
Ratio 0.12 0.15 0.16 0.17

Return on Assets
Return on assets (ROA) is an indicator of how profitable a company is
relative to its total assets. ROA gives an idea as to how efficient management is
at using its assets to generate earnings. Calculated by dividing a company's
annual earnings by its total assets, ROA is displayed as a percentage.
Table No
Return on Assets
Month 1 2 3 4
Net Income 1,639.80 2,421.00 3,181.20 3,953.40
Average
Assets 13,693.80 16,114.80 19,302.00 23,255.40
Ratio 0.12 0.15 0.16 0.17
Table above shows the computed rate of return of assets for five months.
Asset Turnover
Asset turnover is a productivity measure that reflects the volume of sales
that a company generates from each peso invested in assets. A company can
increase its asset turnover by increasing sales volume with no increase in assets
and/or by reducing asset investment without reducing sales.

Table 19
Asset Turnover
Month 1 2 3 4
Net Sale 6,000.00 7,500.00 9,000.00 10,500.00
Average
Assets 13,693.80 16,114.80 19,302.00 23,255.40
Ratio 0.44 0.47 0.47 0.45
Break-even Point Analysis
The break-even point is the production level where total revenues equal
total expenses. In other words, the break-even point is where a company
produces the same amount of revenues as expenses either during a
manufacturing process or an accounting period.
Table No
Break-even Point Analysis Peso Sales
Month 1 2 3 4
Fixed Cost 1,639.80 2,421.00 3,181.20 3,953.40
Divided by:
CM Ratio 0.68 0.68 0.68 0.68
BEP–Peso Sales 2,490.88 3,560.29 4,687.06 5,813.82
Table 20 shows the break-even point of the company in peso sales for four
months period.
Payback Period
The payback period is the time required for the amount invested in an asset to be
repaid by the net cash outflow generated by the asset. It is a simple way to
evaluate the risk associated with a proposed project. The formula for the payback
method is simplistic: Divide the cash outlay (which is assumed to occur entirely at

the beginning of the project) by the amount of net cash flow generated by the
project per month (which is assumed to be the same in every month).
Table No
Monthly Cash Return
Month 1 2 3 4
Net Income 1,639.80 2,421.00 3,181.20 3,953.40
Monthly
Income 1,639.80 2,421.00 3,181.20 3,953.40
Return
Table No
Payback Period
Month Cost of Monthly Balance Payback
Investment Cash Period
Return
1 12,000.00 1,639.80 10,306.20 1

2 10,306.20 2,421.00 7,885.20 1
3 7,885.20 3,181.20 4,698.00 1
4 4,698.00 3,953.40 744.60 1
5 744.60 - -
Total 4.00
Payback
Period
(Month)
The table shows that in the 4 span of months, the proponents will be able
to recover their initial investment to the company. By this month, the partners
have already accumulated their contributed capital. The company is also
financially stable.

SCHEDULES

SCHEDULE NO. 1
VARIABLE EXPENSE
MONTH 1 2 3 4
Direct 1,935.20 2,419.00 2,908.80 3,386.60

Materials
Total 1,935.20 2,419.00 2,908.80 3,386.60
SCHEDULE NO. 2
FIXED EXPENSE
MONTH 1 2 3 4
Utility Expense 800.00 900.00 1,000.00 1,100.00
Total Fixed 800.00 900.00 1,000.00 1,100.00

Cost
SCHEDULE NO. 3
VAIABLE COST PER PESO
MONTH 1 2 3 4
Variable Cost 1,935.20 2,419.00 2,908.80 3,386.60
Divided By:
Monthly 20 25 30 35
Production
Total Fixed Cost 96.76 96.76 96.76 96.76

SCHEDULE NO. 4
CONTRIBUTION MARGIN PER PESO
MONTH 1 2 3 4
Selling Prices 298.37 298.37 298.37 298.37
Variable Cost per Peso 96.76 96.76 96.76 96.76
Contribution Margin Per 201.61 201.61 201.61 201.61

Peso
SCHEDULE NO. 5
CONTRIBUTION MARGIN RATIO
MONTH 1 2 3 4
Contribution margin per 201.67 201.67 201.67 201.67

peso
298.37 298.37 298.37 298.37
Divided by: selling price
CONTRIBUTION MARGIN 0.68 0.68 0.68 0.68

RATIO

SCHEDULE NO. 6
COST OF GOOD SOLD
First Month Second Month Third Month Fourth Month
Direct 96.76 96.76 96.76 96.76

Materials
per unit
Production 40 units 40 units 40 units 40 units
per Month
Cost of P3,870.40 P3,870.40 P3,870.40 P3,870.40
Good Sold

EXHIBITS

EXHIBIT NO. 1
UTILITIES EXPENSE
MONTH 1 2 3 4
Water Bills 150.00 200.00 250.00 300.00
Electricity 150.00 200.00 250.00 300.00
Internet 500.00 500.00 500.00 500.00

Usage
Total 800.00 900.00 1,000.00 1,100.00
EXHIBIT NO. 2
PRODUCTION SCHEDULE
MONTH 1 2 3 4
Production 20 25 30 35

EXHIBIT NO. 3
DIRECT MATERIALS
Direct materials Peso Unit Peso/Unit
1 Canvass 50.00 1 yard P 50.00

¼ Katrina (Black) 14.75 1/8 yard 7.38
¼ Katrina (White) 14.75 1/16 yard 3.69
¼ Katrina (Orange) 14.75 1/16 yard 3.69
¼ Tulle 7.00 1/8 yard 3.50
1 pc. Zipper (White) 3.50 1 pc 3.50
1 pc. Foam 50.00 1/2 25.00
P 96.76
EXHIBIT NO. 4
DIRECT MATERIALS (MONTHLY)
MONTH 1 2 3 4
Monthly Production 20 25 30 35
Direct Materials per 96.76 96.76 96.76 96.76

peso
Total 1,935.20 2,419.00 2,908.80 3,386.60

EXHIBIT NO. 5
TOOLS & SUPPLIES
Tools & Supplies Cost per unit Quantity Cost
Measuring tape 15.00 1 15.00
Manila paper 5.00 5 25.00
Marker 35.00 1 35.00
Total 75.00
EXHIBIT NO. 6
MANUFACTURING OVERHEAD
MONTH 1 2 3 4
Utility Expense
Water, electricity 800.00 900.00 1,000.00 1,100.00

and internet usage
Total 800.00 900.00 1,000.00 1,100.00

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Westmead International School

School of Economics, Business and Accountancy

for a business plan to understand it needs money to start. To determine whether

unfavourable economic condition. In addition, it serves as a guide for the

researchers to know if the transaction within five months is increasing.

Objectives of the Study

1. To have enough information about the financial account of the business.

2. To assure that the business is profitable and feasible.

3. To calculate the expenses of the business.

Financing is needed to start a business and ramp it up to profitability.

relatives. They intended to have personal borrowings to exempt the partnership

Laundrix: Multi-Purpose Themed Laundry Hamper

opportunities of their investments in the business.

Initial Capital Requirements

Name of the partners Contribution

Total Projected Cost

whole operation, and the rest covers weekly consumption.

Laundrix: Multi-Purpose Themed Laundry Hamper

In order to come up with financial projections, the following are assumed

in the preparation of financial statements and supporting schedules:

2. The business will operate for only four (4) months.

3. The business expects to produce 20 pcs on monthly basis

4. The product price for consumers will be P300.00 per piece

5. The production will increase each month depending on the inventory

7. All purchases during the operation will be made on cash basis.

8. The profit and loss will be distributed equally to the partners.

Financial Statement is a collection of reports about an organization's

statements is to provide information about the financial position, performance

and changes in financial position of an enterprise that is useful to a wide range of

Laundrix: Multi-Purpose Themed Laundry Hamper

users in making economic decisions. Financial statement should be

understandable, relevant, reliable and comparable. It contains useful information

regarding the four basic financial statements such as statement of financial

position, statement of changes in equity, income statement and cash flow

Statement of the Financial Position

It provides a picture of the business financial position at a specific period

time. It is used in evaluating the company’s liquidity, solvency, financial structure

and capacity for adaptation.

Laundrix: Multi-Purpose Themed Laundry Hamper

It presents the result of the company’s operation or performance for a

given time. This statement consists of expense and revenue.

Operating 2,100.00 2,350 .00 2,600.00 2,850.00

Net Income 1,639.80 2,421.00 3,181.20 3,953.40

Statement of Partner’s Equity

accounts during an accounting period.

Laundrix: Multi-Purpose Themed Laundry Hamper

Add: Share in net Income 423.45 605.25 796.80 988.35

Ilagan Capital 2,500.00 2,923.45 3,528.70 4,325.50

Add: Share in net Income 423.45 605.25 796.80 988.35

Palmones Capital 2,500.00 2,923.45 3,528.70 4,325.50

Add: Share in net Income 423.45 605.25 796.80 988.35

Rodriguez Capital 2,500.00 2,923.45 3,528.70 4,325.50

Add: Share in net Income 423.45 605.25 796.80 988.35

Laundrix: Multi-Purpose Themed Laundry Hamper

Statement of Cash Flow

It presents the summary of the operating, investing and financing activities

cash equivalents in the SFP.

Net Income 1,639.80 2,421.00 3,181.20 3,953.40

without any deductions included within the figure.

Cost per unit. It is commonly derived when a company produces a large

Laundrix: Multi-Purpose Themed Laundry Hamper

fixed costs incurred by a production process, divided by the number of units

categories of direct labor, materials, and overhead.

Financial Statement Analysis. Financial Statement Analysis is the