FINANCIAL STUDY 107

FINANCIAL STUDY

INTRODUCTION

The financial study proves that the business is

financially viable. A financially viable project is expected
to be profitable to meet short-term obligations, to be
liquid and remain liquid during adversities, to grow in its
ability to finance its operations mostly from net worth
sources rather than credit applications and to be able to
service their financing charges. The financial study also
emphasizes that the business can survive financially despite
the competition existing in the market. Through the
financial statements and financial ratio analysis report
presented below, people will have an idea on how the
business operates financially. As a result, the figures will
give the investors and other stakeholders the idea of how
healthy the business is.
The proponents of the business have proven that this
business is financially viable and assures that the business
can meet both short-term and long-term profitability issues.

I. MAJOR ASSUMPTIONS

Revenues are mostly dependent on students who are

willing to buy or sell their secondhand school items and
patronized them. Based on the questionnaire floated the
company will assume a sales mix of 73% for school textbooks
and reviewers and a 27% for school supplies. It is also
assumed that the cost of a textbook and reviewers is at PHP
250.00 while the school supplies is at PHP 170.00 based on
 FINANCIAL STUDY 108

the average cost the company can buy from its suppliers
including the students who are willing to sell their
secondhand school item.

Presented below is the average selling price for each

of the category of school item:

Books Supplies
Cost of the school item 250.00 170.00
Allocated Fixed Cost 35.74279 35.74279
TOTAL 285.74279 205.74279
Mark up 10% 10%
Selling Price 314.00 226.00
Output VAT 12% 12%
Invoice Price 352.00 253.00

CKrAF Company will push through with this pricing

strategy unless proven that it is inefficient. It is the
corporate philosophy of CKrAF Company to be in partnership
with all its stakeholders and as such the company will not
make any strategy to jeopardize any of the stakeholders by
having a volatile price list. However, the company does not
undermine the effects of economic downturns, inflation and
any other activity that can adversely affect the company’s
operation, so instead of passing the cost to consumers
through price increase, CKrAF Company will utilize a cost-
leadership strategy to still gain as much without making the
consumers suffer. This way, the company can also gain a
greater patronage from the market.

Cost of Sales are based on the average prices of

textbooks and office supplies which is derived from
estimating prices from the ones existing in the market and
the limitations prescribed by the study.
 FINANCIAL STUDY 109

Salaries and Wages will be given every 15th day of the

month and is subject to SSS, Philhealth and Pag-ibig
deductions which the company will contribute the same
amount. 13th month pay will be given at the end of the year
and a day off every week.

No. of Position Monthly Salary

Employee
1 Accounting clerk PHP 8,000.00

1 Cashier PHP 7,000.00

1 Store room personnel PHP 7,000.00

1 Security Guard PHP 6,500.00

2 Sales Representative PHP 6,500.00

TOTAL SALARIES EXPENSE PHP 35,000.00

The salaries will be constant and will only change

depending on different circumstances. The administrative
employees of the company shall be the partners themselves
and therefore won’t receive any salaries because as partners
whatever gain or profit the company will be distributed to
them.

The Depreciation of machineries, equipment, and tools

shall be computed using the Straight-line Depreciation

method. This method of depreciation allocates the cost of

the asset equally throughout its estimated useful life.

Some tools will be expensed upon purchase as it is not

material.
 FINANCIAL STUDY 110

The estimated salvage value of each depreciable asset

is assumed to be 5% of its total cost, while the estimated

useful life is assumed to be 5 years for machineries and

equipment and 10 years for furniture and fixtures otherwise

specifically stated.

The formula for Straight-line Depreciation is:

Annual Depreciation= Total Cost – Estimated Salvage Value

Estimated Useful Life (in years)

Depreciable assets include equipment and machineries,

administrative equipment and machineries furniture and

fixture and other assets.

UTILITIES Expense includes light, power, water,

telephone and internet expense.

The light and power of the company shall be supplied by

BENECO Inc. at the rate of PHP 7.8233 KwH. It is assumed

that the business will be able to consume kilowatts per year

at normal capacity including idle time. Then the energy

requirement in KwH per unit of equipment must be multiplied

to the number of units of that equipment and multiplied to

the number of working hours per day that is 9 hours, to get

the daily energy requirement. The daily energy requirement

 FINANCIAL STUDY 111

then would be multiplied to the total working days for the

year which is assumed to be 300 days. For the computations,

four decimal places were considered while in the final

result only two decimal places were considered.

The water for the company is assumed to be supplied by

BAWADI suppliers who charge a minimum of P340.00 for a 11-20

m3 of water consumption and it is also assumed that the

company’s water consumption per month is within the P340.00

minimum. The water rate shall have an increase of 3.2 % per

year due to inflation. It is assumed that the water usage is

assumed to be 80% and 20% to production and administrative

department respectively.

For the telephone and internet, the company will be

availing the PHP 999.00 per month promo by Philippine Long

Distance Telephone Company (PLDT) so the annual telephone

and internet expense will be PHP 11,988.00.

Operating Expense control account is composed of

Advertising Expense, Depreciation Expense- Administrative,

Licenses and Business Taxes, Office Supplies Expense,

Employer’s Pag-Ibig Contribution, Employer’s Philhealth

Contribution, SSS Contribution, Property Insurance-

 FINANCIAL STUDY 112

Administrative, Utilities Expense-Administrative,

Organizational Cost, and other operating expense.

Advertising expense is assumed to have no cost because

there is no plan to spend large amount of money for

advertisement. The plan is to use the social media to

advertise. Though the business is ready to spend

considerable amount for advertisement is necessary.

Licenses and Business Taxes account is composed of

Mayor’s permit fee, garbage fee, sanitary permit fee, police

fees, and business plate ID / stickers, SEC registration,

BIR payment DTI name registration and occupation taxes.

Office Supplies Expense is assumed to be 100% of the

total annual supplies bought, thus making the Office

Supplies, end as 0% of Total Annual supplies bought. Office

supplies shall include ball pens, markers, bond paper, inks,

and others. It is assumed that there will be no Purchase

Discount Lost because the company will see to it that it

pays whatever obligations it may have within the discount

period.
 FINANCIAL STUDY 113

Organizational Costs shall include cost of hiring and

training employees, renovation cost, equipment installation

costs, cost incurred during the making of the feasibility

study, notary and filing fees and all other costs incurred

in the establishment of the business.

Table 4.1 Organizational cost

BIR Registration Php 500

SEC Form Php 350
SEC Registration Fees Php 1,800
SEC Miscellaneous Fees Php 475
SEC Verification Php 120
Notary Public Php 150
Documentary Stamp Fee Php 15
Regulatory Fees:
Mayor’s Permit (500)
Sanitary Permit (100)
Tax Certificate Fee (150)
CEPMO and Fire Clearance (225)
Fire Inspection Fees (45)
Business Plate (150)
Garbage Fee (2400) Php 3,570
Mayor’s Fee Php 500
DTI Registration Fee Php 815
Barangay Clearance Php 300
Utilities Connection Charges Php 5,000
TOTAL Php 13,595

Table 4.2 Projected Taxes and Licenses

2014 2015 2016 2017 2018

BIR Renewal Php 500 Php 500 Php 500 Php 500 Php 500
DTI Renewal Php 315 Php 315 Php 315 Php 315 Php 315
Mayor's permit Php 500 Php 1000 Php 1000 Php 1000 Php 1000
Sanitary Fee Php 200 Php 200 Php 200 Php 200 Php 200
Garbage Fee Php 300 Php 300 Php 300 Php 300 Php 300
TOTAL PHP 1,815 PHP 2,315 PHP 2,315 PHP 2,315 PHP 2,315
 FINANCIAL STUDY 114

The Tax Expense applicable to a commercial partnership

is 30% subject to the provisions of the National Internal

Revenue Code (NIRC), Republic Act 9337, and relevant BIR

pronouncements and rulings regarding corporate and

partnership taxes.

The company is required to withhold income taxes on

wages of all regular employees based on the withholding tax

table. All of the employees are assumed to be single in

status.

The partners shall share in the net income/(Loss)

equally based on their initial capital investment.

The Assets of the Company shall include Cash, Accounts

Receivable, Inventories, Tools, Administrative Equipment and

Property, Plant and Equipment.

The beginning Cash balance shall be donated by the

partners to cover the necessary transaction costs for the

first month of operation where there is no cash inflow yet.

The cash of the company shall all be in the bank. The

necessary expenses for everyday transactions shall be taken

from the cash received during the day and not yet deposited.

Administrative Equipment shall include computers,

printer, water dispenser. Property, Plant, and Equipment

will be valued at its historical cost less Accumulated

Depreciation. Property plan and equipment includes the

 FINANCIAL STUDY 115

building, truck and production equipment. The capitalized

historical cost of each non-current asset of the company

includes the purchase costs and all the additional costs

incurred in the transfer and establishment of the asset in

the company premises. The estimated useful life is

determined considering the cost and the economic benefits

arising from the use of the following assets. The cost of

the PPE is measured reliably by the cost of the market

transaction (purchase price) assuming there are no

additional costs required to bring them into use.

Est. Salvage Est. Useful Annual

Asset Cost Value Life (years) Dep’n
Cash register box 12,000.00 600.00 5 2,280.00
Computer Set 14,270.00 713.50 5 2,711.30
Telephone 1,400.00 70.00 5 266.00
Printer 2,945.00 147.25 5 559.55
Fire Extinguisher 700.00 35.00 3 221.67
Book Shelf 1,800.00 90.00 10 171.00
1,800.00 90.00 10 171.00
1,800.00 90.00 10 171.00
1,800.00 90.00 10 171.00
Table 1,200.00 60.00 10 114.00
Mono block Chair 1,300.00 65.00 10 123.50
Filing Cabinet 1,200.00 60.00 10 114.00
Renovation cost 68,685.00 3,434.25 10 6,525.07
Total 111,100.00 5,555.00 118 13,598.79

1. TOTAL PROJECT COST

Description Amount
Office Supplies PHP 1,651.00
Furniture & Fixtures PHP 82,385.00
Machines & Equipment PHP 31,315.00
Cleaning Tools PHP 1,010.00
Organizational Cost PHP 13,595.00
Taxes and Licenses PHP 2,315.00
Working Capital PHP 149,237.00
 FINANCIAL STUDY 116

Total Project Cost PHP 281,508.00

2. INITIAL WORKING CAPITAL REQUIREMENTS

Partner’s Capital Contribution Amount

Codod, A. PHP 200,000.00
Mallari, K. PHP 200,000.00
Rollog, K. PHP 200,000.00
Simalong, F. PHP 200,000.00
Vicuña, C. PHP 200,000.00

3. SOURCES OF FINANCING

The five proponents of the business will contribute

cash amounting to PHP 200,000.00 each as their initial

investment and will share in the company’s net income

equally.

4. Alternative Sources of Financing

In case of fluctuations of working capital, CKrAF Company

is considering the following sources of financing:

1) Special Financing Assistance to Small and Medium

Exporters (SFA-SMEx)

2) Small and Medium Credit Program

3) Additional investment of the partners.

5. Preparation of Projected Financial Statements

Financial statements present in an orderly and

understandable form the cash budget, the operating

 FINANCIAL STUDY 117

performance and the financial condition of a business

enterprise. The Statements depict the progress of a firm in

financial terms.

PROJECTED FINANCIAL STATEMENTS

CKrAF Company
Projected Statements of Comprehensive Income
For the Fiscal Years Ended December 31, 2014-2019

N 2014 2015 2016 2017 2018 2019

Sales 1
2,816,280.96 6,759,074.32 5,407,259.45 4,055,444.59 5,880,394.65 6,759,074.32
Less:Cost of Sales 2
1,827,200.00 4,385,280.00 3,508,240.00 2,631,200.00 3,815,200.00 4,295,600.00
Gross Profit
989,080.96 2,373,794.32 1,899,019.45 1,424,244.59 2,065,194.65 2,463,474.32
Less:
Distribution
Cost 3 115,589.00 277,414.40 277,414.40 277,414.40 277,414.40 277,414.40
Administrative
Cost 4 188,130.76 408,847.22 408,847.22 408,847.22 408,847.22 408,847.22
Income Before
Tax 685,361.20 1,687,532.70 1,212,757.83 737,982.97 1,378,933.03 1,777,212.70
Tax Expense 5
277,206.39 719,859.65 601,528.21 404,679.73 623,317.38 805,276.54
Net Income
408,154.81 967,673.04 611,229.62 333,303.24 755,615.65 971,936.16

CKrAF Company
Projected Statements of Financial Position
For the Fiscal Years Ended December 31, 2014-2018

Pre-
N operating 2014 2015 2016 2017 2018
ASSETS

Cash and cash 635,8 807,312. 61

equivalents 6 299237 10.04 385,465.80 585,702.11 07 9,726.43
365,4 526,240. 76
Inventories 7 580002 40.00 877056 701648 00 3,040.00
Prepaid
expenses 8 9561 1493.93 1493.93 1493.93 1493.93 1493.93
Total current 1,002,7 1,335,046. 1,384
assets 888800 43.97 1,264,015.73 1,288,844.04 00 ,260.36
 FINANCIAL STUDY 118

Property, plant,
and equipment 111200 105410.83 91812.12 78213.41 65314.7 51715.99
Total noncurrent
assets 9 111200 105410.83 91812.12 78213.41 65314.7 51715.99
Total Assets 1000000 1108154.8 1355827.85 1367057.45 1425460.7 1461076.35

CAPITAL
C, capital 200000 221630.96 271165.57 273411.49 280072.14 287195.27
M, capital 200000 221630.96 271165.57 273411.49 280072.14 287195.27
R. capital 200000 221630.96 271165.57 273411.49 280072.14 287195.27
S, capital 200000 221630.96 271165.57 273411.49 280072.14 287195.27
V, capital 200000 221630.96 271165.57 273411.49 280072.14 287195.27
Total capital 1000000 1108154.8 1355827.85 1367057.45 1400360.7 1435976.35

Total liabilities
and equity 1000000 1108154.8 1355827.85 1367057.45 1400360.7 1435976.35

CKrAF Company
Projected Statements of Changes in Partners' Capital
For the Fiscal Years Ending December 31, 2014-2018

Pre-
operating 2014 2015 2016 2017 2018

C, capital
Balance, Beginning 200000 200000 221630.96 271165.57 273411.49 280072.14
Share in net income 81630.96 193534.61 122245.92 66660.65 151123.13
Drawings   -60000 -144000 -120000 -60000 -144000
Balance, Ending   221630.96 271165.57 273411.49 280072.14 287195.27

M, capital
Balance, Beginning 200000 200000 221630.96 271165.57 273411.49 280072.14
Share in net income 81630.96 193534.61 122245.92 66660.65 151123.13
Drawings   -60000 -144000 -120000 -60000 -144000
 FINANCIAL STUDY 119

Balance, Ending   221630.96 271165.57 273411.49 280072.14 287195.27

R, capital
Balance, Beginning 200000 200000 221630.96 271165.57 273411.49 280072.14
Share in net income 81630.96 193534.61 122245.92 66660.65 151123.13
Drawings -60000 -144000 -120000 -60000 -144000
Balance, Ending 221630.96 271165.57 273411.49 280072.14 287195.27

S, capital

Balance, Beginning 200000 200000 221630.96 271165.57 273411.49 280072.14

Share in net income 81630.96 193534.61 122245.92 66660.65 151123.13
Drawings -60000 -144000 -120000 -60000 -144000
Balance, Ending 221630.96 271165.57 273411.49 280072.14 287195.27

V, capital
Balance, Beginning 200000 200000 221630.96 271165.57 273411.49 280072.14
Share in net income 81630.96 193534.61 122245.92 66660.65 151123.13
Drawings -60000 -144000 -120000 -60000 -144000
Balance, Ending 221630.96 271165.57 273411.49 280072.14 287195.27

CKraF Company
Projected Statements of Cash Flows
For the Fiscal Years Ended December, 2014-2018
2014 2015 2016 2017 2018
Cashflow from Operating activities
Net Income 967,673. 611,229. 333,303.2 755,615.6
408,154.81 04 62 4 5
Decrease(Increase) in Inventory (511,616. 175,408. 175,408.0
-385,438.01 00) 00 0 -236,800.00
Decrease(Increase)
in Inventory 8067.07 8067.07 8067.07 8067.07 8067.07
Depreciation 13,898.7 13,898 13,898.7 13,898.7
5789.17 1 .71 1 1
Net cash Provided by CO 36,573.04 -970,344.24 -399,763.69 -78,390.04 -907,585.64

Cashflow from Investing Activities

Drawings 300,000.00 720,000.00 600,000.00 300,000.00 720,000.00

Increase in Cash and Cash Equivalent 336,573.04 -250,344.24 200,236.31 221,609.96 -187,585.64
Add: Cash and Cash Equivalent-Jan.1 635,810. 385,465. 585,702.1 807,312.0
299,237.00 04 80 1 7
Cash and Cash Equivalent-Dec.31 385,465. 585,702. 807,312.0 619,726.4
635,810.04 80 11 7 3

Notes to Financial Statements:

Sales (1)
2014 2015 2016 2017 2018 2019
Books 2,055,885.10 4,934,124.25 3,947,369.81 2,960,615.36 4,292,716.26 4,539,492.88

Supplies 760,395.86 1,824,950.07 1,459,889.65 1,094,829.23 1,587,678.39 2,219,581.44

Total 2,816,280.96 6,759,074.32 5,407,259.45 4,055,444.59 5,880,394.65 6,759,074.32

Sales

Projected sales computation

Year School item Number of Selling Total
items sold price
 FINANCIAL STUDY 120

2014 Books 5840 352.00 2,055,680.00

Supplies 216 253.00 54,648.00
2015 Books 14016 352.00 4,933,632.00
Supplies 5184 253.00 1,311,552.00
2016 Books 11213 352.00 3,946,976.00
Supplies 4147 253.00 1,049,191.00
2017 Books 8410 352.00 2,960,320.00
Supplies 3110 253.00 786,830.00
2018 Books 12,194 352.00 4,292,288.00
Supplies 4,510 253.00 1,141,030.00
2019 Books 12,895 352.00 4,539,040.00
Supplies 6,305 253.00 1,595,165.00

Cost of Sales (2)

2014 2015 2016 2017 2018 2019

Inv. Beg. - 365,440.00 877,056.00 701,648.00 526,240.00 763,040.00
Purchases 2,219,630.71 4,979,075.61 3,426,418.97 2,528,070.90 4,133,415.74 4,491,468.22
Freight In 110,981.54 248,953.78 171,320.95 126,403.55 206,670.79 224,573.41
Total 2,330,612.24 5,593,469.39 4,474,795.92 3,356,122.45 4,866,326.53 5,479,081.63
Less: Purch. Disc. 46,612.24 111,869.39 89,495.92 67,122.45 97,326.53 109,581.63
COGS 2,284,000.00 5,481,600.00 4,385,300.00 3,289,000.00 4,769,000.00 5,369,500.00
Less: Inv. end 365,440.00 877,056.00 701,648.00 526,240.00 763,040.00 859,120.00
Cost of Sales 1,827,200.00 4,385,280.00 3,508,240.00 2,631,200.00 3,815,200.00 4,295,600.00

Purchases
2014 2015 2016 2017 2018 2019
Supplier
Books 730000 1,752,000.00 1,401,600.00 1,051,200.00 1,524,240.00 1,752,000.00
Supplies 183600 440,640.00 352,512.00 264,384.00 383,356.80 440,640.00
Total 913600 2,192,640.00 1,754,112.00 1,315,584.00 1,907,596.80 2,192,640.00

Customer
Books 945014.836 2,268,035.61 1,814,428.49 1,360,821.36 1,973,190.98 2,268,035.61
Supplies 216000 518,400.00 414,720.00 311,040.00 451,008.00 518,400.00
Total 1161014.84 2,786,435.61 2,229,148.49 1,671,861.36 2,424,198.98 2,786,435.61

Distribution Cost (3)

2014 2015 2016 2017 2018

Salaries and wages
Cashier 37917 91000 91000 91000 91000
storeroom personnel 35208 84500 84500 84500 84500
Sales representative 35208 84500 84500 84500 84500
SSS contribution
Cashier 1166.5 2799.6 2799.6 2799.6 2799.6
storeroom personnel 1083.5 2600.4 2600.4 2600.4 2600.4
Sales representative 1083.5 2600.4 2600.4 2600.4 2600.4
Philhealth contribution
Cashier 437.5 1050 1050 1050 1050
 FINANCIAL STUDY 121

storeroom personnel 375 900 900 900 900

Sales representative 375 900 900 900 900
HDMF contribution
Cashier 500 1200 1200 1200 1200
storeroom personnel 500 1200 1200 1200 1200
Sales representative 500 1200 1200 1200 1200
Depreciation
Cash Register 950 2280 2280 2280 2280
Bookshelf 285 684 684 684 684
Total 115589 277414.4 277414.4 277414.4 277414.4

Administrative Cost (4)

2014 2015 2016 2017 2018

Salaries and wages
Accounting clerk 43334 96000 96000 96000 96000
Guard 37917 91000 91000 91000 91000
SSS contribution
Accounting clerk 1333.35 3200.04 3200.04 3200.04 3200.04
Guard 1166.5 2799.6 2799.6 2799.6 2799.6
Philhealth contribution
Accounting clerk 500 1200 1200 1200 1200
Guard 437.5 1050 1050 1050 1050
HDMF contribution
Accounting clerk 500 1200 1200 1200 1200
Guard 500 1200 1200 1200 1200
Dep. Office Equipment
Calculator 39.58 100 100 100 100
Computer 1129.71 2711.3 2711.3 2711.3 2711.3
Fire extinguisher 92.36 221.67 221.67 221.67 221.67
Telephone 110.83 266 266 266 266
Printer 233.15 559.55 559.55 559.55 559.55
Clock 83.33 200 200 200 200
Table 47.5 114 114 114 114
Chair 51.46 123.5 123.5 123.5 123.5
Cabinet 47.5 114 114 114 114
Renovation 2718.75 6525 6525 6525 6525
Rent expense 70000 168000 168000 168000 168000
Repairs and maintenance 1000 2400 2400 2400 2400
Office supplies expense
Ballpen 33.33 80 80 80 80
Stapler 25 60 60 60 60
Bond paper 123.33 296 296 296 296
Scissors 41.67 100 100 100 100
Cutter 33.33 80 80 80 80
Pencil 20.83 50 50 50 50
Ink 358.33 860 860 860 860
Tapes 10.42 25 25 25 25
Cleaning supplies
Broom 56.35 135 135 135 135
Mop 72.92 175 175 175 175
Trashcan 187.5 450 450 450 450
Trashbag 20.83 50 50 50 50
Cloth 8.33 20 20 20 20
Dustpan 75 180 180 180 180
Utilities
Electricity 3716.07 8918.56 8918.56 8918.56 8918.56
Internet 4995 11988 11988 11988 11988
 FINANCIAL STUDY 122

Water 1700 4080 4080 4080 4080

Taxes and licenses 1815 2315 2315 2315 2315
Organization cost 13595
Total 188130.76 408847.22 408847.22 408847.22 408847.22

Tax Expense (5)

2014 2015 2016 2017 2018 2019

Income Tax Expense 205,608.36 506,259.81 363,827.35 221,394.89 413,679.91 533,163.81

Net Vat Payable 71,598.03 213,599.85 237,700.86 183,284.84 209,637.47 272,112.73

Total 277,206.39 719,859.65 601,528.21 404,679.73 623,317.38 805,276.54

Cash and Cash Equivalent (6)

Pre
operating 2014 2015 2016 2017 2018
Cash on
Hand 149,237.00 365,810.04 105,465.80 438,702.11 601,512.07 311,026.43
Cash in 147,000
Bank 150,000.00 270,000 .00 280,000.00 .00 205,800.00 308,700.00
Total 299,237.00 635,810.04 385,465.80 585,702.11 807,312.07 619,726.43

Inventories (7)

2014 2015 2016 2017 2018 2019

Inv. Beg. - 365,440.00 877,056.00 701,648.00 526,240.00 763,040.00
Purchases 2,219,630.71 4,979,075.61 3,426,418.97 2,528,070.90 4,133,415.74 4,491,468.22
Freight In 110,981.54 248,953.78 171,320.95 126,403.55 206,670.79 224,573.41
Total 2,330,612.24 5,593,469.39 4,474,795.92 3,356,122.45 4,866,326.53 5,479,081.63
Less: Purch. Disc. 46,612.24 111,869.39 89,495.92 67,122.45 97,326.53 109,581.63
COGS 2,284,000.00 5,481,600.00 4,385,300.00 3,289,000.00 4,769,000.00 5,369,500.00
Less: Cost of Sales 1,827,200.00 4,385,280.00 3,508,240.00 2,631,200.00 3,815,200.00 4,295,600.00
Ending Inventory 365,440.00 877,056.00 701,648.00 526,240.00 763,040.00 859,120.00

Prepaid Expenses (8)

pre-operating 2014 2015 2016 2017 2018

Office Supply
Ballpen 80 46.67 46.67 46.67 46.67 46.67
Stapler 60 35 35 35 35 35
Bond paper 296 172.67 172.67 172.67 172.67 172.67
Scissors 100 58.33 58.33 58.33 58.33 58.33
Cutter 80 46.67 46.67 46.67 46.67 46.67
Pencil 50 29.17 29.17 29.17 29.17 29.17
Ink 860 501.67 501.67 501.67 501.67 501.67
Tapes 25 14.58 14.58 14.58 14.58 14.58
Broom 135 78.75 78.75 78.75 78.75 78.75
Mop 175 102.08 102.08 102.08 102.08 102.08
 FINANCIAL STUDY 123

Trashcan 450 262.5 262.5 262.5 262.5 262.5

Trash bags 50 29.17 29.17 29.17 29.17 29.17
Cloth 20 11.67 11.67 11.67 11.67 11.67
Dustpan 180 105 105 105 105 105
Prepaid Rent 7000 0 0 0 0
Total 9561 1493.93 1493.93 1493.93 1493.93 1493.93

Noncurrent Assets (9)

pre-
operating 2014 2015 2016 2017 2018
Machine and equipment
Cash register 12,000 11,050 8,770 6,490 4,210 1,930
Computer 14270 13,140 10,429 7,718 5,006 2,295
Fire extinguisher 700 608 386 165 644 422
Telephone 1400 1,289 1,023 757 491 225
Printer 2945 2,712 2,152 1,593 1,033 474
Calculator 100 60 60 60 60 60
Clock 200 117 117 117 117 117
Furniture and fixture
Bookshelves 7,200 6,915 6,231 5,547 4,863 4,179
Table 1,200 1,153 1,039 925 811 697
Chair 1,300 1,249 1,125 1,002 878 755
Cabinet 1,200 1,153 1,039 925 811 697
Renovation 68,685 65,966 59,441 52,916 46,391 39,866
Total 111,200 105,411 91,812 78,213 65,315 51,716

Dep.- Machine and

equipment
Cash register 950 2280 2280 2280 2280
Computer 1129.71 2711.3 2711.3 2711.3 2711.3
Fire extinguisher 92.36 221.36 221.36 221.36 221.36
Telephone 110.83 266 266 266 266
Printer 233.15 559.55 559.55 559.55 559.55
Calculator 39.58 100 100 100 100
Clock 83.33 200 200 200 200
Dep.-Furniture and fixture
Bookshelves 285 684 684 684 684
Table 47.5 114 114 114 114
Chair 51.46 123.5 123.5 123.5 123.5
Cabinet 47.5 114 114 114 114
Renovation 2718.75 6525 6525 6525 6525
Total Dep. 5789.17 13898.71 13898.71 13898.71 13898.71
TOTAL 111,200 105,711 92,112 79,213 65,615
 FINANCIAL STUDY 124

VI. FINANCIAL ANALYSIS

The financial ratio analysis gauges the project’s

profitability, liquidity, cash solvency, and growth over
time. In this part of the study we can observe how healthy
the enterprise is in its financial aspect.

TESTS OF PROFITABILITY

The absolute level of profit may provide an indication

of the size of the business, but on its own it says very
little about company performance. In order to evaluate the
level of profit, profit must be compared and related to
other aspects of the business. Profit must be compared with
the amount of capital invested in the business, and to sales
revenue.

Profitability ratios will inevitably reflect the

business environment of the time. So, the business,
political and economic climate must also be considered when
looking at the trend of profitability for one company over
time. Comparisons with other businesses in the same industry
segment will provide an indication of management's relative
ability to perform in the same business and economic
environment.

Operating Profit Margin

2014 2015 2016 2017 2018
Gross profit 989080.96 2373794.32 1899019.45 1424244. 2065194.
 FINANCIAL STUDY 125

59 65

5407259.4 4055444.5 5880394.6

Net sales 2816280.96 6759074.32 5 9 5

Operating profit
margin 35% 35% 35% 35% 35%

It shows a very preferable overall operating efficiency

at the first five years due to the ability of the company to
control or lessen expenses.

Net Profit Margin

2014 2015 2016 2017 2018

611229.6 333303.2 755615.6

Net profit 408154.81 967673.04 2 4 5

5407259.4 4055444.5 5880394.6

Net sales 2816280.96 6759074.32 5 9 5

Net profit
margin 14% 14% 11% 8% 13%

The net profit margin was relatively stable throughout

the years although it still maintains its profitability.

Long-term Financial Position or Stability

Also refer to Leverage ratios that measure the extent

of a firm’s financing, with debt relative to equity and its
ability to cover interest and other fixed charges such as
rent and sinking fund payments.

Equity ratio
2014 2015 2016 2017 2018

Total equity 1108154.8 1108154.8 1108154.8 1108154.8 1108154.8

Total asset 1108154.8 1108154.8 1108154.8 1108154.8 1108154.8

Equity ratio 1 1 1 1 1
 FINANCIAL STUDY 126

It indicates that majority of the assets was provided

by the partners and reflecting its financial strength

Return on Stockholder Equity

2014 2015 2016 2017 2018

Net Income 408154.81 967673.04 611229.62 333303.24 755615.65

Ave. Stockholder
equity 1054077 621868.8 751320.2 1383709 1418169

38.72% 155.61% 81.35% 24.09% 53.28%

This measures the capability of the company’s

investment to earn income.

Return on Average Total Asset

2014 2015 2016 2017 2018

Net Income 408154.81 967673.04 611229.62 333303.24 755615.65

Ave. Total Asset 1054077 1231991 1361443 1396259 1443269

6.76% 78.55% 44.90% 23.87% 52.35%

The result shows that it has a gradual increasing and

decreasing trend of the company’s return on average total
asset.

Short term financial position or Liquidity

 FINANCIAL STUDY 127

Liquidity ratios are ratios that measure the firm’s

ability to meet cash needs as they rise (e.g., payment of
accounts payable, bank loans and operating costs)

Current Ratio
2014 2015 2016 2017 2018

Current asset 814,920.13 2,532,051.53 3,940,412.45 5,458,422.77 7,086,082.49

Current liabilities 306,352.69 724,772.57 724,772.57 724,772.57 724,772.57

3.
Current ratio 2.66 49 5.44 7.53 9.78

It measures the ability of the company to pay its debts

from its assets. With the results, it shows that the company
would easily cover its obligations due to a significant
amount of assets.

Management Efficiency

This ratio analysis also refer to activity ratios that

measure the liquidity of specific assets and efficiency in
managing assets such as accounts receivable, inventory, and
fixed assets.

Inventory turn over

2014 2015 2016 2017 2018

Cost of goods/service 1827200 4385280 3508240 2631200 3815200

Merchandise
inventory 472721 621248 789352 613944 644640

3.87 1.76 1.11 1.07 1.48

 FINANCIAL STUDY 128

From the trend of the results in the table above, it

shows that disposing the inventory started well but
eventually fluctuated. This is due to the fact that the
inventories refer to the starting inventory that was
purchased during the inception of the business. This ratio
measures the efficiency of the business to manage and sell
inventories.

Asset turn over Ratio

2014 2015 2016 2017 2018

Net Sales 1827200 4385280 3508240 2631200 3815200

Average Total Asset 472721 621248 789352 613944 644640

2.67 5.49 3.97 2.9 4.07

It measures the number of times the asset is being

disposed and replaced through out the five years of
operation.

Fixed Asset turn over Ratio

2014 2015 2016 2017 2018

4055444.5 5880394.6
Net Sales 2816280.96 6759074.32 5407259.45 9 5

Average Net Fixed

Asset 108305.42 98611.48 85012.77 71764.06 58514.85

26.00 68.54 63.61 56.51 100.49

The results show that it has increased its fixed asset

turnover at the end of year 2018.