Case Analyzation

FR

in
Business Finance
Group 5
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Case
Background
• Anthony Cruz owns Zapatoes
Inc. ,a shoe company that grows in
the Philippines
• He experienced unusual growth
since 2009 that he started his
operation
• He planned to open his first
production facility
• He pays another company to 2
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• He is thinking to produce his facility
and hoping that it can low the cost of
production
• Php 10,000,000.00 is the amount he
needs for the expansion ,but he didn’t
have enough money
• Anthony Cruz is wondering where he
can get the fund he need.
• He come up to 3 options to find the
most alternative way to have enough
money for the expansion 3
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3 OPTIONS:
1.) Accept a Php 10,000,000.00 equity
investment from his friend Alex. Alex,
will hold 45% of ownership afterwards.
Alex doesn’t demand any specific return.
2.) Short- term loan for 1 year for Php
10,000,000.00 at 6% per annum from
Short time Bank.
3.) Long – term loan for 5 years for Php
10,000,000.00 at 10% per annum from
Longly Bank.
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• He is thinking if he owning his own
manufacturing facility can improve its
profitability.
• Currently he is producing his shoes at Php
475.00 per pair, but he expect that he can
lower the production costs as much as Php
300.00 if he will manufacture it himself.
• Operating a new production facility will
increase operating expenses(including
depreciation by 30 %)
• Currently most of his operating expenses are
marketing and distribution costs. 5
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Analyzing
:
Option #1: Accept the money from
Alex

-From a SOLE PROPRIETORSHIP

it become a PARTNERSHIP with
Alex the investor of the company.
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Option #2: Short – term

Loan

A = P ( 1 + rt )
= 10,000,000 ( 1 + ( 0.06
)(1))
= 10,000,000 ( 1 +
0.06 )
= 10,000,000 ( 1.06 ) 7
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Option #3: Long– term Loan

A = P ( 1 + rt )
= 10,000,000 ( 1 + ( 0.10
)(5))
= 10,000,000 ( 1 +
0.50 )
= 10,000,000 ( 1.50 ) 8
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Therefore our group accept the

offer of Alex that state 10 M
equity investment from his
friend . Alex will hold 45%
ownership of the business
afterward , Alex does not
demand any specific return.
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Recommendatio
n:
Our group decided that the company of Mr.
Anthony Cruz which is the Zapatoes Inc. will
continue his plan to build a new production
facility with his partner/ investor Mr. Alex. We
choose to accept the money and his 45%
ownership ,because in the situation of Mr.
Anthony Cruz,he experienced a unusual income
for the past years so he needs a person who can
help him to manage or person who has a skills to
allocate the money of the company properly.
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Even though he need to
divide/share the profit of the
company with his friend Alex, he
already have an advantages like :
1.He has a partner
2.He has an investor
3.He has a cash flow that can surely
help the company to continue for
growing and away from
bankruptcy. 11
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Unlike to the 2 options after he paid

the loans in the bank the
transaction is also ended. And while
he was paying the loans for a long
period of time the amount of the
loan is also become higher ,like
what we solve earlier.

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Thank you for listening
Group 5
Keanu Justin Baldelomar
Jomar Liwag
Jomarie Argarin
Marc Russel Tenio
Alex Maxinne Beltran
Eric Espedilla
Christine Diaz
Mary Jane Jesalva
Jenny Cruz
Jorene Tamayo

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