50

Cash Flow is the net amount of cash and cash equivalents being

transferred into and out of the business. At the most fundamental level, a

company’s ability to create a value for shareholders is determined by its ability to

generate positive cash flows, or more specifically, maximize long-term, free cash

flow.

Balance Sheet

A balance sheet reports a company’s assets, liabilities and shareholders’s

equity at specific point in time, and provides a basis for computing rates of return

and evaluating its capital structure.

MAJOR ASSUMPTIONS

 The total capital invested in the business is ₱1,000,000

 The income statement, cash flow, and balance sheet shall follow the

standard format.

 The proposed business will use a calendar year method.

 Depreciation expense is computed in a straight line basis with an

estimated useful life of 10 years.

 The estimated salvage value will be 10% of fixed asset total value

 The projected gross sales shall increase by 20% every year.

 The estimated salaries and wages expense and rental expense shall

remain constant for 5 years.

 51

 The SSS, Pag-ibig, and Phil Health Contribution Expense will be based on

the SSS, and Phil Health Contribution Table. It will remain constant in the

five (5) years operation

 The estimated repair and maintenance, utilities, communication, permits

and licenses, transportation, supplies and miscellaneous expenses shall

have an annual increase by 2%.

 Promotional expense is estimated to decrease by 5% every year.

 The raw materials ending will be 10% off 1st year’s raw materials

purchases and decreases every year.

 Cost of finished goods ending will be 10% of 1 st year of Cost of Goods.

Available for sale and decreases 10% every year.

 Raw materials purchases will increase by 20% every year.

 The operation per month is 26 days. (Operation Time, 8:00 a.m– 5:00

p.m)
 52

Project Cost

The Yempolaya Production has total capital Four Million Pesos

(₱1,000,000) that consists of project cost One Hundred Forty Nine Thousand

One Hundred Eighty Seven pesos (₱149,187.00) and the initial working capital

amounting to Eight Hundred Fifty Thousand Eight Hundred Thirteen Pesos

(₱850,813).

Table 15

Project Cost

Particulars Amount
Building (Lease Improvement) ₱70,000
Machineries and Equipment 36,690
Office Equipment 34,490
Furniture and Fixtures 5773
Other Equipment 2,234
Total Projected Cost ₱149,187

Working Capital

The owner will allocate a portion of the total investment into a working

capital amounting to Eight Hundred Fifty Thousand Eight Hundred Thirteen

Pesos (₱850,813).The said working capital will serve as the revolving and

reserve funds which will be utilized in the daily operating expenses on the first

three (3) months of the operation of the business which consists of the following:
 53

Table 16

Working Capital

Particulars Amount

Rental Expense ₱ 45,000

Salaries Expense 141,960
Premium Expense 28,534.44
13th Month Pay 11830
Supplies Expense 700.76
Promotional Expense 1165
Utilities Expense 9,000.00
Communication Expense 5,010.00
Transportation Expense 3797.499
Permits and License Expense 1,062.50
Repair and Maintenance Expense 3,015
Miscellaneous Expense 673.13
Reserved Fund 599064.67
Total Initial Working Capital ₱850,813

Source of Capital

The source of capital will come from the owners. The capital is amounting

₱1,000,000.00. The proponents identify the projected cost in order to determine

the pre – operating and operating expense.

Pre-operating Expense

The pre-operating expense is a vital part of the financial study. This period

provides the need composing some important materials before the business

operation. These are the expenses pre- requisite to get the total pre-operating

expenses.
 54

Cost of Fixed Assets

Particulars Qty. Cost Acquisition Cost

Machineries and Equipment
Blender/Mixer 2 2,885.00 5,770.00
Standard GS 2345 LPG Gas Stove 2 2625 5250
Gas 11-kg Mini Valve LPG Contents 1 670 670
Sub - total ₱11690
Motor 1 25000 25000
Sub-total ₱25,000
Office Equipment
Ceiling Fan 2 P1,500.00 P3,000.00
Fire Extinguisher 2 2,995.00 5,990.00
Laptop 1 21,000 21,000.00
Printer 1 4,500 4,500.00
Sub - total ₱34,490.00
Furniture and Fixtures

Office Table 1 2,785.00 2785.00

Office Chair 1 1,688.00 1688.00

Monoblock Chair 5 200 1000
Wall Clock 2 150 300
Sub - total ₱5773
Other Equipment
Basin 3 100 300
Pan 3 200 600
Ladle (set) 3 99 297
Chopping Board 2 95 190
Knife 3 88 264
Strainer 100cm 2 72 144
Sealer 1 199 199
Kitchen Scale 2 120 240
Sub - total ₱2234
Total Cost of Fixed Asset ₱79,187

Table 17 shows the cost of fixed asset of the proposed business needed in
the operation of the business
 55

Operating Expenses

The operating expenses are expenses during the entire operation of the

business. The expenses are divided into nine (9) components, namely: Rental

Expense, Salaries and Wages, Premium Expenses, Supplies Expenses,

Promotional Expense, Utilities Expense, Communication Expense,

Transportation Expense, Permits and Licenses, Repairs and Maintenance

Expense, and Miscellaneous Expense. To explain and discuss these expenses,

the proponents decided to separate the computation in order to ease the difficulty

in computing the balance sheet and other related financial matter.

Table 18

Promotional Expense
Year Year
Particulars Qty. Price Cost 1 2 Year 3 Year 4 Year 5
Flyers (2.5 x 3.5
ich) 720 ₱3 ₱2160 ₱2160 ₱2052 ₱1949.4 ₱1851.93 ₱1759.334
Free Taste 500 5 2500 2500 - - - -

Total Promotional Expense - ₱4660 ₱2052 ₱1949.4 ₱1851.93 ₱1759.334

Promotional Category. This shows the cost of promotion and advertising the

business for the purpose of improving sales performance.

Table 19

Utilities Expense
Particular Monthly Annually
Electric Bill ₱2000.00 ₱24,000.00
Water Bill 1,000.00 12,000.00
Total ₱ 36,000.00
 56

Utility Category. These are the expenses arising from electricity and wzter.

Electric power will be supplied by the CENPELCO.

Table 20

Communication Expense

Particulars Monthly Annually

Internet ₱1500 ₱18,000
Load 200 2,400
Total Communication Expense ₱20,040

Communication Category. This will include the Wi-Fi internet

connectionused over the entire business. The load of cellphone will also apply.

Table 21

Transportation Expense
Particulars Qty. Price Cost Monthly Annually
LTO Registration - - - - ₱2,230.00
Gasoline 30 L 36 1,080.00 1,080.00 12,960.00
Total Transportation Expense ₱ 15,190

Transportation Category. This account is used for the gasoline

expenseincurred in transacting with distributors, retailers and suppliers.

 57

Table 22

Permits and Licenses Expense

Particulars Annually
Registration with Barangay ₱100
Business Permit 650
BFAD 1500
BIR Permit 1500
DTI Permit 500
Total Permits and Licenses Expense ₱4250

Permits and Licenses Category. This includes business registration

from the creation of the company up to the present to the renewed once a year.

Table 23

Repairs and Maintenance Expense

Particulars Qty Price Cost Year 1 Year 2 Year 3 Year 4 Year 5

Lightings 8 ₱400 ₱3200 ₱3200 - - ₱3395.87 -

Fire
Extinguisher
Refill 2 900 1800 - 1800 1836 1872.72 1910.17
Machine
Maintenance 7,000 - - 7,000 - -
Delivery
Motor
Repair - - 5000 5000 5100 5202 5306.04 5412.16
Change Tire 2 500 1000 1000 1040 1080.8 1122.42 1164.86
Change Oil 1 185 185 2220 2264.4 2309.69 2355.88 2403
Gas (Gas
Tank) 1 640 640 640 652.8 665.86 679.17 692.76
Total Repair & Maintenance
Expenses ₱12,060 ₱10,857.2 ₱18,094.35 ₱14,732.1 ₱11582.95
 58

Repairs and Maintenance Expenses Category. Expenses under this

category are the cost allotted for maintaining the continuous flow of the business

operation.

Table 24

Summary of Operating Expenses

Particulars Amount
Rental Expense ₱180,000
Salaries and Wages Expenses 567,840
Premium Expenses 114,137.76
Office Supplies 2,803.03
Promotional Expenses 4660
Repairs and Maintenance Expenses 12,060
Utilities Expense 36,000
Communication Expense 20,040
Transportation Expense 15,190
Permits and Licenses Expense 4,250
Miscellaneous Expense 2,692.50
Total Expenses ₱959,673.29
 59

Table 25

Cost and Selling Price of Yempolaya per piece

Particulars Cost Selling Price ₱7.288944289 130%
Ampalaya Fruit ₱ 0.33 Cost of Sales ₱ 5.606880222 100%
Condensed Milk 0.98 Profit ₱1.682064067 30%
Powdered Milk 0.27
Vanilla Extract 0.083
Flour 0.13
Sugar 0.27
Butter 0.65
Equipment 0.091658
Water and Electricity 0.17
Labor 1.11
Packaging (Cellophane Wrapper &
Transparent Plastic Box) 1.52
₱
Total 5.606880222
Note 1: 11250 grams of ampalaya fruit is equivalent to 2700 pieces of yempolaya
Note 2: 2700 pieces of yempolaya are produced per day or equivalent to 675 packs

Utilities Labor
Water (Monthly Bill) ₱ 1000 Number of Workers 3
Electricity (Monthly Bill) 2000 Daily Wage ₱ 250
Total (/675) Qty. of Packs
Monthly (/26) 3000 Produced 750
Daily (/675) Qty. of Packs Produced 115.38 Labor Cost per Pack ₱ 1.11
Cost of Utilities per Piece ₱ 0.17

Equipment
Dep. Of Blender ₱ 1038.6
Dep. Of Gas Stove 472.5
Dep. Of Gas Tank 60.3
Dep. Of Equipment 358.92
Annually (/12) 1930.32
Monthly (/26) 160.86
Daily 6.19
Divide by Qty. of Packs Produced ₱ 0.091658

Table 26

Projected Gross Sales

Selling Price per
pack Qty Daily Monthly Annually
₱7.288944289 2700 ₱19680.14958 ₱511683.8891 ₱6140206.669
Note: 2700 pieces or equivalent to 675 packs are being sold per day
 60

Table 27

Schedule of Direct Labor

Particulars Year 1 Year 2 Year 3 Year 4 Year 5
Salary and Wages ₱234,000 ₱234,000 ₱234,000 ₱234,000 ₱234,000
Premium 43,915 43,915 43,915 43,915 43,915
Total ₱277,915 ₱277,915 ₱277,915 ₱277,915 ₱277,915

Table 28

Schedule of Factory Overhead

Particulars Year 1 Year 2 Year 3 Year 4 Year 5
Depreciation of
Blender/Mixer ₱ 1038.6 ₱ 1038.6 ₱ 1038.6 ₱ 1038.6 ₱ 1038.6
Depreciation of
Gas Stove 472.5 472.5 472.5 472.5 472.5
Depreciation of
Gas Tank 60.3 60.3 60.3 60.3 60.3
Depreciation of
Equipment 402.12 402.12 402.12 402.12 402.12
Utilities Expense
(50%) 18,000 18,360 18727.2 19101.744 19483.77888
Miscellaneous
Expense 2692.50 2746.35 2801.277 2857.30254 2914.448591
Total ₱ 22666.02 ₱ 22719.87 ₱ 22774.797 ₱ 22830.823 ₱ 22887.969

Table 29

Schedule of Raw Materials Purchases

Particulars Daily Monthly Annually

Ampalaya ₱ 900 ₱23400 ₱280800
Condensed Milk 2650 68900 826800
Powdered Milk 720 18720 224640
Vanilla Extract 225 5850 70200
Flour 360 9360 112320
Sugar 720 18720 224640
Butter 1755 45630 547560
Packaging 4110 106860 1282320
Total ₱3569280
 61

Table 30

Computation of Cost of Goods Sold

Year 1 Year 2 Year 3 Year 4 Year 5
Raw Materials, Beginning
- 356,928.00 464,006.40 560,376.96 672,809.28
Add: Raw Materials
Purchases 3,569,280.00 4,283,136.00 5,139,763.20 6,167,715.84 7,401,259.01
Raw Materials Available
for Use 3,569,280.00 4,640,064.00 5,603,769.60 6,728,092.80 8,074,068.29
Less: Raw Materials,
Ending 356,928.00 464,006.40 560,376.96 672,809.28 807,406.83
Raw Materials Used
3,212,352.00 4,176,057.60 5,043,392.64 6,055,283.52 7,266,661.46
Add: Direct Labor
277,915.00 277,915.00 277,915.00 277,915.00 277,915.00
Add: Factory Overhead 22666.02 22719.87 22774.797 22830.823 22887.969
Total Manufacturing Cost
3,512,933.02 4,476,692.47 5,344,082.44 6,356,029.34 7,567,464.43
Add: Cost of Finished
Goods, Beginning - 351,293.30 482,798.58 582,688.10 693,871.74
Total Cost of Goods
Available for Sale 3,512,933.02 4,827,985.77 5,826,881.01 6,938,717.44 8,261,336.17
Less: Cost of Finished
Goods, Ending 351,293.30 482,798.58 582,688.10 693,871.74 826,133.62
Cost of Goods Sold
₱ 3,161,639.72 ₱4,345,187.19 ₱5,244,192.91 ₱6,244,845.70 ₱7,435,202.56

Table 31

Schedule of Inventory Ending

Raw Materials, Ending ₱356,928.00 ₱321,235.20 ₱289,111.68 ₱260,200.51 ₱234,180.46

Cost of Finished Goods,
Ending ₱351,293.30 ₱316,160.08 ₱284,544.08 ₱256,089.67 ₱230,480.70

Total ₱708,221.30 ₱637,395.28 ₱573,655.76 ₱516,290.18 ₱464,661.16

 62

Table 32

Depreciation of Fixed Asset

SALVAGE
NON-CURRENT ACQUISITION VALUE USEFUL ACCUMM. NET BOOK
ASSET QTY. PRICE COST (10%) LIFE DEPRECIATION VALUE
Machineries & Equipment
Blender/Mixer 2 2885 5770 577 5 1038.6 4731.4
Standard GS 2345
LPG Gas Stove 2 2625 5250 525 10 472.5 4777.5
Gas 11-kg Mini Valve
LPG Contents 1 670 670 67 10 60.3 609.7
Sub-total ₱6180 ₱11690 ₱1169 ₱1571.4 ₱10118.6
Motor 1 25000 25000 2500 10 2250 22750
Sub-total ₱25000 ₱25000 ₱2500 ₱2250 ₱22750
Office Equipment
Ceiling Fan 2 1500 3000 300 5 540 2460
Fire Extinguisher 2 2995 5990 599 5 1078.2 4911.8
Laptop 1 21000 21000 2100 10 1890 19,110
Printer 1 4500 4500 450 5 810 3690
Sub-Total ₱29995 ₱34490 ₱3449 ₱4318.2 ₱30171.8
Furniture And Fixtures
Office Table 1 2785 2785 278.5 10 250.65 2534.35
Office Chair 1 1688 1688 168.8 10 151.92 1536.08
Monoblock Chair 5 200 1000 100 5 180 820
Wall Clock 2 150 300 30 5 54 246
Sub-Total ₱4823 ₱5773 ₱577.3 ₱636.57 ₱5136.43
Other Equipment
Basin 3 100 300 30 5 54 246
70cm
Pan 3 200 600 60 5 108 492
Ladle (set) 3 99 297 29.7 5 53.46 243.54
Chopping Board 2 95 190 19 5 34.2 155.8
Knife 3 88 264 26.4 5 47.52 216.48
Strainer 100cm 2 72 144 14.4 5 25.92 118.08
Sealer 1 199 199 19.9 5 35.82 163.18
Kitchen Scale 2 120 240 24 5 43.2 196.8
Total ₱973 ₱2234 ₱223.4 ₱402.12 ₱1831.88

Total Depreciation ₱66971 ₱79037 ₱7918.7 ₱9178.29 ₱70008.7

 63

Table 33

YEMPOLAYA PRODUCTION
Projected Income Statement
For the year ended_______

Cash Sales ₱6,140,206.67

Less: Sales Discount
Total Cash Sales 6,140,206.67
Credit Sales
Total Sales ₱6,140,206.67
Less: Cost of Goods Sold 3,161,639.72
Gross Profit 2,978,566.95

Less: Operating Expenses

Salaries & Wages Expenses 333,840.00
Premium Expenses 70,222.76
Office Supplies Expense 2,803.03
Promotional Expenses 4,660.00
Utilities Expenses (50%) 18,000.00
Communication Expenses 20,040.00
Transportation Expenses 15,190.00
Permits and Licenses Expense 4,250.00
Miscellaneous Expense 2,692.50
Repairs & Maintenance
Expenses 12,060.00
Rental Expense 180,000.00
Renovation Expense 70,000.00
Depreciation Expense 9,178.29
Total Operating Expenses 742,936.58
Net Income ₱2,235,630.37
 64

Table 34

YEMPOLAYA PRODUCTION
Projected Cash Flow Statement
_________________
Cash Flow from Operating activities
Cash received from Customer ₱ 6,140,206.67
Collection Accounts Receivable -
Less: Cash Disbursement
Salaries & Wages Expenses ₱ 567,840.00
Premium Expenses 114,137.76
Office Supplies Expense 2,803.03
Promotional Expenses 4,660.00
Utilities Expenses 36,000.00
Transportation Expenses 15,190.00
Permits and Licenses Expense 4,250.00
Repairs & Maintenance Expenses 30,000.00
Miscellaneous Expense 2,692.50
Renovation Expense 70,000.00
Rental Expense 180,000.00
Communication Expenses 20,040.00
Production Materials 3,569,280.00
Total Cash Disbursement ₱ 4,616,893.29

Net Cash Flow from Operating

Activities ₱1,523,313.38

Cash Flow From Investing Activities

Cost of Fixed Assets ₱ 79,187.00
Net Cash Used in Investing Activities ₱ 79,187.00

Cash Flow from Financing Activities

Cash Proceeds from Owner ₱ 1,000,000.00
Net Cash Flow from Financing
Activities ₱ 1,000,000.00

Net Increase(Decrease) in Cash ₱ 2,444,126.38

Cash Balance at the Beginning of the
period -
Cash Balance at the End of the Period ₱ 2,444,126.38
 65

Table 35

YEMPOLAYA PRODUCTION
Projected Balance Sheet
As of ____________
Current Asset
Cash ₱ 2,444,126.38
Accounts Receivable -
Less: Allowance for Bad Debts -
Inventory, Ending 708,221.30
Total Current Asset ₱ 3,152,347.68

Non - Current Asset

Machineries & Equipment ₱ 11,690.00
Less: Accumulated Depreciation 1,571.40
Book Value ₱ 10,118.60
Furniture and Fixtures ₱ 5,773.00
Less: Accumulated Depreciation 636.57
Book Value ₱ 5,136.43
Office Equipment ₱ 34,490.00
Less: Accumulated Depreciation 4,318.20
Book Value ₱ 30,171.80
Delivery Car ₱ 25,000.00
Less: Accumulated Depreciation 2,250.00
Book Value ₱ 22,750.00
Other Equipment 2,234.00
Less: Accumulated Depreciation 402.12
Book Value 1,831.88
Total Non - Current Asset ₱ 70,008.71

Total Assets ₱ 3,222,356.39

Liabilities & Owner's Equity

Liabilities
Current Liabilities -
Non - Current Liabilities -
Total Liabilities -

Owner's Equity
Capital Investment ₱ 1,000,000.00
Net Income 2,235,630.37
Total Owners Equity ₱ 3,235,630.37

Total Liability & Owner's Equity ₱ 3,235,630.37

 66

Table 36

YEMPOLAYA PRODUCTION
5 Year Projected Income Statement
For the year ended__________

1 2 3 4 5

Cash Sales ₱6140206.669 ₱7,368,248.00 ₱8,841,897.60 ₱10,610,277.12 ₱12,732,332.55

Less: Sales Discount - - - - -
Total Cash Sales 6,140,206.67 7,368,248.00 8,841,897.60 10,610,277.12 12,732,332.55
Credit Sales - - - - -
Total Sales 6,140,206.67 7,368,248.00 8,841,897.60 10,610,277.12 12,732,332.55
Less: Cost of
Goods Sold 3,161,639.72 4,654,909.37 5,504,876.53 6,526,885.79 7,755,131.58
Gross Profit ₱2,978,566.95 ₱2,713,338.63 ₱3,337,021.07 ₱4,083,391.34 ₱4,977,200.97
Less: Operating
Expenses
Salaries & Wages
Expenses 333,840.00 333,840.00 333,840.00 333,840.00 333,840.00
Premium Expenses 70,222.76 70,222.76 70,222.76 70,222.76 70,222.76
Office Supplies
Expense 2,803.03 2,859.09 2,916.27 2,974.60 3,034.09
Promotional
Expenses 4,660.00 2,052.00 1,949.40 1,851.93 1,759.33
Utilities Expenses
(50%) 18,000.00 18,360.00 18,727.20 19,101.74 19,483.78
Communication
Expenses 20,040.00 20,440.80 20,849.62 21,266.61 21,691.94
Transportation
Expenses 15,190.00 15,493.80 15,803.68 16,119.75 16,442.14
Permits and Licenses
Expense 4,250.00 4,335.00 4,421.70 4,510.13 4,600.34
Miscellaneous
Expense 2,692.50 2,746.35 2,801.28 2,857.30 2,914.45
Repairs &
Maintenance
Expenses 12,060.00 10,857.20 18,094.35 14,732.10 11,582.95
Rental Expense 180,000.00 180,000.00 180,000.00 180,000.00 180,000.00
Renovation Expense 70,000.00 - - - -
Depreciation
Expense 9,178.29 9,178.29 9,178.29 9,178.29 9,178.29
Total Operating
Expenses 742,936.58 670,385.29 678,804.54 676,655.22 674,750.07
Net Income ₱2,235,630.37 ₱2,042,953.34 ₱2,658,216.53 ₱3,406,736.12 ₱4,302,450.90
 67

Table 37

YEMPOLAYA PRODUCTION

5 Year Projected Cash Flow Statement

_________________

1 2 3 4 5
Cash Flow from
Operating activities
Cash received from
Customer ₱6,140,206.67 ₱7,368,248.00 ₱8,841,897.60 ₱10,610,277.12 ₱12,732,332.55
Less: Cash
Disbursement
Salaries & Wages
Expenses 567,840.00 567,840.00 567,840.00 567,840.00 567,840.00
Premium Expenses
114,137.76 114,137.76 114,137.76 114,137.76 114,137.76
Office Supplies Expense
2,803.03 2,859.09 2,916.27 2,974.60 3,034.09
Promotional Expenses
4,660.00 2,052.00 1,990.44 1,930.73 1,759.33
Utilities Expenses
36,000.00 36,720.00 37,454.40 38,203.49 38,967.56
Transportation
Expenses 15,190.00 15,493.80 15,803.68 16,119.75 16,442.14
Permits and Licenses
Expense 4,250.00 4,250.00 4,250.00 4,250.00 4,250.00
Repairs & Maintenance
Expenses 30,000.00 31,500.00 33,075.00 34,728.75 36,465.19
Miscellaneous Expense
2,692.50 2,746.35 2,801.28 2,857.30 2,914.45

Renovation Expense 70,000.00 - - - -

Rental Expense 180,000.00 180,000.00 180,000.00 180,000.00 180,000.00

Communication
Expenses 20,040.00 20,440.80 20,849.62 21,266.61 21,691.94
Production Materials
3,569,280.00 4,283,136.00 5,139,763.20 6,167,715.84 7,401,259.01
Total Cash
Disbursement ₱4,616,893.29 ₱5,261,175.80 ₱6,120,881.64 ₱7,152,024.82 ₱8,388,761.47

Net Cash Flow from

Operating Activities ₱1,523,313.38 ₱2,107,072.20 ₱2,721,015.96 ₱3,458,252.30 ₱4,343,571.08

Cash Flow From

Investing Activities
 68

Cost of Fixed Assets - - - -

79,187.00
Net Cash Used in
- - - -
Investing Activities 79,187.00

Cash Flow from

Financing Activities
Cash Proceeds from
- - - -
Owner ₱1,000,000.00
Net Cash Flow from
- - -
Financing Activities ₱1,000,000.00 -

Net
Increase(Decrease) in
Cash 2,444,126.38 2,107,072.20 2,721,015.96 3,458,252.30 4,343,571.08
Cash Balance at the
Beginning of the period - 2,444,126.38 4,551,198.58 7,272,214.54 10,730,466.84
Cash Balance at the
End of the Period ₱2,444,126.38 ₱4,551,198.58 ₱7,272,214.54 ₱10,730,466.84 ₱15,074,037.92

Table 38

YEMPOLAYA PRODUCTION
5 Year Projected Balance Sheet
As of ____________

1 2 3 4 5
Current Asset
₱ ₱ ₱ ₱ ₱
Cash 2,444,126.38 4,551,198.58 7,272,214.54 10,730,466.84 15,074,037.92
Inventory,
Ending 708,221.30 637,395.28 573,655.76 516,290.18 464,661.16
Total Current ₱ ₱ ₱ ₱ ₱
Asset 3,152,347.68 5,188,593.87 7,845,870.30 11,246,757.02 15,538,699.08

Non - Current
Asset
Machineries & ₱ ₱ ₱ ₱ ₱
Equipment 11,690.00 11,690.00 11,690.00 11,690.00 11,690.00
Less:
Accumulated
Depreciation 1,571.40 3,142.80 4,714.20 6,285.60 7,857.00
₱ ₱ ₱ ₱ ₱
Book Value 10,118.60 8,547.20 6,975.80 5,404.40 3,833.00
Furniture and ₱ ₱ ₱ ₱ ₱
Fixtures 5,773.00 5,773.00 5,773.00 5,773.00 5,773.00
Less:
Accumulated
Depreciation 636.57 1,273.14 1,909.71 2,546.28 3,182.85
 69

₱ ₱ ₱ ₱ ₱
Book Value 5,136.43 4,499.86 3,863.29 3,226.72 2,590.15
Office ₱ ₱ ₱ ₱ ₱
Equipment 34,490.00 34,490.00 34,490.00 34,490.00 34,490.00
Less:
Accumulated
Depreciation 4,318.20 8,636.40 12,954.60 17,272.80 21,591.00
₱ ₱ ₱ ₱ ₱
Book Value 30,171.80 25,853.60 21,535.40 17,217.20 12,899.00
₱ ₱ ₱ ₱ ₱
Delivery Car 25,000.00 25,000.00 25,000.00 25,000.00 25,000.00
Less:
Accumulated
Depreciation 2,250.00 4,500.00 6,750.00 9,000.00 11,250.00
₱ ₱ ₱ ₱ ₱
Book Value 22,750.00 20,500.00 18,250.00 16,000.00 13,750.00
Other
Equipment 2,234.00 2,234.00 2,234.00 2,234.00 2,234.00
Less:
Accumulated
Depreciation 402.12 804.24 1,206.36 1,608.48 2,010.60

Book Value 1,831.88 1,429.76 1,027.64 625.52 223.40

Total Non - ₱ ₱ ₱ ₱ ₱
Current Asset 70,008.71 60,830.42 51,652.13 42,473.84 33,295.55

₱ ₱ ₱ ₱ ₱
Total Assets 3,222,356.39 5,249,424.29 7,897,522.43 11,289,230.86 15,571,994.63

Liabilities &
Owner's
Equity

Liabilities
Current
- - - - -
Liabilities
Non - Current
- - - - -
Liabilities
Total
- - - - -
Liabilities

Owner's
Equity
Capital ₱ ₱ ₱ ₱ ₱
Investment 1,000,000.00 3,235,630.37 5,278,583.72 7,936,800.25 11,343,536.37

Net Income 2,235,630.37 2,042,953.34 2,658,216.53 3,406,736.12 4,302,450.90

Total Owners ₱ ₱ ₱ ₱ ₱
Equity 3,235,630.37 5,278,583.72 7,936,800.25 11,343,536.37 15,645,987.27

Total Liability
& Owner's ₱ ₱ ₱ ₱ ₱
Equity 3,235,630.37 5,278,583.72 7,936,800.25 11,343,536.37 15,645,987.27
 70

Financial Analysis

As we progress to Financial Analysis, you are expected to have already

known how to prepare financial statements. By this time, you have to analyze

and interpret the result of your operation and other financial figures.

Computing percentages and ratios in the financial statement has no

significance at all if there is no interpretation, as well as recommendations for

improvement of what is considered weak areas in the operation. The reason is

that financial analysis is prepared not to push certain people in the organization,

but to improve the weak areas, and, therefore, build better control, protecting the

assets of the company.

Payback Period (PBP)

It is the period of the time required to recoup the funds expended in

investment. It is also a period here a business reaches thee break even post.

Payback period intuitively measures how long something takes to pay for itself.

Cash
Capital Balance
Investment (End) Total
Payback Period ₱
= ₱1,000,000.00 =
(PBP) / 2,444,126.38 0.41

0.41x12
Payback Period =
(PBP) 4.92 years

This means 4.92 years is the amount of time that is expected before an

investment will be returned in the form of income.

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Return on Investment

The return on investment (ROI) is also called as the return on assets or

simple accounting of return. It is the most common profitability ratio. It is a

performance measure used to evaluate the efficiency of the investment.

Net Income
Return on Investment =
Capital Investment

Table 35

Year 1 Year 2 Year 3 Year 4 Year 5

Net
Income 2,235,630.37 2,042,953.34 2,658,216.53 3,406,736.12 4,302,450.90
Investment 1000000 1000000 1000000 1000000 1000000
Return on
Investment 2.24 2.04 2.66 3.41 4.30

This means that the 224 % for 1st year, 204 % for 2nd year, 266 % for 3rd

year, 341 % of 4th year and 430 % of 5th year represents the amount of return on

an investment, relative to the investment’s cost.

Profit Margin Ratio

It is also called the return on sales ratio or gross profit ratio, is a

profitability ratio that measures the amount of net income earned with each cash

of sales generated by comparing the net income and net sales of a company. In

other words, the profit margin ratio shows what percentages of sales are left over

all expenses are paid by the business. It also used this ratio to measure how

effectively a company can convert sales into net income.

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Net Income
Profit Margin Ratio =
Sales

Table 36

Year 1 Year 2 Year 3 Year 4 Year 5

Net Income 2,235,630.37 2,042,953.34 2,658,216.53 3,406,736.12 4,302,450.90
Sales
6140206.669 7,368,248.00 8,841,897.60 10,610,277.12 12,732,332.55
Profit Margin
Ratio 0.36 0.28 0.30 0.32 0.34

A 26% of 1st year, 28 % of 2nd year, 30 % of 3rd year, 32 % of 4th year and

34 % of 5th year profit margin, then, this means the company has the net inome

of ₱.36 of 1st year, ₱.28 of 2nd year, ₱.30 of 3rd year, ₱.32 of 4th year and ₱.34 of

5th year for each peso of total revenue earned.

In other words, the profit margin ratio shows what percentage of sales are

left over after all expenses are paid by the business.