Chapter 5

Financing and Financial Feasibility

This chapter shows how much capital is needed for the

project and the expected expenses, gain or loss for the

entire operation. It includes: (1) Total Project Cost, (2)

Financiers, (3) Major Assumptions Used, (4) Projected Income

Statement, (5) Projected Statement of Financial Position,

(6) Projected Statement of Cash Flows, and (7) Financial

Analysis.

Part One, Total Project Cost, shows the total capital

requirement of the project.

Part Two, Financiers, identifies the financial

contributors for the establishment of the project and their

respective shares to be contributed to the capital

structure.

Part Three, Major Assumptions Used, describes the basis

used in production, marketing, interest, inflation,

financial analysis and other considerations on which the

analysis is based.

Part Four, Projected Income Statement, present

information concerning the revenue earned by the business

for five years.

 Part Five, Projected Statement of Financial Position,

provide insights of the business assets and debts for five

years. Part Six, Projected Statement of Cash Flows, provide

a look at the movement of cash in and out of the business.

Part Seven, Financial Analysis, includes the

investigation and interpretation of financial statements and

related financial reports.

Total Project Cost

A project cost is the needed initial capital to start

up a project or a business. Stated below is the project cost

to open the DMDC Assisted Living Facility.

DMDC Assisted Living Facility

First Month of Year 1
Project Cost

START UP COST YEAR 1

Site advertisement 1,500.00
Leaflets and flyers 3,000.00
Business permits and
registrations 20,132.00
TOTAL 24,632.00

FIXED CAPITAL
Building and Facilities 13,004,588.94
Materials and Equipment 3,128,107.00
TOTAL 16,132,695.94

WORKING CAPITAL 842,672.06

GRAND TOTAL 17,000,000.00

Financiers

The financiers of the proposed project is

Major Assumptions

 Sales will have an increase of 10% annually.

 Cost of Service will increase for 5% per annum.

 Electricity and water increases 10 % annually.

 PHIC will increase to 5% in year 2.

 DMDC ASSISTED LIVING FACILITY
INCOME STATEMENT
(Amount in Philippine Peso)

NOTE
YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
S
33,180, 36,498,00 40,147,800 44,162,580 48,578,838.0
SALES 1 000.00 0.00 .00 .00 0

10,270, 10,633,14 11,013,597 11,413,076 11,832,530.6

LESS: Cost of Services 2 800.00 0.00 .00 .85 9

22,909, 25,864,86 29,134,203 32,749,503 36,746,307.3

GROSS PROFIT 200.00 0.00 .00 .15 1

LESS
: Operating Expenses

Pre-Operating Expenses 3 36,632.00

3 2, 3, 2,00
Advertising Expenses 4 2,000.00 ,500.00 000.00 500.00 0.00
Salaries, Wages and 7,566 7,563,1 7,563,12 7,563,12 7,563,120.
13th Month Pay 5 ,590.00 20.00 0.00 0.00 00
SSS/PHIC/HDMF Premiums 1,237 1,314,0 1,314,06 1,314,06 1,314,060.
Expenses 6 ,720.00 60.00 0.00 0.00 00
51 536, 563,8 593,4 625,925
Utilities Expense 7 2,556.00 983.80 54.38 12.02 .42
19 203, 207,8 211,9 216,230
Supplies Expense 8 9,764.00 759.28 34.47 91.15 .98
Taxes, Permits and 1,673,6 1,839,55 2,022,04 2,222,779.
Licenses 9 50.00 0.00 0.00 00
20 20, 20,0 20,000
Professional Fees 20,000.00 ,000.00 000.00 00.00 .00
Depreciation Expense - 23 234, 234,0 234,0 234,082
Building 10 4,082.60 082.60 82.60 82.60 .60
Depreciation Expense - 29 296, 296,0 296,0 296,036
Material & Equipment 10 6,036.91 036.91 36.91 36.91 .91
TOTAL OPERATING 10,105, 11,845,19 12,040,538 12,258,242 12,494,234.9
EXPENSES 381.51 2.59 .36 .68 1

12,803, 14,019,66 17,093,664 20,491,260 24,252,072.4

OPERATING PROFIT 818.49 7.41 .64 .47 0
 3,883 4,309,3 5,385,28 6,574,44 7,890,725.
LESS: Income Tax Due 13 ,836.47 83.59 2.63 1.16 34

8,919 9,710,2 11,708,382 13,916,819 16,361,347.0

NET PROFIT ,982.02 83.82 .02 .30 6
 DMDC ASSISTED LIVING FACILITY
STATEMENT OF FINANCIAL CONDITION
(Amount in Philippine Peso)

NOTES YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5

ASSETS
Current Assets

Cash 13,542,854.06 23,245,301.11 35,592,395.10 49,264,645.45 65,512,364.24

TOTAL CURRENT ASSETS 13,542,854.06 23,245,301.11 35,592,395.10 49,264,645.45 65,512,364.24

Non-current Assets

Property and Equipment 10 15,602,576.43 15,072,456.92 14,542,337.41 14,012,217.90 13,482,098.39

TOTAL NON-CURRENT ASSETS 15,602,576.43 15,072,456.92 14,542,337.41 14,012,217.90 13,482,098.39

TOTAL ASSETS 29,145,430.49 38,317,758.03 50,134,732.51 63,276,863.35 78,994,462.63

LIABILITIES AND PARTNER’S EQUITY

Liabilities

SSS, PHIC & HDMF Payable 11 112,520.00 119,460.00 119,460.00 119,460.00 119,460.00

VAT Payable 12 229,092.00 258,648.60 291,342.03 327,495.03 367,463.07

Income Tax Payable 13 3,883,836.47 4,309,383.59 5,385,282.63 6,574,441.16 7,890,725.34

TOTAL CURRENT LIABILITIES 4,225,448.47 4,687,492.19 5,796,084.66 7,021,396.19 8,377,648.41

Equity

Beginning Capital 24,919,982.02 33,630,265.83 44,338,647.85 56,255,467.16

Initial Investment
 17,000,000.00

Net Income 8,919,982.02 9,710,283.82 11,708,382.02 13,916,819.30 16,361,347.06

(1,000,000.00 (1,000,000.00 (2,000,000.00 (2,000,000.00

Withdrawal (1,000,000.00) ) ) ) )

TOTAL EQUITY 24,919,982.02 33,630,265.83 44,338,647.85 56,255,467.16 70,616,814.21

TOTAL LIABILITIES AND

EQUITY 29,145,430.49 38,317,758.03 50,134,732.51 63,276,863.35 78,994,462.63
 DMDC ASSISTED LIVING FACILITY
STATEMENT OF CASH FLOW
(Amount in Philippine Peso)

NOTES YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5

Cash flows from operating

activities
8,919,982 9,710,28 11,708,382 13,916,819.3 16,361,347.0
Net Income 1 .02 3.82 .02 0 6
530,11 530,1 530,1 530,119. 530,119
Depreciation Expense 9.51 19.51 19.51 51 .51
Increase/(Decrease) in SSS, PHIC & 112,52 6
HDMF Payable 0.00 ,940.00 - - -
Increase/(Decrease) in VAT 229,09 29, 32, 36,153 39,968
payable 2.00 556.60 693.43 .00 .04
Increase/(Decrease) in 3,883,836 425,5 1,075,89 1,189,158.5 1,316,284.
Income Tax payable .47 47.12 9.03 4 18
13,675,550. 10,702,447 13,347,093 15,672,250.3 18,247,718.7
CASH FLOWS FROM OPERATING ACTIVITIES 00 .05 .99 5 9

Cash flows from investing

activities
(13,004,588.
Building Construction 10 94) - - - -
(3,128,107
Materials and Equipment 10 .00) - - - -
(16,132,695.
CASH FLOWS FROM INVESTING ACTIVITIES 94) - - - -

Cash flows from financing

activities
17,000,000.
Owner's initial investment 00 - - - -
(1,000,000 (1,000,00 (1,000,00 (2,000,000.0 (2,000,000.0
Withdrawals .00) 0.00) 0.00) 0) 0)
16,000,000. (1,000,00 (1,000,00 (2,000,000.0 (2,000,000.0
CASH FLOWS FROM FINANCING ACTIVITIES 00 0.00) 0.00) 0) 0)
Net increase (decrease) in 13,542,854. 9,702,44 12,347,093 13,672,250.3 16,247,718.7
Cash 06 7.05 .99 5 9
13,542,854 23,245,301 35,592,395.1 49,264,645.4
Cash, Beginning - .06 .11 0 5
13,542,854. 23,245,301 35,592,395 49,264,645.4 65,512,364.2
CASH, ENDING 06 .11 .10 5 4
Notes to Financial

Notes 1. Sales

Private Rooms
No. of
Care Level Unit Price Total Price
Residents
Assisted Living 7 65,000.00 455,000.00
Care Living 1 5 80,000.00 400,000.00
Care Living 2 2 95,000.00 190,000.00
Dementia Care 2 100,000.00 200,000.00
TOTAL 16 1,245,000.00
Common Rooms
No. of
Care Level Unit Price Total Price
Residents
Assisted Living 3 55,000.00 165,000.00
Care Living 1 1 70,000.00 70,000.00
Care Living 2 4 85,000.00 340,000.00
TOTAL 8 210,000.00 575,000.00
Home-Based Care*
No. of
Care Level
Days Unit Price Total Price
Home Care 1 201 1,000.00 201,000.00
Home Care 2 144 2,500.00 360,000.00
Home Care 3 96 4,000.00 384,000.00
TOTAL 441 7,500.00 945,000.00
GRAND TOTAL 2,765,000.00
ANNUAL TOTAL 33,180,000.00
Notes 2. Cost of Services

DIRECT MATERIALS YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5

Medications
68 722
Assisted Living 624,000.00 655,200.00 7,960.00 ,358.00 758,475.90
54 569
Care Living 1 492,000.00 516,600.00 2,430.00 ,551.50 598,029.08
70 736
Care Living 2 636,000.00 667,800.00 1,190.00 ,249.50 773,061.98
97 1,021, 1,0
Dementia Care 882,000.00 926,100.00 2,405.00 025.25 72,076.51
41 437
Home-Based Care 378,000.00 396,900.00 6,745.00 ,582.25 459,461.36
Medical Supplies
34 361
Assisted Living 312,000.00 327,600.00 3,980.00 ,179.00 379,237.95
27 284
Care Living 1 246,000.00 258,300.00 1,215.00 ,775.75 299,014.54
35 368
Care Living 2 318,000.00 333,900.00 0,595.00 ,124.75 386,530.99
48 510
Dementia Care 441,000.00 463,050.00 6,202.50 ,512.63 536,038.26
20 218
Home-Based Care 189,000.00 198,450.00 8,372.50 ,791.13 229,730.68
Food and Sanitation
68 722
Assisted Living 624,000.00 655,200.00 7,960.00 ,358.00 758,475.90
54 569
Care Living 1 492,000.00 516,600.00 2,430.00 ,551.50 598,029.08
70 736
Care Living 2 636,000.00 667,800.00 1,190.00 ,249.50 773,061.98
97 1,021, 1,0
Dementia Care 882,000.00 926,100.00 2,405.00 025.25 72,076.51
10 109
Miscellaneous 94,800.00 99,540.00 4,517.00 ,742.85 115,229.99
 7,246,800.0 7,609,140.0 7,989 8,389, 8,8
TOTAL 0 0 ,597.00 076.85 08,530.69
Direct Labor

1,296,000.0 1,296,000.0 1,296 1,296, 1,2

Nurse 0 0 ,000.00 000.00 96,000.00

1,728,000.0 1,728,000.0 1,728 1,728, 1,7

Caregiver 0 0 ,000.00 000.00 28,000.00

3,024,000.0 3,024,000.0 3,024 3,024, 3,0

TOTAL 0 0 ,000.00 000.00 24,000.00
10 10 11,013, 11,413,0 11,83
GRAND TOTAL ,270,800.00 ,633,140.00 597.00 76.85 2,530.69

Note 3. Pre-Operating Expense

START UP COST YEAR 1

Site advertisement 1,500.00

Leaflets and flyers 3,000.00

Business permits and
registrations 32,132.00

TOTAL 36,632.00

Note 4. Advertising Expenses

YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5

Site
advertisements 1,500.00 1,500.00
Leaflets and 2,000.00 2,000.00 2,000.00 2,000.00 2,000.00
flyers
2 2, 3,
TOTAL ,000.00 3,500.00 000.00 500.00 2,000.00

Note 5. Salaries and Wages

YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5

240,000. 240,000 240,000. 240,00 240,
Physician 00 .00 00 0.00 000.00
238,500. 238,400 238,400. 238,40 238,
Head Nurse 00 .00 00 0.00 400.00
1,288,780. 1,288,240 1,288,240. 1,288,240 1,288,2
Nurse 00 .00 00 .00 40.00
715,900. 715,600 715,600. 715,60 715,
PT 00 .00 00 0.00 600.00
1,718,440. 1,717,720 1,717,720. 1,717,720 1,717,7
Caregiver 00 .00 00 .00 20.00
240,000. 239,500 239,500. 239,50 239,
Pathologist 00 .00 00 0.00 500.00
477,200. 477,000 477,000. 477,00 477,
Med Tech 00 .00 00 0.00 000.00
238,500. 238,400 238,400. 238,40 238,
Lab Aide 00 .00 00 0.00 400.00
238,500. 238,400 238,400. 238,40 238,
Accountant 00 .00 00 0.00 400.00
143,020. 142,960 142,960. 142,96 142,
Cashier 00 .00 00 0.00 960.00
178,825. 178,750 178,750. 178,75 178,
Supply Officer 00 .00 00 0.00 750.00
178,825. 178,750 178,750. 178,75 178,
Records Officer 00 .00 00 0.00 750.00
143,020. 142,960 142,960. 142,96 142,
Supply Staff 00 .00 00 0.00 960.00
 596,550. 596,300 596,300. 596,30 596,
Maintenance 00 .00 00 0.00 300.00
357,850. 357,700 357,700. 357,70 357,
Driver 00 .00 00 0.00 700.00
572,680. 572,440 572,440. 572,44 572,
Security 00 .00 00 0.00 440.00
7,566,590.0 7,563,120. 7,563,120.0 7,563,120 7,563,1
TOTAL 0 00 0 .00 20.00
Note 6. SSS, PHIC, HDMF Premium Expenses

YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5

914,76 914, 9
SSS Premiums Expense 914,760.00 0.00 760.00 14,760.00 914,760.00
337,70 337, 3
PHIC Premiums Expense 261,360.00 0.00 700.00 37,700.00 337,700.00
61,6 61,
HDMF Premiums Expense 61,600.00 00.00 600.00 61,600.00 61,600.00
1,2 1,314,060 1,314,0 1,31 1,3
TOTAL 37,720.00 .00 60.00 4,060.00 14,060.00

Note 7. Utilities Expenses

YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5

3 391, 411,8 43 459
Electricity 72,732.00 368.60 68.86 4,419.15 ,224.46
1 121, 127,9 13 142
Water 15,824.00 615.20 85.52 4,992.87 ,700.96
Communication and Internet 24 24, 2
connectivity 24,000.00 ,000.00 000.00 24,000.00 4,000.00
5 536, 563,8 59 625
TOTAL 12,556.00 983.80 54.38 3,412.02 ,925.42

Note 8. Supply Expenses

 YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5

199,764.0 203,759.2 207,834.4 211,991.1 216,230.9

Supply Expense 0 8 7 5 8

199,764.0 203,759.2 207,834.4 211,991.1 216,230.9

TOTAL 0 8 7 5 8

Note 9. Permit and Licenses

YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR

BIR with documentary stamp - 500.00 500.00 500.00 500.00

1,65 1,824 2,007, 2,208
Mayor's permit* - 9,000.00 ,900.00 390.00 ,129.00

Garbage fee - 800.00 800.00 800.00 800.00

Health inspection fee - 250.00 250.00 250.00 250.00

Inspection fee (BFP) - 100.00 100.00 100.00 100.00

1 12 1
License to operate (DOH) - 12,000.00 2,000.00 ,000.00 2,000.00

Brgy. Clearance - 1,000.00 1,000.00 1,000.00 1,000.00

1,67 1,839, 2,022,0 2,222,
TOTAL 3,650.00 550.00 40.00 779.00

Note: Mayor's permit is computed as 5% of the total sale of preceding year

Note 10. Property and Equipment

 YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5

16,132,695.9 16,132,695.9 16,132,695.9 16,132,695.9

Cost, Beg 4 4 4 4
16,132
Additions ,695.94
Disposals
16,132 16,132,695. 16,132,695 16,132,69 16,132,69
COST, END ,695.94 94 .94 5.94 5.94

LESS: Accum. Dep., 530,11 1,060,23 1,590,3 2,120,4

Beg. 9.51 9.02 58.53 78.04
Depreciation - 2 296,03 296,0 296, 296,
Materials & Equipment 96,036.91 6.91 36.91 036.91 036.91
Depreciation - 2 234,08 234,0 234, 234,
Building 34,082.60 2.60 82.60 082.60 082.60
5 1,060,239 1,590,35 2,120,4 2,650,5
ACCUM. DEP., END 30,119.51 .02 8.53 78.04 97.55

15,602 15,072,456. 14,542,337 14,012,21 13,482,09

CARRYING VALUE ,576.43 92 .41 7.90 8.39

Note 11. SSS, PHIC, HDMF Premium Payable

YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5

SSS Premiums Payable 83,160.00 83,160.00 83,160.00 83,160.00 83,160.00

PHIC Premiums Payable 23,760.00 30,700.00 30,700.00 30,700.00 30,700.00

HDMF Premiums Payable 5,600.00 5,600.00 5,600.00 5,600.00 5,600.00

1 1 1
TOTAL 112,520.00 119,460.00 19,460.00 19,460.00 19,460.00
Note 12. VAT Payable

YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5

33,180 36,498,0 40,147,8 44,162,5 48,578,
SALES ,000.00 00.00 00.00 80.00 838.00
2,76 3,041,5 3,345, 3,680,2 4,048
Monthly Sales 5,000.00 00.00 650.00 15.00 ,236.50
MULTIPLY:VAT 12% 12% 12% 12% 12%
3 364, 401 441, 485
OUTPUT VAT 31,800.00 980.00 ,478.00 625.80 ,788.38

10,270 10,633,1 11,013,5 11,413,0 11,832,

COGS ,800.00 40.00 97.00 76.85 530.69
12% 12% 12% 12% 12%
1,23 1,275,9 1,321, 1,369,5 1,419
INPUT VAT 2,496.00 76.80 631.64 69.22 ,903.68
1 106, 110 114, 11
Monthly 02,708.00 331.40 ,135.97 130.77 8,325.31
2 258, 291 327, 367
VAT TAX DUE 29,092.00 648.60 ,342.03 495.03 ,463.07

Note 13. Income Tax

 YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
12,803,818. 14,019,667.4 17,093,664. 20,491, 24,252,
Profit before Tax 49 1 64 260.47 072.40
8,000,000 8,000,000. 8,000,000. 8,000 8,000
Less .00 00 00 ,000.00 ,000.00
4,803,818 6,019,667. 9,093,664. 12,491, 16,252,
Total .49 41 64 260.47 072.40
Multiply: Tax Rate 35% 35% 35% 35% 35%
1,681,336 2,106,883. 3,182,782. 4,371 5,688
Total .47 59 63 ,941.16 ,225.34
2,202,500 2,202,500. 2,202,500. 2,202 2,202
Add: Tax based .00 00 00 ,500.00 ,500.00
3,883,836 4,309,383. 5,385,282. 6,574, 7,890,
INCOME TAX DUE .47 59 63 441.16 725.34
Financial Analysis

Payback Period

Initial Investment

Cash Inflow

17,000,000.00
= 1.3 or 1 year and 3 months
13,542,854.06

PROFITABILIT
Y RATIO YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5

8,919,982 9,710,2 11,708,38 13,916,819 16,361,34

Net Income .02 83.82 2.02 .30 7.06
33,180,000. 36,498,00 40,147,80 44,162,580 48,578,83
Sales 00 0.00 0.00 .00 8.00
RATIO 27% 27% 29% 32% 34%

OPERATING
RATIO YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5

Operating 12,803,818.4 14,019,667.4 17,093,664.6 20,491,260.4 24,252,072.4

Income 9 1 4 7 0

33,180,000.0 36,498,000.0 40,147,800.0 44,162,580.0 48,578,838.0

Sales 0 0 0 0 0
RATIO 39% 38% 43% 46% 50%

RETURN ON
TOTAL ASSETS YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5

11,708,382.0 13,916,819.3 16,361,347.0

Net Income 8,919,982.02 9,710,283.82 2 0 6

Average 29,145,430.4 38,317,758.0 50,134,732.5 63,276,863.3 78,994,462.6

Total Assets 9 3 1 5 3
RATIO 31% 25% 23% 22% 21%

RATE OF
RETURN ON
EQUITY YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5

11,708,382.0 13,916,819.3 16,361,347.0

Net Income 8,919,982.02 9,710,283.82 2 0 6
Average
Owner's 24,919,982.0 33,630,265.8 44,338,647.8 56,255,467.1 70,616,814.2
Equity 2 3 5 6 1
RATIO 36% 29% 26% 25% 23%

SOLVENCY
RATIO YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5

Total
Liabilities 4,225,448.47 4,687,492.19 5,796,084.66 7,021,396.19 8,377,648.41

29,145,430.4 38,317,758.0 50,134,732.5 63,276,863.3 78,994,462.6

Total Assets 9 3 1 5 3
RATIO 14% 12% 12% 11% 11%

STABILITY
EQUITY RATIO YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5

Owner's 24,919,982.0 33,630,265.8 44,338,647.8 56,255,467.1 70,616,814.2

Equity 2 3 5 6 1

29,145,430.4 38,317,758.0 50,134,732.5 63,276,863.3 78,994,462.6

Total Assets 9 3 1 5 3
RATIO 86% 88% 88% 89% 89%