1. Chapter V
Financial Aspect
FRAMEWORK
This aspect quantifies the results of the marketing, technical, management, taxation and legal phases of the project study, and expresses
in peso terms the possible outcome of operating the project.
This chapter presents the overall financial picture in terms of operating cash requirements, profitability and cash flows.
MAJOR ASSUMPTION
In the formulation of financial projection, assumptions play a vital role because they serve as the foundation for estimating the future
expenditures, expenses, and revenues of the project as accurately as possible. These assumptions that the proponent made are based on the
workable facts and research.
1. The business operations will start on January 2010 and will operate continuously.
2. The total capital contribution is fifteen million pesos (15,000,000) where in the capital partners will contribute twenty five percent (25%)
equivalent to one million two hundred fifty thousand pesos (1,250,000), and limited partners will contribute fifteen percent (15%)
equivalent to seven hundred fifty thousand (750,000).
3. The pre-operating expenses is estimated to be at P 25,520.00
4. Total fixed assets are estimated to be at P 5,769.65.00
5. Depreciation is computed using the straight – line method. The company assumes a salvage value estimated to be ten percent (10%)of
the cost fixed assets.
6. The company shall maintain a policy of ten percent (10%) increase of selling price and number of units sold annually.
7. Sales discount is estimated at ten percent (10%) of sales and sales returns and allowances are estimated at one percent (1%)
8. Purchase of the first year are estimated at P 2,292,382.50 for year one with an annual increase of ten percent (10%)
9. Overhead shall consist of the following accounts with a ten percent (10%).
a) Light – P244,800.00
b) Water –P 22,965.00
2. c) Telephone – P 11,289.00
d) Repairs and maintenance – P3,044.89.00
10. Raw materials are estimated for one month available for use.
11. Operating expenses are estimated as follows:
a) Rent expense – P 40,000.00
b) Retainer’s – P 40,000.00
c) Advertising - P 30,000.00
12. Monthly SSS, withholding tax, philhealth and EC are based on the 2009 contribution as provided by Social Security System (SSS), bureau
of internal revenue (BIR), and Philhealth Insurance Corporation. See the said contribution tables on the appendix section.
13. Monthly PAG-IBIG contribution is considered one – hundred pesos (P100)
14. Salaries and wages are based on the prescribed wage order by the department of labor and employment (DOLE) with an ten percent
(10%) increase annually.
8. Total 5,000.000.00 656,879.00
Partner A Partner B Partner C Partner D Total
Capital balance, beginning 1,250,000.00 1,250,000.00 1,250,000.00 1,250,000.00 5,000,000.00
Add: share in Net-Income- YEAR 1 209,941.61 209,941.61 209,941.61 209,941.61 839,766.44
Total 1,459,941.61 1,459,941.61 1,459,941.61 1,459,941.61 5,839,766.44
Less: Share in withdrawal- Year 1 100,000.00 100,000.00 100,000.00 100,000.00 400,000.00
Capital balance, Ending 1,359,941.61 1,359,941.61 1,359,941.61 1,359,941.61 5,439,766.44
Capital Balance, Beginning- YEAR 2 1,359,941.61 1,359,941.61 1,359,941.61 1,359,941.61 5,439,766.44
Add: Share in Net income 266,762.92 266,762.92 266,762.92 266,762.92 1,067,051.70
Total 1,626,704.54 1,626,704.54 1,626,704.54 1,626,704.54 6,506,818.14
Less: Share in Withdrawal 100,000.00 100,000.00 100,000.00 100,000.00 400,000.00
Capital Balance, Ending 1,526,704,54 1,526,704,54 1,526,704,54 1,526,704,54 6,106,818.14
Capital Balance, Beginning- YEAR 3 1,526,704,54 1,526,704,54 1,526,704,54 1,526,704,54 6,106,818.14
Add: Share in Net Income 301,254.01 301,254.01 301,254.01 301,254.01 1,205,016.04
Less: Share in withdrawal 1,827,958.55 1,827,958.55 1,827,958.55 1,827,958.55 7,311,834.18
Capital Balance, Ending 100,000.00 100,000.00 100,000.00 100,000.00 400,000.00
9. Capital Balance, Beginning- YEAR 4 1,727,958.55 1,727,958.55 1,727,958.55 1,727,958.55 6,911,834.18
Add: Share in Net income 345,096.38 345,096.38 345,096.38 345,096.38 1,380.385.51
Total 2,073,054.92 2,073,054.92 2,073,054.92 2,073,054.92 8,292.219.69
Less: share in withdrawal 100,000.00 100,000.00 100,000.00 100,000.00 400,000.00
Capital Balance, Ending 1,973,054.92 1,973,054.92 1,973,054.92 1,973,054.92 7,982,219.69
Capital Balance, Beginning- YEAR 5 1,973,054.92 1,973,054.92 1,973,054.92 1,973,054.92 7,982,219.69
Add: Share in Net income 392,823.09 392,823.09 392,823.09 392,823.09 1,571,292.37
Total 2,365,878.02 2,365,878.02 2,365,878.02 2,365,878.02 9,463,512.06
Less: Share in withdrawal 100,000.00 100,000.00 100,000.00 100,000.00 400,000.00
Capital Balance, Ending 2,265,878.02 2,265,878.02 2,265,878.02 2,265,878.02 9,063,512
15. COFFEE TALK
Projected Cash Flow
For the Years Ended 2008-2009
2008 2009 2010 2011 2012
Excess of Sales Over Expenses 839,766.44 1,067,051.70 1,205,016.04 1,380,385.51 1,571,292.37
Depreciation 54,244.62 54,244.62 54,244.62 54,244.62 54,244.62
Increase/Decrease in Current Assets/Liablities
Withholding Tax Payable 201,245.47 238,496.06 217,115.42 268,011.98 349,128.50
SSS Premium Payable 184,500.00 191,731.32 203,522.40 209,455.20 211,152.00
Pag-ibig Premium Payable 20,400.00 20,400.00 20,400.00 20,400.00 20,400.00
Employees Compensation Payable 3,720.00 3,720.00 3,720.00 3,720.00 3,720.00
Phil Health Payable 37,332.00 37,500.00 41,100.00 44,250.00 49,650.00
Income Tax Payable 395,184.21 502,141.98 567,066.37 649,593.18 739,431.70
VAT Payable 588,378.18 646,579.22 711,184.08 782,298.06 860,527.50
Net Cash Provided by Operating Activities 2,325,070.92 2,761,864.90 3,023,368.94 3,412,358.56 3,859,546.70
16. Cash Flows from investing activities
Purchase of Equipments
Office Equipment 42,500.00
Coffee Shop Machineries and equip. 202,959.00
Furniture and Fixtures 55,900.00
Net Cash Provided by Investing Activities 301,359.00
Cash Flows From Financing Activities
Contributed Capital 5,000,000.00
Drawing 400,000.00 400,000.00 400,000.00 400,000.00 400,000.00
Net Cash Provided by Financing Activities 4,600,000.00 1,213,143.70 1,345,118.49 1,581,467.31 1,859,587.00
Increase (Decrease in Cash ) 4,298,641.00 1,213,143.70 1,345,118.49 1,581,467.31 1,859,587.00
Cash Beginning of Year -- 4,298,641.00 5,511,784.70 6,856,903.19 8.437.370.50
Cash End of Year 4,298,641,00 5,511,784.70 6,856,903.19 8.437.370.50 10,296,958.00
Cash on Hand 429,864.10 551,178.47 685,690.32 843,737.05 1,029,695.80
Cash on Bank 3,868,776.90 4,960,606.23 6,171,212.82 7,593,633.45 9,267,262.20
Interest on Bank Deposit 154,751.08 198,424.25 246,848.51 303,745.34 370,690.49
17. 2008 2009 2010 2011 2012
FINANCIAL STATEMENT ANALYSIS
Net Income 839,766.44 1,067,051.70 1,205,016.04 1,380,385.51 1,571,292.37
Contributed Capital 5,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00
(Earnings rate on resource provided by owners) 17% 21% 24% 28% 31%
RATE ON RETURN SALES
Net Income 839,766.44 1,067,051.70 1,205,016.04 1,380,385.51 1,571,292.37
Sales 7,641,275.00 8,405,402.50 9,245,942.75 10,170,537.03 11,187,590.73
(indicated Net Profitability of each peso Sales) 11% 13% 13% 14% 14%
PAYBACK PERIOD
Net Investment 5,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00
Annual Cash Return 4,298,641.00 5,511,784.19 6,856,903.19 8,437,370.50 10,296,958.00
(Indicates the year investments made may had return 1.16 0.91 0.73 0.59 0.49
to the company inflow of cash)