Chapter V                                                                 Financial AspectFRAMEWORK        This aspect qua...
c) Telephone – P 11,289.00      d) Repairs and maintenance – P3,044.89.0010.   Raw materials are estimated for one month a...
COFFEE TALK                                                      Projected Sales                       Hot Coffee         ...
Caramel                                      90   4380   394,200.00   394,200.00Hazelnut                                  ...
COFFEE TALK                                                 Computation of depreciation ( Straight Line Method )Office Mac...
Aircondition             25,000.00    2   25,000.00    5   4,500.00    4,500.00 4,500.00 4,500.00 4,500.00 4,500.00Electri...
COFFEE TALK                                                    Capital RequirementsCoffee Shop Rental ( six months advance...
Total                                                                                         5,000.000.00             656...
Capital Balance, Beginning- YEAR 4   1,727,958.55   1,727,958.55   1,727,958.55   1,727,958.55   6,911,834.18Add: Share in...
COFFEE TALK                                                       Income Statement                                        ...
Insurance Expense                              3,208.33       3,796.53       4,198.46       4,620.16       5,082.33Adverti...
COFFEE TALK                                                                 Projected Balance Sheet                       ...
Net Book Value                  247,114.38     192,869.76     138,625.14     84,380.52       30,135.90Leasehold Improvemen...
Less: Partner’s Drawing             400,000.00     400,000.00     400,000.00     400,000.00      400,000.00Total Partner’s...
COFFEE TALK                                                                     Projected Cash Flow                       ...
Cash Flows from investing activitiesPurchase of EquipmentsOffice Equipment                            42,500.00Coffee Shop...
2008           2009           2010           2011            2012FINANCIAL STATEMENT ANALYSISNet Income                   ...
Chapter v
Chapter v
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Chapter v

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Chapter v

  1. 1. Chapter V Financial AspectFRAMEWORK This aspect quantifies the results of the marketing, technical, management, taxation and legal phases of the project study, and expressesin 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 futureexpenditures, expenses, and revenues of the project as accurately as possible. These assumptions that the proponent made are based on theworkable 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. 2. c) Telephone – P 11,289.00 d) Repairs and maintenance – P3,044.89.0010. 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 30,000.0012. 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.
  3. 3. COFFEE TALK Projected Sales Hot Coffee Price Qnty Total Grand TotalEspresso 120.00 2920 350,400.00 350,400.00Caffe Doppio 110.00 2920 321,200.00 321,200.00Caffe Hag 110.00 2920 321,200.00 321,200.00Cappuccino 105 1825 383,400.00 383,400.00Iced Cappuccino 105 1825 191,625.00 191,625.00Milky way Cappuccino 120 1825 219,000.00 219,000.00Almond Cappuccino 120 1825 219,000.00 219,000.00Frapped capuccino 120 1825 219,000.00 219,000.00Caffe Latte 115 1825 209,875.00 209,875.00Caffe Mocha 115 1825 209,875.00 209,875.00 Coffee with a twistCafé Breve 120 3650 438,000.00 438,000.00Caffe Freddo 120 3650 438,000.00 438,000.00Café Macchiato 120 3650 401,500.00 401,500.00Latte macchiato 120 3650 401,500.00 401,500.00 Flavored CoffeeVanill 90 4380 394,200.00 394,200.00Irish Crème 90 5475 492,750.00 492,750.00
  4. 4. Caramel 90 4380 394,200.00 394,200.00Hazelnut 90 5475 492,750.00 492,750.00Fruit flavors such as orange and raspberry 90 5475 492,750.00 492,750.00
  5. 5. COFFEE TALK Computation of depreciation ( Straight Line Method )Office Machineries and equip. Cost Quantity Total Cost Life Depreciation 2008 2009 2010 2011 2012Computer ( Intel Pentium 4) 12,500.00 1 12,500.00 5 2,250.00 2,250.00 2,250.00 2,250.00 2,250.00 2,250.00Printer ( Hewlett Packard) 2,000.00 1 2,000.00 5 360.00 360.00 360.00 360.00 360.00 360.00Stereo ( JVC) 28,000.00 1 28,000.00 5 5,040.00 5,040.00 5,040.00 5,040.00 5,040.00 5,040.00TOTAL 42,500.00 42,500.00 7,650.00 7,650.00 7,650.00 7,650.00 7,650.00 7,650.00Coffee shop’s Machineriesand EquipmentAroma Grande Coffee Maker 17,100.00 1 17,100.00 5 3,078.00 3,078.00 3,078.00 3,078.00 3,078.00 3,078.00Espresso Machine 5,159.00 1 5,159.00 5 928.62 928.62 928.62 928.62 928.62 928.62Coffee Press 1,700.00 1 1,700.00 5 306.00 306.00 306.00 306.00 306.00 306.00Thermal Coffee Press 7,000.00 1 7,000.00 5 1,260.00 1,260.00 1,260.00 1,260.00 1,260.00 1,260.00Grinder 1,000.00 1 1,000.00 5 180.00 180.00 180.00 180.00 180.00 180.00Blender 2,500.00 1 2,500.00 5 450.00 450.00 450.00 450.00 450.00 450.00Refrigerator 8,000.00 1 8,000.00 5 2,880.00 2,880.00 2,880.00 2,880.00 2,880.00 2,880.00Oven-Gas Range 15,000.00 1 15,000.00 5 2,700.00 2,700.00 2,700.00 2,700.00 2,700.00 2,700.00Microwave Oven 7,500.00 1 7,500.00 5 1,350.00 1,350.00 1,350.00 1,350.00 1,350.00 1,350.00Television 22,000.00 1 22,000.00 5 3,960.00 3,960.00 3,960.00 3,960.00 3,960.00 3,960.00
  6. 6. Aircondition 25,000.00 2 25,000.00 5 4,500.00 4,500.00 4,500.00 4,500.00 4,500.00 4,500.00Electric Fan 4,000.00 1 4,000.00 5 720.00 720.00 720.00 720.00 720.00 720.00Water Purifier 4,500.00 1 4,500.00 5 810.00 810.00 810.00 810.00 810.00 810.00Generator 70,000.00 1 70,000,00 5 12,600.00 12,600.00 12,600.00 12,600.00 12,600.00 12,600.0Fire Extinguisher 1,500.00 3 4,500.00 5 810.00 810.00 810.00 810.00 810.00 810.00TOTAL 191,959.00 202,959.00 36,532.62 36,532.62 36,532.62 36,532.62 36,532.62 36,532.62Furniture and FixturesSet of table and chair 7,500.00 2 15,000.00 5 2,700.00 2,700.00 2,700.00 2,700.00 2,700.00 2,700.00Table (steel) 4,500.00 1 4,500.00 5 810.00 810.00 810.00 810.00 810.00 810.00Office chairs 850.00 4 3,400.00 5 612.00 612.00 612.00 612.00 612.00 612.00Couch 5,500.00 6 33,000.00 5 5,940.00 5,940.00 5,940.00 5,940.00 5,940.00 5,940.00TOTAL 18,350.00 55,900.00 10,062.00 10,062.00 10,062.00 10,062.00 10,062.00 10,062.00TOTAL FIXED ASSETS 252,809.00 301,359.00 54.244.62 54.244.62 54.244.62 54.244.62 54.244.62 54.244.62DepreciationLeasehold improvement 60,000.00 12,000.00 12,000.00 12,000.00 12,000.00 12,000.00 12,000.00
  7. 7. COFFEE TALK Capital RequirementsCoffee Shop Rental ( six months advance deposit ) 240,000.00Leasehold Improvements 60,000.00Office Equipment 42,500.00Coffee Shop Machineries and Equipments 202,959.00Furniture and Fixtures 55,900.00Advertising Expense 30,000.00Pre-operating Expense Mayors Permit 5,000.00 Taxes and License 4,500.00 Engineering Permit Sanitary Inspection Fee 1,500.00 Garbage Fee 700.00 SEC 3,500.00 Attotney’s Fee (notary) 350.00 BIR Registration 500.00 Barangay permit 850.00 Health permit 4,000.00 Miscellaneous Fee 2,320.00 25,520.00Reserve Money 4,343,121.00
  8. 8. Total 5,000.000.00 656,879.00 Partner A Partner B Partner C Partner D TotalCapital balance, beginning 1,250,000.00 1,250,000.00 1,250,000.00 1,250,000.00 5,000,000.00Add: share in Net-Income- YEAR 1 209,941.61 209,941.61 209,941.61 209,941.61 839,766.44Total 1,459,941.61 1,459,941.61 1,459,941.61 1,459,941.61 5,839,766.44Less: Share in withdrawal- Year 1 100,000.00 100,000.00 100,000.00 100,000.00 400,000.00Capital balance, Ending 1,359,941.61 1,359,941.61 1,359,941.61 1,359,941.61 5,439,766.44Capital Balance, Beginning- YEAR 2 1,359,941.61 1,359,941.61 1,359,941.61 1,359,941.61 5,439,766.44Add: Share in Net income 266,762.92 266,762.92 266,762.92 266,762.92 1,067,051.70Total 1,626,704.54 1,626,704.54 1,626,704.54 1,626,704.54 6,506,818.14Less: Share in Withdrawal 100,000.00 100,000.00 100,000.00 100,000.00 400,000.00Capital Balance, Ending 1,526,704,54 1,526,704,54 1,526,704,54 1,526,704,54 6,106,818.14Capital Balance, Beginning- YEAR 3 1,526,704,54 1,526,704,54 1,526,704,54 1,526,704,54 6,106,818.14Add: Share in Net Income 301,254.01 301,254.01 301,254.01 301,254.01 1,205,016.04Less: Share in withdrawal 1,827,958.55 1,827,958.55 1,827,958.55 1,827,958.55 7,311,834.18Capital Balance, Ending 100,000.00 100,000.00 100,000.00 100,000.00 400,000.00
  9. 9. Capital Balance, Beginning- YEAR 4 1,727,958.55 1,727,958.55 1,727,958.55 1,727,958.55 6,911,834.18Add: Share in Net income 345,096.38 345,096.38 345,096.38 345,096.38 1,380.385.51Total 2,073,054.92 2,073,054.92 2,073,054.92 2,073,054.92 8,292.219.69Less: share in withdrawal 100,000.00 100,000.00 100,000.00 100,000.00 400,000.00Capital Balance, Ending 1,973,054.92 1,973,054.92 1,973,054.92 1,973,054.92 7,982,219.69Capital Balance, Beginning- YEAR 5 1,973,054.92 1,973,054.92 1,973,054.92 1,973,054.92 7,982,219.69Add: Share in Net income 392,823.09 392,823.09 392,823.09 392,823.09 1,571,292.37Total 2,365,878.02 2,365,878.02 2,365,878.02 2,365,878.02 9,463,512.06Less: Share in withdrawal 100,000.00 100,000.00 100,000.00 100,000.00 400,000.00Capital Balance, Ending 2,265,878.02 2,265,878.02 2,265,878.02 2,265,878.02 9,063,512
  10. 10. COFFEE TALK Income Statement For the years ended December 31 2008 2009 2010 2011 2012Sales 7,641,257.00 8,405,402.50 9,245,942.75 10,170,537.03 11,187,509.73Less: Sales Discounts 382,063.75 7,985,132.38 8,783,645.61 9,662,010.17 10,628,211.19Net Sales 7,289,211.25 7,985,132.38 8,783,645.61 9,662,010.17 10,628,211.19Less: Cost of Sales 483391898 528455318 583881079 642305417 706118949Gross Profit 2,425,292.27 2,700,579.20 2,944,834.82 3,238,956.00 3,567,021,70Less: Operating ExpensesSSS Contribution 184,500.00 191,731.32 203,522.40 209,455.20 211,152.00Philhealth Contribution 37,332.00 37,500.00 41,100.00 44,250.00 49,650.00Employee Compensation 3,720.00 3,720.00 3,720.00 3,720.00 3,720.00Pag-ibig Contribution 20,400.00 20,400.00 20,400.00 20,400.00 20,400.00Bonus- 13th Month Pay 233,000.00 253,900.00 281,770.00 310,307.00 341,320.00Rent Expense 480.000.00 480.000.00 480.000.00 480.000.00 480.000.00Retainer’s Fee 40,000.00 44,000.00 48,400.00 53,240.00 58,554.00Office Supplies Expense 6,416.67 7,593.06 8,396.92 9,240.33 10,164.67
  11. 11. Insurance Expense 3,208.33 3,796.53 4,198.46 4,620.16 5,082.33Advertising Expense 30,000.00 22,500.00 15,000.00 7,500.00 10,000.00Depreciation- Office Machinery & Equip. 7,650.00 7,650.00 7,650.00 7,650.00 7,650.00Depreciation- Office Shop Machinery & equip. 36,532.62 36,532.62 36,532.62 36,532.62 36,532.62Depreciation Furniture and Fixtures 10,062.00 10,062.00 10,062.00 10,062.00 10,062.00Depreciation- Leasehold Improvements 12,000.00 12,000.00 12,000.00 12,000.00 12,000.00Pre-Operating Expenses 25,520.00Leasehold Improvements 60,000.00Total Operating Expense 1,190,341.62 1,131,385.52 1,172,752.40 1,208,977.31 1,256,297.62Net Income Before Tax 1,234.950.65 1,569,193.67 1,772,08.42 2,029,978.69 2,310,724.08Provision for Income Tax (32%) 39518421 50214198 56706637 64959318 73943170Net Income After tax 839,766.44 1,067,051.70 1,205,016.04 1,380,385.51 1,571,292.37
  12. 12. COFFEE TALK Projected Balance Sheet For the years ended 2008-2010 2008 2009 2010 2011 2012ASSETS Current Assets Cash 4,298,641.00 5,511,784.70 6,856,903.19 8,437,370.50 10,296,958.00 Accounts Receivable 700,450.21 828,866.08 916,616.93 1,008,683.97 1,109,586.15 Inventories 191,03.188 226,054.39 249,986.43 275,095.63 302,614.40 Prepaid expenses Supplies on hand 583.33 690.33 763.36 840.03 924.06 Insurance Expense 291.67 345.14 381.68 420.01 462.03Interest on Bank Deposit 283,591.19 198,424.25 246,848.51 303,745.34 370,690.49Total Current Assets 5,474,589.27 6,766,164.83 8,271,500.10 10,026,155.48 12,081,235.13Fixed Assets Office Machineries and Equip. 42,500.00 42,500.00 42,500.00 42,500.00 42,500.00 Coffee Shop Machineries and equip. 202,959.00 202,959.00 202,959.00 202,959.00 202,959.00 Furniture and Fixtures 55,900.00 55,900.00 55,900.00 55,900.00 55,900.00 Total Fixed Assets 301,359.00 301,359.00 301,359.00 301,359.00 301,359.00 Less Accumulated Depreciation 54,244.62 108,489.24 162,733.86 216,978.48 271,223.10
  13. 13. Net Book Value 247,114.38 192,869.76 138,625.14 84,380.52 30,135.90Leasehold Improvement 60,000.00 60,000.00 60,000.00 60,000.00 60,000.00Less: Accumulated Depreciation 12,000.00 24,000.00 36,000.00 48,000.00 60,000.00Net Book Value 48,000.00 36,000.00 24,000.00 12,000.00 0.00Total Assets 5,769,703.55 6,995,034.59 8,434,125.24 10,122,536.00 12,111,371.03Liabilities and Partner EquityAccounts Payable 191,031.88 226,054.39 249,966.43 275,095.63 302,614.40SSS Contributions Payable 22,941.66 25,556.08 27,089.67 27,885.47 28,219.79Employees Compensation Payable 6,222.00 6,768.50 7,414.04 7,992.84 8,941.07Pag-ibig Contribution Payable 310.00 335.83 337.99 338.17 338.18Withholding Taxes Payable 16,795.46 21,274.29 19,865.81 23,989.82 31,093.19Estimated Income Tax Payable 32,932.02 44,589.50 50,971.32 58,380.38 66,484.34Value Added Tax Payable 49,031.51 57,967.56 64,095.97 70,532.84 77,588.36Other Current Liabilities 7,272.68 501,986.97 1,098,822.87 1,762,392.26 2,528,870.55TOTAL LIABILITIES 329,937.20 888.216/45 1,522,291.05 2,230,316.30 3,047,858.96Partner’s Equity Capital Beginning 5,000,000.00 5,439,766.44 6,106,813.14 6,911,834.18 Add: Net Income after tax 83976644 106705170 120501604 138038551 157129237 TOTAL 5,839,766.44 6,506,818.14 7,311,834.18 8,292,219.69 9,463,512.06
  14. 14. Less: Partner’s Drawing 400,000.00 400,000.00 400,000.00 400,000.00 400,000.00Total Partner’s Equity 5,439,766.44 6,106,818.14 6,911,834.18 7,892,219.69 9,063,512.06TOTAL LIABILITIES & PARTNER EQUITY 5,769,703.65 6,995,034.59 8,434,125.23 10,122,536.00 12,111,371.03
  15. 15. COFFEE TALK Projected Cash Flow For the Years Ended 2008-2009 2008 2009 2010 2011 2012Excess of Sales Over Expenses 839,766.44 1,067,051.70 1,205,016.04 1,380,385.51 1,571,292.37Depreciation 54,244.62 54,244.62 54,244.62 54,244.62 54,244.62Increase/Decrease in Current Assets/LiablitiesWithholding Tax Payable 201,245.47 238,496.06 217,115.42 268,011.98 349,128.50SSS Premium Payable 184,500.00 191,731.32 203,522.40 209,455.20 211,152.00Pag-ibig Premium Payable 20,400.00 20,400.00 20,400.00 20,400.00 20,400.00Employees Compensation Payable 3,720.00 3,720.00 3,720.00 3,720.00 3,720.00Phil Health Payable 37,332.00 37,500.00 41,100.00 44,250.00 49,650.00Income Tax Payable 395,184.21 502,141.98 567,066.37 649,593.18 739,431.70VAT Payable 588,378.18 646,579.22 711,184.08 782,298.06 860,527.50Net 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. 16. Cash Flows from investing activitiesPurchase of EquipmentsOffice Equipment 42,500.00Coffee Shop Machineries and equip. 202,959.00Furniture and Fixtures 55,900.00Net Cash Provided by Investing Activities 301,359.00Cash Flows From Financing ActivitiesContributed Capital 5,000,000.00Drawing 400,000.00 400,000.00 400,000.00 400,000.00 400,000.00Net Cash Provided by Financing Activities 4,600,000.00 1,213,143.70 1,345,118.49 1,581,467.31 1,859,587.00Increase (Decrease in Cash ) 4,298,641.00 1,213,143.70 1,345,118.49 1,581,467.31 1,859,587.00Cash Beginning of Year -- 4,298,641.00 5,511,784.70 6,856,903.19 8.437.370.50Cash End of Year 4,298,641,00 5,511,784.70 6,856,903.19 8.437.370.50 10,296,958.00Cash on Hand 429,864.10 551,178.47 685,690.32 843,737.05 1,029,695.80Cash on Bank 3,868,776.90 4,960,606.23 6,171,212.82 7,593,633.45 9,267,262.20Interest on Bank Deposit 154,751.08 198,424.25 246,848.51 303,745.34 370,690.49
  17. 17. 2008 2009 2010 2011 2012FINANCIAL STATEMENT ANALYSISNet Income 839,766.44 1,067,051.70 1,205,016.04 1,380,385.51 1,571,292.37Contributed 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 SALESNet Income 839,766.44 1,067,051.70 1,205,016.04 1,380,385.51 1,571,292.37Sales 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 PERIODNet Investment 5,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00Annual 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 0.49to the company inflow of cash)

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