Chapter 4

FINANCIAL PLAN

4.1 Project Cost

The business will be financed by Mrs. Armelaine Cabilin-Sumagang, a

government employee who is currently residing at Dapitan City, Zamboanga del Norte.

The proponent is willing to put up ₱450,000.00; which will be used to acquire resources

such as equipment, machineries, rental fee for the commercial space and its leasehold

improvements, supplies, promotional costs; and for the payment for permits, licenses, and

fees to legally operate the business.

Project Cost Amount

Leasehold Improvements 100,000.00
Machinery and Equipment 58,200.00
Office Equipment 26,000.00
Furniture and Fixtures 18,100.00
Supplies Expense 6,956.83
Initial Raw Materials 35,350.00
Cash for Pre-operating Expenses
Cash on Hand Beg. of Opearations 22,007.17
Salaries and Wages 124,800.00
PHIC Contributions Expense 2,184.00
PAG-IBIG Contributions Expense 2,496.00
SSS Contributions Expense 10,640.00
Utility Expense 17,000.00
Business permits and licenses 10,466.00
Advertising Expenses 10,800.00
Repairs and Maintenance Expenses 5,000.00 205,393.17
Total 450,000.00

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4.2 Profit and Loss Statement (3-year projection)

TSEKEN SEYO
Projected Statement of Financial Performance (3 years)
For the period Ended

Notes Pre-Op Year Year 1 Year 2 Year 3

Sales 1 - 6,289,920.00 6,604,416.00 6,934,636.80
Less: Cost Goods Sold 2 5,233,576.00 5,471,132.80 5,720,567.44
Gross profit 1,056,344.00 1,133,283.20 1,214,069.36
Less: Adminstrative Expenses
Salaries and Wages 3 124,800.00 436,800.00 436,800.00 436,800.00
13th Month Pay 62,400.00 62,400.00 62,400.00
Christmans Bonus 25,000.00 25,000.00 25,000.00
PHIC Contributions Expense 4 2,184.00 13,104.00 13,104.00 13,104.00
PAG-IBIG Contributions Expense 2,496.00 14,976.00 14,976.00 14,976.00
SSS Contributions Expense 10,640.00 63,840.00 63,840.00 63,840.00
Supplies Expense 5 6,956.83 32,543.96 35,093.96 32,543.96
Utility Expense 6 17,000.00 102,000.00 102,000.00 102,000.00
Business permits and licenses 7 10,466.00 10,466.00 10,466.00 10,466.00
Advertising Expenses 8 10,800.00 74,600.00 74,600.00 74,600.00
Repairs and Maintenance Expenses 9 5,000.00 60,000.00 60,000.00 60,000.00
Depreciation Expense
Leasehold Improvements 10 1,666.67 10,000.00 10,000.00 10,000.00
Machinery and Equipment 10 970.00 - - -
Office Equipment 10 433.33 5,200.00 5,200.00 5,200.00
Furniture and Fixture 10 301.67 3,620.00 3,620.00 3,620.00
Total Expense 193,714.50 914,549.96 917,099.96 914,549.96
Net Income (193,714.50) 141,794.04 216,183.24 299,519.40

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4.3 Cash Flow Statement (3-year projection)

TSEKEN SEYO
Projected Statement of Cash Flows (3 years)
For the Period ended December 31

Year 0 Year 1 Year 2 Year 3

Cash Flow from Operating Activities:
Cash Inflows:
Collection from Sales 6,289,920.00 6,604,416.00 6,934,636.80
Total Cash Inflows - 6,289,920.00 6,604,416.00 6,934,636.80
Cash Outflows:
Payment for Purchase of Raw Materials 37,350.00 4,751,136.00 4,988,692.80 5,238,127.44
Payment of Salaries and Wages 114,540.00 687,240.00 687,240.00 687,240.00
13th Month Pay 62,400.00 62,400.00 62,400.00
Christmans Bonus 25,000.00 25,000.00 25,000.00
PHIC Contributions 2,184.00 26,208.00 26,208.00 26,208.00
PAG-IBIG Contributions 2,496.00 29,952.00 29,952.00 29,952.00
SSS Contributions 8,110.00 97,320.00 97,320.00 97,320.00
Supplies Expense 6,956.83 32,543.96 35,093.96 32,543.96
Utility Expense 17,000.00 250,800.00 250,800.00 250,800.00
Business permits and licenses 10,466.00 10,466.00 10,466.00 10,466.00
Advertising Expenses 10,800.00 74,600.00 74,600.00 74,600.00
Repairs and Maintenance Expenses 5,000.00 60,000.00 60,000.00 60,000.00
Total Cash Outflows 214,902.83 6,107,665.96 6,347,772.76 6,594,657.40
Net Cash Provided(Used) from Operating Activities (214,902.83) 182,254.04 256,643.24 339,979.40
Cash Flows from Investing Activities:
Cash Inflows:
Proceeds from sale of assets 0.00 0.00 0.00 0.00
Total cash Inflows 0.00 0.00 0.00 0.00
Cash Outflows:
Purchase of Property, Plant and equipment
Construction of Leasehold Improvements 100,000.00 0.00 0.00 0.00
Purchase of Machinery and Equipment 58,200.00
Purchase of Office Equipment 26,000.00
Purcahse of Furnitures and Fixtures 18,100.00 0.00 0.00 0.00
Total Cash Outflows 202,300.00 0.00 0.00 0.00
Net Cash Provided(Used) from Investing Activities (202,300.00) 0.00 0.00 0.00
Cash Flows from Financing Activities
Cash Inflows:
Initial Inventment 450,000.00 0.00 0.00 0.00
Total Cash inflows 450,000.00 0.00 0.00 0.00
Cash Outflows:
Payment of loans 0.00 0.00 0.00 0.00
Total Cash Outflows 0.00 0.00 0.00 0.00
Net Cash Provided(Used) from Financing Activities 450,000.00 0.00 0.00 0.00
Cash provided(used) by Operating, Investing and Financing Activities
32,797.17 182,254.04 256,643.24 339,979.40
Add: Cash Balance, Beg. - 32,797.17 215,051.21 471,694.45
Cash Balance, End 32,797.17 215,051.21 471,694.45 811,673.85

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4.4 Balance Sheet (3-year projection)

TSEKEN SEYO
Projected Statement of Financial Position (3 years)
As of December 31

Notes Year 0 Year 1 Year 2 Year 3

ASSET
Curent Assets
Cash and Cash Equivalent 11
Cash on Hand ₱ 20,000.00 ₱ 100,000.00 ₱ 100,000.00 ₱ 100,000.00
Cash In Bank 12,797.17 115,051.21 371,694.45 711,673.85
Total 32,797.17 215,051.21 471,694.45 811,673.85
Inventory
Raw Materials Inventory 12 37,350.00 37,350.00 37,350.00 37,350.00
Total 37,350.00 37,350.00 37,350.00 37,350.00
Total Curent Assets 70,147.17 252,401.21 509,044.45 849,023.85

Non-Curent Assets (Net of Depreciation)

Property, Plant and Equipment
Leasehold Improvements 13 98,333.33 78,333.33 58,333.33 38,333.33
Machinery and Equipment 13 57,230.00 45,590.00 33,950.00 22,310.00
Office Equipment 13 25,566.67 20,366.67 15,166.67 9,966.67
Furniture and Fixtures 13 17,798.33 14,178.33 10,558.33 6,938.33
Total Non-Curent Assets 198,928.33 158,468.33 118,008.33 77,548.33
TOTAL ASSETS ₱ 269,075.50 ₱ 410,869.54 ₱ 627,052.78 ₱ 926,572.18

LIABILITIES AND OWNER'S EQUITY

Current Liabilities
Philhealth Contribution Payable 14 ₱ 2,184.00 ₱ 2,184.00 ₱ 2,184.00 ₱ 2,184.00
Pag-ibig Contribution Payable 14 2,496.00 2,496.00 2,496.00 2,496.00
SSS Contribution Payable 4 8,110.00 8,110.00 8,110.00 8,110.00
Total Curent Liabilities 12,790.00 12,790.00 12,790.00 12,790.00

Non-Current Liabilities
Other Payables - - - -
Total Non-Curent Liabilities - - - -
TOTAL LIABILITIES 12,790.00 12,790.00 12,790.00 12,790.00

OWNER'S EQUITY
Owner's Equity, Beg. 450,000.00 256,285.50 398,079.54 614,262.78
Add (Less):
Income / (Loss) (193,714.50) 141,794.04 216,183.24 299,519.40
Owner's Equity, End. 256,285.50 398,079.54 614,262.78 913,782.18
TOTAL LIABILITIES AND OWNER'S EQUITY ₱ 269,075.50 ₱ 410,869.54 ₱ 627,052.78 ₱ 926,572.18

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4.5 Break-even Point (BEP)
Particualrs Amounts
Selling Price per Unit 35.00
Less:
Direct Materials Cost Per Unit 25.94
Indirect Materials Cost Per Unit 0.50
Gross profit before fixed Cost per Unit 8.56

Fixed Cost Compuation

COGS: 482,440.00
Direct Labor 312,000.00
FOH 170,440.00
Admin Expenses 895,729.96
Depreciation Expenses 18,820.00
Total 1,396,989.96

Break-Even Point = Fixed Cost Compuation

Gross profit per Unit

Break-Even Point = 1,396,989.96

8.56

Total QTY of
Break-Even Point = 163,152.11
Sales

Annual Break Even Demand = 163,152.11

Monthly Break-even Demand = 13,596.01

The computation above indicates that in order to have a zero (0) or a break-even

profit / Loss, the business is required to reach at least an annual demand quantity of about

163,152 orders. A sample Statement of Financial performance based on the 163,152 sales

demand is presented as follows:

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 SP/Cost per
Break even point Demand QTY Total Sales
Unit
Sales 163,152.00 35.00 5,710,320.00
Less: Cost Goods Sold
Direct Materials 163,152.00 25.94 4,231,755.00
Indirect Materials 163,152.00 0.50 81,576.00
Direct Labor 312,000.00
FOH 170,440.00
Gross profit 914,549.00
Less: (Annual Cost)
Adminstrative Expenses 895,729.96
Depreciation Expense 18,820.00
Income / Loss (0.96)

4.6 Return on Investment (ROI)

Net Imcome
Return of Investment =
Cost of Investment

141,794.04
Return of Investment =
450,000.00

Return of Investment = 31.51%

The return on investment ratio (ROI), also known as the return on assets ratio, is a

profitability measure that evaluates the performance or potential return from a business or

investment. The ROI formula looks at the benefit received from an investment, or its net

income, divided by the investment's original cost. For an ROI rate of 31.51%, it is safe to

say that the business can be efficient in using the entity’s asset to generate sales.

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4.7 Financial Analysis

Based on the Financial computations and projections made, the proposed business

is profitable and could have a return of investment for about 2 and a half year. Considering

the high quality of the way of preparing foods that follows various food standards and

seasoned with the full flavors of love, we concluded that the said business plan is feasible

and viable in the market.

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