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I. Introduction According to Merriam Webster Dictionary, Finance is the science or the study of managing and obtaining capital investment. Basically, it is the process by which people and organization evaluate their investments and raise capital to fund them. This includes decision making on how long term investments should the firm undertake, how these are supposed to be raised to support investments and how can the firm best manage its cash flows as they arise in its days to years operation. Included in the part of this study are the Projected Sales and Productions, Major Assumptions in the Years of Projection, Schedule of Production and Purchases, and most especially the 3 Major Components of the Financial Statements, namely: The Statement of Financial Performance, The Statement of Financial Position, and The Cash Flow Statement. Aligned with the gathered and formulated figures from the former outline of this Project Feasibility the Market, Technical, and Management , Karuru Keiku would like to know what general effect could materialize in the future with respect to all the factors what were considered in undertaking this business. Lastly, all Financial Statements in this study incorporated relevant assumptions to suffice some unreadily available data which could only be found in real life.
A. Major Assumptions This study covers three (3) years of operations on the basis of Academic School Year of University of Santo Tomas, its Major Potential Consumer. Operating hours of Karuru Keiku Shop would be nine (9) hours per day, six (6) days per week, and twohundred-and-forty (240) days per year or ten (10) months per year. Provided hereunder are the Major Assumptions that the proponents used to project Karuru Keikus Financial Feasibility Study:
Projected Sales were derived from the Actual Demand based on Market Share of Karuru Keiku Shop, which reflects 2% growth every year. Sales Returns and Allowances are expected to be 5% of the Projected Sales every year. Finished Goods Inventory is 2% the Total Goods Accounted for during the period. Raw Materials Inventory, End is 10% of the Production Requirements during the period. Property - Japanese Cake Molder is depreciated for six (6) years. Property - Cart is depreciated for five (5) years. Property Electric Fan depreciated for is four (4) years. Furniture and Fixtures Mono block Chairs are depreciated for five (5) years. Utilities and Rent Expenses are accounted jointly as the Rent in AMV College of Accountancy building includes free use of electricity and water. Income Tax Payables are paid in full every year.
No Direct and Indirect Labor, as well as Salaries Expenses; instead, partners will benefit through Share in Profits. There is no beginning and ending of work in progress. It is assumed that all will be completed. All Sales Revenue are Cash Sales.
YEAR PROJECTED SALES Projected Sales in Units Sales Price Total Gross Sales Less: Sales Returns Total Projected Net Sales PROJECTED PRODUCTION Projected Sales in Units Finished Goods Inventory, End Total Goods Accounted For Less: Finished Goods Inventory, Beg Production (in units)
The Projected Sales in units were derived from the Actual Demand based on Karuru Keikus Market Share. To determine the Projected Production in units, assumed Finished Goods Inventory, End, which is 2% of the Total Goods Accounted for, is subtracted from the Projected Sales in Units; then, the Total Goods Accounted for is subtracted by the Finished Goods Inventory, Beginning. Since its only the first year of operations, Finished Goods Inventory balance is equal to zero (0).
C. Projected Financial Statements As for Karuru Keiku Shop, limitations in Accounting exists due relevant assumptions that was made to suffice the unreadily data which could only be found in realistic setting.
Cost of goods sold (COGS) refers to the cost of inventory goods a business has sold during a particular period.
YEAR Direct Materials Materials Inventory, Beginning Add: Purchases Materials Available For Use Less: Materials Inventory, Ending Direct Materials Consumed Factory Overhead: Supplies Expense - Indirect Materials Depreciation Expense Utilities and Rent Expense Total Manufacturing Cost Add: Finished Goods Inventory, Beginning Cost of Goods Available For Sale Less: Finished Goods Inventory, Ending Cost of Goods Sold Cost per Unit 1 2 3
0 245,722.12 245,722.12 22,338.37 223,383.74 290.00 2,988 157,500 384,161 0 384,161.24 7,686.36 376,474.88 8
22,338.37 224,264.13 246,602.51 22,418.41 224,184.10 290.00 2,988 157,500 384,962 7,686.36 392,647.96 7,851.96 384,796.00 8
22,418.41 225,129.85 247,548.26 22,181.42 225,366.84 290.00 2,988 157,500 386,144 7,851.96 393,996.30 7,877.77 386,118.53 7
Projected Statement of financial position is used to analyze and evaluate factors such as liquidity, solvency as well as the need of the entity for additional financing.1 These includes the three (3) Major Elements which are the Assets, Liabilities and Equity. KARURU KEIKU SHOP Statement of Financial Position as of December 31
YEAR ASSETS Current Assets: Cash Inventories: Raw Materials Finished Goods Factory Supplies Office Supplies Total Current Assets Fixed Assets: PPE - Japanese Cake Molder Less: Accumulated Depreciation PPE - Cart Less: Accumulated Depreciation PPE - Electric Fan Less: Accumulated Depreciation Furnitures and Fixtures - Monoblock Chair Less: Accumulated Depreciation Total Fixed Assets TOTAL ASSETS LIABILITIES & EQUITY Current Liabilities: Income Tax Payable Total Liabilities PARNER'S EQUITY Dimagiba, Capital (25%) Escasinas Capital (25%) Palomar, Capital (25%) Taupa, Capital (25%)
1
9,500.00 (1,900.00) 6,000.00 (1,000.00) 350.00 (87.50) 300.00 (60.00) 13,102.50 151,632.83
9,500.00 (3,800.00) 6,000.00 (2,000.00) 350.00 (175.00) 300.00 (120.00) 10,055.00 209,712.93
9,500.00 (5,700.00) 6,000.00 (3,000.00) 350.00 (262.50) 300.00 (180.00) 7,007.50 279,264.85
0.00 0.00
0.00 0.00
0.00 0.00
Excerpted from Financial Accounting Volume 3, 2010 edition, by Valix and Peralta
151,632.83 151,632.83
209,712.93 209,712.93
279,264.85 279,264.85
3. Projected Statement of Financial Performance The Projected Statement of Financial Performance measures the amount of profits generated by Karuru Keiku Shop as they produce Japanese Cakes. All Sales Revenue are treated as Cash Sales. KARURU KEIKU SHOP Statement of Financial Performance for the Years Ended December 31
YEAR Sales Sales Return and Allowances Net Sales Less: Cost of Goods Sold Gross Profit Less: Supplies Expense Depreciation Expenses Income from Operation Net Income Before Tax Less: Income Tax Net Income After Tax Share in profit 12,9 Dimagiba Escasinas Palomar Taupa 08.21 12,9 08.21 12,9 08.21 12,9 08.21 20.02 20.02 14,5 87.98 20.02 14,5 87.98 17,3 20.02 14,5 87.98 17,3 14,5 87.98 17,3 17,3 1 480,000.00 (24,000.00) 456,000.00 376,474.88 79,525.12 30.00 60.00 79,435.12 79,435.12 27,802.29 51,632.83 2 499,200.00 (24,960.00) 474,240.00 384,796.00 89,444.00 30.00 60.00 89,354.00 89,354.00 31,273.90 58,080.10 3 519,170.00 (25,958.50) 493,211.50 386,118.53 107,092.97 30.00 60.00 107,002.97 107,002.97 37,451.04 69,551.93
TOTAL
51,632.83
58,080.10
69,551.93
4. Projected Statement of Cash Flows A Statement of Cash Flows is a component of financial statements summarizing the operating, investing and financing activity of an entity.
In simple language the statement of cash flows provides information about the cash receipts and cash payments of an entity during the period.
KARURU KEIKU SHOP Statement of Financial Performance for the Years Ended December 31
YEAR Cash Inflows: Investment Collections from Sales Total Cash Inflows Cash Outflows: Equipment Supplies Purchases Payments Manufacturing Overhead Rent and Utilities Expense Income Tax Payments Total Cash Outflows Cash inflows minus outflows Plus: Beginning Cash Ending Cash 0 100,000.00 0.00 100,000.00 456,000.00 456,000.00 474,240.00 474,240.00 493,211.50 493,211.50 1 2 3
16,150.00 362.25 245,722.12 1,812.15 157,500 0.00 100,000.00 0.00 100,000.00 27,802.29 449,348.81 6,651.19 100,000.00 106,651.19
30.00 225,129.85 290.00 157,500 37,451.04 420,400.89 72,810.61 167,533.16 240,343 .77
1. Test of Liquidity
a. Liquidity is the ability of the organization to convert noncash current
2. Test of Profitability a. Profitability is the ability to generate adequate profits to sustain tge
Total Asset Profitability Gross Margin Ratio Return on Sales Return on Asset Return on Current Assets Over-all Efficiency Asset Turnover
150%
113%
88%