CHAPTER IV FINANCIAL ASPECT Financial aspect is the vital part of feasibility study, which needs a critical analysis.

The primary objective of every entrepreneur for investing his/her capital is to gain profit. This chapter will give them the benefits of forecasting the success of the business.

Objectives The main objective of this chapter is to evaluate the output of the operation thru the use of financial ratios. These ratios will determine the financial status of the business. After determining the financial status, the proponent could conclude the advisable starting number of buses to acquire. Moreover, the proponents could conclude if the business is feasible or not.

Major Assumptions The proponents used the following assumptions: a. Method of Depreciation The proponents used the straight line method to compute the fixed assets depreciation. It is calculated by deducting the salvage value which is 10% of the investment cost then divided by the life remaining years.

b.

Operating Accounts The operating accounts will use the following assumptions:

1. employees. 2. 3.

Fringe benefits is 25% of the Wages and Salaries of selected

Repair and Maintenance is 5% of the Total Fixed Assets. Advertising and Promotion, Office Supplies, Telephone, Fax and

Postage, Licenses, Utilities, and Miscellaneous Expenses will increase 5% annually.

c.

Fixed Assets The proponents will acquire bus after 5 years of operation to

sustain the growing demand for transportation.

d.

Labor and Management Compensation The employees will expect an increase in their compensation of at

least Php 20.00 yearly as prescribed by the Department of Labor and Employment (DOLE). Also, a 13th month pay will be provided on time annually.

e.

SSS, PhilHealth, and Pag-ibig Contributions The contributions will be withhold from the salaries and wages of

the employees and will form an Contribution Payable at the Liabilities part of the companys balance sheet.

f.

Sales Forecast The Sales Forecast that is summarized can be found at Table 5.1.

g.

Cash to be stored at Bank Whatever cash that will exceed on the starting balance on cash

before the date of operation will be deposited in the bank to grow by means of interest.

h.

Revenue Cost The cost of revenue is 28% of each services as figured below:

Depreciation Expense Fuel, Oil, and Break Fluids Repair and Maintenance

6% 7% 2%

Utilities Compensation Toll Fee

1% 11% 1%

Capital Formation The incorporators shall furnish an equal amount of contribution for the preliminary capital formation. Below is the listing of incorporators and their percentage of contributions for the business equity:

Edzel Jose Melody Araza Darlene Guelas Jasper John Abunyawan Reyman Delgado John Ronald Kevin Galeon Leovin Licop

7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00%

Table 5.1 SALES FORECAST SALES FORECAST LESS ALLOWANCE Year Sales FOR SALES Units Starting 10 units 2014 2015 2016 2017 2018 10 10 10 10 10 79,027,200 79,027,200 79,027,200 79,027,200 79,027,200 3,841,600 3,841,600 3,841,600 3,841,600 3,841,600 75,185,600 75,185,600 75,185,600 75,185,600 75,185,600 DEC. IN TOTAL SALES

This table shows the sales forecast of the proposed business. The proponents computed for total sales by deducting the allowance for December sales to the whole year sales. The two weeks sales for the month of December is deducted

Table 5.2 Salaries and Wages Schedule 13th Month 1,053,000 234,000

Position Manager Chief Accountant Repair and Maintenance Receiving Security

Manpower 3 1 12

Salary 27,000 18,000 349.50

Monthly 81,000 18,000 109,044

Yearly 972,000 216,000

1,308,528 1,417,572

1 6 3 6 3

349.50 349.50 628.50 349.50 349.50

9,087 54,522 49,023 54,522 27,261

109,044 654,264 588,276 654,264 327,132

118,131 708,786 637,299 708,786 354,393

Inventory Clerk General/Payroll/Purchase Accounting Clerk Ticket Sales Clerk Sales Accounting Clerk Cash Receipts/Disburse Inspector

6 6 6 6

349.50 349.50 369.50 369.50

54,522 54,522 57,642 57,642

654,264 654,264 691,704 691,704

708,786 708,786 749,346 749,346

Dispatcher

3-Laguna 3-NCR

369,.50 28,821 486.00 37,908

345,852 454,896

374,673 492,804

Driver Conductor Utilities

10 10 3 3

1,080 848 349.50 349.50

250,800 220,480 27,261 27,261

3,369,600 3,650,400 2,645,760 2,866,240 327,132 354,393 327,132 354,393

Total Gross pay yearly with 13th month pay

16,241,134.00

Table 5.3 PhilHealth Schedule of Contribution

Position Manager Chief Accountant Repair and Maintenance Receiving Security Inventory Clerk General/Payroll/ Purchase Accounting Clerk Ticket Sales Clerk Sales Accounting Clerk Cash Receipts/Disburse Inspector Dispatcher

Salary 27,000 18,000 9,087 9,087 9,087 15,084 9,524 9,524

ER 337.50 225 112.50 112.50 112.50 187.50 112.50 112.50

EE 337.50 225 112.50 112.50 112.50 187.50 112.50 112.50

Total Contribution 675 450 225 225 225 375 225 225

9,087 9,087 9,524 9,524 9,087 12,649

112.50 112.50 112.50 112.50 112.50 150

112.50 112.50 112.50 112.50 112.50 150

225 225 225 225 225 300

Driver Conductor Utilities Total

28,080 22,048 9,087

350 275 112.50 2762.50

350 275 112.50 2762.50

700 550 225 5,525

Table 5.4 SSS Schedule of Contribution Position Manager Chief Accountant Repair and Maintenance Receiving Security Salary 27,000 18,000 9,087 9,087 9,087 15,084 9,524 ER 1,060 636 636 636 636 1,060 671.30 EE 500 500 300 300 300 500 316.20 Total Contribution 1560 1560 936 936 936 1560 988

Inventory Clerk

General/Payroll/Purchase Accounting Clerk Ticket Sales Clerk Sales Accounting Clerk Cash Receipts/Disburse Inspector Dispatcher

9,524

671.30

316.20

988

9,087 9,087 9,524 9,524 9,087 12,649

636 636 671.30 671.30 636 883.30

300 300 316.70 316.70 300 416.70

936 936 988 988 936 1300

Driver Conductor Utilities

28,080 22,048 9,087 9,087

1,060 1,060 636 636

500 500 300 300

1560 1560 936 936

Total

13,956

6583.50

20,540