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CHAPTER 5

FINANCIAL STUDY

In every business, financial information is very important. It serves as a basis in


making economic decision and evaluation. Financial information also shows the capacity
of a company in settling its obligations. Hence, it helps creditors to decide on matters like
extending credit to a company or business. For the investors, it allows them to determine
the future rate of return of investments. All the financial information of a company is
reflected on its financial statements

Major Assumptions

The major assumptions made by the company in the preparation of its financial
statements are listed below:

Sales

All sales are made in cash

Cash & Cash Equivalents

The company has the policy to maintain only ₱ 200,000 as Cash on hand
maximum, ₱ 25,000 as Petty cash fund , ₱1,000,000 for Cash in Bank and the excess of
the same amount will be invested to Marketable Securities.

Long Term Investment

The company will purchase bonds and other long term securities. An additional
cost of investment amounting to ₱ 500,000 is expected by the company.

Pre-Operating Costs

Pre-operating costs is fully charged against revenue earned during the first year of
operations.

Sources of Financing

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Sources of financing are 86.67% equity and 13.33% debt will be financed through
a bank loan obtained from Bank of the Philippine Islands (BPI) payable in five (5) equal
annual instalments of ₱ 200,000 each year with a 12% interest. The first payment of loan
and interest will be on December 31, 2020.

Salaries

There will be a 10% increase in salaries to all employees starting 2024.

Withdrawal

Partners are allowed to make a withdrawal of ₱350,000 annually. It is assumed


that all partners have made a withdrawal in anticipation of income.

Property, Plant and Equipment

All Property Plant and Equipment items are acquired during the pre-operating
period. The method of depreciation used is the straight line method, with items estimated
life ranging from 5 to 20 years and residual values ranging from ₱ 100 to ₱ 15,000.

Office Supplies

Annually, Office Supplies in the amount of ₱ 30,000 is acquired to which 75% is


assumed to be utilized each year.

Project Cost

Before the start of the normal operations of The StudyHab Co., a formal
organization of the business took place with the acquisition of property and equipment,
location site and employing labor force and other resources. Several other activities
would also be taken. Hence, prior to its normal operations various costs would be
incurred and these costs are aggregated that would be the project cost or the initial capital
requirement to start the company’s operations.

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THE STUDYHAB CO.
Project Cost
December 31,2019
(in Philippine Pesos)

A. Fixed Asset Investment


Land 2,300,000.00
Building 4,000,000.00
Furniture & Fixtures 271,500.00
Equipment 335,450.00

TOTAL 6,906,950.00

PRE-OPERATING COSTS
Project Identification, Formulation & Design 4,000.00
Preparation of Project Feasibility Studies 15,000.00
Review, Negotiations & Finance 10,000.00
Bidding and awarding of Engineering Contracts 25,000.00
Business Permits and Licenses 105,050.00
Recruitment, Selection and Training of Management Staff 20,000.00
Market Research/ Marketing & Promotion 25,000.00
Administrative Expenses 5,000.00
Operational Test Dry Run 10,000.00
TOTAL 219,050.00

Investment Cost

Fixed Assets 6,906,950.00


Pre-Operating Costs 219,050.00
Initial Working Capital 374,000.00
Total Investment Cost 7,500,000.00

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Pre-Operating Financial Statements

This section presents the company’s Pre-Operating Statement of Financial


Position and Pre-Operating Statement of Cash Flows

THE STUDYHAB CO.


Pre-Operating Statement of Financial Position
December 31,2019
(in Philippine Pesos)

ASSETS
Current Assets Note
Cash and Cash Equivalents 344,000.00
Office Supplies 30,000.00
Organizational Cost 219,050.00
Total Current Assets 593,050.00
Non Current Assets
Property Plant and 6,906,950.00
Equipment
Total Non-Current Assets 6,906,950.00
TOTAL ASSETS 7,500,000.00

LIABILITIES & PARTNER'S EQUITY


Liabilities
Bank Loan (12%) 1,000,000.00
Partner's Equity
Bustillos, Capital 1,000,000.00
Cosme, Capital 1,000,000.00
Cruz, Capital 500,000.00
Gabrillo, Capital 1,000,000.00
Mariano, Capital 1,000,000.00
Niepez, Capital 1,000,000.00
Rubiano, Capital 1,000,000.00
Total Partner's Equity 6,500,000.00
TOTAL LIABILITIES & PARTNER'S EQUITY 7,500,000.00

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THE STUDYHAB CO.
Pre-Operating Statement of Cash Flows
December 31,2019
(in Philippine Pesos)

Operating Acivities
Payment of Office Supplies (30,000.00)
Payment of Pre-Operating Costs (219,050.00)
Net Cash from operating
activities (249,050.00)
Investing Activities
Acquisition of Land & for Land
Improvements (2,300,000.00)
Construction of Building (4,000,000.00)
Acquisition of Equipment (335,450.00)
Acquisition of Furniture & Fixtures (271,500.00)
Net Cash from investing
activities (6,906,950.00)
Financing Activities
Proceeds from Bank Loan 1,000,000.00
Proceeds from Partner's Contribution 6,500,000.00
Net Cash from financing
activities 7,500,000.00
Net increase in cash and cash equivalents 344,000.00
Cash and Cash Equivalents, beginning 0
Cash and Cash Equivalents, end 344,000.00

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Projected Financial Statements

The following shows the complete set of projected financial statements of the company for the years 2020 to 2024. Such
financial statements include: Statement of Financial Position, Income Statement, Statement of Cash Flows, Statement of Changes in
Partner’s Equity, and Notes to Financial Statements. These figures will be used by the company for decision making purposes.

THE STUDYHAB CO.


Projected Statement of Financial Position
For the First Five Years of Operation
(in Philippine Pesos)

ASSETS
Notes 2020 2021 2022 2023 2024
Current Assets
Cash and Cash Equivalents 4 1,225,000.00 1,225,000.00 1,225,000.00 1,225,000.00 1,225,000.00
Marketable Securities 404,020.33 953,039.50 1,589,549.77 2,314,300.09 2,898,174.17
Office Supplies 7,500.00 9,375.00 9,843.75 9,960.94 9,990.24
Inventory 5 384,000.00 394,500.00 404,940.00 415,968.00 550,000.00
Total Current Assets 2,020,520.33 2,581,914.50 3,229,333.52 3,965,229.03 4,683,164.41
Non Current Assets
Propert Plant and Equipment (net) 6 6,748,366.25 6,589,782.50 6,431,198.75 6,272,615.00 6,114,031.25
Long Term Investment 500,000.00 1,000,000.00 1,500,000.00 2,000,000.00 2,500,000.00
Total Non Current Assets 7,248,366.25 7,589,782.50 7,931,198.75 8,272,615.00 8,614,031.25

TOTAL ASSETS 9,268,886.58 10,171,697.00 11,160,532.27 12,237,844.03 13,297,195.66

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LIABILITIES & PARTNER'S EQUITY
Current Liabilities
Trade and Other Payables 7 1,257,597.72 1,216,052.01 1,180,101.09 1,150,729.85 1,125,980.84
Bank Loan 200,000.00 200,000.00 200,000.00 200,000.00 -
Total Current Liabilities 1,457,597.72 1,416,052.01 1,380,101.09 1,350,729.85 1,125,980.84
Non Current Liabilities
Bank Loan 600,000.00 400,000.00 200,000.00 - -
Total Non Current Liabilities 600,000.00 400,000.00 200,000.00 - -
Total Liabilities 2,057,597.72 1,816,052.01 1,580,101.09 1,350,729.85 1,125,980.84
Partner's Equity
Bustillos, Capital 1,120,967.52 1,308,560.86 1,508,527.87 1,721,094.49 1,930,186.90
Cosme, Capital 1,120,967.52 1,308,560.86 1,508,527.87 1,721,094.49 1,930,186.90
Cruz, Capital 485,483.76 504,280.43 529,263.94 560,547.24 590,093.45
Gabrillo, Capital 1,120,967.52 1,308,560.86 1,508,527.87 1,721,094.49 1,930,186.90
Mariano, Capital 1,120,967.52 1,308,560.86 1,508,527.87 1,721,094.49 1,930,186.90
Niepez, Capital 1,120,967.52 1,308,560.86 1,508,527.87 1,721,094.49 1,930,186.90
Rubiano, Capital 1,120,967.52 1,308,560.86 1,508,527.87 1,721,094.49 1,930,186.90
Total Equity 7,211,288.85 8,355,645.56 9,580,431.18 10,887,114.17 12,171,214.82

TOTAL LIABILITIES &


PARTNER'S EQUITY 9,268,886.58 10,171,697.57 11,160,532.27 12,237,844.03 13,297,195.66

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THE STUDYHAB CO.
Projected Income Statement
For the First Five Years of Operations
(in Philippine Pesos)

Note 2020 2021 2022 2023 2024


Revenue 8 6,447,845.43 6,607,098.79 6,773,743.31 6,948,228.40 7,131,038.20
Less: Cost of Sales 9 1,280,000.00 1,313,680.00 1,349,199.82 1,386,683.10 1,426,263.69
Gross Profit 5,167,845.43 5,293,418.79 5,424,543.49 5,561,545.30 5,704,774.51
Less: Expenses
Operating Expenses 10 1,575,618.50 1,608,218.50 1,645,038.50 1,686,692.50 1,845,494.30
Administrative and Selling Expense 11 956,100.00 454,405.00 457,811.25 460,162.81 500,850.71
Total 2,531,718.50 2,062,623.50 2,102,849.75 2,146,855.31 2,346,345.01
Income before Interest and Taxes 2,636,126.93 3,230,795.29 3,321,693.74 3,414,689.99 3,358,429.50
Less: Interest Expense 120,000.00 96,000.00 72,000.00 48,000.00 24,000.00
Income after Interest but before Taxes 2,516,126.93 3,134,795.29 3,249,693.74 3,366,689.99 3,334,429.50
Income Tax (30%) 754,838.08 940,438.59 974,908.12 1,010,007.00 1,000,328.85
Net Income/(Loss) for the Year 1,761,288.85 2,194,356.71 2,274,785.62 2,356,682.99 2,334,100.65

Distribution
Partner's Share in Net Income
Based on Capital Contribution
Bustillos 270,967.52 337,593.34 349,967.02 362,566.61 359,092.41
Cosme 270,967.52 337,593.34 349,967.02 362,566.61 359,092.41
Cruz 135,483.76 168,796.67 174,983.51 181,283.31 179,546.20
Gabrillo 270,967.52 337,593.34 349,967.02 362,566.61 359,092.41
Mariano 270,967.52 337,593.34 349,967.02 362,566.61 359,092.41

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Niepez 270,967.52 337,593.34 349,967.02 362,566.61 359,092.41
Rubiano 270,967.52 337,593.34 349,967.02 362,566.61 359,092.41
TOTAL 1,761,288.85 2,194,356.71 2,274,785.62 2,356,682.99 2,334,100.65

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THE STUDYHAB CO.
Projected Statement of Cash Flows
For the First Five Years of Operation
(in Philippine Pesos)

2020 2021 2022 2023 2024


Operating Activities
Net Income before tax 2,516,126.93 3,134,795.29 3,249,693.74 3,366,689.99 3,334,429.50
Adjustments for:
Depreciation Expense 158,583.75 158,583.75 158,583.75 158,583.75 158,583.75
Interest Expense 120,000.00 96,000.00 72,000.00 48,000.00 24,000.00
Adjusted Income 2,794,710.68 3,389,379.04 3,480,277.49 3,573,273.74 3,517,013.25
(Increase)/ Decrease in Office Supplies 22,500.00 (1,875.00) (468.75) (117.19) (29.30)
(Increase)/ Decrease in Inventory (384,000.00) (10,500.00) (10,440.00) (11,028.00) (134,032.00)
Increase/ (Decrease) in Trade & Other Payables 1,257,597.73 (41,546.28) (35,950.35) (29,371.23) (24,749.02)
Acquisition of Marketable Securities (404,020.33) (549,019.17) (636,510.27) (724,750.32) (583,874.08)
Income Tax paid (754,838.08) (940,438.59) (974,908.12) (1,010,007.00) (1,000,328.85)
Pre-Operating Costs 219,050.00 - - - -
Net Cash from Operating Activities 2,751,000.00 1,846,000.00 1,822,000.00 1,798,000.00 1,774,000.00

Investing Activities
Purchase of Long Term Investment (500,000.00) (500,000.00) (500,000.00) (500,000.00) (500,000.00)
Net Cash from Investing Activities (500,000.00) (500,000.00) (500,000.00) (500,000.00) (500,000.00)

Financing Activities
Payment of Bank Loan (200,000.00) (200,000.00) (200,000.00) (200,000.00) (200,000.00)
Payment of Bank Loan interest (120,000.00) (96,000.00) (72,000.00) (48,000.00) (24,000.00)

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Partner's Withdrawal (1,050,000.00) (1,050,000.00) (1,050,000.00) (1,050,000.00) (1,050,000.00)
Net Cash from Investing Activities (1,370,000.00) (1,346,000.00) (1,322,000.00) (1,298,000.00) (1,274,000.00)

Net Increase/ (Decrease) in Cash 881,000.00 0.00 0.00 0.00 (0.00)


Cash, Beginning Balance 344,000.00 1,225,000.00 1,225,000.00 1,225,000.00 1,225,000.00
Cash, Ending Balance 1,225,000.00 1,225,000.00 1,225,000.00 1,225,000.00 1,225,000.00

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THE STUDYHAB CO.
Projected Statement of Changes in Partner's Equity
For the First Five Years of Operation
(in Philippine Pesos)

2020 2021 2022 2023 2024


Bustillos, Capital
Beginning balance 1,000,000.00 1,120,967.52 1,308,560.86 1,508,527.87 1,721,094.49
Add: Share in Net Income 270,967.52 337,593.34 349,967.02 362,566.61 359,092.41
Balance 1,270,967.52 1,458,560.86 1,658,527.87 1,871,094.49 2,080,186.90
Less: Withdrawals 150,000.00 150,000.00 150,000.00 150,000.00 150,000.00
Ending Balance 1,120,967.52 1,308,560.86 1,508,527.87 1,721,094.49 1,930,186.90

Cosme, Capital
Beginning balance 1,000,000.00 1,120,967.52 1,308,560.86 1,508,527.87 1,721,094.49
Add: Share in Net Income 270,967.52 337,593.34 349,967.02 362,566.61 359,092.41
Balance 1,270,967.52 1,458,560.86 1,658,527.87 1,871,094.49 2,080,186.90
Less: Withdrawals 150,000.00 150,000.00 150,000.00 150,000.00 150,000.00
Ending Balance 1,120,967.52 1,308,560.86 1,508,527.87 1,721,094.49 1,930,186.90

Cruz, Capital
Beginning balance 500,000.00 485,483.76 504,280.43 529,263.94 560,547.24
Add: Share in Net Income 135,483.76 168,796.67 174,983.51 181,283.31 179,546.20
Balance 635,483.76 654,280.43 679,263.94 710,547.24 740,093.45
Less: Withdrawals 150,000.00 150,000.00 150,000.00 150,000.00 150,000.00
Ending Balance 485,483.76 504,280.43 529,263.94 560,547.24 590,093.45

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Gabrillo, Capital
Beginning balance 1,000,000.00 1,120,967.52 1,308,560.86 1,508,527.87 1,721,094.49
Add: Share in Net Income 270,967.52 337,593.34 349,967.02 362,566.61 359,092.41
Balance 1,270,967.52 1,458,560.86 1,658,527.87 1,871,094.49 2,080,186.90
Less: Withdrawals 150,000.00 150,000.00 150,000.00 150,000.00 150,000.00
Ending Balance 1,120,967.52 1,308,560.86 1,508,527.87 1,721,094.49 1,930,186.90

Mariano, Capital
Beginning balance 1,000,000.00 1,120,967.52 1,308,560.86 1,508,527.87 1,721,094.49
Add: Share in Net Income 270,967.52 337,593.34 349,967.02 362,566.61 359,092.41
Balance 1,270,967.52 1,458,560.86 1,658,527.87 1,871,094.49 2,080,186.90
Less: Withdrawals 150,000.00 150,000.00 150,000.00 150,000.00 150,000.00
Ending Balance 1,120,967.52 1,308,560.86 1,508,527.87 1,721,094.49 1,930,186.90

Niepez, Capital
Beginning balance 1,000,000.00 1,120,967.52 1,308,560.86 1,508,527.87 1,721,094.49
Add: Share in Net Income 270,967.52 337,593.34 349,967.02 362,566.61 359,092.41
Balance 1,270,967.52 1,458,560.86 1,658,527.87 1,871,094.49 2,080,186.90
Less: Withdrawals 150,000.00 150,000.00 150,000.00 150,000.00 150,000.00
Ending Balance 1,120,967.52 1,308,560.86 1,508,527.87 1,721,094.49 1,930,186.90

Rubiano, Capital
Beginning balance 1,000,000.00 1,120,967.52 1,308,560.86 1,508,527.87 1,721,094.49
Add: Share in Net Income 270,967.52 337,593.34 349,967.02 362,566.61 359,092.41
Balance 1,270,967.52 1,458,560.86 1,658,527.87 1,871,094.49 2,080,186.90
Less: Withdrawals 150,000.00 150,000.00 150,000.00 150,000.00 150,000.00
Ending Balance 1,120,967.52 1,308,560.86 1,508,527.87 1,721,094.49 1,930,186.90

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PROJECTED NOTES TO FINANCIAL STATEMENTS

Note 1: Partnership Information

The StudyHab Co. is an established General Partnership registered with the


Securities and Exchange Commission on January 2019 to operate as a study lounge
business. It was organized by seven (7) general partners namely, Regina Aleisandra
Bustillos, Lyssa Pauleen Cosme, John Lery Cruz, Mary Jane Gabrillo, Rod Floriven
Mariano, Rency Joy Niepez, and Alina Claine Rubiano to which the profit will be divided
according to the partner’s capital contributions.

The address of the registered office is Magsaysay St., San Jose, Balanga City,
Bataan.

Note 2: Basis For Preparation

2.1 Statement of Compliance with Philippine Financial Reporting Standards

The accompanying financial statements of The StudyHab Co. have been


prepared by applying accounting policies in accordance with the Philippine
Financial Reporting Standards (PFRS) that are issued by the Financial Reporting
Standards Council (FRSC) and approved by the Philippine Board of Accountancy
(BOA) based in the International Financial Reporting Standards (IFRS) as issued
by the International Accounting Standards Board (IASB).

2.2 Presentation of Financial Statements

The Financial Statements are presented in accordance with Philippine


Accounting Standards (PAS) 1, presentation of Financial Statements.

2.3 Functional and Presentation Currency

The Financial Statements are presented in Philippine Peso, the Company’s


functional and presentation currency, and all the values represent absolute
amounts except when otherwise indicated.

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Items included in the financial statements of the company are measured using its
functional currency. Functional currency is the currency of the primary economic
environment in which the business operates.

Note 3: Summary of Significant Accounting Process

Revenue Recognition

The Partnership recognizes their income on cash basis on the period when cash is
received.

Cash and Cash Equivalents

Cash includes cash on hand and in banks. Cash equivalents are short-term, highly
liquid investments that are readily convertible to known amounts of cash with original
maturities of three months or less and are subject to an insignicant risk of change in value.

Financial Instruments

Initial recognition of financial instruments All financial instruments, including


trading and investment securities and loans and receivables, are initially measured at fair
value. Except for financial assets and financial liabilities valued at FVPL, the initial
measurement of financial instruments includes transaction costs. The Group classifies its
financial assets in the following categories: financial assets at FVPL, HTM investments,
AFS investments, and loans and receivables while financial liabilities are classified as
financial liabilities at FVPL and financial liabilities carried at amortized cost. The
classification depends on the purpose for which the investments were acquired and if they
are quoted in an active market. Management determines the classification of its
investments at initial recognition and, where allowed and appropriate, re-evaluates such
designation at every reporting date.

Determination of Fair Value

Fair value is the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement date.

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The fair value measurement is based on the presumption that the transaction to sell the
asset or transfer the liability takes place either:

- in the principal market for the asset or liability, or

-in the absence of a principal market, in the most advantageous market for the
asset or liability

Inventory

Inventories are valued at the lower of cost or net realizable value. Cost, which
includes all costs directly attributable to acquisition, such as purchase price and transport
costs, is primarily determined using the weighted average method. Net realizable value is
the estimated selling price in the ordinary course of business, less estimated costs
necessary to make the sale.

Property and Equipment

Property and equipment are carried at cost less accumulated depreciation and
amortization and any impairment in value. When the assets are sold or retired, their cost
and accumulated depreciation and amortization are eliminated from the accounts and any
gain or loss resulting from their disposal is recognized in the profit or loss.

The initial cost of property and equipment comprises its purchase price and any
directly attributable cost of bringing the asset to its working condition and location for its
intended use. Expenditures incurred after the fixed assets have been put into operation,
such as repairs and maintenance costs, are normally charged to profit and loss in the
period in which the costs are incurred.

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Depreciation and amortization is calculated on a straight-line basis over the
estimated useful life (EUL) of the property and equipment as follows:

Number of Years
Building 30-50 years
Fixtures and Furnitures 5-20 years
Equipments 5-20 years

The useful life and depreciation and amortization methods are reviewed
periodically to ensure that the period and method of depreciation and amortization are
consistent with the expected pattern of economic benefits from items of property and
equipment.

Investment Properties

Investment properties are measured at their fair value as the deemed cost as
allowed under PFRS 1 and PAS 40. Subsequent to initial recognition, investment
properties are stated at cost less accumulated depreciation and impairment loss.
Investment properties are derecognized when they have either been disposed of or when
the investment property is permanently withdrawn from use and no future benefit is 19
expected from its disposal. Any gains or losses on derecognition of an investment
property are recognized in the profit and loss in the year of derecognition.

Expenditures incurred after the fixed investment properties have been put into
operation, such as repairs and maintenance costs, are normally charged to expense in the
period in which the costs are incurred.

Depreciation is calculated on a straight-line basis over 10 to 30 years, which is the


estimated useful life of the investment properties.

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Note 4: Cash and Cash Equivalents
This account consists of:
2020 2021 2022 2023 2024
Cash on Hand 200,000.00 200,000.00 200,000.00 200,000.00 200,000.00
Cash in Bank- BPI 1,000,000.00 1,000,000.00 1,000,000.00 1,000,000.00 1,000,000.00
Petty Cash Fund 25,000.00 25,000.00 25,000.00 25,000.00 25,000.00
TOTAL 1,225,000.00 1,225,000.00 1,225,000.00 1,225,000.00 1,225,000.00

Note 5: Inventory
2020 2021 2022 2023 2024
Inventory, beg - 384,000.00 394,500.00 404,940.00 415,968.00
Add: Purchases 1,664,000.00 1,324,180.00 1,359,639.82 1,397,711.10 1,560,295.69
Total 1,664,000.00 1,708,180.00 1,754,139.82 1,802,651.10 1,976,263.69
Less: Used 1,280,000.00 1,313,680.00 1,349,199.82 1,386,683.10 1,426,263.69
Inventory, end 384,000.00 394,500.00 404,940.00 415,968.00 550,000.00

Note 6: Property Plant and Equipment


This account consists of: 2020 2021 2022 2023 2024
Land 2,300,000.00 2,300,000.00 2,300,000.00 2,300,000.00 2,300,000.00
Building 4,000,000.00 4,000,000.00 4,000,000.00 4,000,000.00 4,000,000.00
Equipment 335,450.00 335,450.00 335,450.00 335,450.00 335,450.00
Furniture & Fixtures 271,500.00 271,500.00 271,500.00 271,500.00 271,500.00
Total 6,906,950.00 6,906,950.00 6,906,950.00 6,906,950.00 6,906,950.00
Less: Accumulated Depreciation
Building 115,000.00 230,000.00 345,000.00 460,000.00 575,000.00
Equipment 25,643.75 51,287.50 76,931.25 102,575.00 128,218.75

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Furniture & Fixtures 17,940.00 35,880.00 53,820.00 71,760.00 89,700.00
Total 158,583.75 317,167.50 475,751.25 634,335.00 792,918.75
Carrying Amount 6,748,366.25 6,589,782.50 6,431,198.75 6,272,615.00 6,114,031.25

Note 7: Trade & Other Payables


This account consists of:
2020 2021 2022 2023 2024
Accounts Payable 550,000.00 495,000.00 445,000.00 400,950.00 360,855.00
SSS Payable 110,220.00 110,220.00 110,220.00 110,220.00 110,220.00
Pag-ibig Payable 14,400.00 14,400.00 14,400.00 14,400.00 14,400.00
Philhealth Payable 7,800.00 7,800.00 7,800.00 7,800.00 7,800.00
Withholding Tax Payable 21,480.00 21,480.00 21,480.00 21,480.00 21,480.00
VAT Payable 553,697.72 567,152.01 581,201.09 595,879.85 611,225.84
TOTAL 1,257,597.72 1,216,052.01 1,180,101.09 1,150,729.85 1,125,980.84

Note 8: Revenue
2020 2021 2022 2023 2024
Membership Revenue 447,845.43 459,834.79 471,824.16 483,813.52 495,802.88
Ammenities Revenue 4,032,000.00 4,118,284.80 4,208,063.41 4,301,482.42 4,398,696
FoodHub Revenue 1,440,000.00 1,470,816.00 1,502,879.79 1,536,243.72 1,570,962.83
Tech-E Revenue 288,000.00 294,163.20 300,575.96 307,248.74 314,192.57
Other Revenue 240,000.00 264,000.00 290,400.00 319,440 351,384
Total 6,447,845.43 6,607,098.79 6,773,743.31 6,948,228.40 7,131,038.20

146
Note 9: Cost of Sales
2020 2021 2022 2023 2024
Inventory, beg - 384,000.00 394,500.00 404,940.00 415,968.00
Add: Net Purchases 1,664,000.00 1,324,180.00 1,359,639.82 1,397,711.10 1,560,295.69
Total Goods Available for Sale 1,664,000.00 1,708,180.00 1,754,139.82 1,802,651.10 1,976,263.69
Less: Inventory, end 384,000.00 394,500.00 404,940.00 415,968.00 550,000.00
Cost of Sales 1,280,000.00 1,313,680.00 1,349,199.82 1,386,683.10 1,426,263.69

Note 10: Operating Expenses


2020 2021 2022 2023 2024
Utilities Expense 132,000.00 134,640.00 137,333.00 140,080.00 142,882.00
Depreciation Expense 158,583.75 158,583.75 158,583.75 158,583.75 158,583.75
Salaries Expense 1,116,000.00 1,116,000.00 1,116,000.00 1,116,000.00 1,227,600.00
Repairs and Maintenance Expense 23,034.75 23,034.75 23,034.75 23,034.75 23,034.75
Total 1,429,618.50 1,432,258.50 1,434,951.50 1,437,698.50 1,552,100.50

Note 11: Administrative & Selling Expenses


2020 2021 2022 2023 2024
Office Supplies Expense 22,500.00 28,125.00 29,531.25 29,882.81 29,970.71
Advertising Expense 17,750.00 17,480.00 19,480.00 21,480.00 22,480.00
Taxes & Licenses 12,800.00 12,800.00 12,800.00 12,800.00 12,800.00
Pre-Operating Expense 219,050.00 - - - -
Salaries Expense 396,000.00 396,000.00 396,000.00 396,000.00 435,600.00
Total 668,100.00 454,405.00 457,811.25 460,162.81 500,850.71

147
Schedule 1: Property Plant and Equipment

2020 2021 2022 2023 2024


Land 2,300,000.00 2,300,000.00 2,300,000.00 2,300,000.00 2,300,000.00

Building
Cost 4,000,000.00 4,000,000.00 4,000,000.00 4,000,000.00 4,000,000.00
Less: Accumulated Depreciation 115,000.00 230,000.00 345,000.00 460,000.00 575,000.00
Carrying Amount 3,885,000.00 3,770,000.00 3,655,000.00 3,540,000.00 3,425,000.00

Equipment
Cost
Air Conditioner (split type) 60,000.00 60,000.00 60,000.00 60,000.00 60,000.00
Air Conditioner (window type) 22,500.00 22,500.00 22,500.00 22,500.00 22,500.00
Air Cooler 4,000.00 4,000.00 4,000.00 4,000.00 4,000.00
Printing Machine 13,450.00 13,450.00 13,450.00 13,450.00 13,450.00
Photocopy Machine 40,000.00 40,000.00 40,000.00 40,000.00 40,000.00
Computer Set 140,000.00 140,000.00 140,000.00 140,000.00 140,000.00
Surveillance Camera 15,000.00 15,000.00 15,000.00 15,000.00 15,000.00
Speakers 3,000.00 3,000.00 3,000.00 3,000.00 3,000.00
Fire alarm 500.00 500.00 500.00 500.00 500.00
Fire extinguisher 2,000.00 2,000.00 2,000.00 2,000.00 2,000.00
Refrigerator 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00
Water Dispenser 6,000.00 6,000.00 6,000.00 6,000.00 6,000.00
Microwave 7,000.00 7,000.00 7,000.00 7,000.00 7,000.00
Projector 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00

148
Burner Gas Stove 2,000.00 2,000.00 2,000.00 2,000.00 2,000.00
Total 335,450.00 335,450.00 335,450.00 335,450.00 335,450.00
Less: Accumulated Depreciation
Air Conditioner (split type) 4,800.00 9,600.00 14,400.00 19,200.00 24,000.00
Air Conditioner (window type) 1,350.00 2,700.00 4,050.00 5,400.00 6,750.00
Air Cooler 300.00 600.00 900.00 1,200.00 1,500.00
Printing Machine 1,056.25 2,112.50 3,168.75 4,225.00 5,281.25
Photocopy Machine 2,000.00 4,000.00 6,000.00 8,000.00 10,000.00
Computer Set 11,500.00 23,000.00 34,500.00 46,000.00 57,500.00
Surveillance Camera 1,000.00 2,000.00 3,000.00 4,000.00 5,000.00
Speakers 400.00 800.00 1,200.00 1,600.00 2,000.00
Refrigerator 650.00 1,300.00 1,950.00 2,600.00 3,250.00
Water Dispenser 437.50 875.00 1,312.50 1,750.00 2,187.50
Microwave 450.00 900.00 1,350.00 1,800.00 2,250.00
Projector 1,400.00 2,800.00 4,200.00 5,600.00 7,000.00
Burner Gas Stove 300.00 600.00 900.00 1,200.00 1,500.00
Total 25,643.75 51,287.50 76,931.25 102,575.00 128,218.75
Carrying Amount 309,806.25 284,162.50 258,518.75 232,875.00 207,231.25

Furniture & Fixtures


Cost
Chair-Study Chair 96,000.00 96,000.00 96,000.00 96,000.00 96,000.00
Chair-Monobloc 3,800.00 3,800.00 3,800.00 3,800.00 3,800.00
Chair-Office 13,000.00 13,000.00 13,000.00 13,000.00 13,000.00
Chair-Bench 4,000.00 4,000.00 4,000.00 4,000.00 4,000.00
Chair-Small 800.00 800.00 800.00 800.00 800.00
Chair-Sofa 9,000.00 9,000.00 9,000.00 9,000.00 9,000.00

149
Chair-Single Sofa 2,600.00 2,600.00 2,600.00 2,600.00 2,600.00
Table-Round 12,000.00 12,000.00 12,000.00 12,000.00 12,000.00
Table-Computer 30,000.00 30,000.00 30,000.00 30,000.00 30,000.00
Table- Single 28,500.00 28,500.00 28,500.00 28,500.00 28,500.00
Table- Medium 34,000.00 34,000.00 34,000.00 34,000.00 34,000.00
Table-long 20,000.00 20,000.00 20,000.00 20,000.00 20,000.00
Table-Office 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00
Table-Small 500.00 500.00 500.00 500.00 500.00
Hanging Shelves-Short 2,500.00 2,500.00 2,500.00 2,500.00 2,500.00
Hanging Shelves-Long 800.00 800.00 800.00 800.00 800.00
Standing Shelves 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00
Book Shelf 3,000.00 3,000.00 3,000.00 3,000.00 3,000.00
Total 271,500.00 271,500.00 271,500.00 271,500.00 271,500.00
Less: Accumulated Depreciation
Chair-Study Chair 8,320.00 16,640.00 24,960.00 33,280.00 41,600.00
Chair-Monobloc 285.00 570.00 855.00 1,140.00 1,425.00
Chair-Office 1,170.00 2,340.00 3,510.00 4,680.00 5,850.00
Chair-Bench 350.00 700.00 1,050.00 1,400.00 1,750.00
Chair-Small 80.00 160.00 240.00 320.00 400.00
Chair-Sofa 375.00 750.00 1,125.00 1,500.00 1,875.00
Chair-Single Sofa 240.00 480.00 720.00 960.00 1,200.00
Table-Round 540.00 1,080.00 1,620.00 2,160.00 2,700.00
Table-Computer 1,350.00 2,700.00 4,050.00 5,400.00 6,750.00
Table- Single 1,235.00 2,470.00 3,705.00 4,940.00 6,175.00
Table- Medium 1,675.00 3,350.00 5,025.00 6,700.00 8,375.00
Table-long 980.00 1,960.00 2,940.00 3,920.00 4,900.00
Table-Office 375.00 750.00 1,125.00 1,500.00 1,875.00

150
Table-Small 25.00 50.00 75.00 100.00 125.00
Hanging Shelves-Short 400.00 800.00 1,200.00 1,600.00 2,000.00
Hanging Shelves-Long 140.00 280.00 420.00 560.00 700.00
Standing Shelves 200.00 400.00 600.00 800.00 1,000.00
Book Shelf 200.00 400.00 600.00 800.00 1,000.00
Total 17,940.00 35,880.00 53,820.00 71,760.00 89,700.00
Carrying Amount 253,560.00 235,620.00 217,680.00 199,740.00 181,800.00

TOTAL 6,748,366.25 6,589,782.50 6,431,198.75 6,272,615.00 6,114,031.25

Schedule 2: Depreciation Expense


Unit Unit Cost Cost Scrap Value Depreciable Useful Life Annual
(in pesos) (in pesos) (in pesos) Cost (in pesos) (years) Depreciation
Building
4,000,000.00 550,000.00 3,450,000.00 30 115,000.00

Equipment
Air Conditioner (split type) 6 10,000.00 60,000.00 12,000.00 48,000.00 10 4,800.00
Air Conditioner (window type) 3 7,500.00 22,500.00 9,000.00 13,500.00 10 1,350.00
Air Cooler 1 4,000.00 4,000.00 1,000.00 3,000.00 10 300
Printing Machine 1 13,450.00 13,450.00 5,000.00 8,450.00 8 1,056.25
Photocopy Machine 1 40,000.00 40,000.00 10,000.00 30,000.00 15 2,000.00
Computer Set 7 20,000.00 140,000.00 25,000.00 115,000.00 10 11,500.00
Surveillance Camera 10 1,500.00 15,000.00 5,000.00 10,000.00 10 1,000.00
Speakers 2 1,500.00 3,000.00 1,000.00 2,000.00 5 400
Fire alarm 1 500 500 - - - -

151
Fire extinguisher 2 1,000.00 2,000.00 - - - -
Refrigerator 1 10,000.00 10,000.00 3,500.00 6,500.00 10 650
Water Dispenser 1 6,000.00 6,000.00 2,500.00 3,500.00 8 437.5
Microwave 1 7,000.00 7,000.00 2,500.00 4,500.00 10 450
Projector 1 10,000.00 10,000.00 3,000.00 7,000.00 5 1,400.00
Burner Gas Stove 1 2,000.00 2,000.00 500 1,500.00 5 300
25,643.75
Furniture & Fixtures
Chair-Study Chair 64 1,500.00 96,000.00 12,800.00 83,200.00 10 8,320.00
Chair-Monobloc 19 200 3,800.00 950 2,850.00 10 285
Chair-Office 13 1,000.00 13,000.00 1,300.00 11,700.00 10 1,170.00
Chair-Bench 2 2,000.00 4,000.00 500 3,500.00 10 350
Chair-Small 4 200 800 - 800 10 80

Chair-Sofa 3 3,000.00 9,000.00 1,500.00 7,500.00 20 375


Chair-Single Sofa 2 1,300.00 2,600.00 200 2,400.00 10 240
Table-Round 6 2,000.00 12,000.00 1,200.00 10,800.00 20 540
Table-Computer 15 2,000.00 30,000.00 3,000.00 27,000.00 20 1,350.00
Table- Single 19 1,500.00 28,500.00 3,800.00 24,700.00 20 1,235.00
Table- Medium 17 2,000.00 34,000.00 500 33,500.00 20 1,675.00
Table-long 4 5,000.00 20,000.00 400 19,600.00 20 980
Table-Office 5 2,000.00 10,000.00 2,500.00 7,500.00 20 375
Table-Small 1 500 500 - 500 20 25
Hanging Shelves-Short 5 500 2,500.00 500 2,000.00 5 400
Hanging Shelves-Long 1 800 800 100 700 5 140
Standing Shelves 2 500 1,000.00 - 1,000.00 5 200

152
Book Shelf 3 1,000.00 3,000.00 - 3,000.00 15 200

17,940.00
Total Annual Depreciation 158,583.75

Schedule 3: Salaries Expense


2020 2021 2022 2023 2024
Operating Expense
Store Manager 240,000.00 240,000.00 240,000.00 240,000.00 264,000.00
Front Desk Personnel 300,000.00 300,000.00 300,000.00 300,000.00 330,000.00
Service Personnel 432,000.00 432,000.00 432,000.00 432,000.00 475,200.00
Food Hub Personnel 144,000.00 144,000.00 144,000.00 144,000.00 158,400.00
Total 1,116,000.00 1,116,000.00 1,116,000.00 1,116,000.00 1,227,600.00

Administrative & Selling Expense


Marketing Manager 180,000.00 180,000.00 180,000.00 180,000.00 198,000.00
Accountant 216,000.00 216,000.00 216,000.00 216,000.00 237,600.00
Total 396,000.00 396,000.00 396,000.00 396,000.00 435,600.00

Schedule 4: Advertising Expense


2020 2021 2022 2023 2024
Social Media Advertisement 2,400.00 2,400.00 2,400.00 2,400.00 2,400.00
Stickers for PUVs 2,000.00 2,000.00 2,000.00 2,000.00 2,000.00
Seminar of the Marketing Manager 5,000.00 5,000.00 5,000.00 5,000.00 5,000.00
Posters 2,000.00 2,000.00 2,000.00 2,000.00 2,000.00

153
Radio Advertisements 675.00 675.00 675.00 675.00 675.00
Total 12,075.00 12,075.00 12,075.00 12,075.00 12,075.00

Schedule 5: Taxes & Licenses


Pre-
Operational 2020 2021 2022 2023 2024
Mayor’s Permit 15,000 - - - - -
Locational Clearance 1,000 - - - - -
Occupancy Permit 500 - - - - -
Barangay Business Clearance/Permit 150 150 150 150 150 150
Barangay Clearance 50 50 50 50 50 50
Sanitary Permit 2,000 2,000 2,000 2,000 2,000 2,000
Electrical Permit 550 - - - - -
Inspection Permit 600 600 600 600 600 600
Fire Service Fee 9,000 9,000 9,000 9,000 9,000 9,000
Fire Clearance 800 - - - - -
Garbage Fee 500 500 500 500 500 500
Building Plan Permit 7,500 - - - - -
Police Clearance Permit 100 - - - - -
Fencing Permit 2,800 - - - - -
Zoning Permit 10,000 - - - - -
SEC Registration 50,000 - - - - -
Documentary Stamp 4,000 - - - - -
BIR Registration 500 500 500 500 500 500
TOTAL 105,050 12,800 12,800 12,800 12,800 12,800

154
Schedule 6: Repairs and Maintenance Expense
2020 2021 2022 2023 2024
Building 20,000.00 20,000.00 20,000.00 20,000.00 20,000.00
Equipment 1,677.25 1,677.25 1,677.25 1,677.25 1,677.25
Furniture & Fixtures 1,357.50 1,357.50 1,357.50 1,357.50 1,357.50
TOTAL 23,034.75 23,034.75 23,034.75 23,034.75 23,034.75

Schedule 7: Utilities Expense


2020 2021 2022 2023 2024
Electricity 230,000.00 253,000.00 278,300.00 306,130.00 336,743.00
Other Utility Cost 48,000.00 57,600.00 69,120.00 82,944.00 99,532.80
Total 278,000.00 310,600.00 347,420.00 389,074.00 436,275.80

Schedule 8: Advertising Expense


2020 2021 2022 2023 2024
Social Media Advertisement (Facebook) 2,400.00 2,400.00 2,400.00 2,400.00 2,400.00
Stickers for PUVs 4,500.00 4,500.00 4,500.00 4,500.00 4,500.00
Seminar of the marketing manager 5,000.00 5,000.00 7,000.00 9,000.00 10,000.00
Posters 4,500.00 4,500.00 4,500.00 4,500.00 4,500.00
Radio Advertisement 1,350.00 1,080.00 1,080.00 1,080.00 1,080.00
Total 17,750.00 17,480.00 19,480.00 21,480.00 22,480.00

Schedule 9: Partner's Distribution of Share in Income


2020 2021 2022 2023 2024
Bustillos 270,967.52 337,593.34 349,967.02 362,566.61 359,092.41
Cosme 270,967.52 337,593.34 349,967.02 362,566.61 359,092.41

155
Cruz 135,483.76 168,796.67 174,983.51 181,283.31 179,546.20
Gabrillo 270,967.52 337,593.34 349,967.02 362,566.61 359,092.41
Mariano 270,967.52 337,593.34 349,967.02 362,566.61 359,092.41
Niepez 270,967.52 337,593.34 349,967.02 362,566.61 359,092.41
Rubiano 270,967.52 337,593.34 349,967.02 362,566.61 359,092.41
Total 1,761,288.85 2,194,356.71 2,274,785.62 2,356,682.99 2,334,100.65

156
Financial Statement Analysis

Financial statement analysis examines the present as well as past statement of


financial position and results of operations of the firm in order to determine the best
suitable estimate and predict the future state and performance of the company.

This section shows the various ratios such as Liquidity, Asset Utilization, Debt
Utilization and Profitability ratios which can be used in evaluating the financial status of
the company.

157
THE STUDYHAB COMPANY
FINANCIAL RATIO ANALYSIS
For the First Five Years of Operation
(In Pesos)
LIQUIDITY RATIO 2020 2021 2022 2023 2024

Current Ratio Current Assets 2,020,520.33 2,581,914.50 3,229,333.52 3,965,229.03 4,683,164.41


Current Liabilities 1,457,597.72 1,416,052.01 1,380,101.09 1,350,729.85 1,125,980.84
= 1.3862 1.8233 2.3399 2.9356 4.1592

Quick Ratio Quick Assets 1,629,020.33 2,178,039.50 2,814,549.77 3,539,300.09 4,729,302.88


Current Liabilities 1,457,597.72 1,416,052.01 1,380,101.09 1,350,729.85 1,125,980.84
= 1.1176 1.5381 2.0394 2.6203 4.2002

Current Assets to Total


Assets Current Assets 2,020,520.33 2,581,914.50 3,229,333.52 3,965,229.03 4,683,164.41
Total Assets 9,268,886.58 10,171,697.00 11,160,532.27 12,237,844.03 13,297,195.66

= 0.2180 0.2538 0.2894 0.3240 0.3522

ASSET UTILIZATION
Inventory Turnover Costs of goods sold 1,280,000.00 1,313,680.00 1,349,199.82 1,386,683.10 1,426,263.69
Average Inventory 192,000.00 389,250.00 399,720.00 410,454.00 482,984.00
= 6.6667 3.3749 3.3754 3.3784 2.9530

Current Asset Turnover Current Assets 2,020,520.33 2,581,914.50 3,229,333.52 3,965,229.03 4,683,164.41
Average Current
Assets 1,010,260.17 2,301,217.42 2,905,624.01 3,597,281.28 4,324,196.72
= 2.0000 1.1220 1.1114 1.1023 1.0830

158
Asset Turnover Net Sales 6,447,845.43 6,607,098.79 6,773,743.31 6,948,228.40 7,131,038.20
Average Total
Assets 4,634,443.29 9,720,291.79 10,666,114.64 11,699,188.15 12,767,519.85
= 1.3913 0.6797 0.6351 0.5939 0.5585

PPE Turnover Net Sales 6,447,845.43 6,607,098.79 6,773,743.31 6,948,228.40 7,131,038.20


Average PPE Assets 3,374,183.13 6,669,074.38 6,510,490.63 6,351,906.88 6,193,323.13
= 1.9109 0.9907 1.0404 0.5469 1.1514

DEBT UTILIZATION

Debt to Equity Ratio Total Liabilities 2,057,597.72 1,816,052.01 1,580,101.09 1,350,729.85 1,125,980.84
Owners' Equity 7,222,488.85 8,408,245.24 9,705,853.05 11,118,054.89 12,541,699.11
= 0.2849 0.2160 0.1628 0.1215 0.0898

Equity to Debt Ratio Owner's Equity 7,222,488.85 8,408,245.24 9,705,853.05 11,118,054.89 12,541,699.11
Total Liabilities 2,057,597.72 1,816,052.01 1,580,101.09 1,350,729.85 1,125,980.84
= 3.5102 4.6300 6.1426 8.2311 11.1385

Equity Ratio Owner's Equity 7,211,288.85 8,355,645.56 9,580,431.18 10,887,114.17 12,171,214.82


Total Assets 9,268,886.58 10,444,919.65 11,511,386.11 12,699,221.30 13,903,324.37
= 0.7780 0.8000 0.8323 0.8573 0.8754

Debt Ratio Total Liabilities 2,057,597.72 1,816,052.01 1,580,101.09 1,350,729.85 1,125,980.84


Total Assets 9,268,886.58 10,444,919.65 11,511,386.11 12,699,221.30 13,903,324.37
= 0.2220 0.1739 0.1373 0.1064 0.0810

Fixed Assets to Total PPE 6,748,366.25 6,589,782.50 6,431,198.75 6,272,615.00 6,114,031.25


Owner's Equity Owner's Equity 7,211,288.85 8,355,645.56 9,580,431.18 10,887,114.17 12,171,214.82
= 0.9358 0.7887 0.6713 0.5762 0.5023

159
Fixed Assets to Total
Assets PPE 6,748,366.25 6,589,782.50 6,431,198.75 6,272,615.00 6,114,031.25
Total Assets 9,268,886.58 10,171,697.00 11,160,532.27 12,237,844.03 13,297,195.66
= 0.7281 0.6479 0.5762 0.5126 0.4598
PPE 6,748,366.25 6,589,782.50 6,431,198.75 6,272,615.00 6,114,031.25
Fixed Assets to Total Total Long-term
Long-term Liabilities Liabilities 600,000.00 400,000.00 200,000.00 - -
= 11.2473 16.4745 32.1560 n/a n/a

Plant Turnover Net Sales 6,447,845.43 6,607,098.79 6,773,743.31 6,948,228.40 7,131,038.20


Average PPE 3,374,183.13 6,669,074.38 6,510,490.63 6,351,906.88 6,193,323.13
= 1.9109 0.9907 1.0404 1.0939 1.1514

PROFITABILITY RATIO

Rate of Return on Sales Net Income 1,761,288.85 2,194,356.71 2,274,785.62 2,356,682.99 2,334,100.65
Net Sales 6,447,845.43 6,607,098.79 6,773,743.31 6,948,228.40 7,131,038.20
= 0.2732 0.3321 0.3358 0.3392 0.3273

Net Income 1,761,288.85 2,194,356.71 2,274,785.62 2,356,682.99 2,334,100.65


Rate of Return to Total Assets Average total
(ROA) Assets 4,634,443.29 9,720,291.79 10,666,114.64 11,699,188.15 12,767,519.85
= 0.3800 0.2258 0.2133 0.2014 0.1828

Asset Turnover Net Sales 6,447,845.43 6,607,098.79 6,773,743.31 6,948,228.40 7,131,038.20


Average Total
Assets 4,634,443.29 9,720,291.79 10,666,114.64 11,699,188.15 12,767,519.85
= 1.3913 0.6797 0.6351 0.5939 0.5585

160
Gross Profit Ratio Gross Profit 5,167,845.43 5,293,418.79 5,424,543.49 5,561,545.30 5,704,774.51
Net Sales 6,447,845.43 6,607,098.79 6,773,743.31 6,948,228.40 7,131,038.20
= 0.8015 0.8012 0.8008 0.8004 0.8000

Cash flow from


Operating
Cash Flow Margin activities 4,151,000.00 3,246,000.00 3,222,000.00 3,198,000.00 3,174,000.00
Net Sales 6,447,845.43 6,607,098.79 6,773,743.31 6,948,228.40 7,131,038.20
= 0.6438 0.4913 0.4757 0.4603 0.4451

Net Income 1,761,288.85 2,194,356.71 2,274,785.62 2,356,682.99 2,334,100.65


Rate of Return on Current Average
Assets Current assets 1,010,260.17 2,301,217.42 2,905,624.01 3,597,281.28 4,324,196.72
= 1.7434 0.9536 0.7829 0.6551 0.5398

Net Income 1,761,288.85 2,194,356.71 2,274,785.62 2,356,682.99 2,334,100.65


Rate of Return on Owners' Average
Equity Owner's Equity 3,611,244.43 7,783,467.21 8,968,038.37 10,233,772.68 11,529,164.50
= 0.4877 0.2819 0.2537 0.2303 0.2025

Cash and Cash Equivalents 1,225,000.00 1,225,000.00 1,225,000.00 1,225,000.00 1,225,000.00


Marketable Securities 404,020.33 953,039.50 1,589,549.77 2,314,300.09 3,504,302.88
QUICK ASSETS 1,629,020.33 2,178,039.50 2,814,549.77 3,539,300.09 4,729,302.88

2020 2021 2022 2023 2024


TOTAL ASSETS 9,268,886.58 10,171,697.00 11,160,532.27 12,237,844.03 13,297,195.66

AVERAGE TOTAL
ASSETS Beg.+ End. = 9,268,886.58 19,440,583.58 21,332,229.27 23,398,376.30 25,535,039.69
2 2 2 2 2 2
= 4,634,443.29 9,720,291.79 10,666,114.64 11,699,188.15 12,767,519.85

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Property Plant and
Equipment (net) 6,748,366.25 6,589,782.50 6,431,198.75 6,272,615.00 6,114,031.25

AVERAGE PPE ASSETS Beg.+End. 6,748,366.25 13,338,148.75 13,020,981.25 12,703,813.75 12,386,646.25


2 2 2 2 2 2
= 3,374,183.13 6,669,074.38 6,510,490.63 6,351,906.88 6,193,323.13

Total Current Assets 2,020,520.33 2,581,914.50 3,229,333.52 3,965,229.03 4,683,164.41

AVERAGE CURRENT
ASSETS Beg.+ End 2,020,520.33 4,602,434.83 5,811,248.02 7,194,562.55 8,648,393.44
2 2 2 2 2 2
= 1,010,260.17 2,301,217.42 2,905,624.01 3,597,281.28 4,324,196.72

Inventory 384,000.00 394,500.00 404,940.00 415,968.00 550,000.00

Beg.
Inventory
AVERAGE INVENTORY
+ End.
Inventory = 384,000.00 778,500.00 799,440.00 820,908.00 965,968.00
2 2 2 2 2 2
= 192,000.00 389,250.00 399,720.00 410,454.00 482,984.00

Owner's Equity 7,211,288.85 8,355,645.56 9,580,431.18 10,887,114.17 12,171,214.82

Beg. +
AVERAGE OWNER'S End. 7,211,288.85 15,566,934.41 17,936,076.74 20,467,545.35 23,058,328.99
EQUITY 2 2 2 2 2 2
= 3,605,644.43 7,783,467.21 8,968,038.37 10,233,772.68 11,529,164.50

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THE STUDYHAB CO.
COMMON SIZE STATEMENT OF FINANCIAL POSITION
For the First Five Years of Operations
(in Pesos)
2020 2021 2022 2023 2024
ASSETS

Current Assets
Cash 13.22% 12.04% 10.98% 10.01% 9.21%
Marketable Securities 4.36% 9.37% 14.24% 18.91% 21.80%
Office Supplies 0.08% 0.09% 0.09% 0.08% 0.08%
Inventory 4.14% 3.88% 3.63% 3.40% 4.14%
Total Current Assets 21.80% 25.38% 28.94% 32.40% 35.22%

Non Current Assets


Property Plant and Equipment (net) 72.81% 64.79% 57.62% 51.26% 45.98%
Long term investment 5.39% 9.83% 13.44% 16.34% 18.80%
Total Non Current Asset 78.20% 74.62% 71.06% 67.60% 64.78%

TOTAL ASSETS 100% 100% 100% 100% 100%

LIABILITIES AND PARTNER'S EQUITY

Current Liabilities
Trade and Other Payables 13.57% 11.96% 10.57% 9.40% 8.47%
Bank Loan 2.16% 1.97% 1.79% 1.63% 0.00%
Total Current Liablities 15.73% 13.92% 12.37% 11.04% 8.47%

Non Current Liabilities


Bank Loan 6.47% 3.93% 1.79% 0.00% 0.00%
Total Non Current Liabilities 6.47% 3.93% 1.79% 0.00% 0.00%

Total Liabilities 22.20% 17.85% 14.16% 11.04% 8.47%

Partner's Equity
Bustillos, Capital 12.09% 12.86% 13.52% 14.06% 14.52%
Cosme, Capital 12.09% 12.86% 13.52% 14.06% 14.52%
Cruz, Capital 5.24% 4.96% 4.74% 4.58% 4.44%
Gabrillo, Capital 12.09% 12.86% 13.52% 14.06% 14.52%
Mariano, Capital 12.09% 12.86% 13.52% 14.06% 14.52%

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Niepez, Capital 12.09% 12.86% 13.52% 14.06% 14.52%
Rubiano, Capital 12.09% 12.86% 13.52% 14.06% 14.52%
Total Equity 77.80% 82.15% 85.84% 88.96% 91.53%

TOTAL LIABILITIES AND


EQUITY 100% 100% 100% 100% 100%

THE STUDYHAB CO.


COMMON SIZE STATEMENT OF FINANCIAL PERFORMANCE
For the First Five Years of Operations
(in Pesos)
2020 2021 2022 2023 2024

Revenue 100% 100% 100% 100% 100%


Cost of Sales 19.85% 19.88% 19.92% 19.96% 20.00%
Gross Profit 80.15% 80.12% 80.08% 80.04% 80.00%
Less: Expenses
Operating Expense 24.44% 24.34% 24.29% 24.28% 25.88%
Administrative and Selling Expense 14.83% 6.88% 6.76% 6.62% 7.02%
Total 39.26% 31.22% 31.04% 30.90% 32.90%
Income before Interest and Taxes 40.88% 48.90% 49.04% 49.14% 47.10%
Less: Interest Expenses 1.86% 1.45% 1.06% 0.69% 0.34%
Income after interest but before taxes 39.02% 47.45% 47.97% 48.45% 46.76%
Income tax (30%) 11.71% 14.23% 14.39% 14.54% 14.03%
Net Income(Loss) for the Year 27.32% 33.21% 33.58% 33.92% 32.73%

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THE STUDYHAB CO.
TREND ANALYSIS OF STATEMENT OF FINANCIAL POSITION
For the First Five Years of Operations
(in Pesos)
2020 2021 2022 2023 2024
ASSETS
Current Assets
Cash 100% 100% 100% 100% 100%
Marketable Securities 100% 236% 393% 573% 717%
Office Supplies 100% 125% 131% 133% 133%
Inventory 100% 103% 105% 108% 143%
Total Current Assets 100% 128% 160% 196% 232%

Non Current Assets


Property Plant and Equipment (net) 100% 98% 95% 93% 91%
Long term investment 100% 200% 300% 400% 500%
Total Non Current Asset 100% 105% 109% 114% 119%

TOTAL ASSETS 100% 110% 120% 132% 143%

LIABILITIES AND PARTNER'S EQUITY


Current Liabilities
Trade and Other Payables 100% 97% 94% 92% 90%
Bank Loan 100% 100% 100% 100% 0%
Total Current Liablities 100% 97% 95% 93% 77%

Non Current Liabilities


Bank Loan 100% 67% 33% 0% 0%
Total Non Current Liabilities 100% 67% 33% 0% 0%

Total Liabilities 100% 88% 77% 66% 55%

Partner's Equity
Bustillos, Capital 100% 117% 135% 154% 172%
Cosme, Capital 100% 117% 135% 154% 172%
Cruz, Capital 100% 104% 109% 115% 122%
Gabrillo, Capital 100% 117% 135% 154% 172%
Mariano, Capital 100% 117% 135% 154% 172%
Niepez, Capital 100% 117% 135% 154% 172%
Rubiano, Capital 100% 117% 135% 154% 172%
Total Equity 100% 116% 133% 151% 169%

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TOTAL LIABILITIES AND
EQUITY 100% 110% 120% 132% 143%

THE STUDYHAB CO.


TREND ANALYSIS OF INCOME STATEMENT
For the First Five Years of Operations
(in Pesos)
2020 2021 2022 2023 2024
Revenue
Cost of Sales 100% 102% 105% 108% 111%
Gross Profit 100% 103% 105% 108% 111%
Less: Expenses
Operating Expense 100% 102% 104% 107% 117%
Administrative and Selling Expense 100% 48% 48% 48% 52%
Total 100% 81% 83% 85% 93%
Income before Interest and Taxes 100% 123% 126% 130% 127%
Less: Interest Expenses 100% 80% 60% 40% 20%
Income after interest but before taxes 100% 125% 129% 134% 133%
Income tax (30%) 100% 125% 129% 134% 133%
Net Income(Loss) for the Year 100% 125% 129% 134% 133%

LIQUIDITY AND SOLVENCY

Current Ratio

The current ratio measures the company’s ability to pay short-term obligations or
those due within one year. The current ratio at the end of first year indicates that the
company has the financial resources to remain solvent in the short-term. The ratio shows
an upward trend to pay its obligations for the succeeding years.

Quick Ratio

The quick ratio indicates the company’s short-term liquidity position and
measures the company’s ability to meet its short-term obligation with its most liquid
assets. The quick ratio of the company tends to increase for the next succeeding years that

166
indicate that the company is fully equipped with enough assets to be instantly liquidated
to pay off its current liabilities.

Current Assets to Total Assets

The current assets to total assets show the proportion of current assets to total
assets. It also suggests the relative liquidity of the total assets for the next years.

ASSETS UTILIZATION

Current Assets Turnover

The current asset turnover signifies the pace by which current assets are used and
it also indicates the adequacy of current assets in the firm’s operation.

Asset Turnover

The asset turnover can be used as an indicator of the efficiency with which a
company is using its asset to generate revenue. Since the company have large assets bases,
it is expected that they would slowly turnover their assets through sales.

PPE Turnover

The PPE turnover is used to measure operating performance. It measures the


company’s ability to generate net sales from its fixed-assets investment, namely property,
plant and equipment. In the computation of the PPE turnover, it indicates that the
company has more effectively utilized investment in fixed-assets to generate revenue.

DEBT UTILIZATION

Debt to equity ratio

The debt to equity ratio is used to evaluate the company’s financial leverage. It is
a measure of the degree to which a company is financing its operations through debt
versus wholly owned funds. Based on the analysis, the owners are the one who provide
more resources. And it also shows that the creditors have better protection regarding to
their investments.

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Equity to debt ratio

The equity to debt ratio measures the margin of safety of creditors. Based on the
analysis, showing the company is better able to cover its debt.

Equity Ratio

The equity ratio measures the proportion of the firm’s assets coming from its
owners. It signifies the financial stability of the firm and cautions the creditors. In the
analysis, equity ratio tends to increase over the years; it means that the company is worth
investing in since so many investors are willing to finance the company. A higher ratio
also shows potential creditors that the company is more sustainable and less risky to lend
future loans.

Debt Ratio

This ratio measures the proportion of the firm’s assets coming from its creditors
and it also signifies the extent of trading on equity. Based on the ratio, 22% of the
company’s assets are being financed by debt. It indicates that the company will be able to
manage it obligations well.

Fixed Assets to Total Owners’ Equity

This ratio measures the portion of the owners’ equity used to acquire fixed assets.
In the analysis, the ratio is 94% which is less than 1, it means that all fixed assets and a
portion of working capital of the company has been financed by the stockholders.

Fixed Assets to Total Assets

It signifies whether the firm over or under invested in PPE.

Fixed Assets to Total Long-term Liabilities

This ratio measures the extent covered by the carrying value of PPE to long-term
obligations. Based on the analysis, the ratio is high and tends to increase over the years, it
only means that there’s a greater ability to cover the long-term liabilities and also the debt
capacity of the company.

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Plant Turnover

It signifies the firm’s efficiency in using their PPE.

PROFITABILITY RATIO

Rate of return on Sales (ROS)

The rate of return on sales measures the amount of net income per peso of sales. It
also shows the proportion of the net income to the firm’s sales revenue. Its shows in the
analysis that the ROS is tend to increase by 6% in the following year. If the company
wants to increase efficiently, it can focus on increasing the sales while incrementally
increasing expenses, or it can focus on decreasing expenses while maintaining or
increasing revenue.

Rate of return to Total Assets (ROA)

The rate of return to total assets measures the company’s profitability in using
their total assets. It also shows the net income generated by using the firm’s total assets.
This signifies management efficiency in using their assets to earn income. In the analysis,
the rate of return to total asset shows decreasing trend that indicates that the company
will earn more money for the first year compare to the next years of operation.

Gross Profit Ratio

This ratio measures the gross profit per peso of sales revenue. The gross profit
ratio is important in ascertaining the adequacy of gross profit to meet operating expenses
plus their desired profit. Based on the computation, the gross profit ratio is 80%, it means
that the company is sufficient to cover all the expenses and provide for profit. And
generally, the higher ratio is considered better.

Rate of return on Current Assets

It gauges management efficiency in using current asset assets to generate net


income.

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Rate of return on Owners’ Equity

It indicates the amount of return per peso of owners’ equity. It also gauges
management efficiency in using its invested capital to generate revenue. Based on the
analysis, the company has a strong rate on return on equity in the first year of operation
and it tends to decrease over the years. It indicates that the company will generate more
income in the first year as to compare to the following years.

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PROJECT EVALUATION

Determining whether the invested capital will be returned or not is essential to every
project. Some of the factors that must be considered are the time value of money, risk of
investment and other possible projects.

The company used the payback period, net present value and internal rate of
return for this project to assess whether it is feasible or not.

PAYBACK PERIOD (in Pesos)

PAYBACK PERIOD (in Pesos)


2020 2021 2022 2023 2024

Net Income 1,761,288.85 2,194,356.71 2,274,785.62 2,356,682.99 2,334,100.65


Add Back: Depreciation
Expense 158,583.75 158,583.75 158,583.75 158,583.75 158,583.75
Total Annual Cash Flows 1,919,872.60 2,352,940.46 2,433,369.37 2,515,266.74 2,492,684.40

Average Cash Flows 2,342,826.71


Capital investment 7,500,000
Payback Period 3.20

Based on the analysis of the payback period, The StudyHab Co. is expecting to
receive the capital investment in 3.2 years time. If the project will work as planned, 2
years and 14 months would be enough to get back its capital.

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NET PRESENT VALUE

Cash PV of Cash
Year Inflows PVF Flows
(in Pesos) (in Pesos)

2020 1,919,872.60 0.892857143 1,714,171.97


2021 2,194,356.71 0.797193878 1,749,327.73
2022 2,433,369.37 0.711780248 1,732,024.25
2023 2,515,266.74 0.635518078 1,598,497.49
2024 2,492,684.40 0.567426856 1,414,416.07
Total PV of Cash Inflows 8,208,437.51
Cost of Investment 7,500,000.00
Net Present Value 708,437.51

Based on the net present value, it can be concluded that if the business is pursued,
the project will generate a positive result. As a rule of thumb, if the Net Present Value is
positive, the project is feasible and is acceptable to continue.

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INTERNAL RATE OF
RETURN

PVF @ 16% PVF @ 14%


n Cash Inflow PVF PVCI PVF PVCI
(in Pesos) (in Pesos) (in Pesos)

1 1,919,872.60 0.862068966 1,655,062.59 0.877192982 1,684,098.77

2 2,194,356.71 0.743162901 1,630,764.50 0.769467528 1,688,486.23

3 2,433,369.37 0.640657674 1,558,956.76 0.674971516 1,642,455.01

4 2,515,266.74 0.552291098 1,389,159.43 0.592080277 1,489,239.83

5 2,492,684.40 0.476113015 1,186,799.48 0.519368664 1,294,622.17

7,420,742.76 7,798,902.02

IRR= 14% + (2% x (298,902.02/378,159.26)


IRR = 14% + (2% x 0.79041306564)
IRR= 14% + 0.01580826131
IRR= 15.58%

The internal rate of return generates 15.58%. This percentage is more than 3.58%
to the company’s assumed rate of return which is 12%. This indicates that the project is
more feasible than the other investment that would only generate 12% of return.

Based on the analyses used by the company, there is a strong indication that the
project is feasible in all aspects. Therefore, the company is making the right decision to
continue this project.

173