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Section 4

FINANCIAL STUDY

This section shows the financial study of the proposed business. Itincludes

the total project cost, projected income statement, cash flow statement, projected

balance sheet and financial analysis.

BATAGDESAL
Total Project Costs
Property and equipment

Equipment, Furniture and Fixture 8,829.00

Tools and Utensils 4,033.55 12,862.55

Working Capital
Raw Materials 40,980.00
Rent 2,000.00
Office Supplies 252.75
Packaging 750.00
Cleaning Materials 464.00
Salaries 14,320.00
SSS 200.00
Philhealth 275.00
PAG-Ibig 545.00
Utilities 1,557.15 61,343.90
Pre-operating Expenses

Permits& Licenses 3,510.00

Promotion 400.00 3,910.00
Sub Total 78,116.45
Contingency (5%) 3,905.82

Total Project Cost P 82,022.27

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Financial Analysis

A. Current Ratio – Measures the liquidity

𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠
=
𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

178,549.42
=
34768.56

= 5.135 or 5 times

It means that the proposed business has 5 times more current assets than

current liabilities. It means that the proposed business has a decent average

because the asset is higher than the liabilities.

B. Return on Investment – Measures the profitability of the investment

𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒
=
𝐼𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡

71046.64
=
82,022.27

= 86.6 %

The return on investment is 108% which means that the proposed

business is more likely will yield good income upon operation.

C. Payback Period – shows how long the capital will be recovered.

𝑇𝑜𝑡𝑎𝑙 𝑝𝑟𝑜𝑗𝑒𝑐𝑡 𝑐𝑜𝑠𝑡

=
𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒 + 𝐷𝑒𝑝𝑟𝑒𝑐𝑖𝑎𝑡𝑖𝑜𝑛

82,022.27
=
71046.64 + 3,574.50

= 1.10 𝑜𝑟 1 𝑦𝑒𝑎𝑟 𝑎𝑛𝑑 10 𝑚𝑜𝑛𝑡ℎ𝑠

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CRITICAL RISK

All business has certain risk to take. The risk either controlled or beyond the

control of the people managing the business can be alleviated. After a thorough study

and analysis on how feasible the project is, the proponents had identified the risky areas

that may arise in the operation of the proposed business.

1. Unsold Products

It will ensure that there is just enough products to be produced base on

demands.

2. Contamination

The proponents will see to it that the product undergoes quality check and proper

sanitation during preparations.

3. Price Increase of the Raw Materials

Increasing of raw materials are unavoidable, the proponents will continue to do

search to maximize the use of cheaper substitute ingredients without sacrificing

the quality and taste of the product.

4. Spoilage of the product/raw materials

The proponents will see to it that the daily products that will be used is based

from the daily inventory and from the sales projection.