CHAPTER VI

FINANCIAL PLAN
This chapter consists of the projected income statement and balance sheet of the
Aennovative Company for five (5) years. This chapter also shows the current standing of the
company and its situation in the near future. The chapter displays the assumptions of the
company and its financial goals for the next five years of operation

Assumptions for the first six months of operation:

 There will be an accumulated profit that will be saved.
 The Eggsthetic product will be sold the whole Ateneo community and will cater to the
whole community
 The production of the product will have an increase of five percent per year.
 The company will adjust to the demand of the customers in terms of the quantity of the
products being sold.

Financial Goals:
 Year 1: Save 200,000.00 for new equipment like refrigerator, waffle maker.
 Year 2: Offer new flavors like savory and other sweets.
 Year 3: Buy new equipment
 Year 4: Save 200,000 for new location outside Ateneo
 Year 5: Expand market share by renting new locations outside Ateneo.

Income Statement
Table 1. Income Statement
YEAR
ACCOUNTS 2019 2020 2021 2022 2023
Sales Php Php 737, Php 773, Php 812, Php 853,
702,000 100 955 652.75 285.39
Less: Cost of Sales
Purchase 298, 350 313, 267.5 328, 345, 377.38 362, 646.25
930.88
Freight In 5, 096 5, 096 5, 096 5, 096 5, 096
Total Cost of Sales 303, 446 318, 363.5 334, 350, 473.38 367, 742.25
026.88
 Gross Profit 398, 554 418, 736.5 439, 462, 179.37 485, 543.14
928.12
Less: Operating
Expense
Utilities Expense 45, 545.76 45, 545.76 45, 545.76 45, 545.76 45, 545.76
Salaries Expense 24, 736.14 24, 736.14 24, 736.14 24, 736.14 24, 736.14
Supplies 18, 252 19, 164.6 20, 122.82 21, 128.96 22, 185.41
Expense
Packaging Expense 2, 281.5 2, 395.58 2, 515.36 2, 641.13 2, 773.19
Total Operating 90, 815.4 91, 842.34 92, 920.43 94, 052.35 95, 240.86
Expense
NET INCOME 307, 738.6 326, 347, 368, 127.02 390, 302.28
894.16 007.69
Projected Income Statement for 5 years

The Income Statement shows the projected net income earned in the first year of
operation up to its fifth year that would be generated and would incurred the expenses by the
company. It is assumed that the sales will increase by 5% per year. The company had produced
17, 550 Eggsthetic Waffle and been sold for P40 each which results to P307, 738.6. Since it is
assumed that there is an increase of 5% in the production, it is expected that there will also be an
increase in the sales. With this, the net income for the next years of operation would
approximately be P326, 894.16, P347, 007.69, P368, 127.02, and P390, 302.28 respectively.

Balance Sheet
Table 2. Balance Sheet
Aennovative Company
Three-Year Projected Balance Sheet
2019 2020 2021 2022 2023
ASSETS
Cash PHP PHP PHP PHP PHP
322,600.00 315,583.00 356,179.00 364,237.95 393,217.85
Equipment 23,397.00 46,794.00 23,397.00 23,397.00 23,397.00
Prepaid Rent 10,000.00
Other Assets 5,000.00 5,000.00 5,000.00 5,000.00 5,000.00
TOTAL ASSETS PHP PHP PHP PHP PHP
350,997.00 367,377.00 384,576.00 402,634.95 421,596.85

LIABILITIES
TOTAL
------------- ------------- ------------- ------------- -------------
LIABILITIES
 OWNER’S
EQUITY
Amaro, Capital PHP PHP PHP PHP PHP
43,874.625 45,922.125 48,072.00 50,329.37 52,699.61
Baldonado, Capital 43,874.625 45,922.125 48,072.00 50,329.37 52,699.61
Escalante, Capital 43,874.625 45,922.125 48,072.00 50,329.37 52,699.61
Enciso, Capital 43,874.625 45,922.125 48,072.00 50,329.37 52,699.61
Esmeria, Capital 43,874.625 45,922.125 48,072.00 50,329.37 52,699.61
Mangampo, Capital 43,874.625 45,922.125 48,072.00 50,329.37 52,699.61
Moll, Capital 43,874.625 45,922.125 48,072.00 50,329.37 52,699.61
Morales, Capital 43,874.625 45,922.125 48,072.00 50,329.37 52,699.61
TOTAL
LIABILITIES PHP PHP PHP PHP PHP
AND EQUITY 350,997.00 367,377.00 384,576.00 402,634.95 421,596.85
Presents five sets of projected assets, liabilities, and owner’s equity of Aennovative Company
with one-year-length period each.

The balance sheet presents the projected assets and equities of the business. For year 1
each owner will invest Php 43,874.625 in the company which will be used for the business
equipment and other assets. For year 2, owners will be increasing their investment because of the
income of the company. We used the investments to add another equipment which is the waffle
maker for more efficient production. Owners again increased their investment in year 3. All the
earnings in year 3 will be saved for year 4. In year 4, we will rent a place outside Ateneo to cater
a wider scope of customers to gain income. In year 5, owners increase their investment ang the
income of the business will be saved for future purposes and for the expansion of the business in
the coming years

Financial Ratios:

a. Return on investment= Net Income/Total Investment x 100%

b. Net Profit Margin = Net Profit/Sales

Table 3. Return on Investment and Net Profit Margin

Year 1 Year 2 Year 3 Year 4 Year 5

Net Income 307,738.6 326,894.16 347,007.69 368,127.02 390,302.28

Total Investment 350,997 367,377 384,576 402,634.95 421,596.85

Return on Investment 88% 89% 90% 91% 92%

Net profit 307,738.6 328,894.16 347,007.69 368,127.02 390,362.28

 Sales 702,000 737,100 773,955 812,652.75 853,285.39

Net profit margin 43 44 45 45 45

This means that it will take at most one year of operation to recover the investments. The
ratio shows that 92% of the investments will be recovered in 5 years of operation thus; more than
50% will be recovered for an annual operation. But then, since the sales are increasing about
10% per semester. The invested cash would hopefully be realized as cash for a shorter length of
time. Along with this is the data showing the Net Margin. The ratio implies that the capability of
the business to generate profit. The result of the ratio shows that out of the total sales 43% of it
remains as the profit after deducting operating expenses and other expenses sustained for one
year. The firm must work on minimizing fixed cost and other expenses to maximize the profit
generated by the business.

c. Break-even point = Fixed costs/contribution margin

Table 4. Break-Even

Year Month Day

58 x 234 58 x 26 1,530.75/19.59-20.41
=13,572 =1508 =57.73

The table above shows the computation of the break-even points that are needed in order for our
capital to be regained again. The table shows three individual computations for the break-even
point. This shows the computation for a day which will be composed of 1,530.75, the actual cost
of 75 servings of Eggsthetic, ang it is divided by 19.59 pesos, the revenue per each unit, minus
the cost per unit which is 20.41 pesos. The result is 57.73 or 58 servings of Egssthetic. This is the
quantity of non-profitable products. Alongside with this, the table also shows 1,508 serving for a
break-even point for a month and 13,572 for a whole year of operation.