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Financial Study

A. Financial Assumption

1. All Purchases and Sales will be VAT inclusive and on Cash basis.

2. All Purchases and Selling Prices will be assumed to increase by 2.72 percent

based on the average inflation rate.

The Philippine Statistics Authority (PSA) provided the historical rates:

Year Rate

2014 3.60%

2015 0.67%

2016 1.25%

2017 2.85%

2018 5.21%

Total 13.58%

Divided by 5

Average inflation rate 2.72%

3. Purchases are procured monthly.

4. The Sales Volume of 2,256 trays of Lasagna, 540 trays of Baked Macaroni,

180 trays of Tuna Carbonara, 2,304 boxes of Oreo Cheesecake Cookies, and

1440 boxes of Chocolate Chips or Red Velvet Cookies in the initial year of

store operation was expected to increase 20 percent annually based on

experience rate of demand for pastas and pastries by the owner.

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5. Direct materials, Beverages, and Indirect materials will also increase 20

percent annually in proportion to increase of demand.

6. The Utilities, Rent, Supplies and an Advertising cost of ₱500.00 per month

are assumed to increase based on the average annual inflation rate of 2.72

percent.

7. The Furniture and Equipment will be depreciated in a straight-line basis using

the expected useful life of five years.

8. Utensils and Pre-operating expenses will be treated as outright expenses.

9. The Chef will receive a minimum of ₱ 17,602.00 while the employees will

each receive a minimum of ₱ 9,438.00 per month as salary and all are

assumed to increase by 2.72 percent per year.

10. Overtime pays will also increase at average annual inflation rate of 2.72

percent.

11. Incentives to the Chef and Employees are given in the form of labor fringe

benefits. The rate of SSS, PhilHEALTH ang PAG-IBIG are based on the

contribution schedule provided by respective government agencies.

12. The Café will be VAT registered from the start of operation.

13. Due to Data Privacy, the study will assume a Balance Sheet for the year

ended 2019 based on the existing non-current assets of the business

establishment and an assumed balance of ₱ 500,000.00 in Cash account.