Sweet Beginnings Co.

Ratio

Current Ratio Therefore the

𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠 company is able to pay
𝐶𝑢𝑢𝑟𝑒𝑛𝑡 𝑅𝑎𝑡𝑖𝑜 = the debt of the company
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
because for every Peso of
15, 436,341 C.L. the company has a 2
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑅𝑎𝑡𝑖𝑜 =
6,823,926 Peso of C.A. The
company is solvent
𝐶𝑢𝑟𝑒𝑛𝑡 𝑅𝑎𝑡𝑖𝑜 = 2.26: 1 enough to meet current
obligations.

Debt Ratio A lower debt ratio

𝑇𝑜𝑡𝑎𝑙 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 usually implies a more
𝐷𝑒𝑏𝑡 𝑅𝑎𝑡𝑖𝑜 = stable business with the
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠
potential of longevity
6,823,926 because a company with
𝐷𝑒𝑏𝑡 𝑅𝑎𝑡𝑖𝑜 =
23, 064, 241 lower ratio also has lower
overall debt. So the
𝐷𝑒𝑏𝑡 𝑅𝑎𝑡𝑖𝑜 = 29.59% company can pay all the
liabilities because of its
assets
The Branch Manager,

Fresh Rural Bank

Dear Madam/Sir,

By means of this letter dispatch to you derive from Sweet Beginnings Co.
With a manifest path record of successful outcome in the management and
marketing of investment services. We be convinced by our healthy financial
position and has capacity to pay loans when due comes and would come up
with greatly regards to the continued success of our investment corporation.
This letter reflects an occupancy in investment banking traverse in 2O15,
2O16 and 2O17 for the past three years and give a demonstration proven
track record and remarkable experience. This will show the outcome from the
profit ratio that shows our ability of the company to pay the loans.

Thanks for considering our application. Please inform us what all documents
are required to initiate the process so that we can avail the loan at the earliest.

Sincerely,

Mr. Phil

Financial Manager of Sweet Beginnings Co.

 Sweet Beginnings Co.

Monthly Sales
Monthlly Sales for 2016

Month 2015 2016

January 1,361,240 1,633,488
February 2,035,060 2,442,072
March 3,008,340 3,610,008
April 6,193,650 8,051,745
May 10,617,680 13,802,984
June 13,449,060 17,483,778
July 12,475,770 15,594,713
August 6,282,130 7,852,663
September 3,539,230 4,424,038
October 3,008,340 3,760,425
November 2,388,980 2,986,225
December 1,946,570 2,433,213
Total 66,306,050 84,075,350
 Sweet Beginnings Co.

Conclusion
The company was performing well based on the budgets and
projections even though the budget decreased for a few months. It has been a
break even situation. Eventually, the company needs to have a stable budget to
be able to pay Ms. Muff's loans and will be able to sustain the company's
operation. The company has the chance to continuously grow in the near future
because the sales of the company is still growing however the operatiing
expenses of the company needs to decresed because it is too much to handle the
expensive operation of the company, so if the company wants a cash balanced if
they need it or it the company has a emergeny they can just provide it with the
cash of the company instead of getting a loan in the bank.
The Sweet Beginnings Co. is capable to pay a debt that will make to
Fresh Rural Bank. According to the current ratio which is 2.26: 1 is that the
company has the ability to pay off its short-term liabilities with its current
assets. The current ratio is an important measure of liquidity because short-term
liabilities are due within the next year. The other ratio is Debt Ratio which
shows the percentage of the total assets. In a sense, the debt ratio shows a
company’s ability to pay off its liabilities with its assets and the company’s
percentage is 29.59% which is good because a company with lower ratio also has
lower overall debt.

Income Statement and Balance Sheet makes the financial of the

company stable by giving the financial ratios of the company needed to calculate.
The Balance Sheet provide the company’s information where are the financial of
the company go and focus more on the capital management of the firm in terms
of both assets and structure. While the Income Statement provides the record of
the earned revenue and expenses of the company where the money is
came from and where is the money goes? The two statements make
the company know and analyze the performance of the company.
 Sweet Beginnings Co.

Methodology

The Cash Budget in the Sweet Beginnings Co. is made

because it allows a company to establish the amount of credit
that it can extend to customers without having problems with
liquidity. A cash budget helps avoid a shortage of cash during
periods in which a company encounters a high number of
expenses it was also made because they need to see why their
company has no cash balance when they need it. Statement of
financial position is made because the Fresh Rural Banks need
to see it for them to know that the Sweet Beginnings Co. Has
good records and are essential in obtaining credit. Bankers want
to see a balance sheet, income statement, and cash flow
statement before they loan money to any business.
Accurate financial records along with production data
are important in making decisions to obtain a loan. This was the
thing that the bank needs to see if the company is stable or it is
capable to pay all of the debt that will happen through the year.
 Sweet Beginnings Co.

Case Background

The company has been in the business industry since

2010 and we are constantly growing and our sales had grown an
annual rate of 18% in 2015. There is a delayed with our delivery
in our product because our company failed to pay the delivery
contractor so he pulled out all his delivery truck. Our company
needs to pay the delivery contractor so that the company will
reach the qouta for this month. Therefore, the company request
a loan appication so that we can reach our quota and we can
send our product and the financial manager need to preprare a
cash budget and a statement of financial position so that they
will presented the good condition of the company which the
Fresh Rural Bank will see that the company is capable to have a
debt and they will be able to pay the loan that they will get in
the bank.
 Sweet Beginnings Co.

Projected Income
Statement 2016

Income Statement 2016

Gross Sales 84,075,350
Cost of Goods 61,963,533
Gross Profit 22,111,817
Delivery Fees 2,522,261
Operating Expenses 5,044,521
Depreciation 989,600
Interest Expense 1,485,866
Pretax Profit 12,069,570
Income Tax 3,980,127
Net Profit 8,089,443
 Sweet Beginnings Co.

Projected Finacial
Position 2016
Financial Position 2016
Cash 640,000
Accounts Receivable 4,224,948
Inventories 1,076,000
Short Term Investments 9,495,393
Total Current Assets 15,436,341

Gross Plant, Property and Equipment 9,896,000

Accumulated Depreciation 2,268,100
Net PPE 7,627,900
Total Assets 23,064,241

Accounts Payable 5,189,351

Short Term Borrowings
Payable to PPE Suppliers 1,200,000
Accrued Taxes 434,575
Total Current Liabilities 6,823,926

Owner's Equity 16,240,315

Total Liabilities and Equity 23,064,241
 Sweet Beginnings Co.

Sales Forecast

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
Sales in 2015 1,361,240.00 2,035,060.00 3,008,340.00 6,193,650.00 10,617,680.00 13,449,060.00 12,475,770.00 6,282,130.00 3,539,230.00 3,008,340.00 2,388,980.00 1,946,570.00 66,306,050.00
Sales Forecast 2016 1,633,488.00 2,442,072.00 3,610,008.00 8,051,745.00 13,802,984.00 17,483,778.00 15,594,712.50 7,852,662.50 4,424,037.50 3,760,425.00 2,986,225.00 2,433,212.50 84,075,350.00
Sales Forecast 2017 1,960,185.60 2,930,486.40 4,890,672.00
 Sweet Beginnings Co.

Cash Budget 2016

`
Cash Budget Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
Cash Receipts from Collection 2,212,016.00 1,821,337.20 1,956,921.60 2,909,246.40 5,386,702.80 10,352,240.60 15,275,301.60 16,728,151.80 12,497,892.50 6,481,212.50 4,158,592.50 3,450,745.00 83,230,360.50
Less: Purchase of Raw Materials 1,985,504.40 4,428,459.75 7,591,641.20 9,616,077.90 8,577,091.88 4,318,964.38 2,433,220.63 2,068,233.75 1,642,423.75 1,338,266.88 1,078,102.08 1,611,767.52 46,689,754.10
Less: Purchase for Salaries and Wages 456,667.46 675,071.50 1,505,676.32 2,581,158.01 3,269,466.49 2,916,211.24 1,468,447.89 827,295.01 703,199.48 558,424.08 455,010.74 366,554.71 15,783,182.90
Less: Payment to Delivery Contractors 49,004.64 73,262.16 108,300.24 241,552.35 414,089.52 524,513.34 467,841.38 235,579.88 132,721.13 112,812.75 89,586.75 72,996.38 2,522,260.50
Less: Dividends Paid 450,000.00 450,000.00 450,000.00 450,000.00 1,800,000.00
Less: Income Tax Paid 1,321,900.20 363,834.79 1,862,284.92 1,319,432.67 4,867,452.58
Net Cash Flow (279,160.50) (3,355,456.21) (7,698,696.16) (10,851,442.06) (7,237,779.87) 2,142,551.65 10,905,791.71 11,734,758.24 9,569,548.15 4,471,708.80 1,216,460.26 949,426.40 11,567,710.42

Add: Beginning Cash 641,123.00 640,000.00 640,000.00 640,000.00 640,000.00 640,000.00 640,000.00 640,000.00 640,000.00 640,000.00 640,000.00 640,000.00 641,123.00
Less:Required Ending Balance (640,000.00) (640,000.00) (640,000.00) (640,000.00) (640,000.00) (640,000.00) (640,000.00) (640,000.00) (640,000.00) (640,000.00) (640,000.00) (640,000.00) (640,000.00)
Add: Return on Investment (12%) 26,747.05 71,731.61 84,613.53 183,092.19
Less: Interest Borrowing (16%) (7,834.33) (11,645.96) (56,540.65) (159,943.81) (306,762.29) (407,356.18) (384,220.25) (243,932.63) (90,721.62) (1,668,957.72)
Less: Repayment of Principal (1,735,195.46) (10,521,571.47) (11,490,825.62) (6,804,121.29) (587,575.00)
Add: Liquidation of Investment -
Required Financing (285,871.84) (3,367,102.16) (7,755,236.81) (11,011,385.87) (7,544,542.16) 0.00 (0.00) (0.00) -
Excess Cash 2,674,705.24 4,498,455.85 1,288,191.88 1,034,039.93 9,495,392.90

2016 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
Loan Balance - Beginning (587,575.00) (873,446.84) (4,240,549.00) (11,995,785.81) (23,007,171.68) (30,551,713.84) (28,816,518.38) (18,294,946.91) (6,804,121.29) (125,171,828.75)
Add: Required Financing (285,871.84) (3,367,102.16) (7,755,236.81) (11,011,385.87) (7,544,542.16) (29,964,138.84)
Less: Repayments 1,735,195.46 10,521,571.47 11,490,825.62 6,804,121.29 30,551,713.84
Loan Balance - Ending (873,446.84) (4,240,549.00) (11,995,785.81) (23,007,171.68) (30,551,713.84) (28,816,518.38) (18,294,946.91) (6,804,121.29) - (124,584,253.75)

2016 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
Investment Balance - Beginning 2,674,705.24 7,173,161.10 8,461,352.97 18,309,219.31
Add: Excess Cash 2,674,705.24 4,498,455.85 1,288,191.88 1,034,039.93 9,495,392.90
Less: Liquidation
Investment Balance - Ending 2,674,705.24 7,173,161.10 8,461,352.97 9,495,392.90 27,804,612.21
 Business Finance
Project

Temprosa, Christine Mae B.

Amorado, Jefrielynne Mae A.
Jaime, Jhamil
Rayos Del Sol, Andrea Ysabel
Natividad, Patricia
Solo, Janino
Zamora, Kurtney Gwen
Sanduyugan, Alexis