CHAPTER IV

FINANCIAL STUDY

INTRODUCTION

The financial study of a proposed product is very important part

to determine the feasibility of the project. This portion determines

the profitability level of our project; it is generally defined as the

relationship of the net income after taxes to the total investment.

This portion shows, in specific terms, whether the project will

be profitable even with the existing competition and unfavorable

economic conditions. It also presents the detailed figure to show the

improvement of the project’s financial condition.

RETURN OF INVESTMENT

Return on investment (ROI) is a performance measure used to

evaluate the efficiency or profitability of an investment or compare

the efficiency of a number of different investments. ROI tries to

directly measure the amount of return on a particular investment,

relative to the investment’s cost.

To calculate ROI, the benefit (or return) of an investment is

divided by the cost of the investment. The result is expressed as a

percentage or a ratio.

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PAYBACK PERIOD

Payback period it means in how long/years the initial investment

capital in a project will returns to the firm by the annual cash flow

it will provide.

SCHEDULE 1: BUILDING IMPROVEMENT

DESCRIPTION AMOUNT
BUILDING IMPROVEMENTS 200,000.00
TOTAL COST 200,000.00

SCHEDULE 2: PRODUCTION EQUIPMENT AND MACHINERIES

TOTAL COST OF EQUIPMENT PRICE
STORAGE TANK ₱528,000

AGITATOR MOTOR ₱150,000

EGG BREAKING MACHINE ₱20,000

₱250,000
REFRIGERATOR
₱85,000
PRE-EMUSION TANK
TOTAL ₱823,000.00

SCHEDULE 3: OFFICE FURNITURE AND EQUIPMENT

DESCRIPTION QUANTITY UNIT COST TOTAL COST
COMPUTER 5 unit 25,000.00 125,000.00
OFFICE CHAIR 20 pieces 1,200.00 24,000.00
AIR-CONDITION UNIT 2 unit 25,000.00 50,000.00
OFFICE TABLE 15 units 3,000.00 45,000.00

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WATER DISPENSER 3 units 2,000.00 6,000.00
PRINTER W/ SCANNER 2 units 15,000.00 30,000.00
CABINET 4 unit 3,000.00 12,000.00
FIRE EXTINGUISHERS 10 unit 1,300.00 13,000.00
TOTAL 305,000.00

SCHEDULE 4: VEHICLE EXPENSE

DESCRIPTION QUANTITY UNIT COST TOTAL COST

(PHP)
DELIVERY TRUCK 3 1,300,000.00 3,900,000.00
CART WHEEL 5 2,500.00 12,500.00
TOTAL COST   3,912,500.00

SCHEDULE 5: PRE-OPERATING EXPENSE

DESCRIPTION MONTHS PRIOR TO AMOUNT TOTAL AMOUNT

OPERATION
UTILITIES 3 4,571.17 13,713.51
HIRING 1 5,000.00 5,000.00
SAMPLES 2 4,000.00 8,000.00
ADVERTISING EXPENSE 1 5,000.00 5,000.00
SALARIES 1 5,000.00 5,000.00
LICENSE AND PERMIT     5,550.00
TOTAL     42,263.51

SCHEDULE 6: INSURANCE EXPENSE

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 FIXED ASSET TOTAL COST
MACHINE/EQUIPMENT 800,000.00
VEHICLE 300,000.00
TOTAL 1,100,000.00
ANNUAL COST 22,000.00

P 1,100,000 X 2%

3 MONTHS = 1,833.33
YEARLY = 22,000.00

SCHEDULE 7: REPAIR AND MAINTENANCE

FIXED ASSET TOTAL COST
MACHINE/EQUIPMENT 250,000.00
OFFICE EQUIPMENT 20,000.00
VEHICLE 150,000.00
TOTAL 420,000.00
ANNUAL COST = 420,000.00 X 1% 4,200.00

3 MONTHS = 350.00
YEARLY = 4,200.00

SCHEDULE 8: RENT EXPENSES

DESCRIPTION AREA (SIZE) RATE/SQ METER TOTAL COST
RENT FOR 10000 5.00 50,000.00

LAND/BUILDING
TOTAL     50,000.00

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 3 MONTHS = 150,000.00
YEARLY = 600,000.00

SCHEDULE 9: DIRECT SUPPLIES

YEAR 2021
DESCRIPTION QUANTITY REQ’T/YEAR AMOUNT TOTAL AMOUNT
PLASTIC WRAPPER 1 1687 40.00 67,480.00
SPRAY PAINT 2 3374 300.00 1,012,200.00
SCREWS 10 16870 0.50 8,435.00
FIBER GLASS 1 1687 900.00 1,518,300.00

(CASING)
SOLAR PANEL 1 1687 2,100.00 3,542,700.00
COIN SLOT W/ 2 3374 400.00 1,349,600.00

TIMER
RELAY 1 1687 100.00 168,700.00
HINGES 4 6748 30.00 202,440.00
ALUMINUM STEEL 1 1687 2,500.00 4,217,500.00
WIRE 2 3374 10.00 33,740.00
TOTAL (YEARLY)     6,380.50 12,121,095.00

3 Months = 3,030,273.75

SCHEDULE 10: INDIRECT SUPPLIES

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 YEAR 2014
DESCRIPTION QUANTITY REQ’T/YEAR AMOUNT TOTAL

AMOUNT
PLASTIC WRAPPER 15 m 73,875 m 300.00 73,800.00

(246pcs)
TOTAL       73,800.00

Note: Each Plastic Wrapper has 300 m and costs P300

3 Months = 18,450.00
Yearly = 73,800.00

SCHEDULE 11: SALARIES AND WAGES

INDIRECT LABOR
INDIRECT QUANTITY RATE/ WORKING MONTHLY YEARLY

LABOR DAY DAYS/

YEAR
MARKETING 1 450.00 241 9,037.50 108,450.00

SUPERVISOR
ACCOUNTANT 1 350.00 241 7,029.17 84,350.00
HR 1 330.00 241 6,627.50 79,530.00
TECHNICIAN 2 350.00 241 14,058.33 168,700.00
INSTALLER 2 350.00 241 14,058.33 168,700.00
DRIVER 1 300.00 241 6,025.00 72,300.00
GUARD 2 330.00 241 13,255.00 159,060.00
JANITOR 1 300.00 241 6,025.00 72,300.00
TOTAL       76,115.83 913,390.00

(YEARLY)

3 MONTHS = 228,347.50
DIRECT LABOR
DIRECT LABOR QUANTITY RATE/ WORKING MONTHLY YEARLY

DAY DAYS/

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 YEAR
MANAGER 1 500.00 241 10,041.67 120,500.00
PRODUCTION 1 470.00 241 9,439.17 113,270.00

OFFICER
PRODUCTION 10 320.00 241 64,266.67 771,200.00

OPERATOR
TOTAL       83,747.50 1,004,970.

(YEARLY) 00

3 MONTHS = 251,242.50

SCHEDULE 12A: SSS CONTRIBUTION (2021)

    SALARY SSS CONTRIBUTION
    SSS E TOTAL ANNUAL

C
INDIRECT N MONTH ANNUALLY ER EE E    

LABOR O LY R

.
MARKETING 1 9,037 108,450. 663.0 327.00 1 1,000.0 12,000.0

SUPERVISO .50 00 0 0 0 0

R
ACCOUNTAN 1 7,029 84,350.0 515.7 254.30 1 780.00 9,360.00

T .17 0 0 0
HR 1 6,627 79,530.0 515.7 254.30 1 780.00 9,360.00

.50 0 0 0
TECHNICIA 2 14,05 168,700. 1178. 581.40 2 1,780.0 21,360.0

N 8.33 00 60 0 0 0

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INSTALLER 2 14,05 168,700. 1178. 581.40 2 1,780.0 21,360.0

8.33 00 60 0 0 0
DRIVER 1 6,025 72,300.0 478.8 236.20 1 725.00 8,700.00

.00 0 0 0
JANITOR 1 6,025 72,300.0 442.0 218.00 1 670.00 8,040.00

.00 0 0 0

ANNUALLY TOTAL INDIRECT LABOR OF SSS 90,180.00

SCHEDULE 12A: SSS CONTRIBUTION (2021)

    SALARY SSS CONTRIBUTION
    SSS EC TOTAL ANNUAL
DIRECT N MONTH ANNUALLY ER EE ER    

LABOR O LY

.
MANAGER 1 10,04 120,500. 736.7 363.3 10 1,110. 13,320.00

1.67 00 0 0 00
PRODUCTIO 1 9,439 113,270. 699.8 345.2 10 1,055. 12,660.00

N OFFICER .17 00 0 0 00
PRODUCTIO 1 64,26 771,200. 5157. 2543. 100 7,800. 93,600.00

N 0 6.67 00 00 00 00

OPERATOR
TOTAL               119,580.0

ANNUALLY TOTAL DIRECT LABOR OF 119,580.00

SSS =
3 MONTHS TOTAL OF SSS = 29,895.00

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 SCHEDULE 12B: PHIL-HEALTH (INDIRECT LABOR)
DESCRIPTION AMOUNT
MARKETING SUPERVISOR 100.00
ACCOUNTANT 100.00
HR 100.00
TECHNICIAN 200.00
INSTALLER 200.00
DRIVER 100.00
JANITOR 100.00
TOTAL 900.00

3 MONTHS = 2,700.00
YEARLY = 10,800.00
SCHEDULE 12B: PHIL-HEALTH (DIRECT LABOR)  
DESCRIPTION AMOUNT
MANAGER (1) 100.00
PRODUCTION OFFICER (1) 100.00
PRODUCTION OPERATOR (10) 1,000.00
TOTAL 1,200.00

3 MONTHS = 3,600.00
YEARLY = 14,400.00

SCHEDULE 13: UTILITIES EXPENSE

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 GENERAL LIGHTING POWER CONSUMPTION (kW/hr)
PRODUCTION AREA 0.4
EXECUTIVE DEPARTMENT 0.08
CONFERENCE ROOM 0.12
FINANCE DEPARTMENT 0.08
H.R. DEPARTMENT 0.12
ENGINEERING/MAINTENANCE DEPARTMENT 0.16
STOCK AREA 0.2
REST AREA 0.08
COMFORT ROOM IN PRODUCTION AREA 0.16
COMFORT ROOM IN OFFICE 0.03
LOCKER ROOM 0.16
HALLWAY 0.12
PATHWAY 0.2
GUARD HOUSE 0.02
TOTAL GENERAL LIGHTING LOAD 1.93 kW

MACHINERIES AND EQUIPMENT POWER CONSUMPTION (kW/hr)

REFRIGERATOR 71.41
AGITATOR MOTOR 16
EGG BREAKING MACHINE 5.316
COMPUTER UNIT 2.316
WATER DISPENSER 0.5
PRINTER W/ SCANNER 0.78
TOTAL MACHINERIES/EQUIPMENT LOAD 96.32 kW

MAXIMUM POWER CONSUMPTION 96.32

A.    MAXIMUM DEMAND FACTOR (DEMAND 85% x 96.32 kW

FACTOR X CONNECT LOAD)

  81.87 kWh
B.    AVERAGE DEMAND (LOAD FACTOR X 45% x 81.87 kWh

MAXIMUM DEMAND)
  36.84 kWh
DEMAND (KWH/MONTH) (36.84 kWh x 9 hrs/day) x

24days/month
  7958.12 kWh/month

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GENERATION CHARGE / KWH P 5.3105/kWh
GENERATION CHARGE 7958.12 kWh/month x

P 5.3105/kWh
  42261.62
TOTAL DISTRIBUTION CHARGE 144.73
WATER CONSUMPTION (MONTHLY) 1023
TOTAL MONTHLY BILL 43429.34559

3 MONTHS UTILITIES EXPENSES = 130288.0368

YEARLY DEMAND = 521152.1471

SCHEDULE 14: TRANSPORTATION (GAS, GASOLINE) EXPENSE

DESCRIPTION QUANTITY UNIT COST TOTAL COST
ESTIMATED FUEL 95 48.75 4,631.25

CONSUMPTION/MONTH
TOTAL     4,631.25

3 MONTHS EXPENSES = 13,893.75

YEARLY = 55,575.00

SCHEDULE 15: OFFICE SUPPLIES

DESCRIPTION QUANTITY COST PER UNIT TOTAL COST
BOND PAPER (RIM) 5 150.00 750.00
CLIP (BOX) 4 30.00 120.00
LOGBOOK 3 50.00 150.00
PENCIL (BOX) 10 30.00 300.00
SCISSORS 3 120.00 360.00
RECEIPT 12 100.00 1,200.00
SCOTCH TAPE 6 16.00 96.00
STAPLE WIRE (BOX) 15 36.00 540.00

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BALL PEN (RED, BLACK) 2 (25 pcs.) 50.00 100.00

(BOX)
STAPLER 4 65.00 260.00
ENVELOPE (BUNDLE) 5 36.00 180.00
TAPE DISPENSER 3 70.00 210.00
TRASHCAN 3 80.00 240.00
WHITE BOARD 1 350.00 350.00
WHITE BOARD MARKER 6 36.00 216.00
OTHERS     4,000.00
TOTAL COST     9,072.00

3 MONTHS = 2,268.00
YEARLY OFFICE SUPPLIES = 9,072.00

SCHEDULE 16: COMMUNICATION EXPENSES

DESCRIPTION COST
PHONE/INTERNET BILL 2,500.00
TOTAL (2 TELEPHONE) 2,500.00

3 MONTHS EXPENSES = 7,500.00

YEARLY EXPENSES = 30,000.00

SCHEDULE 17: CLEANING MATERIALS

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 ITEMS QUANTITY UNIT COST TOTAL COST

(PHP)
BROOM (TAMBO) 2 50.00 100.00
BROOM (TINGTING) 2 15.00 30.00
CLEANING DETERGENTS 10 10.00 100.00
DUST PAN 3 30.00 90.00
FLOOR MAT 10 10.00 100.00
FLOOR MOP 2 150.00 350.00
TRASH CAN 5 50.00 250.00
BRUSH 2 20.00 40.00
TOTAL COST     1,060.00

SCHEDULE 18: UNIFORM EXPENSES

DESCRIPTION QUANTITY AMOUNT TOTAL AMOUNT
UNIFORM 28 180.00 P 5,040.00
PROPER PROTECTIVE EQUIPMENT (DIRECT LABOR)
MASK 23 5.00 115.00
GOGGLES 23 50.00 1,150.00
GLOVES 23 30.00 690.00
TOTAL     6,995.00

Note: Guards has their own uniform

SCHEDULE 19: LICENSE AND PERMIT

DESCRIPTION AMOUNT
MUNICIPAL FEE 3,000.00
MUNICIPAL TAX 1,300.00
SANITARY FEE 50.00
HEALTH CERTIFICATE FEE 100.00
GARBAGE COLLECTOR 600.00
BARANGAY PERMIT 150.00
PENALTY 350.00
TOTAL 5,550.00

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 PROJECTED COST
FIXED ASSETS SCHEDULE    
BUILDING IMPROVEMENTS 1 250,000.00  
PRODUCTION EQUIPMENT 2 34,370.00  

AND MACHINERIES
OFFICE FURNITURE AND 3 85,250.00  

EQUIPMENT
VEHICLE EXPENSE 4 408,800.00  
TOTAL   778,420.00  
      778,420.00
PRE-OPERATING COST 5 42,263.51  
TOTAL     42,263.51
WORKING CAPITAL (3      

MONTHS)
RAW MATERIALS 9 3,030,273.75  
DIRECT LABOR 11 251,242.50  
INDIRECT MATERIALS 10 18,450.00  
INDIRECT LABOR 11 228,347.50  
LIGHT AND WATER 13 38,778.97  
SSS/PHIL HEALTH 12 119,580.00  
RENT EXPENSE 8 75,000.00  
INSURANCE EXPENSE 6 2,215.85  
REPAIR AND MAINTENANCE 7 1,321.05  

EXPENSES
TRANSPORTATION EXPENSE 14 13,893.75  
OFFICE SUPPLIES 15 2,268.00  

EXPENSE
COMMUNICATION EXPENSE 16 9,000.00  
MAINTENANCE SUPPLIES 18 1,060.00  
LICENSE AND PERMIT 20 5,550.00  

EXPENSES
UNIFORM EXPENSE 19 6,995.00  
TOTAL   3,806,476.37 3,806,476.37

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TOTAL     4,627,159.88

3 MONTHS PROJECTED COST = 1,156,789.97

YEARLY PROJECTED COST = 4,627,159.88

SCHEDULE 20: DEPRECIATION (STRAIGHT LINE METHOD)

DESCRIPTION Co Ci L DEPRECIATION
MACHINE AND 34,370.00 3,437.00 15 2,062.20

EQUIPMENT
VEHICLE 408,800.00 40,880.00 5 73,584.00
OFFICE EQUIPMENT 85,250.00 8,525.00 10 7,672.50
TOTAL       83,318.70

SCHEDULE 21: FACTORY OVERHEAD BUDGET

DESCRIPTION 2021 2022 2023 2024 2025
INDIRECT LABOR 72,300.00 73,746.00 75,220.92 76,725.34 78,259.85
INDIRECT 73,800.00 75,276.00 76,781.52 78,317.15 79,883.85

MATERIALS
TRANSPORTATION 55,575.00 56,686.50 57,820.23 58,976.63 60,156.17

EXPENSE
UTILITIES 933998.35 934998.35 937998.35 939998.35 943998.35

EXPENSE
OFFICE SUPPLIES
SSS/PHILHEALTH
REPAIR AND

MAINTENANCE
DEPRECIATION
13TH MONTH PAY
TOTAL FACTORY

HEAD

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 2020

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 BALANCE SHEET

LIABILITIES AMOUNT ASSETS AMOUNT

BUILDING IMPROVEMENT 200,000 LAND & BUILDING 420,000

RESERVES & SURPLUS 3,912,500 PLANT & MACHINERIES 823,000

OUTSTANDING EXPENSES 42,263.51 FURNITURE 305,000

INSURANCE 22,000 STOCK 12,121,095.00

INDIRECT SUPPLIES 73,800 SALARIES AND WAGES 913,390

TOTAL AMMOUNT 18,834,048.51

80