Performance Task

Instruction: Prepare the two cases following the case study outline given. Consider the Financial
Statement Analysis in the previous module given to you.
Case Study Outline:
1. Introduction – Write an introduction where you identify the key problem and make a
summary
2. Background Information – Include some relevant facts and issues and conduct research
on the problem.
3. Alternatives – Describe several alternatives and explain why some were rejected.
Describe existing constraints and explain why some alternatives were rejected.
4. Solution – Provide one realistic solution to the problem, explain the reasons behind the
proposed solution, support this solution with justification, include relevant theoretical
concepts in addition to the results of your research.
5. Recommendations – Identify specific strategies to accomplish the proposed solution,
recommend further actions, outline an implementation plan
CASE ANALYSIS I
The case study analyzes the finance expansion with a tight cash position. Anthony Cruz
whom the owner of Zapatoes, Inc., which is a Filipino shoe manufacturer, is considering
producing the shoes at the Zapatoes, Inc. factory in order to reduce manufacturing costs. Since its
starting point in 2009, his firm has enjoyed significant development because it has a rising
demand for the goods. He is also thinking of expanding his operations by building his own
manufacturing plant which he currently pays another firm to make the shoes he designs.
Moreover, the firm needs 10 million pesos to fund this growth and is now cash-strapped.
Mr. Anthony Cruz, the owner, is currently contemplating how to raise the necessary funds. The
first choice is to invite an investor while the second choice is personally borrowing from a bank.
In 2013, Zapatoes, Inc. sold 3,300 pairs, 4,500 pairs in 2014, and 6,200 pairs in 2015. With the
brand's target demographic whom the young entrepreneurs and undergraduates, it can only offer
at a price range of P1,000 to P2,000 each pair.
Mr. Anthony wonders if owning his own manufacturing facility will actually enhance its
profitability. Currently, he sells his shoes for P475 each pair. He anticipates that if he
manufactures it himself, he would be able to reduce manufacturing costs to as little as P300 per
pair. Opening a new production plant, on the other hand, will raise operational expenditures
(including depreciation) by 30% which is approximately (P2,350,000+P705,000 = P3,055,000)
Currently, marketing and distribution costs account for the majority of his operational expenses.
The alternatives Mr. Cruz has three. The first one is to accept a P10 million equity
investment from Alex, his buddy whom Alex will have 45 percent ownership of the company
after that. Alex does not specify what he expects in return. The second time is where Shortime
Bank offering a one-year loan for P10 million at a rate of 6% per year. Lastly, Longly Bank
whom the extended 5-year loan will be available for P10 million at a rate of 10% per year.
The first alternative has a great opportunity though 45% is so much for a friend. With the
statement of Financial Position in 2015, we assume that the 45% of P2,570,000, the P1,156,500
would be given to Mr. Alex. It is half of the net income. The second alternative has a future
value of P10,600,000 using the simple interest calculation (P10,000,000(1+0.06) = P10,600,000)
if the Shortime Bank offering a one-year loan for P10 million at a rate of 6% per year. The third
option has a future value of P 16,105,100 using the compound interest calculation
(P10,000,000(1+0.1)5 = P 16,105,100) if the Longly Bank whom the extended 5-year loan will
be available for P10 million at a rate of 10% per year.
Hence, Mr. Anthony Cruz, the owner should choose the Shortime Bank for it has only
Loans Payable of P10,600,000 which has P600,000 of interest and P10,000,000 as the principal
loan.
CASE ANALYSIS II

The case study analyzes the finance of Chloe Mendez which her bank account has only
has a P67,000 balance. Chloe Mendez is the owner of Chloe's Closet, a clothing store. She has a
staff of stylists that work 8 hours a day, Monday through Saturday. Her firm is in high demand,
but something appears to be stopping her from reaching her clients' expectations. Under the
name Chloe's Closet, Chloe sells to both large department shops and tiny boutique stores. Some
companies also ask her to produce their own designs.
Moreover, Chloe's enterprise has been successful since its inception in 2014. In fact,
despite stiff competition from lower-cost producers in other countries, she continues to expand
her client base. She got a billing statement from a raw material supplier for PHP400,000 on
December 4, 2015, which is due in 5 days. She is also planning to pay her employees' monthly
wage of PHP70,000 the next day. Her bank account only has a PHP67,000 balance, according to
a check. She is aware that she exceeded her sales objective in October and November of last
year, so she is perplexed as to why she only has this amount of cash in her bank account.
There are some reasons why she only has this amount of cash in her bank account. First,
the Statement of Financial Position with their “TOTAL ASSETS”. There may be an error in
encoding the data. The second is the “TOTAL EQUITY & LIABILITIES” which has a great
difference.

Accounts Payable 400,000 500,000

Salaries Payable 150,000 150,000
Total Liabilities 550,000 650,000
Capital Stock 200,000 200,000
Accumulated Profit 1,600,000 1,320,000
Total Equity 1,800,000 1,520,000
TOTAL EQUITY & LIABILITIES 2,350,000 2,170,000

Lastly, the problem would be on which be the best realistic solution to the problem that
explains the reasons behind the proposed solution is vague unlike the first case analysis that the
best option is selected. On this case analysis, there is incomplete data and details that can support
the solution with justification. It is because the statement of the problem has the total amount of
cash in the bank account, thereby insufficient.
Therefore, there are relevant theoretical concepts wherein there may be a foul play in the
company that may also be in addition to confusion of the bank account statements.