CHAPTER V
FINANCIAL FEASIBILITY
The financial aspect of the project feasibility study quantifies the results of the
marketing, technical, management, taxation and legal phase of the project study and
expresses in peso terms the possible outcome of operating the project.
Capital Requirement
Major Assumptions
Sales increase by 3% annually
Cost Of Goods Sold (COGS) increase by 5% annually
Depreciation method is straight line method
Marketing expense is ₱650.00
Annual Rent expense is ₱67,200.00
Annual Permits and license is ₱5,000.00
Tax is 3%
Sales
Palabo Sellin Quantit Daily Monthly Year 1 Year 2 Year 3
k Size g y sales sales
Price
Small 1,250.0 30,000.0 360,000.0 370,800.0
25 50 381,924.00
0 0 0 0
Mediu 1,050.0 25,200.0 302,400.0 311,472.0
35 30 320,816.16
m 0 0 0 0
Large 1,000.0 24,000.0 288,000.0 296,640.0
50 20 305,539.20
0 0 0 0
Total 950,400.0 978,912.0 1,008,279.3
0 0 6
Cost Of Goods Sold
Monthly
Particular % used Year 1 Year 2 Year 3
Cost
Raw materals 100% 15,000 180,000 189,000 198,450
Direct labor 9,600.00 115,200.00 115,200.00 115,200.00
electricity 60% 450.00 5,400.00 5,670.00 5,953.50
water 80% 320.00 3,840.00 4,032.00 4,233.60
packaging 100% 4,925.00 59,100.00 62,055.00 65,157.75
Lpg 80% 960.00 11,520.00 12,096.00 12,701.80
Total 30,990.00 375,060.00 388,053.00 401,696.65
Depreciation
Year 1 Year 2 Year 3
15,998.05 31,996.10 47,994.15
Marketing Expense
Particular Cost Quantity Total Cost
Tarpaulin 250.00 1pc 250.00
Flyers 2.00 200pcs 400.00
Total 650.00
Total Project Cost
Particulars Projected expense
Government license and Permit ₱5,000.00
Marketing Expense ₱650.00
Cost of building ₱12,235.00
Equipment ₱60,248.00
Supplies ₱1,815.00
Utilities ₱2,350.00
Rent ₱5,600.00
Packaging ₱4,925.00
Raw Materials ₱15,000.00
TOTAL CAPITAL REQUIREMENT ₱107,823.00
Government license and Permit
Particular Annual Cost
BIR Registration fee 500.00
Business permit 3,000.00
Sanitary permit 1,500.00
Total 5,000.00
Cost of Building
Particular Cost
Cost of building 8,860.00
Labor (3) 3,375.00
Total 12,235.00
Salaries
Employee Daily Monthly Year 1 Year 2 Year 3
Cook 400.00 9,600.00 115,200.00 115,200.00 115,200.00
Service 375.00 9,000.00 108,000.00 108,000.00 108,000.00
crew
Cashier 375.00 9,000.00 108,000.00 108,000.00 108,000.00
Total 1,150.00 27,600.00 331,200.00 331,200.00 331,200.00
Utilities
Particular Monthly Cost Annual cost
LPG 1,200.00 14,400.00
Water 400.00 4,800.00
Electricity 750.00 9,000.00
Total 2,350.00 28,200.00
Utilities Expense
Monthly
Particular % excess Year 1 Year 2 Year 3
cost
LPG 20% 240.00 2,880.00 2,880.00 2,880.00
Electricity 40% 300.00 3,600.00 3,600.00 3,600.00
Water 20% 80.00 960.00 960.00 960.00
Total 620.00 7,440.00 7,440.00 7,440.00
Packaging
Particular Price per bundle Quantity Monthly Cost Annual Cost
Cardboard box 120.00 20 2,400.00 28,800.00
Wooden fork 70.00 20 1,400.00 16,800.00
Paper bag 75.00 15 1,125.00 13,500.00
Total 4,925.00 59,100.00
Rent Expense
Particular Monthly Cost Annual Cost
Rent 5,600.00 67,200.00
Total 5,600.00 67,200.00
Equity and Credit Needs
Yumpy Palabok will acquire capital through equity and credit needs. The business
partners will provide an initial capital of ₱107,823.00 to be used in the pre-operating period
of the business. Each Partner will contribute ₱35,941.00 to meet the capital requirements
needed of the business. The partners’ personal fund and loan will be the equity sources of the
business.
Income and Cost Analysis
Statement of Comprehensive Income
Yumpy Palabok
Income Statement
As the Period as Indicated
Year 1 Year 2 Year 3
Sales 950,400.00 978,912.00 1,008,279.36
Cost Of Goods Sold 375,060.00 388,053.00 401,696.65
Gross Margin 575,340.00 590,859.00 606,582.71
Operating Expenses:
Supplies Expense 21,780.00 21,780.00 21,780.00
Salaries Expense 216,000.00 216,000.00 216,000.00
Utilities Expense 7,440.00 7,440.00 7,440.00
Rent Expenses 67,200.00 67,200.00 67,200.00
Marketing Expense 650.00 650.00 650.00
Permit and License
5,000.00 5,000.00 5,000.00
Expense
Depreciation Expense 15,998.05 15,998.05 15,998.05
Total Operating Expenses 334,068.05 334,068.05 334,068.05
Income before tax 241,271.95 256,790.95 272,514.66
Percentage Tax 7,238.16 7,703.73 8,175.44
Net Income 234,033.79 249,087.22 264,339.22
Table 25. Statement of Comprehensive Income
Statement of Cash Flow
Yumpy Palabok
Statement of Cash Flow
As the Period as Indicated
Year 1 Year 2 Year 3
Cash Flow from Operating
Activities
Cash Generated from Operations 234,033.79 249,087.22 264,339.22
Add: Depreciation Expense 15,998.05 15,998.05 15,998.05
Net Cash Flow from Operating
250,031.84 265,085.27 280,337.27
Activities
Cash Flow from Investing
Activities
Purchase of Equipment (21,119.00)
Purchase of furniture and fixture (25,962.00)
Purchase of utensils (13,167.00)
Net Cash Flow from Investing
(60,248.00)
Activities
Cash Flow from Financing
Activities
Partners Investment 107,823.00
Net Cash Flow from Financing
107,823.00
Activities
Net (Decrease)/Increase in Cash 297,606.84 265,085.27 280,337.27
Cash at the Beginning of the Period - 297,606.84 562,692.11
Cash at End of the Period ₱297,606.84 ₱562,692.11 ₱843,029.38
Table 26. Statement of Cash Flow
Statement of Changes in Partner’s Equity
Yumpy Palabok
Statement of Changes in Partner’s Equity
As the Period Indicated
Year 1 Year 2 Year 3
Beginning Capital 341,856.79 590,944.01
Partner’s Investment
Partner 1 35,941.00
Partner 2 35,941.00
Partner 3 35,941.00
Total Partner’s Investment 107,823.00
Net Income (loss) 234,033.79 249,087.22 264,339.22
Withdrawal 0 0 0
Ending Capital ₱341,856.79 ₱590,944.01 ₱855,283.23
Table 28. Statement of Changes in Owner’s Equity
Statement of Financial Position
Yumpy Palabok
Statement of Financial Position
As the Period Indicated
ASSETS Year 1 Year 2 Year 3
Cash 297,606.84 562,692.11 843,029.38
Equipment 60,248.00 60,248.00 60,248.00
Accumulated Depreciation -
(15,998.05) (31,996.10) (47,994.15)
Equipment
TOTAL ASSETS ₱341,856.79 ₱590,944.01 ₱855,283.23
LIABILITIES
Accounts Payable 0 0 0
PARTNER’S EQUITY
Partner 1 113,952.26 196,981.34 285,094.41
Partner 2 113,952.26 196,981.34 285,094.41
Partner 3 113,952.26 196,981.34 285,094.41
Total Partner’s Equity 341,856.79 590,944.01 855,283.23
TOTAL LIABILITIES AND
₱341,856.79 ₱590,944.01 ₱855,283.23
PARTNER’S EQUITY
Table 27. Statement of Financial Position
Financial Analysis
Return on Investment
Year 1 Year 2 Year 3
Net Income After Tax/ 234,033.79 249,087.22 264,339.22
Total Cost 916,646.21 932,630.78 948,826.20
26% 27% 28%
Net Profit Margin
Year 1 Year 2 Year 3
Net Income After Tax/ 227,002.50 245,355.87 274,446.42
Sales 950,400.00 979,200.00 1,008,000.00
25% 25% 26%
