TRES CHICC CAFE

FEASIBILITY STUDY TITLE TYPEWRITTEN IN

INVERTED PYRAMID, 14-POINT, ARIAL,
BOLD, AND ALL CAPS

A Feasibility Study
Presented to the Faculty of the College of Business Administration
Abe International Business College,
Urdaneta City, Pangasinan

In Partial Fulfillment of the Requirements for the Degree

Bachelor of Science in Business Administration

By

Ashleigh Nicole E. Alipio

Kaitlin Juneau L. Valdez
Aira Joy P. Samoy

April 2022

i
 TABLE OF CONTENTS

PROJECT BACKGROUND AND HISTORY....................................................................1

Introduction............................................................................................................................. 1
Name and Address of Project Promoter..................................................................................1
Profile of the Business............................................................................................................1
Products and Services............................................................................................................2
Short Term and Long Term Goals...........................................................................................3
Target Market.......................................................................................................................... 4
Economic and Industrial Policies Supporting the Project.........................................................4

MANAGEMENT FEASIBILITY.........................................................................................6
Introduction............................................................................................................................. 6
Legal Structure of the Business..............................................................................................6
Organization Chart..................................................................................................................6
Job Descriptions, Duties and Responsibilities.........................................................................7
Employee Benefits.................................................................................................................. 7

MARKET FEASIBILITY....................................................................................................9
Introduction............................................................................................................................. 9
Demand Analysis.................................................................................................................... 9
Supply Analysis....................................................................................................................... 9
Sales Forecast...................................................................................................................... 10
Marketing Strategy................................................................................................................ 10
Marketing Plan...................................................................................................................... 11

TECHNICAL FEASIBILITY.............................................................................................12
Introduction........................................................................................................................... 12
Physical Location.................................................................................................................. 12
Floor Plan (Layout)................................................................................................................ 12
Description of Products and Services....................................................................................12
Technology Requirements....................................................................................................13
Machines and Equipment......................................................................................................13
Production Process............................................................................................................... 13
Production Schedule............................................................................................................. 13
Inventory Schedule............................................................................................................... 14
Product Delivery.................................................................................................................... 14
Manpower Requirement........................................................................................................14
Project Timetable (Gantt Chart)............................................................................................14

FINANCIAL FEASIBILITY..............................................................................................16
Introduction........................................................................................................................... 16
Start-Up Costs...................................................................................................................... 16
Capital Requirement............................................................................................................. 18
Loan Repayment Schedule...................................................................................................18
Sales Forecast...................................................................................................................... 19
Cost of Sales......................................................................................................................... 19

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 Operating Expense Forecast.................................................................................................19
Projected Income Statement.................................................................................................19
Statement of Financial Position.............................................................................................20
Cash Flow Statement............................................................................................................ 20
Financial Ratios.................................................................................................................... 20
Liquidity Ratios................................................................................................................. 20
Leverage Financial Ratios................................................................................................21
Efficiency Ratios............................................................................................................... 21
Profitability Ratios............................................................................................................. 22

SOCIO-ECONOMIC FEASIBILITY.................................................................................23
Introduction........................................................................................................................... 23
Contribution to the government.............................................................................................23
Contribution to the society.....................................................................................................23

iii
 Chapter 1

PROJECT BACKGROUND AND HISTORY

Introduction

Tres Chicc Café is a micro business owned and managed by a students. It is

located at Zone 4,190 Tomana west Rosales Pangasinan.

The idea to establish Tres Chicc Café from general interest of 3 students who are
looking to be challenged themselves. Starting from individual favorite, our group decides
to make a take-out milk-tea business plan which is mostly famous in Asia and combine
with new flavors from other countries. We hope we can bring convenience to
consumers. Besides that we also hope with new processing formula, milk-tea not only a
beverage but also nutrition drink for all ages, from kindergarten to workers or employees
working in large firms.

Name and Address of Project Promoter

NAME ADDRESS
Ashleigh Nicole E. Alipio Tomana West Rosales, Pangasinan
Kaitlin Juneau L. Valdez Pilar Sta. Maria Pangasinan
Aira Joy P. Samoy Artacho Bautista, Pangasinan

Profile of the Business

Our business is called Tres Chicc café and is located in Zone 4, Tomana West
Rosales, Pangasinan with our brand name “Leaf n’ Milk”.

The picture below shows our location.

4
  Mission

Our Mission is to provide our customers with the best tasting Milk tea. At Tres Chick
Café, we stay to our word by always providing the best quality experience, customer
service, and tea.

 Vision

Our goal is to provide the best quality tea experience for our customers. Tres Chicc
Café wants to continue the trend of providing beverage options and by combining
drinking excellent teas with their daily lifestyle. We want to change the way people see
and think about tea, one cup at a time.

Products and Services

Our products and services offerings are listed below:

 We offer Small, Medium and Large Milk tea
 We also offer Small, Medium and Large for Fries
 The main product is milk tea with delicious taste.
 Customers can chose how many percentage of ice and sugar (25% - 50% -
75%).

5
  We apply hygienic and best quality services. In adition, there will have delivery
Milk tea service for bulk buyer.

 We always look for feedback, take into account and always be better and better.  
 See the potential demand on the market, try new flavours, make a comparison of them
and see what the preference by customers is.

MILK TEA FRIES

FLAVORS
Taro Milktea Cheese
Dark Choco Milktea Sour Cream
Okinawa Milk tea BBQ
Mango Cheesecake Milk tea
Cookies and Cream Milktea
Red Velvet Milktea
Matcha Milktea
Hazelnut Milktea

Short Term and Long Term Goals

Short Term

Our short term goals of our business in the next 6-12 months are:
 Improve our menu items and test new menu items.
 We will acquire for at least 100 customers in less than a week.
 Make our own social media page for our product to attract more customers.

6
Long Term Goals

Our long term goals of our business in the next 1-3 years are:
 Adding two branches to increase the total income of our business over the next
three years.
 To be one of the top in Milk tea business and to be recognize in our province and
social media in 1-2 years.
 Reduce production expenses by 5% over the next three years and to increase
overall awareness.

Target Market

The market that we will be targeting is all age around Tomana East and West
Rosales area, but the majority of our costumers target are young people around 13 to
25 years old. This means that our product and services will have to be focused on the
wants, needs and demands of this group of people.

Different market segment or groups of customers with the similar characteristic

and needs will respond to the different types of marketing strategies, so it is very
important to be sure to gear the promotional techniques toward the segments target. It
is also possible to develop promotional strategies that target one or more in the
following sequence:
 Senior
 Tourist
 Family and children
 Students and young adult

Economic and Industrial Policies Supporting the Project

Economic Policy refers to the actions that governments take in th economic field.
It covers the systems for setting interest rates and government budgets as well as the
labor market, national ownership, and many other areas of government interventions
into the economy.

Policy is generally directed to achieve four major goals: stabilizing markets,

promoting economics prosperity, ensuring business development, and promoting

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employment. Sometimes other objective, like military spending or nationalization, are
important.

One of the major goals of economic policy is to promote economic growth. How
growth is measured though is another question. The above image rate of change of
Gross domestic product, world and OECD, since 1961, is one representation of
economic growth.

To achieve these goals, governments use policy tools which are under the
control of the government. These generally include the interest rate and money
supply,tax and government spending, tariffs, exchange rates, labor market regulations,
and many other aspects of government.

8
 Chapter 2

MANAGEMENT FEASIBILITY

Introduction

This chapter is all about entire organization arrangement of the business. This
tackles the legal structures of the business, Organizational chart, Job Descriptions,
Duties and Responsibilities and also the other benefits of the employees.

Legal Structure of the Business

Tres Chicc Café’ business structure is formed by three people. It is a

partnershipby the three friends/students combined to share profit and looses of the
business. The names who build the business is Aira Joy Samoy, Kaitlin Valdez,
Ashleigh Alipio. This business is inspired by the trends now a days and made with our
own taste.

Organization Chart

Business Owner
Aira Samoy,Ashleigh
Figure x. Organizational ChartAlipio, Kaitlin
of XYZ Juneau
Company
Valdez

Finance Manager Customer Service Manager

Kaitlin Juneau Valdez Aira Joy Samoy

Production Manager
Ashleigh Alipio
Job Descriptions, Duties and Responsibilities

9
 Business Owner: Someone who owns the business either of product or services
with the aim of meeting a need in the public, and in so doing makes profit. The other
tasks of a business owner is to share their brand and services to public. Planning a
marketing strategy is of the owners need to do for the business.

The key roles and responsibilities of a small business is staffing and

management, financial, planning and strategy, daily opertions, sales and marketing,
customer service.

Production Manager: Who overseas a company’s production processes to

ensure they stay within budget and enhance effeciencies. They perform tasks such as
taking inventory, making supply orders, handling disputes among team members and
regularly assessing safety standards in all areas. The one who select equipments and
take responsibilities for its maintenance.

Financial Manager: Financial managers create financial reports, direct

investments, amd create plans and strategies for the long-term financial benefit of a
business. They have the most critical role by providing financial guidance and support in
the business.

Costumer Service Manager: The one who talk to the costumers complains and
questions. Give costumers clear informations about the business and the one who
manage the product returns.

Employee Benefits

SSS: Social Insurance program that aims to provide protection to the employee’s family members and
beneficiaries. SSS members can avail of maternity, sickness, disability, retirement, funeral and death
services.

PhilHealth: Implements the National Health Insurance Program that aims to provide the employee with
financial assistance and accessto affordable health services.

13th Month Pay: It is a mandatory compensation that is provided to rank and file employees by the end
of the year. In this way we can thank the employees for their honesty and hardwork given to the
business.

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 Chapter 3

MARKET FEASIBILITY

Introduction

In this study, it will Identifies the success of aproduct in a particular market. It will
helps to identify the potential markets, market competition, potential development in the
market, and market analysis to evaluate the business idea.

Demand Analysis

As of we started a year 2021-2022 are the most demand year for pearl milk teas.
Milkteas are eye-catching patterns of tapioca pearls, unconventional toppings and fresh
look, are among the key factors boosting demand of pearl milk teas. In the Philippines it
is the fast paced drink. You can seen all the stalls sells different kind of milkteas.

Supply Analysis

The milktea are being distributed in 3 different sizes of cup. The cup sizes are
small, medium, and large.the sizes are made are to adequate the genuine consumer’s
needs. We are offering our milktea in a very friendly price but a quality product/milktea.
And the sizes of our fries is small, regular and a large size.

COST OF SALES PER

PRODUCT/SERVICES SRP UNIT SOLD PER MONTH MONTHLY SALES MONTH

SMALL MILKTEA PHP 45.00 195 PHP 8,755 19.5

MEDIUM MILKTEA PHP 55.00 175 PHP 9,625 24.25

LARGE MILKTEA PHP 65.00 210 PHP 13,650 29.5

SMALL FRIES PHP 30.00 80 PHP 2,400 15.5

MEDIUM FRIES PHP 40.00 85 PHP 3,400 19.75

LARGE FRIES PHP 50.00 110 PHP 5,500 29.5

MONTHLY TOTAL 855 PHP 43,330

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 Sales Forecast

PRODUCT/SERVICES PRICE UNIT SOLD PER MONTH SALES PER MONTH YEAR 1 SAL

SMALL MILKTEA PHP 45.00 120 5,200 62,400

MEDIUM MILKTEA PHP 55.00 150 8,250 99,000

LARGE MILKTEA PHP 65.00 200 13,000 156,000

SMALL FRIES PHP 25.00 50 1,250 15,000

MEDIUM FRIES PHP 30.00 80 2,400 28,000

LARGE FRIES PHP 50.00 90 4,500 54,000

TOTALS 690 34,800 414,400

Marketing Strategy

The marketing strategy will help Tres Chicc café business to achieve marketing
mission and objectives for the three years of business. The product/service, pricing,
position, promotion and people

The 4 P’s of marketing product

Tres Chicc Café has different variant of sizes to enjoy and in a good condition.

Pricing

At Tres Chicc Café, our pricing system is going to be based on what is

obtainable in the industry,we don’t intend to charge more (except for premium ang
customized services) and we don’t intend less than our competitors are offering in
Tomana West Rosales, Pangasinan.

Preposition

Tres Chicc Café can easily access location especially to the resident of Zone
4, Tomana West, Rosales Pangasinan. And the location of the store is near Tomana
West Elementary School Sped Center.

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 Advertising. Since most of people noe are hanging out and spending time in
social media , using facebook and instagram are a good platform that we also use to
promote our business product.

Word of mouth. Ask our friends and loyal costumers to refer our product to their
family and friends are another way to promote our product. Since most of people trust
word from close peole more than from a company.

Marketing Plan

This are the four marketing objectives of Tres Chicc Café aims to increase
customers and have a positive feedbacks, and excellent in every high quality, refreshing
and affordable product we produce.

 Attract new costumers

 Increases company profit
 Introducing the product to new local markets
 Retain current costumers

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 Chapter 4
TECHNICAL FEASIBILITY

Introduction

The technical feasibility projects show how the products distribute to the
consumers. It will discuss the proper flow of communication between the owner and its
buyer. The purpose of this study is to ensure the success of the operation of the
proposed project.

Physical Location

Our physical location is located at Zone 4, 190 Tomana West Rosales Pangasinan near
Tomana West baranggay hall. And our business location is close to Tomana
Elementary School and we are also near at Richbake INC Goldilocks im wjich they will
be our potential customers.

14
Floor Plan (Layout)

The total floor of Tres Chicc Café store is 3 square meterswhich is enough space
for our employee to accommodate customers, business products display space for our
products.

15
Description of Products and Services

The product and services that Tres Chicc Café has different sizes of milk tea to
offer. We have small, medium, and large milk tea. And we have a fries that comes with
also in different sizes. We offer free delivery around Tomana area only.

Small Milktea

Our small milktea is recommended for

teens , adults who loves pearl tea.
It’s a 400ml tea, flavor of your choice
with tapioca toppings.

Price: php 45.00

Medium Milktea

Our medium milktea are

recommended for teens, adults who
loves pearl tea. It’s a 600ml
tea,flavor of your choice with tapioca
toppings.

Price:php 55.00

Large Milktea
Our large milktea are recommended
for teens, adults who loves pearl tea.
It's a 800ml tea,flavor of your choice
with tapioca toppings.
Price:php 65.00

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 Small Fries

It's a freshly slice potato cut into thin

slices who will enjoy the children,
teens,and also the adults

price: php30.00

Medium Fries

It's a freshly slice potato cut into thin

slices who will enjoy the children,
teens,and also the adults.

price: php 40.00

Large Fries

It's a freshly slice potato cut into thin

slices who will enjoy the children,
teens,and also the adults.

price: php 50.00

Technology Requirements

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 Smartphone and Telephone are almost a must need in terms of orders. A
messenger account in all customers (regular) in case they want to buy, they can easily
message their orders. Computers, in terms of inventory, we can use MS Excel in listing
computation and inventory.

Machines and Equipment

The most basic equipment in making milk tea is Sealer Machine, Shaker
Machine and Fructose Dispenser. Sealer machines are used to put a plastic seal on
your plastic cup. Fructose Dispenser is used to keep your drink quality consistent and
reduce employee cost. The pre-sized measuring scoops are included and the tapioca
container.
Milk tea will also need basic supplies such as cups and straws, sealer film. We
also need metal stirrers, measuring cups, a scale, some syrup pumps and plastic
searing films that covers and seals most milk tea.

Production Process

Bubble tea is one of the most popular drinks in Asia. It can be served in many
various flavors. These instructions will help you make milk tea flavored bubble tea at
home in few very easy steps. The whole process will only take about 10-15 minutes.
Milk tea is a very sweet tea that consists of tea and balls of tapioca and honey.

Step 1 Gather materials

For this instructable you will need the following:

-3/4 Black Tea
-5 Tablespoons of Sugar Syrup (More or less to taste)
-A Little Less than 2 Cups of Ice Cubes
-1/2 Cup of Milk (More or less to taste)
-A blender
-Various Measuring Utensils

For the sugar syrup you will need 1 cup of water and 1/2 cup of white and 1/2 cup of
brown sugar.

Step 2 Make the Sugar Syrup

Sugar syrup is what sets milk tea apart from black tea with milk. This step should be
done first, as it will take a long time to complete.

-Boil 1 cup of water in a pan (yes, a pan).

18
-Add 1/2 cup of white and 1/2 cup of brown sugar (You can experiment with ratios).
-Turn the temperature to low and allow it to cook until all the sugar crystals have
dissolved, gently stirring every few minutes. It should take about 25 minutes until the
sugar has fully dissolved.
-Put the sugar syrup into a cup and put it in the fridge for later.

Step 3 Make the Black Tea

This step is pretty easy, just make some tea.

-Boil 3/4 cup of water in a kettle.

-Put two bags of black tea into the cup (you can put one if you don't want too much tea
flavour).
-Steep the tea for about 2 minutes

Step 4 Mix the Ingiridients

-Mix the milk and ice into the blender.

-Pour in the black tea from the previous step.
-Put in 5 tablespoons of sugar syrup (experiment with this, you may think it is too sweet,
or vice versa).
-Blend until it is a smooth texture, with few pieces of ice left.

Production Materials

The Modified-Traditional Method are another way to make milk tea at your bubble
tea store would be combining pre-made with a made-to-order method. With over
90% of tea shops on board with this hybrid system, it is clearly the most popular
tea-making model. The initial process of making tea batches is the same, but with
the use of tea warmer dispenser, tea can remain heated for up to 8 hours. The
largest tea warmer currently on the market can hold up to 12 liters (3.15 gallons)
of tea. This method gives customers the option of ordering drinks hot or cold.
Tea batches are usually made at least twice a day: before the store opens and
midday during business hours.
Barista would need to pour hot tea from the dispenser into a shaker, add sugar and
creamer, and mix until the tea is smooth. If the customer wants their milk tea cold, ice
and toppings may be added afterwards. Concocting milk tea with this hybrid model is
cost efficient, and it allows for more drink versatility.

19
Production Schedule

Showing the details below how the work is going to be spread out in the next 12
months. This has to be made in order to ensure that the number of units to be sold or
services to be completed, based on the projected sales, are produced in time. Among
others, the schedule will show the status of production at any point during the
production period; the specific periods when production or service will start and when
the product or service will be completed.

MARC
Manufacturing Steps JANUARY H MAY JULY SEPTEMBER NOVEMBER
INITIANAL NUMBER
OF EMPLOYEE 3 3 3 3 3
REGUGAR TIME CAPACITY
IN HOUR PER EMPLOYEE 35 35 35 35 35
OVERTIME CAPACITY IN
HOUR PER EMPLOYEE 15 15 15 15 15
HIRING COST PER
EMPLOYEE 537 537 537 537 537
DISMISSAL COST PER
EMPLOYEE 2000 2000 2000 2000 2000
UNIT SUBCONTRACTING
ALLOWED 50 50 50 50 50

Inventory Schedule

The prposed setup is assumed to maintain a minimum milk tea to act as a safety
stock any shortage from supplier and to meet regular market demand.

INVENTORY
SCHEDULE
SIZES OF MILK TEA & UNITS SOLD PER SALES PER
FRIES PRICE WEEK WEEK
PHP
SMALL MILK TEA 45.00 40 UNITS PHP 1,800
PHP55.0
MIDIUM MILK TEA 0 50 UNITS PHP 2,750
PHP
LARGE MILK TEA 65.00 67 UNITS PHP 4,355
PHP
SMALL FRIES 25.00 17 UNITS PHP 425

20
 PHP
MIDIUM FRIES 30.00 27 UNITS PHP 810
PHP
LARGE FRIES 50.00 30 UNITS PHP 1,800
TOTAL 231 UNITS PHP 11,940

Product Delivery

One of the trends which attracts most of the youth is a chain of milk-tea shops.
Many famous milk-tea trade-names appear in recent years susch as: Macao Imperial
and Mang Cha.This kind of business is quite popular in Philippines current market, from
popularity level to premium level.Living standards and income of each household is
increasing. The take-out mlik tea shops was launched which can meet this end. This
type of business model has been appeared for a long time and has been growing and
developing countries susch as USA, UK, Singapore and Taiwan.

Manpower Requirement

In order to run operatons of Milktea Marketing and Distribution smoothly, details

of human resources required along with the number of employees and monthly salary
are recommended as under..

MANPOWER COST
Year 1 - 2022
4.0%
Daily
Monthly Provident
Position Wage Pax SSS-ER EC-ER Philhealth
Salary Fund
Rate

Finance Manager 200.00 1 5,000 - - -

Production Manager 200.00 1 5,000 - - -

Customer Service Manager 200.00 1 5,000 - - -

Totals 3 15,0 -

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 00 - - -

Year 1 Totals 180,000 - - -

Year 2 - 2023
Salary Increase 5% 4.0%
Daily
Monthly Provident
Position Wage Pax SSS-ER EC-ER Philhealth
Salary Fund
Rate

Finance Manager 220.00 1 5,500 - - - -

Production Manager 220.00 1 5,500 - - - -

Customer Service Manager 220.00 1 5,500 - - - -

16,5
Totals 3 00 - - -

Year 2 Totals 198,000 - - -

Year 3 - 2024
Salary Increase 10% 5.0%
Daily
Monthly Provident
Position Wage Pax SSS-ER EC-ER Philhealth
Salary Fund
Rate
15
Finance Manager 250.00 1 6,050 - - - .3
15
Production Manager 250.00 1 6,050 - - - .3
15
Customer Service Manager 250.00 1 6,050 - - - .3

18,1
Totals 3 50 - - 54

Year 3 Totals 217,800 - - -

Year 4 - 2025
Salary Increase 10% 5.0%
Daily
Monthly Provident
Position Wage Pax SSS-ER EC-ER Philhealth
Salary Fund
Rate
Finance Manager 250.00 1 16

22
 6,655 - - - .4
16
Production Manager 250.00 1 6,655 - - - .4
16
Customer Service Manager 250.00 1 6,655 - - - .4

19,9
Totals 3 65 - - 99

Year 4 Totals 239,580 - - -

Year 5 - 2026
Salary Increase 10% 5.0%
Daily
Monthly Provident
Position Wage Pax SSS-ER EC-ER Philhealth
Salary Fund
Rate
18
Finance Manager 300.00 1 7,321 - - - .0
18
Production Manager 300.00 1 7,321 - - - .0
18
Customer Service Manager 300.00 1 7,321 - - - .0

21,9
Totals 3 62 - - 49

Year 5 Totals 263,538 - - -

Project Timetable (Gantt Chart)

The is a list of all the activities for launching the business and the timeframe for
accomplishing them.

No. Task Name 26-Dec 10-Jan 15-Jan 15-Jan 10-Feb

1 Registrations of the business
2 Renovation of store
3 Hiring Employee

23
4 Acquisition of equipment and machinery
5 Start to operate business

24
 Chapter 5
FINANCIAL FEASIBILITY

Introduction

Financial feasibility analysis is an analytical tool used to evaluate the economical

viability of an investment. It consists of evaluating the financial condition and operating
performance of the investment and forecasting its future condition and performance. In
this chapter, it will discuss the financial performance of the study.

Start-Up Costs

Following fixed and working capital requirements have been identified for operations of the proposed
business.

Particular Amount
FOUNDING EXPENSES 7,150
Legal fees 2,000
Business permits, licenses and insurance fees 5,150
CAPITAL EXPENDITURES 5,300
Machines and Equipment 4,000
Furniture and Fixtures 1,000
Technological Expenses 300
PRE-OPERATING EXPENSES 17,500
Business/Market Research 300
Advance Rent 300
Advertising and Promotion 200
Pre-Employment Expenses 16,500
Other Pre-Operating Expenses 200
Total Start-Up Costs 29,950

25
 Start writing here…

Capital Requirement

19,950 pesos total of Capital requirement for financing

Particular Amount
Total Start-Up Costs 29,950
Total Capital Requirement 29,950
Less: Owner’s Capital Contribution 10,000
Total Amount to be Financed 19,950

Loan Repayment Schedule

Loan Amount 370,000.00 Rate (per period)

0.500%
Annual Interest Rate 6.00% Total Payments
393,567.02
Term of Loan in Years 2 Total Interest
23,567.02
First Payment Date 1/30/2021 Est. Interest Savings
0.00
Payment Frequency Monthly
Compound Period Monthly
Payment Type End of period
Rounding

Monthly Payment 16,398.63

Sales Forecast

PRODUCT/SERVICES PRICE UNIT SOLD PER MONTH SALES PER MONTH YEAR 1 SAL

SMALL MILKTEA PHP 45.00 120 5,200 62,400

MEDIUM MILKTEA PHP 55.00 150 8,250 99,000

LARGE MILKTEA PHP 65.00 200 13,000 156,000

26
 SMALL FRIES PHP 25.00 50 1,250 15,000

MEDIUM FRIES PHP 30.00 80 2,400 28,000

LARGE FRIES PHP 50.00 90 4,500 54,000

TOTALS 690 34,800 414,400

Cost of Sales

COST OF SALES PER

PRODUCT/SERVICES SRP UNIT SOLD PER MONTH MONTHLY SALES MONTH

SMALL MILKTEA PHP 45.00 195 PHP 8,755 19.5

MEDIUM MILKTEA PHP 55.00 175 PHP 9,625 24.25

LARGE MILKTEA PHP 65.00 210 PHP 13,650 29.5

SMALL FRIES PHP 30.00 80 PHP 2,400 15.5

MEDIUM FRIES PHP 40.00 85 PHP 3,400 19.75

LARGE FRIES PHP 50.00 110 PHP 5,500 29.5

MONTHLY TOTAL 855 PHP 43,330

Operating Expense Forecast

Operating Expense Forecast is a measure of the number of times a company can pay off current
liabilities with the cash generated in a given period

Projected Income Statement

The business is projected to have a monthly net income of P 43,330 for a net annual income of P
519,600 for the first year.

27
 UNIT SOLD PER COST OF SALES PER
PRODUCT/SERVICES SRP MONTHLY SALES MONTH
MONTH

SMALL MILKTEA PHP 45.00 195 PHP 8,755 19.5

MEDIUM MILKTEA PHP 55.00 175 PHP 9,625 24.25

LARGE MILKTEA PHP 65.00 210 PHP 13,650 29.5

SMALL FRIES PHP 30.00 80 PHP 2,400 15.5

MEDIUM FRIES PHP 40.00 85 PHP 3,400 19.75

LARGE FRIES PHP 50.00 110 PHP 5,500 29.5

MONTHLY TOTAL 855 PHP 43,330

Statement of Financial Position

Assets php Liabilities php

current assets: current liabilities
Cash on hand 4,000 accounts payable 4,500
Cash in the bank 20,000 utilities 2,000
inventory 6,750 sales tax 1,250
prepaid expenses 1,500 income taxes 2,500
total 28,250 payroll 12,000
total 22,250
fixed assets
furnishing 6,000
kitchen equipment 14,000
other assets 15,000
total 35,000

Cash Flow Statement

cash used in operating activities 10,000

cash used in investing activities 15,000
cash provided by financing activities 30,000
cash, beginning of year 35,000
cash, end of year 60,000

28
Financial Ratios
BALANCE SHEET

Are created with the use of numerical values taken from financial statements to
gain information about company.

Liquidity Ratios

Liquidity ratios are financial ratios that measure a company’s ability to repay
dhort- and long-term obligations. Common liquidity ratios include following:

The current ratio measures a company’s ability to pay off short-term liabilities with
current assets.

Current Ratio = Current Assets / Current Liabilities =

1,085,968.44/65,067.33 = 16.6

Leverage Financial Ratios

Leverage ratios measure the amount of capital that comes from debt. In other words, leverage
financial ratios are used to evaluate a company’s debt levels. Common leverage ratios include the
following:

The debt ratio measures the relative amount of a company’s assets that are provided from debt:

Debt ratio = Total liabilities / Total assets

65,067.33 / 1,278,138.27 = 0.05

The debt to equity ratio calculates the weight of total debt and financial liabilities against
shareholders’ equity:

Debt to equity ratio = Total liabilities / Shareholder’s equity

65,067.33 / 101,440.92 = 0.64

The interest coverage ratio shows how easily a company can pay its interest expenses:

Interest coverage ratio = Operating income / Interest expenses

895,207 / 17,291.04 = 51.7

The debt service coverage ratio reveals how easily a company can pay its debt obligations:

Debt service coverage ratio = Operating income / Total debt service

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 895,207 / 190,534.5 = 4.69

Efficiency Ratios

Efficiency ratios, also known as activity financial ratios, are used to measure how well a company is
utilizing its assets and resources. Common efficiency ratios include:

The asset turnover ratio measures a company’s ability to generate sales from assets:

Asset turnover ratio = Net sales / Average total assets

1,996,150 / 1,213,071.74 = 1.65

The inventory turnover ratio measures how many times a company’s inventory is sold and replaced
over a given period:

Inventory turnover ratio = Cost of goods sold / Average inventory

780,808 / 65,067 = 12.00

The accounts receivable turnover ratio measures how many times a company can turn receivables
into cash over a given period:

Receivables turnover ratio = Net credit sales / Average accounts receivable

166,346 / 166,346 = 1.00

The days sales in inventory ratio measures the average number of days that a company holds on to
inventory before selling it to customers:

Days sales in inventory ratio = 365 days / Inventory turnover ratio

365 / 12.00 = 30.4

Profitability Ratios

Profitability ratios measure a company’s ability to generate income relative to revenue, balance sheet
assets, operating costs, and equity. Common profitability financial ratios include the following:

The gross margin ratio compares the gross profit of a company to its net sales to show how much
profit a company makes after paying its cost of goods sold:

Gross margin ratio = Gross profit / Net sales

998,075 / 1,996,150 = 0.5

The operating margin ratio compares the operating income of a company to its net sales to determine
operating efficiency:

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 Operating margin ratio = Operating income / Net sales
895,207 /1,996,150 = 0.44
The return on assets ratio measures how efficiently a company is using its assets to generate profit:

Return on assets ratio = Net income / Total assets

895,207 / 1,213,071.74 = 0.73

The return on equity ratio measures how efficiently a company is using its equity to generate profit:

Return on equity ratio = Net income / Shareholder’s equity

895,207 / 190,534.52 = 4.7

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 Chapter 6
SOCIO-ECONOMIC FEASIBILITY

Introduction

The socio-economic study shows the contributin of the business to the

government and to the society. This area ptoves that the business exixted not only for
profit purposes, but also for the improvement of people.

Contribution to the government

 Sales Tax / VAT

o What is Value Added Tax?

o Why is VAT important?
o How much VAT is paid to the government

 Individual Income Tax

o What is individual income tax?

o Why is individual income tax important?
o How much income tax is paid to the government?

 Business permits and licenses

o What are business permits and licenses?

o Why are business permits and licenses important?
o How much business permits and licenses are paid to the government?

Contribution to the society

 Creation of employment

o What is employment?
o Why is employment important?
o How many people are employed by the company?
o How much annual salaries are paid to the employees?

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Contribution to the economy

 Gross Domestic Product (GDP)

o What is GDP?
o Why is GDP important?
o How much is the contribution of the company to GDP in terms of
annual revenue and expenses?

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 APPENDIX A
Legal Requirements to Establish a Business

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 APPENDIX B
Permits and Licenses

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 APPENDIX C
Articles of Partnership/Corporation

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 APPENDIX D
Complete Products and Services

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 APPENDIX E
Machines & Equipment

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 APPENDIX F
Furniture & Fixtures

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 APPENDIX G
AEQ Analysis Table

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 APPENDIX H
Other Relevant Documents

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 APPENDIX I
Curriculum Vitae

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