MAPUA UNIVERSITY

BUSINESS PLAN

Group members:
BIAS, ROBI HUDIEL DL.
CATINDIG, LESLIE VERONICA D.
DEMAULO, KENT JEROME E.
REANTILLO, QYLA MARIE L.
VIZON, MARK DANIEL D.

IE103 / A2
Date of Submission: August 5, 2020

PROFESSOR RIANINA BORRES

Instructor
IV. FINANCIAL PLAN

A. Investment / Funding Requirement

1. Capital Assets

The capital assets for the business are consist of cost of the
office rent, office supplies, office equipment, and furniture and
fixtures. By calculating the total cost of the rent for the initial or first
month of operation, for the supplies, for the equipment, and for the
furniture, the total cost for the capital assets of the business is
₱125,801.25.

2. Pre-Operating Expenses

In order for the business to operate, all legal documents or

permits were considered for the pre-operating expenses such as
the Barangay Clearance, Business Permit, BIR Certificate of
Registration, and DTI Business Name Registration Certificate, It
also include the expenses for the product development and
prototyping, as well as the recruitment expenses.
3. Working Capital

The working capital includes all the costs regarding to the

production of the product such as the direct materials, direct labor,
variable overhead, and the packaging. It also includes the costs for
the utilities such as electricity, and other necessary expenses for
daily work. The calculations assumed a cost for 6 months of
operation.

4. Cash Requirement

With all the required expenses for the initial operation of the
business such as the expenses for the capital assets, legal
documents, product development, recruitment and hiring, and
production, it was estimated that the cash requirement for the
business is ₱904,104.65 considering the available cash-on-hand.
B. Key Assumptions

1. Economic and Business Factors

The business considered a 40% increase in production for

every annual operation. This is to increase the annual net income
of the business. Also, due to the potential increase for the cost of
materials and labors, the business also considered increasing the
price per unit of the product by 4.50%. This is to ensure that the
cash flow within the business will not be severely affected. The plan
also included a corporate tax of 30% for the business to pay.

2. Bases and Schedule of Revenue and Expenses

This shows the sales revenue of the business starting from the
first year up to the fifth year of operation. Due to the different
business and economic factors, the values each year varies. It also
shows the expenses of the business regarding with the production.
C. 5-Year Financial Projections

1. Income Statement (Profit and Loss Statement)

2. Cash Flow Projection

3. Balance Sheet
4. Financial Ratios

The Vertical Analysis was computed by expressing each item

such as the Cost of Goods Sold, SGA Expenses, Net Income
Before Tax (NIBT), and Net Income After Tax (NIAT) as percentage
of the sales revenue of the same year.

Computations of the Vertical Analysis at Year 1

Cost of Goods Sold:

6,370,848
VA = x 100% = 70.79%
9,000,000

Gross Margin:

2,629,152
VA = x 100% = 29.21%
9,000,000

SGA Expenses:

165,000
VA = x 100% = 1.83%
9,000,000

Net Income Before Tax:

2,464,152
VA = x 100% = 27.38%
9,000,000

Net Income After Tax:

 1,724,906.40
VA = x 100% = 19.17%
9,000,000

Same computations were used for the Vertical Analysis of

Years 2-5.

The Horizontal Analysis were also conducted to determine the

percent of increase or decrease in the amount of sales revenue,
expenses, and net income at a given period (5 years).

Computations of the Horizontal Analysis (5 Years)

Sales Revenue:

27,612,000−9,000,000
HA = x 100% = 206.80%
9,000,000

Cost of Goods Sold:

16,564,204.80−6,370,848
HA = x 100% = 160%
6,370,848

SGA Expenses:
 213,000−165,000
HA = x 100% = 29.09%
165,000

Total Expenses:

16,777,204.80−6,535,848
HA = x 100% = 156.70%
6,535,848

Net Income Before Tax:

10,834,795.20−2,464,152
HA = x 100% = 339.70%
2,464,152

Net Income After Tax:

7,584,356.64−1,724,906.40
HA = x 100% = 339.70%
1,724,906.40

According to the analysis, in the span of 5 years, the sales

revenue of the business increased by 206.80%, the cost of goods
sold increased by 160%, the SGA expenses increased by 29.09%,
the total expenses increased by 156.70%, and the net income
before and after the tax increased by 339.70%.

5. Financial Measures

Net Cash Flow = Total Net Income – Initial Investment Value

Year 1:

Net Cash Flow = 1,724,906.40 – 10,000,000 = -8,275,093.60

Year 2:
 Net Cash Flow = (1,724,906.40 + 2,849,568.96) – 10,000,000

= -5,425,524.64

Year 3:

Net Cash Flow = (1,724,906.40 + 2,849,568.96 +

4,201,031.52)

- 10,000,000 = -1,224,493.12

Year 4:

Net Cash Flow = (1,724,906.40 + 2,849,568.96 +

4,201,031.52

+ 5,779,294.08) – 10,000,000 = 4,554,800.96

Year 5:

Net Cash Flow = (1,724,906.40 + 2,849,568.96 +

4,201,031.52

+ 5,779,294.08 + 7,584,356.64) – 10,000,000

= 12,139,157.60

According to the calculated data, the investment for the

business will take 3.25 years to be fully paid.