Management Study

• The following are the basic steps in conducting a management study:

• selecting a business organization
• designing the internal structure
• staffing for the internal structure
• computing total salaries, compensation and fringe benefits
• preparing a time table
Business Organization
• 3 types of business organization:
• sole proprietorshp
• partnership
• corporation
describe the process on business registration and documents needed
state the advantages of your chosen type of organization
Internal Organization Structure
• in this section, include an organizational chart of the structure of an
organization which shows the positions, ranks and relationships of the
employees in the organization.
Staffing Requirement
• based on the proposed internal structure of a business which defines
the various positions, the proponent the determines the require
number of employees and defines the minimum qualification
standards for the position
Staffing Requirements
Computation od Salaries, Compensation, and Fringe Benefits

the following should be considered:

• the amount legally provided in the labor code
• the statutory minimum wage in the regions as stipulated by the Regional
Tripartite Wages and Productivity Board
• the prevalent practice in the industry
• the demand of the position based on expertise, qualifications and work
experience
• the technical requirements of the work to be performed
Project Schedule
• defines the time frame of the pre-operating phase of a proposed
project and the different activities carried out within that time.
• common techniques used in scheduling the various project
implementation:
• Gantt Chart
• PERT/CPM Model
Financial Study
• Procedural Steps In Conducting A Financial Study
1) Determine the total cost of the proposed project
2)Identify the sources of financing
3)Prepare projected financial statements
4) Perform a financial statement analysis
Financial Study
I. Total Project Cost - estimated initial funding
requirements of a proposed project
• Sum of the ff:
• Cost of the land
• Cost of the building
• Cost of Machinery
• Other infrastructure cost (equipment, parking lot, drainage
system, storage faclities)
• Working capital requirements
• Professional fees of lawyers, accountants, engrs..
• Processing fees and business permits
Financial Study
• Working Capital- refers to the amount of current assets, particularly
cash or highly liquid short-term securities, needed to carry out the
day to day operations of the business.
• prevailing practice in the industry
• nature of the industry
• pattern in sales and purchases
Financial Study
II. Sources of Financing
this section explicitly define the possible
sources of funds to finance the initial funding
requirements of the proposed project.
-sole proprietorship - owner’s infusion of
fresh capital
- substantial amount needed- aside from
internal sources, may consider much needed capital
through creditors (banks)
Financial Study
• Sources of Funding
10% loan from a bank xxx
5% preference share xxx
ordinary shares xxx
Total Capital Requirement
Financial Study
III. Projected Financial Statements
1) Prepare the opening balance sheet where only the investments of the owners and creditors are reflected. This statement
presents the initial total project cost

2) Prepare the following schedules based on assumptions:

a. Number of units to produce (monthly and annually)

b. Raw materials to purchase

c. Overhead Costs

d. Total Manufacturing Cost

e. Number of units to sell

f. Amortization Schedule

g. depreciation schedule

f. compensation cost

g. Utility cost (light, water, and gasoline)

Financial Study
3. Prepare the projected income statement covering at least five years with
sensitivity analysis and supporting schedules on the following:
a. Sales
b. Cost of goods manufactured
c. Cost of Goods sold
d. Operating expenses
Financial Study
4. Prepare the projected balance sheet covering at least five
years. It should also indicate external funding requirements are needed
in the period after the initial implementation.
5. Prepare the projected statement of cash flows covering at
least five years.
Financial Study
IV . Financial Statement Analysis
may use the ff. tools in anaylyzing the projected financial
statements:
1. Horizontal or comparative analysis
2. Vertical or common size analysis
3. Trend Percentages
4. Financial ratios
Financial Study
Important points to remember:
• In analyzing the financial statements, put emphasis on
the factors that will support financial viability of the
project. Based on the analysis, the proponent should
make a recommendation and conclusion of the financial
study. The conclusion should focus on the financial
viability of the project in terms of the following:
• profitability and projected level of profitability
• liquidity
• solvency
• return on investment
Legal and Taxation Aspect

This includes the legal requirements such as

building permit, DENR, Mayor’s permit, DTI,
SEC, BIR and others.
This will involve the study of tax implications of
the project possible tax saving measures and all
applicable taxes which should be incorporated
in the estimates of product/project.
Social and Economic Benefits

This will cover the study of the benefits to be

obtained from an undertaking in terms of its
contribution to the community, to other business
firms and to the national economy as a whole.
The social benefits that may be derived from a
project could be in the nature of: