LYCEUM OF SUBIC BAY INCORPORATION

Central Business District, Subic Bay Freeport Zone

A
BUSINESS PLAN STUDY OF
URBANE SCENT COMPANY

Submitted to:
Prof. Mary Joy S. Dallo

By:
Carpio, Jaerhenz B.
Dacumos, Rechel P.
Ebbay, Blescy M.
Prinzest Florence A. Tala
Yaon, Irish Claire G.

May 2024

APPROVAL SHEET
 In partial fulfillment of the requirements for the subject course Entrepreneurship and

Business Planning, this research entitled “URBANE SCENT COMPANY” has been prepared

and submitted by Carpio, Dacumos, Ebbay, Tala, and Yaon is recommended for oral defense.

Ms. Mary Joy s. Dalloi

Professor

Approved by the committee on oral defense with the grade of _____.

________________________ _____________________

PANEL PANEL

________________________

CHAIRPERSON

Accepted as partial fulfillment of the requirement for the subject course Entrepreneurship and

Business Planning.

Date of Oral Examination

May 25, 2024

CHAPTER I

FINANCIAL STUDY
 I. Objectives of the Study

This study evaluates a hypothetical business model designed for students,

focusing on its practicality and manageability. The purpose of this study is to explore the

feasibility of creating a business that is suitable for students. The aim is to provide

students with a realistic and achievable business opportunity that aligns with their

capabilities and resources.

The motivation behind this study is to empower students to gain hands-on

experience in entrepreneurship while balancing their academic commitments. By

developing a business model that is specifically tailored for students, it becomes

possible to create a manageable and sustainable venture. The ultimate goal is to

provide students with a practical platform to apply their skills, foster entrepreneurial

abilities, and explore business opportunities in a way that is accessible and realistic for

their circumstances.

Here is the objectives of the study:

 Evaluate the practicality and manageability of a business model for students.

 Provide young entrepreneurs with hands-on experience in running a business.

 Foster entrepreneurial skills among students.

 Ensure the business model is sustainable and has growth potential.

 Aim for a significant presence in the local market.

II. Total Project Cost-All Items Considered Consumption Made

In any project, accurately estimating the total project cost is crucial for successful

planning, execution, and completion. The total project cost includes all expenses
directly and indirectly related to the project, ensuring that every element contributing to

the project's delivery is accounted for. Below is a detailed breakdown of the items

considered in the consumption made for the monthly total project cost. This also

includes the yearly total project cost items considered consumption made.

Table 1.1
Material Costs

Particulars Amount

Glass Jar ₱ 3000, Php 15 each

Lemon Essential Oil ₱ 430

Lavender Essential Oil ₱ 430

Vanilla Essential Oil ₱ 430

Ocean Essential Oil ₱ 490

Cotton Thread ₱400, 2 each

Soy Wax ₱ 2,490, ₱ 249/kg

Packaging Prints and Ribbons ₱ 1,000

Total Material Costs ₱ 6,570

Table 1.1 illustrates the material cost of the product. This includes the materials

needed to produce the candles. Most of the materials are purchased from trusted

suppliers online, providing affordable and quality products. The prices used for the

illustration are the real prices provided by the supplier. As a young entrepreneur we are

going to adapt to the e-supply chain management to provide the products to our

customers.
 Table 1.2
Direct Costs

Particulars Amount in Peso

Material Cost 8,670

Labor Cost 5,160

Equipment Cost 876

Total Direct Costs 14,706

Computation:

Material Cost: provided in Table 1.1

Labor Cost: 172 pesos per day (The standard hourly rate in the Philippines is 86 pesos)

15 days with 2 hours of work

2 laborers

Labor Cost: 172 * 15 * 2 = 5,160

Equipment Cost: 219.1 pesos 900ml stainless steel frothing pitcher

4 pieces

Equipment Cost: 219.1 * 4 = 876.4

Table 1.3
Indirect Cost

Particulars Amount in Peso

Overhead Cost 2,200

Advertising Cost 500

Office Supplies 500

Total Indirect Cost 3,200

 Computation:

Overhead Cost

: 1,000 pesos for utilities

1,200 pesos for an internet connection (for the selling of products)

Overhead Cost: 1,000 + 1,200 = 2,200

Advertising Cost: 500 pesos for printed ads and acquisition of editing apps for digital

ads

Office Supplies: 500 pesos for stationery, paper, and other general office supplies

III. Initial Capital Requirements items considered

In the realm of business and project management, securing the initial capital

requirement is a fundamental step toward turning a vision into reality. The initial capital

refers to the funds needed to cover the startup costs of a new project or business

venture. This capital ensures that all necessary resources are available from the outset,

setting the foundation for successful operations. Here is the initial distribution capital for

Urbane Scent Company Owners:

Table 2.1
Capital Distribution

Business owners Initial Contributed Capital

Carpio Php 3,500

Dacumos Php 3,500

Ebbay Php 3,500

Tala Php 3,500

Yaon Php 3,500

Total Php 17,500

 The company Urbane Scent utilizes the savings of the students as their funding

source. By choosing this method, the company was able to keep control over its

finances and operations without having to take on loans or equity from outside investors

and has lower risk because it eliminates the risk of defaulting on loans or facing

consequences from investors in case the business underperforms. But in any instance

that the company needs additional capital, they will borrow money from their loved

ones. It is safer and more efficient to borrow from them compared to other people.

Overall, using savings as a source of funds provides greater autonomy and cost-

effectiveness for the business and also Urbane Scent may be able to pursue the

business goals and plans with freedom by utilizing their resources.

i. Sources selected or proposed for both long-term/short-term financing

ii. Alternative Sources

Urbane Scent chooses to rely on self-funding for its financial needs

instead of seeking external financing from banks or lending firms. This means

that the founders invest their own money into the business, allowing them to

maintain full control over their finances and decision-making processes. By

taking this approach, Urbane Scent demonstrates their commitment to financial

independence and strategic management of their business operations

However, if they ever decide to explore alternative sources of funding,

they could consider obtaining loans from financial institutions. Loans can provide

a way to access additional capital that can be used for various needs such as

expanding the business, purchasing new equipment, or investing in marketing

strategies. It's important to carefully evaluate loan options and consider factors

such as interest rates, repayment terms, and the impact on the business's

financial stability before making a decision.

 iii. Amount and Terms of Financing

IV. Financial Statements

i. Assumptions

The company expects to be profitable based on the data and information

that our research team gathered and the business practices the owners plan to

execute. According to Statistica (2024), the revenue generated in the candles

market segment in the Philippines amounts to US$47.33m in 2024. It is projected

that the market will experience an annual growth rate of 3.44% (CAGR 2024-

2029). It means that the product could secure a spot in the market. In relation,

the Philippine inflation rate for 2022 was 5.82%, a 1.89% increase from 2021.

And considering the rising inflation the company will utilize the resources

available and increase the products' prices through the years. This will foster a

greater foundation and secure business profitability which is essential for the

market expansion.

ii. Projected Income Statement

The projected income statement is based on the above-stated cost and

expenses. This part also provides the computation of depreciation and illustration

interpretation of horizontal and vertical analysis.

Urbane Scent Company

Income Statement
For the Month Ended May 31, 2024

Sales 26,000

Less: Sales Returns 240

Sales Allowances 120 360

Net Sales 25,640

Cost of Sale 8,670

Gross Profit 16,970

Selling Expenses:

Sales Salaries Expense 5,160

Utilities Expense 2,200

Depreciation Expense (Equipment) 28 7,388

Administrative Expenses:

Office Supplies Expense 500

Total Selling and Administrative Expenses 7,888

Net Income 9,082

Depreciation Expense Computation:

Accumulated
Beginning Book Depreciation Depreciation Ending Book
Year Depreciation
Value Percent Amount Value
Expense Amount

1 ₱ 876 ₱ 50% ₱ 338 ₱ 338 ₱ 538

2 ₱ 538 ₱ 50% ₱ 338 ₱ 676 ₱ 200

iii. Horizontal Analysis of Income Statement in the Past Three (3) Years

Particulars 2024 2025 2026 Y2/Y1 Y3/Y1 Remarks

Net Sales 307,680 399,984 519,979 30% 69% inc.

Less: Cost of Sales 104,040 135,252 175,828 30% 69% inc.

 Gross Profit 203,640 264,732 344,152 30% 69% inc.

Less: Operating Expense .

Selling Expense 88,656 115,253 149,828 30% 69% inc.

General Administrative
6,000 7,800 10,140 30% 69% inc.
Expense

Net Profit 108,984 141,679 184,183 30% 69% inc.

Interpretation:

 There is an increase of 30% from year 1 and year 2 which means that even the

sales increase, the cost of sales and other expenses also increases.

 There is an increase of 69% from year 2 and year 3 which means that even the

sales increase, the cost of sales and other expenses also increases.

 Overall, the business is most likely to be profitable and will be able to cope up

with the rising inflation.

iv. Vertical Analysis of Income Statement in the Past Three (3) Years

Particulars 2024 2025 2026 Y1 Y2 Y3

Net Sales 307,680 399,984 519,979 100% 100% 100%

Less: Cost of Sales 104,040 135,252 175,828 34% 34% 34%

Gross Profit 203,640 264,732 344,152 66% 66% 66%

Less: Operating Expense

Selling Expense 88,656 115,253 149,828 29% 29% 29%

General Administrative
6,000 7,800 10,140 2% 2% 2%
Expense

Net Profit 108,984 141,679 184,183 35% 35% 35%

 Interpretation:

 There is a constant increase per year but the comparison between items remains

the same. This means that even if the sales rise, the expenses also arise.

 Overall, there is an increase in profit.

CHAPTER 2

GENERAL RESPONSIBILITIES

I. Socio-Economic

II. Contribution to the Philippine Economy

III. Employment Generation

IV. Social Desirability

Socio-Economic

Contribution to the Philippine Economy

Employment Generation

Social Desirability
 I. INTRODUCTION

Financial analysis is the process of looking over a company's financial statements,

ratios, and other relevant data to evaluate its viability, stability, and financial performance. The

two major goals of financial analysis are to evaluate an entity's financial health and to make

informed judgments about its future potential.

Evaluating economic trends, establishing financial policies, creating long-term company

goals, and identifying businesses or projects for investment are all accomplished through

financial analysis. This is accomplished by synthesizing data and financial figures. The income

statement, balance sheet, and cash flow statement are the three financial statements that a

financial analyst will carefully review. Investment finance and corporate finance are two contexts

in which financial analysis can be performed. Calculating ratios from the data in the financial

statements to compare to those of other companies or the company's past performance is one

of the most popular methods for analyzing financial data.

A vertical analysis technique for analyzing financial statements involves listing each line

item as a percentage of a base figure in the statement. As a result, line items on the income

statement can be expressed as a percentage of gross sales, line items on the balance sheet as

a percentage of total assets or total liabilities, and each cash inflow and outflow on the cash flow

statement as a percentage of the total cash inflows are displayed through vertical analysis of the

cash flow statement.

By contrasting the current year's data with those of the base year, trends or changes can

be quantified. Finding any rise or fall in particular values is the aim. In horizontal analysis, a

percentage or an absolute comparison may be utilized.

 Vertical and horizontal analysis are comparable concepts. Horizontal analysis compares

a specific financial statement with other periods or the cross-sectional study of a company

versus another company. In contrast, vertical analysis analyzes a specific financial statement

using only one base financial statement of the reporting period.

II. COMPARATIVE INCOME STATEMENT

A financial statement that shows a company's financial performance across several periods,

usually two or more accounting periods, is called a comparative income statement. It is

sometimes referred to as a comparative income statement study or review. An analysis and

comparison of the company's revenue, expenses, profitability, and financial performance over

time is what a comparative income statement is for.

Here is an example of a comparative income statement of ABC Limited for the period ended

2022 and 2023:

2022(Amount in 2023(Amount in
Particulars
USD) USD)
Sales 200,000 250,000
Less: Cost of Goods Sold 150,000 180,000
Gross Profit 50,000 70,000
Less: Expenses 25,000 30,000
Net Operating Profit 25,000 40,000
Add: Other Income 12,000 18,000
Earnings before Interest and Taxes 37,000 58,000
Less: Interest 17,000 18,000
Earnings before Taxes 20,000 40,000
Less: Taxes 8,000 16,000
Net Profit 12,000 24,000

The Comparative Income Statement of ABC Limited presented above allows for an analysis

of the effects of a 25% increase in sales over the prior year, as well as the contributions of

different line items to the net profit, which increased by 100% in absolute terms.
a) Horizontal Analysis

Choose the base year and the comparative year first to compute the percentage change.

The dollar change can then be computed by deducting the base year's value from the

comparative year's value and dividing the result by the base year. Next, the outcome is

multiplied by 100.

Particulars 2022 2023 2022 vs 2023

Sales 200,000 250,000 25%
Less: Cost of Goods Sold 150,000 180,000 20%
Gross Profit 50,000 70,000 40%
Less: Expenses 25,000 30,000 20%
Net Operating Profit 25,000 40,000 60%
Add: Other Income 12,000 18,000 50%
Earnings before Interest and
37,000 58,000 57%
Taxes
Less: Interest 17,000 18,000 6%
Earnings before Taxes 20,000 40,000 100%
Less: Taxes 8,000 16,000 100%
Net Profit 12,000 24,000 100%

Interpretations:

 In 2022 and 2023, ABC Limited saw positive revenue growth.

 The cost of sales also increased during the corresponding period

 Net Profit increased in 2023, with a 100% inclined in 2023. It means that the 2022 Net

Profit doubled in the following year.

b) Vertical Analysis

The common-size ratio is the formula used in vertical analysis. This formula is Common-

Size Ratio = (Comparison Amount/Base Amount) x 100.

Particulars 2022 2023 2022 2023

Sales 200,000 250,000 100% 100%
 Less: Cost of Goods Sold 150,000 180,000 75% 72%
Gross Profit 50,000 70,000 25% 28%
Less: Expenses 25,000 30,000 13% 12%
Net Operating Profit 25,000 40,000 13% 16%
Add: Other Income 12,000 18,000 6% 7%
Earnings before Interest
37,000 58,000 19% 23%
and Taxes
Less: Interest 17,000 18,000 9% 7%
Earnings before Taxes 20,000 40,000 10% 16%
Less: Taxes 8,000 16,000 4% 6%
Net Profit 12,000 24,000 6% 10%

Interpretations:

 The cost of sales has been in the range of 75%-72% historically. It implies that ABC

Limited's gross profit margin has been around 25% to 28%.

 There has been a decrease in expenses from 13% in 2022 to 12% in the year ending

2023.

 We also note that operating income increased significantly in 2023 to 16%.

 The corresponding net profit also increased to 10% in 2023.

 Effective tax rates jumped to 6% in 2023.

 Overall, there is an increase in profit

Conclusion

It is evident from the data analysis and interpretation that ABC Limited's commercial

profit has increased dramatically. The success of a business involves various aspects of its

operations, such as financial performance, customer satisfaction, and market competitiveness.

An excellent business is typically characterized by strong leadership, strategic vision, effective

management, and a commitment to continuous improvements. The comparative income

statement alone allows for the observation of growth, but the relationship and changes in the

business environment are further explained with the aid of horizontal and vertical analyses. The
business is going well thus far, and we anticipate that it will grow or at least maintain the same

in the upcoming year.

III. COMPARATIVE BALANCE SHEET

To facilitate easy understanding and analysis, a comparative balance sheet presents

financial data on assets, liabilities, and equity for "two or more periods of the same company,"

"two or more subsidiaries of the same company," or "two or more companies of the same

industry" in the same format. Each balance sheet item in the comparative balance sheet

includes two amount columns. The financial status for the current year is displayed in one

column, while the financial situation for the prior year is displayed in the other. This makes it

simple for stakeholders and investors to comprehend and compare the company's financial

performance to that of the previous year.

Here is an example of a comparative balance sheet of MAC Trading Company for the period

ended 2022 and 2023:

MAC TRADING COMPANY

COMPARATIVE BALANCE SHEET
Assets 2022 2023
Non-current assets
Land 500,000 500,000
Building 500,000 550,000
Machinery & Equipment 1,500,000 1,700,000
Goodwill 400,000 400,000
TOTAL NON-CURRENT ASSETS 2,900,000 3,150,000

Current Assets
Inventories 500,000 750,000
Accounts receivable 1,000,000 500,000
Other Assets 90,000 100,000
Marketable securities 1,000,000 850,000
Cash 283,000 150,000
TOTAL CURRENT ASSETS 2,873,000 2,350,000
 TOTAL ASSETS 5,773,000 5,500,000

Equity and Liabilities

15% preferred stock P100 par 500,000 500,000
Common stock, P10 par 1,500,000 1,500,000
Retained earnings 523,000 250,000
TOTAL EQUITY 2,523,000 2,250,000

Non-current liabilities
Long term notes 2,250,000 2,500,000
TOTAL NON-CURRENT LIABILITIES 2,250,000 2,500,000

Current Liabilities
Accounts payable 790,000 610,000
Notes payable 150,000 100,000
Expenses payable 60,000 40,000
TOTAL CURRENT LIABILITIES 1,000,000 750,000

TOTAL EQUITY AND LIABILITIES 5,773,000 5,500,000

The difference between two successive periods is displayed on the Comparative Balance

Sheet. It demonstrates that with ₱ 3,150,000, the non-current asset in 2023 is larger than in

2022 in terms of assets. However, there is a ₱ 523,000 drop in current assets. In contrast, 2022

accumulates more equity and liabilities than 2023 does. In general, the statement of financial

position is declining.

a) Horizontal Analysis

To calculate the percentage change, first select the comparison year and the base year.

After that, the dollar change can be calculated by dividing the result by the base year and
 subtracting the base year's value from the comparable year's value. The result is then

multiplied by 100.

Assets 2022 2023 2022 vs 2023

Non-current assets
Land 500,000 500,000 0%
Building 500,000 550,000 10%
Machinery & Equipment 1,500,000 1,700,000 13%
Goodwill 400,000 400,000 0%
TOTAL NON-CURRENT ASSETS 2,900,000 3,150,000 9%

Current Assets
Inventories 500,000 750,000 50%
Accounts receivable 1,000,000 500,000 -50%
Other Assets 90,000 100,000 11%
Marketable securities 1,000,000 850,000 -15%
Cash 283,000 150,000 -47%
TOTAL CURRENT ASSETS 2,873,000 2,350,000 -18%
TOTAL ASSETS 5,773,000 5,500,000 -5%

Equity and Liabilities

15% preferred stock P100 par 500,000 500,000 0%
Common stock, P10 par 1,500,000 1,500,000 0%
Retained earnings 523,000 250,000 -52%
TOTAL EQUITY 2,523,000 2,250,000 -11%

Non-current liabilities
Long term notes 2,250,000 2,500,000 11%
TOTAL NON-CURRENT LIABILITIES 2,250,000 2,500,000 11%

Current Liabilities
Accounts payable 790,000 610,000 -23%
Notes payable 150,000 100,000 -33%
Expenses payable 60,000 40,000 -33%
TOTAL CURRENT LIABILITIES 1,000,000 750,000 -25%
TOTAL EQUITY AND LIABILITIES 5,773,000 5,500,000 -5%
Interpretations:

 Accounts Receivable decreased by 50% over the period.

 Cash decreased by 47% over the period.

 Total Assets decreased by 5%

  As a result, total equity and liability also decreased by 5%

b) Vertical Analysis

The common-size ratio is the formula for vertical analysis. The computation for this is

Common-Size Ratio = (Comparison Amount/Base Amount) × 100. The total amount of

assets, equity, and liabilities will be the base amount to gain the percentage of each item.

Assets 2022 2023 2022 2023

Non-current assets
Land 500,000 500,000 9% 9%
Building 500,000 550,000 9% 10%
Machinery & Equipment 1,500,000 1,700,000 26% 31%
Goodwill 400,000 400,000 7% 7%
TOTAL NON-CURRENT ASSETS 2,900,000 3,150,000 50% 57%

Current Assets
Inventories 500,000 750,000 9% 14%
Accounts receivable 1,000,000 500,000 17% 9%
Other Assets 90,000 100,000 2% 2%
Marketable securities 1,000,000 850,000 17% 15%
Cash 283,000 150,000 5% 3%
TOTAL CURRENT ASSETS 2,873,000 2,350,000 50% 43%
TOTAL ASSETS 5,773,000 5,500,000 100% 100%

Equity and Liabilities

15% preferred stock P100 par 500,000 500,000 9% 9%
Common stock, P10 par 1,500,000 1,500,000 26% 27%
Retained earnings 523,000 250,000 9% 5%
TOTAL EQUITY 2,523,000 2,250,000 44% 41%
Non-current liabilities
Long term notes 2,250,000 2,500,000 39% 45%
TOTAL NON-CURRENT LIABILITIES 2,250,000 2,500,000 39% 45%

Current Liabilities
Accounts payable 790,000 610,000 14% 11%
Notes payable 150,000 100,000 3% 2%
Expenses payable 60,000 40,000 1% 1%
 TOTAL CURRENT LIABILITIES 1,000,000 750,000 17% 14%

TOTAL EQUITY AND LIABILITIES 5,773,000 5,500,000 100% 100%

Interpretations:

 All of the group items decreased drastically except non-current assets and non-current

liabilities.

 Historically, the cash has ranged from 5% to 3%. This means that the cash decreased.

 The preferred stock remained the same, maintaining 9% of the total equity.

 Retained earnings decreased from 9% in 2022 to 5% in the year that ended in 2023.

 Overall, the vertical analysis shows a decrease in the statement of financial position.

Conclusion

This example is the opposite of the first one. It showed a variety of accounts that could

be used for statements of financial position. There is a loss or decrease in this problem, in

contrast to the income statement of ABC Limited. Based on my observation there is a huge

decrease in capital or equity whereas there is an increase in liability which is bad for a company

it could be a result of poor financial mismanagement, such as excessive debt, poor cash flow

management, or unsustainable spending, can quickly erode a company's financial stability and

lead to its downfall. Poor financial planning, reckless investments, or accounting irregularities

can also contribute to financial crises. It is normal for businesses to experience this kind of

problem but it is within their discretion how they can improve and regain the loss. Upon this

analysis provided by data, they could come up with a solution to the emerging problem. Even

though they are doing badly, it should serve as their inspiration to learn and improve more.

Maybe in the future, they could exceed their expectation and put their mark in the industry they

are in.
IV. REFERENCES

Gabriel, E. (n.d.). Vertical analysis - what is it, formula, examples, advantages.

https://www.wallstreetmojo.com/vertical-analysis-formula/

Master, S. (n.d.). 06TP1 far.xlsx - 1. comparative balance sheet mac trading company
comparative balance sheet assets 20-cy non-current assets land P 500 000 building:
Course hero. 06tp1 far.xlsx - 1. Comparative balance sheet MAC TRADING COMPANY
COMPARATIVE BALANCE SHEET Assets 20-CY Non-current assets Land P 500 000
Building | Course Hero. https://www.coursehero.com/file/95365422/06tp1-farxlsx/

Mojo, W. S. (n.d.-a). Comparative income statement - what is it, examples.

https://www.wallstreetmojo.com/comparative-income-statement/

Tuovila, A. (n.d.). Financial analysis: Definition, importance, types, and examples.

Investopedia. https://www.investopedia.com/terms/f/financial-analysis.asp