CHAPTER VIII

FINANCIAL PLAN

A. Major Assumptions

1. Capital contribution of each partner will be P 100.00

2. Sales will increase by 3% per month.

3. Promotional expenses will be P 1,000.00 for the first month and P 500.00 for

the succeeding month.

4. Contingency fund will be P 500.00

5. Bracelet equipment will be P 379.00 that will be bought during the first month

of operation.

6. Profits and losses will be shared by the partners equally.

7. Breakage and losses will have an initial budget of P 500.00 which will remain

constant for the next 5 months of operation.

8. Garbage collection expense will be P 100.00 per month.

B. Financiers

The proponents of the business will contribute P 100.00 each as their initial

investment and the other practitioners will also contribute the same amount as

additional investment.

C. Total Projected Cost

Fixed Asset:

Zodiac Sign Acrylic beads P 14. 00

 Garter Elastic String 50.00
Jump Ring 29.00
Seed beads 39.00
Lobster lock 46.00
Glossy/Chalk/Glass Acrylic beads 39.00
Pastel Colorful Acrylic beads 45.00
Thank you Card 60.00
Transparent Plastic bag. 57.00
cellophane bracelets sealed
Subtotal P 379.00

Working Capital:

Transportation Expense P 4,400.00

Garbage Collection 100.00
Snacks 200.00
Delivery Expense 125.00
Total P 4,825.00
Total Projected Cost P 5,204.00

D. Projected Sales

Legend:

N =Number of Orders

O = Orders Time

Such as:

Total No. of Orders = 30

Average Time per Customer = 1 hour

Orders Time:

Morning. 7:00 – 11:00 4 hours

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 Maximum Capacity = N x O

Morning Capacity =NxO

= 30 x 1
= 30

Estimated Orders for Flower/Zodiac Sign Bracelet

Average
Order Period Orders Sales per Order
Price

In a day 40 35 P 1,400.00

Total P 1,400.00

Total Sales for Bracelet per day P 1,400.00

Total Sales for Bracelet week 7,000.00

Total Sales for Bracelet month 30,800.00

Total Sales for Bracelet for 5 months P 154,000.00

E. Projected Cost of Goods Sold

Cost of Goods Sold

Direct Materials

Purchases (Exhibit 5) P 51, 201.00

Add: Freight-in P 125.00

Manufacturing Overhead 5,204

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 Total P 5329.00

F. Schedule of Operating Expenses

FLOWER/ZODIAC SIGNS BRACELET

Schedule of Operating Expense
For the Period of Five (5) Months

Particulars 1st month 2nd month 3rd month 4th month 5th month
Garbage Collection 100.00 100.00 100.00 100.00 100.00

General Supplies 379.00 379.00 379.00 379.00 379.00

Snacks Allowance 200.00 200.00 200.00 200.00 200.00

Freight in 125.00 125.00 125.00 125.00 125.00

TOTAL P804.00 P804.00 P804.00 P804.00 P804.00

Depreciation expense is computed using straight line method as follows:

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 Lifespa Depreciation Depreciation
Particulars Cost
n cost per year cost per month
Office equipment P6,000.00 8 P 750.00 P 62.50

Bracelet equipment 379.00 6 63.18 5.26

Furniture 5,000.00 10 500.00 41.68

Total P 109.44

Formula:

Depreciation (Per Year) = Cost / Life Span

Depreciation (Per Month) = Depreciation (Per Year) / 12 months

G. Projected Financial Statement

1. Income Statement

FLOWER/ZODIAC SIGN BRACELET

Projected Income Statement

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 For the Period of Five (5) Months

Particulars 1st month 2nd month 3rd month 4th month 5th month

Sales P30,800.00 P31,724.00 P32,675.72 P33,655.99 P34,665.68

Less: Cost of Sales

Direct Materials:
Bracelet 327.00 336.81 346.91 357.321 368.04
Equipments
Freight-in 125.00 125.00 125.00 125.00 125.00

Manufacturing
Overhead:
Rent 2,000.00 2,000.00 2,000.00 2,000.00 2,000.00
LPG 8,400.00 8,400.00 8,400.00 8,400.00 8,400.00
Gross Profit 268,197.00 276,644.91 285,346.26 294,308.65 303,539.90

Less: Operating
Expenses 83,597.52 73,493.52 73,493.52 73,493.52 73,493.52

Net Income P184,599.48 P203,151.39 P211,852.74 P220,815.13 P230,046.38

2. Changes in Owner’s Equity

FLOWER/ZODIAC SIGN BRACELET

Statement of Changes in Owner’s Equity
For the Period of Five (5) Months

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 Particulars 1st month 2nd month 3rd month 4th month 5th month

Beginning
P304,000.00 P488,599.48 P691,750.87 P903,603.61 P1,124,418.74
Capital

Add:
Net Income 184,599.48 203,151.39 211,852.74 220,815.13 230,046.38

Ending Capital P488,599.48 P691,750.87 P903,603.61 P1,124,418.74 P1,354,465.12

Divided by no. of
partners 38 38 38 38 38

Changes in
Equity P12,857.88 P18, 203.97 P23.779.04 P29,589.97 P35,643.82

3. Cash Flow

HAPIT ANAY RESTO

Projected Cash Flow
For the Period of Five (5) Months

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 0 1stmonth 2ndmonth 3rd month 4th month 5th month
Cash Flow From
Operating Activities:
Sales 384,000.00 395,520.00 407,385.60 419,607.17 432,195.38
Payment for:
Office Supplies (1,504.00) - - - -
Raw Materials (102,403.00) (105,475.09) (108,639.34) (111,898.52) (115,255.48)
LPG Tank (8,400.00) (8,400.00) (8,400.00) (8,400.00) (8,400.00)
Transportation (3,000.00) (3,000.00) (3,000.00) (3,000.00) (3,000.00)
Promotion (4,000.00) (2,000.00) (2,000.00) (2,000.00) (2,000.00)
Garbage Collection (200.00) (200.00) (200.00) (200.00) (200.00)
Rent (2,000.00) (2,000.00) (2,000.00) (2,000.00) (2,000.00)
Breakage and
Losses (5,000.00) (5,000.00) (5,000.00) (5,000.00) (5,000.00)
Water Expense (10,000.00) (10,000.0) (10,000.00) (10,000.00) (10,000.00)
Repair and
Maintenance (5,000.00) (5,000.00) (5,000.00) (5,000.00) (5,000.00)
Employees’ Uniform (7,600.00) - - - -
Meal Allowance (45,600.00) (45,600.00) (45,600.00) (45,600.00) (45,600.00)
General Supplies (3,447.00) (3,447.00) (3,447.00) (3,447.00) (3,447.00)
Cash Flow From
Investing Activities:
Payment to
Acquire:
Kitchen
Equipment (40,610)
Kitchen
Utensils (16,556)
Office
Equipment (18,095)
Furniture and
Fixtures (12,680)
Dining Utensils (14,217)
Other
Necessities (31,910)

Partners’ Capital 304,000

Cash Flow From
Financing Activities:
Beginning cash
169,932.00 355,778.00 560,175.91 773,275.17 995,336.82
Balance
Ending Cash
Balance 169,932 355,778.00 560,175.91 773,275.17 995,336.82 1,226,629.72

4. Balance Sheet

HAPIT ANAY RESTO

Projected Balance Sheet
For the Period of Five (5) Months

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 1st month 2nd month 3rd month 4th month 5th month

Assets

Current
Cash 355,778.00 560,175.91 773,275.17 995,336.82 1,226,629.72
Non – Current
Kitchen Equipment 40,610.00 40,610.00 40,610.00 40,610.00 40,610.00
Kitchen Utensils 16,556.00 16,556.00 16,556.00 16,556.00 16,556.00
Office Equipment 18,095.00 18,095.00 18,095.00 18,095.00 18,095.00
Furniture and Fixture 12,680.00 12,680.00 12,680.00 12,680.00 12,680.00
Dining Utensils 14,217.00 14,217.00 14,217.00 14,217.00 14,217.00
Other Necessities 31,910.00 31,910.00 31,910.00 31,910.00 31,910.00
Less: Depreciation
Expense (1,246.52) (2,493.04) (3,739.56) (4,986.08) (6,232.60)

Total Assets 488,599.48 691,750.87 903,603.61 1,124,418.74 1,354,465.12

Owner’s Equity

Partners’ Capital 304,000.00 488,599.48 691,750.87 903,603.61 1,124,418.74

Add: Net Income 184,599.48 203,151.39 211,852.74 220,815.13 230,046.38

Total Owner’s Equity 488,599.48 691,750.87 903,603.61 1,124,418.74 1,354,465.12

H. Financial Analysis

1. Gross Profit Margin

1st month 2nd month 3rd month 4th month 5th month

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 Gross Profit 268, 197.00 276, 644.91 285, 346.26 294, 308.65 303, 539.90
Margin 384, 000.00 395, 520.00 407, 385.60 419, 607.17 432, 195.38

= Gross Profit/
69.84% 69.94% 70.04% 70.14% 70.23%
Net Sales

* For every peso sales, 0.6984 centavos will cover operating expenses as

well as a desired profit.

2. Net Profit Margin

1st month 2nd month 3rd month 4th month 5th month

Net Profit 184,599.48 203,151.39 211,852.74 220,815.13 230,046.38

Margin 384, 000.00 395, 520.00 407, 385.60 419, 607.17 432, 195.38

= Net Income/
48.07% 51.36% 52.00% 52.62% 53.23%
Sales

* There will be a 48.07% expected net income on the first month of the

business operation.

3. Asset Turnover

1st month 2nd month 3rd month 4th month 5th month

Asset 384, 000.00 395, 520.00 407, 385.60 419, 607.17 432, 195.38
Turnover 488,599.48 590, 175.18 797, 677.24 1,014,011.18 1,239,441.93

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= Net Sales /
Average 78.59% 67.02% 51.07% 41.38% 34.87%
Total Asset

*For every peso sales, 0.7859 centavos or 78.59% is the asset turnover.

I. Investment Ratio

1. Average Rate of Return

Return on Investment = Average Net Income / Average Investment

Average Net Income = P 1, 050, 465.12 / 5

= P 210, 093.02

Average Investment = P 600.00 / 6

= P 680, 187.94

ROI = P 210, 093.02 / 680, 187.94

= 30.89%

*For every peso sales, there will be a return on investment or net profit of

0.3089 or 30.89%.

2. Payback Period

Cost of
Net Cash Payback
Month Investment to be Balance
Inflows Period
Recovered

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 1 P 304, 000.00 186,599.48 117, 400.52 1
2 117, 400.52 203,151.39 .58

 The initial investment will be covered after one (1) month and 17 days.

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