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    Bfin Temp

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    Asi Cas Jav
    Mr. Cruz owns Zapatoes Inc., a growing Filipino shoe store. He wants to expand by opening a new manufacturing facility to lower production costs from PHP 475 to PHP 300 and sell shoes from PHP 1,000 to 2,000. Cruz has three options to finance the PHP 10 million facility: accepting equity investment from Alex, a short-term 1-year loan, or a long-term 5-year loan. Choosing long-term financing allows better allocation of funds and capital since liquidity and efficiency ratios are low, with low payable and receivable days. Therefore, the long-term loan is recommended.

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    Bfin Temp

    Uploaded by

    Asi Cas Jav
    43 views21 pages
    Mr. Cruz owns Zapatoes Inc., a growing Filipino shoe store. He wants to expand by opening a new manufacturing facility to lower production costs from PHP 475 to PHP 300 and sell shoes from PHP 1,000 to 2,000. Cruz has three options to finance the PHP 10 million facility: accepting equity investment from Alex, a short-term 1-year loan, or a long-term 5-year loan. Choosing long-term financing allows better allocation of funds and capital since liquidity and efficiency ratios are low, with low payable and receivable days. Therefore, the long-term loan is recommended.

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    Sample of FABM 1 req

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    bfin temp

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    Mr. Cruz owns Zapatoes Inc., a growing Filipino shoe store. He wants to expand by opening a new manufacturing facility to lower production costs from PHP 475 to PHP 300 and sell shoes from PHP 1,000 to 2,000. Cruz has three options to finance the PHP 10 million facility: accepting equity investment from Alex, a short-term 1-year loan, or a long-term 5-year loan. Choosing long-term financing allows better allocation of funds and capital since liquidity and efficiency ratios are low, with low payable and receivable days. Therefore, the long-term loan is recommended.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    43 views21 pages

    Bfin Temp

    Uploaded by

    Asi Cas Jav
    Mr. Cruz owns Zapatoes Inc., a growing Filipino shoe store. He wants to expand by opening a new manufacturing facility to lower production costs from PHP 475 to PHP 300 and sell shoes from PHP 1,000 to 2,000. Cruz has three options to finance the PHP 10 million facility: accepting equity investment from Alex, a short-term 1-year loan, or a long-term 5-year loan. Choosing long-term financing allows better allocation of funds and capital since liquidity and efficiency ratios are low, with low payable and receivable days. Therefore, the long-term loan is recommended.

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    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 21

    Add a Footer 1

    FINANCIAL ANALYSIS
    OF ZAPATOES INC.
    WHO IS
    BEHIND
    ZAPATOES INC.
    Mr.Anthony Cruz

    Photo Credits to ROverhate.Free vector photos. Retrieved


    fromhttps://pixabay.com/en/man-business-cartoon-businessman- 3
    CASE 1
    Why expansion is
    needed?

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    WHY EXPANSION IS
    NEEDED?
    • Anthony Cruz is a businessman who owns
    Zapatoes Inc. – is a home grown Filipino shoe store
    and since it started its operations in 2009 tremendous
    growth in his company sales was reported. Zapatoes
    Inc. was reported to sold 3 300 pairs in 2013, 4 500
    pairs in 2014 and 6 200 pairs in 2015. It is indeed a
    growing company and people are expecting that their
    profits are high. However, Cruz is still depending on a
    manufacturing facility to produce the shoes that he
    designs. Currently he is producing his shoes for PHP
    475 and he is wandering if he can lower down the cost
    of his productions by PHP300, so he can sell his
    products to young professionals and college students
    with a price range of PHP 1 000 to PHP 2 000.

    Add a Footer 5
    PROFITABILITY
    RATIOS'
    This Ratio measures the
    profitability of the company. It is a
    great analysis to look forward to,
    especially for the company’s creditors
    and investors. It is a great way to gain
    more profit and investors someday.
    Internal and external users of
    Accounting will use this as a basis if
    the company is working well or not

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    SOLUTION FOR CASE 1
    Why expansion Is needed?

    Summary:

    Since the Operating Profit Margin is larger than the Net Profit Margin
    it only indicates that the company spent more funds in their operating
    expenses rather than the profit that they have. So, the reports of Mr. Cruz
    are true, he wants to expand his business to grow more profits and to
    lessen the expenses for the operation and production of his products. And
    if he can lessen his production cost he can earn more profit. And lastly the
    Return on Assets has a big percentage and it only means that if it has a
    large percentage several investments can be done. If the interest rates are
    not bigger than the percentage of the Return on Assets .

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    CASE 2
    W H AT I S T H E B E S T
    F O R T H E C O MPA N Y ?

    Which investment should he choose?

    According to Mr. Cruz if he expands his business and opens a


    new facility it will increase the operating expense by 30%, and
    according to him his operating expenses includes marketing
    and distribution cost.

    To finance a PHP 10 million facility, he has 3 options

    To accept a PHP 10 million equity from Alex and Alex will hold
    45% of the business ownership afterwards and he doesn’t
    demand for any specific returns.

    Short term loan for 1 year with 6% per annum at Short time
    bank

    Long term loan for 5 years with 10% per annum at Longly
    Bank Retrieved from:
    Add a Footer https://unsplash.com/photos/_r4DM9jIaKY 8
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    CASE 2
    SOLUTION AND
    R E C O M M E N D AT I O N

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    Add a Footer HTTPS://UNSPLASH.COM/PHOTOS/QGB4-ECYHY8 16
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    TITLE
    “Choosing a long-term plan is
    the Best for this company,
    since the ratio of liquidity and
    efficiency resulted to low
    payable and receivable days.
    Hence, if they choose to have
    a long term investment they
    will easily allocate funds and
    ByAilyn A. Castillo
    their capital properly and Bank of Commerce
    efficiently.” Philippines
    https://unsplash.com/photos/5f4hUdiJGIs
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    THANK YOU
    H AV E A N I C E D AY A H E A D !

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