CHAPTER 5

FINANCIAL STUDY

This chapter discusses the financial aspects of the study, in order for a

business plan to understand it needs money to start. To determine whether the future

industry will remain profitable through the existence of competitors and unfavorable

economic condition, the researchers have to project a five-year financial statement.

This chapter includes the source of funds, balance sheet, income statement,

cost of goods sold and cost of sales.

Financial Assumptions

A. Production Cost

The production cost is 1,542,330.98 in fist year of operation and it will

increase in year 2 up to 50% and increase in year 3 up to 75%.

B. Demand Projection

The demand projected in year 1 will increase in 50 % in year 2 and 75% in

year 3.

C. Purchasing Cost

The purchasing cost in year 1 will increase in 50 % in year 2 and 70% in year

3.

D. Sales

The Sales in year 1 will increase in 50 % in year 2 and 75% in year 3.

E. Change in selling price

 the selling price set to 30 pesos, in year 2 the selling price will increase to35

pesos reflecting a 16.67 increase. In year 3 the selling price will rise to 40

pesos which is 14.29% increase.

F. Expenses

The operational expenses will increase 5% per year in line with our production

and sales growth.

G. Purchase of plant, property and equipment

We plan to allocate 1,000,000 for plant, property and equipment over the next

2 years of operation. This investment will be phased, with 500,000 in year 3

an year 3.

H. Capital or Investment

The partners agreed to maintain initial investment and consider additional

investment based on performance. Each will contribute 500,000 to ensure

sufficient cash flow.

I. Withdrawal

After 3 years the partners will withdraw 50% of net income as profit

distribution.

Initial Capital Requirements

The partners agreed to contribute an equal sharing of capita in amount of each

Initial Capital Requirements

Partners Ratio Invested Amount

Yshra Sumihay 50% 500,000

Camil Jane Cordova 50% 500,000

Total 100% 1,000,000

A.
 Estimated Annual
Price Depreciatio 1st Year 2nd Year 3rd Year
Item (PHP) quantity n (PHP) (PHP) (PHP) (PHP)
Fridge 20,000 2 8,000 32,000 24,000 16,000
Scissor 20 10 40 160 120 80
Peeler 34 15 102 408 306 204
Spatula 49 10 98 392 294 196
Table 5,000 5 5,000 20,000 15,000 10,000
Bowl 80 15 240 960 720 480
Jar 450 10 900 3,600 2,700 1,800
Measurin
100 10 200 800 600 400
g Spoon
Measurin
100 10 200 800 600 400
g Cup
Chopping
150 5 150 600 450 300
Board
Generator 20,000 2 8,000 32,000 24,000 16,000
Knife 70 10 140 560 420 280
Strainer 50 15 150 600 450 300
Blender 828 10 1,656 6,624 4,968 3,312
freezer 18900 6 22,680 90,720 68,040 45,360
chair 250 20 1,000 4,000 3,000 2,000
Total: 194,224 145,668
97.112

b. Raw materials for the first quarter

Year 1
UNIT TOTAL
MONTHS ITEMS QUANTITY COST COST
Carrot 3,368 30
kg 101,034.00
Lemon 33.78 40
kg 1,351.20
Blue
505.17 166.67
Ternate kg 84,196.68
Water 564 25
Containers 14,100.00
Sugar 673.8 40
kg 26,952.00
Plastic
3
Bottles 50,517 pcs 151,551.00
Labels 2
50,517 pcs 101,034.00
TOTAL 106,179 480,219
Year 2
MONTH UNIT TOTAL
S ITEMS QUANTITY COST COST
 Carrot 5,052 30 151,551.0
kg 0
Lemon 51 40
kg 2,026.80
Blue
758 166.67 126,295.0
Ternate
kg 3
Water 846 25
Containers 21,150.00
Sugar 1,011 40
kg 40,428.00
Plastic
75,776 3 227,326.5
Bottles
pcs 0

Labels 75,776 2 151,551.0

pcs 0
TOTAL 159,268 720,328

Year 3
UNIT
MONT ITEM QUANTI COS TOTAL
HS S TY T COST

Carro
8,840 30 265,214.
t
kg 25
Lemo
89 40
n kg 3,546.90
Blue
166.6
Terna 1,326 221,016.
7
te kg 30
Wate
1,481 Contain 25 37,012.5
r
ers 0

Sugar 1,769 40 70,749.0

kg 0
Plasti
c
132,607 3
Bottle 397,821.
s pcs 38
Label
132,607 2 265,214.
s
pcs 25
1,260,57
TOTAL 278,719 5
c. Pre-operating expenses (product testing and survey)

Expense Category Description Estimated Cost (₱)

Fees for registering the
Business Registration 5,000
business name

Health permits, food safety

Licenses and Permits 10,000
certifications, etc.

Costs associated with market

Market Research 5,000
analysis and surveys

Testing juice quality, flavor,

Product Testing 7,000
and shelf life

Consulting fees for contracts

Legal Fees 7,000
or agreements

Advertising and Initial marketing materials

8,000
Promotion (flyers, posters, etc.)

Fees for business planning or

Consulting Fees 5,000
consulting services

Basic supplies needed to start

Office Supplies 3,000
the business (stationery, etc.)

Advance payment for rental

Rent (Advance) 5,000
space

Deposits for electricity,

Utility Deposits 2,000
water, and other utilities

Costs associated with setting

Equipment Installation 7,000
up machinery and equipment
 Costs for conducting
Surveys 4,000
consumer surveys
total 68,000

d. Business permits and licenses

Permit/License Agency Estimated Fee (₱)

Business Name Registration DTI (City Level) 1,000

Partnership Registration SEC 2,000

Mayor's Permit / Business

Manolo municipal Hall 7,000
Permit

Barangay Clearance Barangay Office 300

Sanitary Permit City Health Office 1,000
FDA License (for food
FDA (based on city sales) 7,000
products)

Environmental Compliance
DENR 3,000
Certificate (ECC)

City Waste Management

Waste Disposal Permit 500
Office
Bureau of Internal Revenue
BIR Registration Fee 500
(BIR)
Organic Certification Organic Certifying Body 7,000
Fire Safety Inspection Bureau of Fire Protection 1,000

Product Labeling Approval

FDA 3,000
(FDA)

Food Handler’s Permit (per

City Health Office 500 per person
employee)
e. Selling and Advertising expense

Expense Category Description Estimated Cost (₱)

Marketing Materials Flyers, posters, and banners 5,000
Paid ads on platforms like
Social Media Advertising 7,000
Facebook and Instagram
Costs for organizing tasting
Sampling Events 10,000
events or product demos
Initial discounts to attract
Promotional Discounts 5,000
customers
Creating a website for online
Website Development 8,000
presence
Incentives for customers to
Customer Feedback Programs 3,000
provide feedback
Sponsoring local events to
Event Sponsorships 6,000
promote the brand
total 44,000

f. Supplies expense

Expense Category Description Estimated Cost (₱)

Pens, notebooks, and other

Stationery 1,000
writing materials

Ink cartridges and printer

Printer Supplies 1,500
paper

Organizing documents and

Folders and Binders 500
files

Desks and chairs for

Office Furniture 4,000
administrative work

Purchase of computers (2 40,000 (₱20,000

Computers
units) each)

Printers Purchase of printers (2 units) 10,000 (₱5,000 each)

 Miscellaneous Supplies Other necessary office items 300

total 7,300

g. Repairs and Maintenance (if you rent an old building)

Leasehold Improvements

Renovation 20,000

Electrical works 10,000

h. Sanitation expense

Expense Category Description Estimated Cost (₱)

Detergents, disinfectants, and
Cleaning Agents 1,500
cleaning chemicals

Hand sanitizers for staff and

Sanitizers 800
production area

Brushes, mops, rags, and

Cleaning Tools 1,000
other cleaning tools
Gloves, hairnets, and face
Protective Gear 500
masks for staff
Trash bags for daily waste
Waste Disposal Bags 400
disposal
For handwashing and
Water and Soap 700
equipment cleaning

Pest Control Monthly pest control service 1,500

Unexpected sanitation-
Miscellaneous Sanitation 600
related needs
total 7,000

i. Rent expense (first quarter)

Rent Expenses

Monthly First quarter

 P 10,000 ₱ 30,000

j. Salaries and wages (first quarter) – includes

mandatory deductions: SSS, Philhealth and Pagibig;

benefits and privileges

Total
Net
Monthl Pag- Net
Daily SS Total Monthl
y PhilHealt IBI Salary
Position Salar S Deductio y
Salary h (₱) G for 1st
y (₱) (₱) ns (₱) Salary
(₱) (₱) Quarte
(₱)
r (₱)
54
Manager 600 13,200 528 100 1,168 12,032
0 36096
42
Cashier 428 9,416 377 100 900 8,516
3 25548
Productio
44
n Worker 450 9,900 396 100 942 8,958
6
1 26874
Productio
44
n Worker 450 9,900 396 100 942 8,958
6
2 26874
Productio
44
n Worker 450 9,900 396 100 942 8,958
6
3 26874
Purchase 44
450 9,900 396 100 942 8,958
r 6 26874
169,14
Total 2,828 62,216 - - - - 56,380
0

k. Utilities installation

Expense Category Description Estimated Cost (₱)

Initial setup and connection

Electricity Installation 3,000
fees for electricity

Initial setup and connection

Water Installation 2,500
fees for water
 Installation fees for internet
Internet Installation 3,500
services

Installation of gas lines for

Gas Line Installation heating or cooking (if 2,000
applicable)

Installation of air
Air Conditioning Installation conditioning units (if 5,000
necessary)

Miscellaneous Installation Unexpected costs related to

1,000
Costs utility installation

Total 17,000