Chapter I INTRODUCTION
A. Brief History of the Project Twenty first (21st) century is called the digital age because it is the era of modern technologies that we are using in our everyday life. These advance and sophiscated technologies help us to do our work easier and faster. One of the advance technologies is the digital t-shirt printer. It is one of the newest machine that was invented to satisfy our growing needs, wants and desires. Printed Tshirts are in demand nowadays that’s why the researchers chose to establish a Digital T-Shirt Printing Business. The proposed name of the business is “WATTASHIRT”. This name was chosen because of its simplicity, uniqueness and sweetness sound that can be easily distinguished by the market. The researchers want to attract customers not only for its remarkable name, but significantly the quality and standard of every printed shirts that it can produce. This establishment is located at the 2nd floor of Mega Center the Mall,Gen. Tinio St., Cabanatuan City financed by Mr. Roberto U. Cariazo Jr. This kind of business is a service type which needs to be established in a place where it is well populated and should be easy to locate.With that the researchers have chosen the right and the best location for the said business. “WATTASHIRT” targets the people of Cabanatuan most especially the students in the nearby schools/universities.
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B. Statement of the Problem The central problem of this study is the evaluation of the viability of establishing
“WATTASHIRT”, a digital t-shirt printing business here in
Cabanatuan City, Nueva Ecija.
C. Objectives The main objective of this study is to determine the viability and feasibility of the proposed venture. Specifically, objectives from the point of view of the four functional areas of management are as follows. 1. Marketing a. To identify the demand and supply for the products. b. To formulate marketing strategies for a successful business operations. 2. Technical a.
To develop the processes involved in operationalizing the project in the most effective and economical way.
b. To know the production requirement in the establishment of a digital printing business. 3. Organization and Management a. To design organizational set-up that is best suited for the proposed project. b. To determine the number and qualifications of the people required to manage the project effectively.
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4. Financial a. To identify the sources and mode of financing of the proposed business. b. To make an estimate of the amount of initial investment required to execute the project. c. To present projected financial statement of the proposed venture for the next five years. d. To evaluate the profitabiliy, liquidity and stability of the proposed business venture.
D. Significance of the Study The significance of the study has a great impact to the community and society as a whole, these are as follows: Firstly, to the potential customers they will have a personalized t-shirt at a very affordable price. Secondly, to the printing industry for it will improve the customers buying habit, and of course the industry’s merely stability as well. To the university, this study will serve as a reference in the library. To show to the aspiring businessman that this kind of business is profitable.
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E. Scope and Limitations This study covers the establishment of “WATTASHIRT” in Mega Center the Mall, Gen. Tinio St.,Cabanatuan City.
All necessary information are
gathered. This study was done within a regular term of second semester of school year 2009 -2010. Relevant datas were gathered during this period. The survey covers those people in the mall. Generally, the target market of this business are the end users. This market includes the students, and those people who were t-shirt lovers. The limitations of the researchers in the study is the actual distance of other possible customers outside the vicinity of Mega Center the Mall, Gen. Tinio St., Cabanatuan City. This study is for academic purposes only.
F. Methodology 1. Sources of Data The Researcher used two classes of data, primary and secondary data. a. Primary Data were obtained through survey questionnaires and interviews. A sample survey questionnaire was formulated by researchers for the target market. This was validated by the five experts and five laymen before administration. Experts are those directly involved or have experience in running a business venture with some advancement in technology. A copy of the validation sheet and questionnaire are presented in Exhibit I-A and Exhibit I-B
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respectively. Three hundred ninety five (395) copies of survey questionnaires were distributed, all of which were retrieved. Interviews were conducted to those who have existing printing business. A copy of a sample letter of request for an interview and structured interview guide questions are presented in Exhibit I-C. b. Secondary Data were gathered from printed materials, books, magazines and related studies made on the subject. These materials were generated from National Statistics Office (NSO), Bureau of Fire Protection(BFP), Department of Trade and Industry(DTI) and some of the website in the internet. 2. Research Design To yield a meaningful and relevant information, the researcher used exploratory and descriptive methods. a. Exploratory Method. The researcher conducted survey and some interviews to some well known establishments who also practice the same business. There were no printed studies regarding this type of business in Araullo University library however, lots of sufficient information were obtained through internet research and surveys. The result of interviews is presented in Exibit I-E. b. Descriptive Method. Descriptive method was used to gather and describe comprehensively the characteristics of the target market’s elements. The description is based on a sample size which represents the total population. Survey questionaires were distributed randomly to the prospective clients to study and determine the demand and supply rate.
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The formula in computing the sample size is:
η=
N
where; η = sample size
1+Nε²
N = estimated population ε = margin error
The target market is composed of eleven thousand one hundred fifty (11, 150) ages 10 – 20, Nine thousand nine hundred thirty five (9, 935) ages 21 – 30 and eight thousand seven hundred fifteen (8, 715) ages 31 – 55. Table I-A Target Market Population 2009 Ages 10 – 20 11, 150
Ages 21 – 30
Ages 31 – 55
9, 935
8, 715
Total 29, 800
Source: Mega Center Mall management
The sample size of three hundred ninety five (395) is resultant of the following computation.
where; η= 29800 1+29800 (5%)² η = 395
η = sample size N= 29800 ε = 5%
The sample size was pro-rated accodding to the weight of each category in population. One hundred fifty five (155) copies where distributed to ages 10 – 20, One hundred twenty eight (128) copies where distributed to ages 21 – 30, One hundred twelve (112) copies where distributed to ages 31 – 55 respectively.
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3. Treatment of Data All quantitative data gathered were processed using manual or personal method. Comparative analysis was also used to analyzed data. Historical information on variables involved in forecasting the figures in the marketing aspect were inconsistently increasing. Hence, projections were computed through the use of Statistical Straight-line Method. This method has a formula that goes as follows:
Y = a + bx
Where;
À = ∑Y - b∑ Ń X = is the assigned value B
= ∑XY- ∑X∑Y/n ∑X² - ( ∑X) ² N
a = is the constant b = is the parameter ń = number of years Y = is the given data
To determine the earning desirability of the investment, the following formula were used.
a. Net Present Value (NPV). A sophisticated capital budgeting technique; found by subtracting the projects initial investments from the present value of its cash inflow discounted at tha rate equal to the investor’s cost of capital.
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Present Value of cash flow
Formula:
Less: Cost of Investment Net Present Value
b. Internal Rate of Return (IRR) is a technique used to determine the discount rate which equates the present value of cash inflows with the initial investment associated with the project. The rate is actually the compound annual rate of return the investor will earn if it invest in the project and receives the project cash inflows.
n IRR =
∑ ___Čƒt____ =
Π
t=1
Čƒt
(1 + IRR ) t Where;
Π = initial investment t
= period
Čƒ = cash flow k =
cost of capital
c. Profitability index (PI) is the ratio of the present value of the future cash flows to the investment.
Formula: PI =
Present value of cash flow/cost of investment
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To ascertain the viability in terms of soundness and condition of the project if implemented, the following formula were used.
d. Current Ratio is measure of the number of pesos of current asset available
to
meet
current
obligation.
It
is
best-knoww
liquidity
measurement. A current ratio of less than one indicates the firm has a negative working capital.
Current Ratio =
Current Assets Current Liabilities
e. Operating Performance Ratios examine the performance of the management in the operating business. They are divided into two subcategories operating efficiency and operating profitability.
e.1
Operating Efficiency Ratios question how efficient would the
management be using the asset they have at their disposal based in the plans set forth in this study.
i.
Net Fixed Asset Turnover Ratio is a measure of the projects utilization of fixed assets.
ii.
Equity Turnover Ratio measures how effectively would the owner’s net worth will be used in the project
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Total Fixed Asset Turnover =
Revenue
Average Total Net Fixed Asset Equity Turnover =
Revenue Average Equity
e.2 Operating Profitability Ratios look at how good plans are set in gaining profit out of the investment in the project.
i.
Gross profit margin equals percent of sales available after
deducting cost of goods sold. This percentage is a available to cover selling general and administrative costs and also earn a profit. It indicates the basic cost structure of the project and its cost-prize position. ii.
Operating Profit Margin relates the projects profit to its net sales .
The variability of this ratio is a prime indicator of the business risk of the project. A higher ratio implies that the company has a higher level of fixed costs and therefore inflexible. iii.
Profit Margin shows how much profit is generated on every peso
of sales. iv.
Return on Net Equity indicates the project’s return on all the net
worth employed. It measures return on all available internal funding.
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Profit Margin =
Profit Revenue
Return on Net Equity =
Profit Average Net Equity
G. Review of Related Literature The literature review identifies and gathers key issues about the quality and status of printing business, including its influences and the range of provisions for students and some professionals and possible customers.
At the beginning of the twentieth century, the T-Shirt quickly became an American favorite. Now, a century later, at the beginning of the twenty-first century, the T-Shirt remains as popular as ever. The American T-Shirt began during WWI when American troops noticed European soldiers wearing a comfortable and lightweight cotton undershirt during the hot and humid European summer days. Compared to the wool uniforms that the American soldiers wore, these undershirts were cooler and more comfortable and they quickly caught on with the Americans. Due to their simple design, these shirts became known in the USA as "T" shirts or, as we know them now, "TShirts". By the 1920's, "T-Shirt" had become an official word in the American English language with it's inclusion in Merriam-Webster's Dictionary. By W.W. II,
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both the Navy and the Army had included the T-Shirt as standard issue underwear. Initially pegged as an undergarment, the T-Shirt soon came in to it's own on the big screen. John Wayne, Marlon Brando and James Dean all shocked Americans by wearing their underwear on national TV. In 1951, Marlon Brando shocked Americans in his film "A Streetcar Named Desire" when his T-Shirt was ripped off of his body revealing his naked chest. By 1955, the T-Shirt was tolerated worn without another shirt covering it. Then James Dean made the T-Shirt real cool in "Rebel Without A Cause". James Dean made the T-Shirt a contemporary symbol of rebellious youth. In the 60's people began to tie dye and screenprint the basic cotton T-Shirt making it an even bigger commercial success. Advances in printing and dying allowed more variety and the Tank Top, Muscle Shirt, Scoop Neck, V-Neck, and many other variations of the T-Shirt came in to fashion. The T-Shirt was inexpensive, in style, and could make any statement you cared to print. The American T-Shirt came into it's own during the late sixties and seventies. Rock and Roll bands began to realize that they could make significant amounts of money selling their T-Shirts. Professional Sports caught on and soon the officially licensed T-Shirt became hot merchandise. During the 80's and 90's the production of T-Shirts and the mechanics of printing on them increased the volume and availability. Soon the American T-Shirt was being called a commodity item in the apparel industry.
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H. Definitions of terms The following terms are defined as used operationally in this research: a. Round neck Shirts – a collarless usually short sleeves knit shirt without fastenings usually made of cotton and worn for leissure and sports. b. Polo shirts – a lightweight casual shirt, usually made of knitted cotton with the small collar and bottoned opening at the neck c. License – a permit granting permission to engaged in an activity that would otherwise be illegel. The main purpose of a license is to protect the public interest. A licensed issued by the government agency is required in order to pursue a certain occupantions, run certain business and enjoy certain privileges. d. Ink – colored paste use in printing e. Printing – the production of printed matter. f. Proprietorship – is the capacity of an individual in effective and efficiently managing abusiness towards customer satisfaction and profitability of services. g. Proprietor – an individual who owns the business himself. h. Market – can be categorized into consumers. i. Depreciation – the systematic allocation of the depreciaable amount of an assets over its useful life. j. Cashier - a person in charge of the cash transaction. k. Design – the arrangement of parts, forms, color, especially as to produce an artistic unit.
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l. Designer – a person whose work is making a design. m. Cotton – a soft, white, fibrous mattter around the seeds of various plants of the mallow family. n. Rayon – any of various textile fibers produced by pressing a cellulose solution through very small holes and solidifying it in the form of filaments o. Silk – a fine, soft, shiny fiber produced by the silkworm. p. Linen – thread or cloth made by flax. q. Wool – a soft, curly hair of some animals like sheep and goat. r. Whole sale – a sale of goods in relatively large quantities, usually at a lower cost per item. s. Retail – the sale of goods in small quatities directly to the consumer.
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Chapter II Marketing Aspect A. Product Description Being different to others make us unique and cool. We are engage in a digital t-shirt printing business. Statement and personalized shirts nowadays are really in demand. We offer an instant printed shirt by using a digital printing machine which is better than the other printing press that only uses heat press machine. We don’t want our customers to wait for a long period of time. We assure that our customers will only wait for a maximum of ten (10) minutes. The machine that we use is the latest t-shirt printer. We sell a finish printed shirt. The customers could choose the designs that they want. They may choose the color size and type of shirts they want. Satisfaction of our customers is always our priority. B. Industry profile We are in printing industry and there are many competitors engaged in the same industry. We are confident with the kind of business that we have even though we knew we have a lot of competitors because we know that we will beat all of them through the use of our latest digital printer. We are concern with our customers’ need and satisfaction. Our price is very affordable.
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Strengths The equipment used is the latest and newest machine a printing company ever had. It could print at the maximum of ten (10) minutes. The finish product is absolutely clean. No mess at all. The business doesn’ t require bulk printing of t – shirts, it accepts even a single piece of printing works. The business offers not just printing of t – shirts it also has its finish products to sell. Weaknesses The ink consumption and electrical consumptions are the only weaknesses of the business. Opportunities The business could also do personalized things aside from printing t – shirts. It could establish another branch in the nearby towns, barangays, and cities. Threats Competitions is a business rivalry; competing for customers or markets would be a great threat for the business. There could be a lot of printing industries around the city. Economic crisis as well could have a great impact on the sales of the business and lastly theft among the employees would also affect the operation of the business.
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C. Demand Demand is the quantity of good that buyers are willing to buy. Before anyone could establish a business that he desire, he must need to know if there is demand in whatever kind of business he’s willing to operate. Cabanatuan City is considered as one of the most progressive place here in Nueva Ecija. Modern technology is already spread out all over the City. The Computation of projected population is presented at Exhibit II – B and results of survey question is presented at Exhibit II – A. All quantitative data gathered were processed using manual or personal method. Comparative analysis was also used to analyze data. Historical information on variables involved in forecasting the figures were inconsistently increasing. Hence, projections were computed through the use of Statistical Straight-line Method. This method has a formula that goes as follows: Y = a + bx
Where;
À = ∑Y - b∑ Ń X = is the assigned value B
= ∑XY- ∑X∑Y/n ∑X² - ( ∑X) ² N
a = is the constant b = is the parameter ń = number of years Y = is the given data
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Table II-A Historical Population of Nueva Ecija Ages 15 – 30 Class A – C 1990 – 2007 Year Population 1990 404, 316 1995 460, 859 2000 586, 940 2007 626, 023 Source: National Statistic Office
Table II - B Projected Population Nueva Ecija Year 2010 2011 2012 2013 2014
Population 690, 383 804, 282 918, 181 1, 032, 080 1, 145, 979
D. Supply The supply is the quantity of goods that sellers are willing to sell. If there is a demand there should always be a supply. Our business is in printing industry there are many existing competitors. Kameraworld and Picture frenzy are our inside competitors. They are accepting t-shirt printing. They need more time to do the printing because they will bring it to manila. Their price is higher compare to us. Octograpix, R. Macapagal and Pinoy advertising are some of our outside competitors. They are using heat press and it takes time to do the job. They don’t accept one time printing because of very expensive cost.
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E. Demand – Supply Analysis The researcher recognizes that the existing capacity of competitors is not enough to satisfy the demand of the market. The data gathered from the question no. 1 of survey questionnaires is the demand of the proposed business. Being conservative, the market share is computed by deducting the hypothetical projected supply from the projected demand. This is based on the assumption regardless of continual supply from the existing competitors availed by the of the market, there is still remaining share for Watta shirt. To analyze the market share meaningfully, the researchers translated the projected demand and projected supply in monetary terms. The projected demand of Watta Shirt is multiplied to unit price. Likewise, the projected supply of Watta shirt is multiplied to unit price to arrive at the total amount. The total amount is projected supply is deducted to the total amount of projected demand to get the total amount of unmet demand. The computation shows that the unmet demand is seven thousand eighteen (7, 018) on 2010 eight thousand one hundred seventy five (8, 175) on 2011 nine thousand three hundred thirty three (9, 333) on 2012 ten thousand four hundred ninety two (10, 492) on 2013 and eleven thousand six hundred forty nine (11, 649) on 2014.
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Table II – C Demand and Supply Year
Demand
Supply
2010 2011 2012 2013
833, 406 970, 901 1, 108, 396 1, 245, 892
826, 388 962, 726 1, 099, 063 1, 235, 400
2014
1, 383, 386
1, 371, 731
Peso 1, 000, 000 1, 165, 000 1, 330, 000 1, 495, 000
Price 310 310 310 310
Peso 935, 580 1, 089, 650 1, 244, 030 1, 398, 720
Percent
10, 492
Round neck tshirt Price 250 250 250 250
11, 649
250
1, 660, 000
310
1, 552, 790
.84%
Unmet Demand Quantity
7, 018 8, 175 9, 333
Collared t-shirt
Market share
.84% .84% .84% .84%
Refer to exhibit II – A Question no. 2 and Exhibit II – C and II – D for supporting computation.
In Milions
Figure I Present demand and Supply
Refer to Table II - C
It can be deduced from the figure I that the demand and supply is gradually increasing in five years, yet the demand is stills exceed the supply. Hence, revenue is assures through the year.
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F. Marketing Plans
Occupants Our target markets are the people who are buying t-shirt specially the personalized t-shirt.
Object Our products and services are different from the others because of the digital machine that we are using. Customers may customize their own design. The can buy ready to wear t-shirts. T-shirts may vary in color, shape, size and design according to the customer’s choice.
Objective Many buyers look for affordable product having high quality. The product that we are going to sell is affordable. We are rendering service with high quality. We want to meet our customer’s satisfaction.
Occasion Most of the buyers usually buy the products occasionally.
Outlet Buyers can buy retail or wholesale from us. We are both retailer and wholesaler. 21
Product In competitive situation, we are different in using the printer. Our competitors are using a heat press machine. It takes so much time to wait and more expensive material that will use just to print a shirt. In our business we are using a digital t-shirt printer, where in ten minutes is enough to wait the finish product. It is much cheaper compare to our competitor’s price.
Promotion In our opening day we are conducting a big discount a ten percent (10%) discount for the fisrt (1st) fifty (50) customers. Discounts will be offered to increase and maintain the volume of customers who will buy in bulk. There are several ways of promoting our business such as giving pliers and putting tarpaulin in some place. In other cases the best way to promote our product to our customer, by personal selling to inform the public that there is such product. Pricing The objective of every business is to maximize profit. The price of our product is based on what kind of materials we will use. We determine its price after deducting the cost of raw materials, direct labor and factory overhead. The full cost of product is presented in Table II – D.
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Table II – D Cost of the Product Prices
Unit Price
Dark color
Light Color
White
Average
Labor
Factory Overhead
Ink
Total
Mark Up
80
75 110
65 100
73.333 105
10 10
25 25
50 50
158.333 190
63.333% 61.29%
Direct Materials:
Round Neck Collared
Sources: Emy Tesoro, and Sulit.com
G. Channel of Distribution The finished product will be sold at the second (2nd) floor Mega Center Mall, Gen. Tinio St., Cabanatuan City. We are also accepting t-shirt printing job. Figure II – A Channel of Distribution
Supplier Raw Materials Processing Customer H. People The people are committed to the business. They really know the product. It is easy to promote our product. Our personnel are motivated and we assure our customers will be satisfied. Our personnel are very approachable. They have the knowledge to do the job. Our designer is very artistic he knows a lot in fashion and his design is different from others. They serve with a smile. They don’t work only for money but to enjoy the things that they are doing.
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Chapter III Technical Aspect Exhibits III – A Process Flow
Creating
Preparing
Placing
Printing
Packaging A. Production Process The exhibits above shows the production process starting from creating innovative designs, then preparing the t – shirt(s) to be used after the preparations is the placing of the t – shirt(s) in the printer and then the printing of designs on the t – shirt(s) and lastly the packaging of the finish product.
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B. Equipment, Machinery, Furniture and Fixture T-shirt Printer - is the most important equipment in establishing a Digital T-shirt printing business. It prints any images directly on the textile with nice, bright, and sharp result. The designs on the t-shirts are waterproof. With our unique software the operations is quite easy to operate. It is just like a normal inkjet printer. It is just highly efficient and low cost. Computer Desktop - it is use to design t-shirts. It can install all the applications needed in t-shirt printing. The pictures of tools and equipment is presented in Exhibits III – C. Computer Table – it holds the computer desktop and t-shirt printer. Divider – it is where the t-shirts are being store/kept. Cashier’s Table – it is where the customer is being entertained and the files are stored. Bench – it is where the customer will sit while waiting for their shirts Chair – it is where the employee will sit while doing their jobs. Table III-A Prices of listed assets Description Computer Desktop
T-shirt Printer Computer Table
Cahier’s Table Divider Chair Bench TOTAL
Quantity 1 1 1 1 1 2 1
Useful life 5 5 5 5 5 5 5
Depreciations P 4,478 P 26,000 P 190 P 530 P 970 P 198 P 450 P32,816
Cost P22,390 P 130,000 P 950 P 2,650 P 4,850 P 990 P2,250 P164,080
Source: Blass Edward, sulit.com and Mega Center the Mall
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C. Building The place of the business is located at the second (2nd) floor of Mega Center Mall, Gen. Tinio St., Cabanatuan City. It is situated in eight (8) square meter lot; Mega Center’s management doesn’t allow a lease contract. They only accept rentals for a maximum of one (1) year. Mega Center’s management have a policy that as long as the mall will opened the stall must be opened. They have penalty of ten pesos (P10) per minute when the stall will closed but the mall is still opened. Rental fee is twenty two thousand pesos (P22, 000) per month. D. Location Location of the business can be considered as one of the most important thing to be done in establishing a business. The location should be desirable and should fit the kind of business that you were conducting. Our business is located in the second (2nd) floor of Mega Center Mall in the proper city of Cabanatuan, because it is well populated and that exactly what we need in our business. The location must easy to reach by the customers. E. Capacity/Scheduling The maximum capacity of the printer is two hundred (200) t-shirts per day but it can operate as long as they are inks. For every five (5) ml of ink one hundred (100) pieces of half bond paper designed t-shirts could be printed and for every one (1) liter of ink one thousand (1, 000) pieces of whole bond paper designed t-shirts could be printed. The employee work ten (10) hours a day, starting from 10:00 a.m to 8:00 p.m
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F. Utilities and Other Operating Cost In establishing a business the following cost will incurred: a. DTI Permit – a permit issued by the government specifically DTI that all the registered business establishment have different names so that they would have they own identity. P150 is needed for the issuance of the said permit and additional P15 with the total cos of P165 and it is renewable every five (5) years. b. Business Permits and License – it is issued by the government (mayor’s office) to protect the public interest. It is needed by every establishment to operate and enjoy certain privileges
Table III - B The Business Permits and Licenses Fees Descriptions Electrical permit Business name Badge fee Business permit Personnel permit for five (5) persons Municipal permit Total
Price P20 P60 P160 P120 P900 P625 P 1, 885
Source: Municipal Office of Cabanatuan City
c. Fire Safety Inspection Certificate – issued by the BFP to assure the public that the establishment building or occupancy has been duly inspected for fire safety with the findings that it has substantially complied with fire safety and protection requirements. Fire safety inspection equivalent to ten percent (10%) of all fees charged by the building official.
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d. Taxes – BIR collects taxes to every establishment to help the government raise funds for the construction of public highways and other projects for the benefit of the public. P500 is needed for issuance of BIR form.
e. SSS contribution and Philhealth – as an employer it is our duty to give our employees the benefits that they needed in case of sickness, maternity, partial/permanent disability, funeral, death, retirement and health. f.
Electricity – the proposed business would not operate when there is no electricity P1, 000 monthly is enough to pay the electrical consumption of the business.
G. Production Cost Fashion nowadays include printed t-shirt or t-shirts with slogans which really in demand. We could see every teens even those young at hearts wearing printed or customized shirts anywhere. Every business has their own materials for them to operate well. In digital t-shirt printing business the raw materials that are needed are as follow: a. T-shirts – it is where the desired designs are printed, we do have our own stocks of t-shirts that were supplied to us by Mrs. Emy Tesoro. Her stall is located at #48 Bldg.A Cabanatuan City Super Market. Wee see to it that thirty (30) pieces of shirts were maintain for our safety and sixty (60) pieces of shirts for our reorder point.
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b. Ink – every printed must have inks to be able to print whatever designs the customer wants. One (1) liter of ink is necessarily maintained for our safety stocks and three (3) liters is the reorder point. The pictures of the raw materials needed is presented in Exhibit III – D. And the sample pictures of finish product is presented in Exhidits III – E. c. Software – it is the software that gives ability to adjust the ink saturation, sharpen the image, manipulate color contrast add lettering effects to your artwork and a variety of other art functions only found in advance programs. The name of the software is Fast ARTIST 1.5 Image Editing Software. d. Pretreatment #1 - This is an odorless, non-toxic inkjet pretreatment designed to be used exclusively with FastINK white textile ink. It will help white ink appear brighter. The direct labor cost is seven nine thousand two hundred (P79, 200) yearly; the other cost to produce the product is estimated to be tho hundred fifty percent (250%) of direct labor. The summary of Production Cost is shown in Exhibit III – B.
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Chapter IV Management Aspect
A. Forms of Business Organization This business will be established as a single or sole proprietorship as the most convenient and suitable type of form of set up. The ownership is vested into one person. The owner enjoys the full freedom of operation. He has the power and full control of the enterprise. He can do what he want in the operation of the business. The owner has the authority to give what benefits and profits that accrue from the business. He can set his own policies and procedure and makes his own decision without asking and consulting anyone. Advantages The established business is very easy to organize it only need at least one computer and one digital printer to operate the business. It only needs at least two (2) employees. It is the first in Cabanatuan City to use a digital printer. Ten (10) minutes is the maximum time to print whatever designs the customers desired. It provide fast and high quality services at an affordable prices. The customers would not wait for a weeks or days for the finish product. Disadvantages The disadvantage of the business is the threat that the competitors may ruin the operations of the business. Its income is subject to tax regardless of whether it is drawn or not. The business has limited capital and is limited only to the areas in which the proprietor has expertise.
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B. Duties and Responsibilities Manager/ Owner He must be efficient leader in order to win workers trust and full cooperation. He must be fair in treating his worker. He must be contract and negotiate of the market. He must be responsible in supervising his staff and motivate them to achieve the company/ business objective. He must be responsible for the records, files, and keep all the book of account. Printer/Designer Must be knowledge to measure design. Must be aware to the latest fashion. Must know how to use computer. Should be responsible in helping others in their vacant time. The working hours is ten (10) hours a day. Seven days a week. Receiver/Cashier Must contact and negotiate with the customer. Must know to receive and releases stocks. Must be responsible for the records, files, and keep all the book of accounts. Must know how to use computer.
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The working hours is ten (10) hours a day. Seven days a week. Should be responsible in helping others in their vacant time. Exhibits IV - A ORGANIZATIONAL CHART
Manager/owner
Printer/Designer
Cashier
C. Personnel Requirement A worker is usually assigned to perform tasks, duties and responsibilities which may differ from those of other job. In this kind of business are the numbers of workers are composing by the following:
Table IV – A Personnel of the Business Position Manager/owner Printer/designer Receiver/cashier Total
Number of workers 1 1 1 3 workers
D. Qualification Standards
a) Printer/Designer 18-25 years of age
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College level Computer literate/ knows how to use, designs and encode With pleasing personality Must have good moral character Must be industrious and hardworking
b) Receiver/Cashier 18 – 25 years of age College level Have a knowledge on how to record a transaction With pleasing personality Must be trust Must have good moral character Must be industrious and hardworkin E. Compensation Package “In any other business operation compensation is primarily given a consideration, The owner wants profit while workers wants a higher wage and shorter time for work. Salary and benefits inspire the workers in performing their job well. The salary of most workers is based on more or less the same salary paid in the community for the same type of work. The employees must be paid in accordance with their knowledge in the business and also with regards to their efforts in works.” The owner/manager will receive net profit based upon the sales after deducting all the expense had been used. The cashier and the designer/printer
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will receive their salary as a monthly terms basis. The computation and the summary of wages and compensation of the employee is presented in Exhibit IVB. Table IV – B Compensation Package Position Cashier Designer
Total
No. Of person
Rate
1 1 2
P200 P220
Deductions SSS Philhealt P200 P75 P233.30 P75
Monthly P5, 725 P6, 291.70
Annually P68, 700 P75, 500.40 P 144, 200.40
Table IV – C Projected Time Table Gantt Chart Activities
Weeks 1 2 3
4
5 6 7 8
acquiring the required capital applying for loan business registration canvassing of machine and equipment purchasing and delivery of equipment recruiting and hiring of workers Training of the employee purchasing, canvassing and delivery of raw materials
34
Chapter V Financial Aspect This potion determines the profitability level of the project which is the generally defined as the relationship of the of the net income after taxes to the total investment. It is largely based on the available opportunity cost in a particular period of time and place. It also involves thorough coverage of all the monetary information of the business. It covers detailed information on the total project cost, initial capital, sources of financing, financial statements and the financial analysis. The financial health of the business is assessed in the financial statements and analysis showing the three important accounting statements such as income, cash flow and balance sheets. Pertinent financial ratios are also illustrated describing the over all business liquidity, degree of indebtedness and profitability. Additional information are also provided such as break even outputs, sales and prices amount of sales required to earn a certain amount of profit and the cash payback period.
35
a. Major Assumption: The following are the general major assumption that the study makes: a. Sales - are the revenues by the business. Sales projection is how much money will be invested into the business, and the potential markets. The sales of the business are based on the demand and supply discussed in Chapter II Marketing Aspect. The business is assumed that on the average twenty one (21) customers per day for the first year of operations. The revenue projection is presented in Exhibit V – A. b. Cost of Goods Sold/Cost of Sales-is the cost of inventory that the business has sold to the customers. The cost of sales is discussed in Chapter III Technical Aspect. It is presented in Exhibit V – B. c. Salary, Wages and Benefits – the salaries that the employee received is discussed in Chapter IV Management Aspect. The supporting computation are presented in Exhibit IV – A. d. Rent-the rental cost of the business is two hundred sixty four pesos (P264, 000) per year. It is discussed in Chapter III Technical Aspect. e. Advertising- the cost for the advertisement of the business is five thousand (P5, 000) and it is increased by ten percent (10%) for the succeeding years. It is discussed in Chapter II Marketing Aspect. f. Supplies – it is the additional materials that are needed by the business. It is discussed in Chapter III Technical Aspect.
36
g. Utilities – are the electricity consumed by the business. The estimated electric consumption of the business is one thousand pesos (P1, 000) monthly; twelve thousand pesos per year and it is increased by ten percent (10%) annually. It is discussed in Chapter III Technical Aspect. h. SSS and Philhealth Contribution – is the only benefit received by the employees. The business assumed that it is included in Factory Overhead. It is discussed in Chapter IV Management Aspect. The schedule of SSS and Philhealth Contribution is presented in the Appendix.
i.
Depreciation – the company estimated that the useful life of tools, equipment and furniture and fixtures is five years. The total depreciation of the business is thirty two thousand eight hundred sixteen pesos (P32, 816). The supporting computation is presented in Table III– A.
j. Permits, Licenses and Taxes – the permits, licenses and taxes that is paid by the business is presented and discussed in Chapter III Technical Aspect.
b. Capital Requirement 1. Pre-Operating Expenses a. Business Permits, Licenses and Taxes – this is the cost incurred for the legality of the business. It is discussed in Chapter III Technical Aspect. The total cost incurred by the business is nine thousand one hundred thirty five pesos (P9, 135).
37
b. Advertising – is the cost incurred for the popularity of the business. It is incurred by the business for them to know the market. It is discussed in Chapter II Marketing Aspect. The pre-operating advertising cost is five thousand pesos (P5, 000) and increased by ten percent (10%) for the succeeding years. c. Electricity - the estimated electric consumption of the business is one thousand pesos (P1, 000) and it is increased by ten percent (10%) annually. d. Salaries –salaries and wages of the employees are divided in two segments. The direct labor and the indirect labor. The total cost of salaries in the pre-operating period is twelve thousand six hundred pesos (P12, 600) per month. e. Rental Cost – the pre-operating period of rental cost incurred by the business is twenty two thousand pesos (P22, 000) and forty four thousand pesos (P44, 000) for the rental deposits, respectively. f. Office Supplies – the office supplies pre-operating period is three thousand pesos (P3, 000). g. Raw Materials – the business have a total of the twenty thousand seven hundred fifty pesos (P20, 750). 2. Operating Expense a. Raw Materials – it is the primary materials that use to produced the product. The total purchases are presented in the Exhibit V – B.
38
b. Advertising – is the cost that incurred for the promotion of the business. The advertising cost is five thousand pesos (P5, 000) and increased by ten percent (10%) for the succeeding years. c. Electricity - the electric consumption of the business is twelve thousand pesos (P12, 000) per year and it is increased by ten percent (10%) for the next years. d. Salaries – the gross salaries that the employee receive is twelve thousand pesos (P12, 000) for indirect labor. It is increased by ten percent (10%) for the next years. e. Permits and licenses – the permits and licenses is renewable yearly. The total cost that incurred for the permits and licenses is nine thousand one hundred thirty five pesos (P9, 135). f. Rental Cost - the rental cost for the year is two hundred sixty four thousand pesos (P264, 000). g. Office Supplies – the business incurred for the supplies is ten thousand pesos (P10, 000) for the first year of the operations and increased by ten percent (10%) for the succeeding years. h. Interest Expense – the business has fifty thousand pesos (P50, 000) loans payable and it has twelve percent (12%) interest per year. The business has six thousand pesos (6, 000) interest payment.
39
3. Capital Expenditure/Fixed Assets The following are the fixed assets needed by the business. a. Tools and Equipment – it is the equipment that needed by the business. It is discussed in Chapter V – A. And the pictures of tools and equipment is presented in Exhibit III – C. Table V – A Tools and Equipment DESCRIPTION
QUANTITY
UNIT
UNIT COST
TOTAL COST
COMPUTER
1
SET
P22, 390
P22, 390
T-SHIRT PRINTER TOTAL
1
UNIT
P130, 000
P130,000 P152, 390
b. Furniture and Fixture – the furniture and fixtures that are needed that by the business are discussed in Chapter III Technical Aspect. The summary of Furniture and Fixture is presented in Table V – B.
DESCRIPTION COMPUTER TABLE CASHIER’S TABLE
DIVIDER CHAIR BENCH TOTAL
Table V - B Furniture and Fixtures QUANTITY UNIT 1 PIECE 1 PIECE 1 PIECE 2 PIECE 1 PIECE
COST UNIT
TOTAL COST
P950 P2, 650 P4, 850 P450 P2, 250
P950 P2, 650 P4, 850 P990 P2, 250 P11, 690
c. Sources of Financing The business is financed by Mr. Roberto U, Cariazo Jr. The business has loan payable of fifty thousand pesos (P50, 000) to Atty. Villar with twelve percent (12%) interest per year. It is payable after one (1) year.
40
d. Preparation of Financial Statements 1. Income Statement – is the formal statement showing the performance of the business for a year. It is summarizes the sale, cost of sales, and expenses incurred for a year. The projected Income Statement is presented in Exhibit V- C.
2. Cash Flow Statement – it provides information about the cash receipts and cash payments of a business for a year. It is a formal statement that classifies cash receipts (Cash Inflow) and cash payments (Cash Outflow) into operating, investments and financing activities. The Projected Cash flow is presented in Exhibit V – D.
3. Balance Sheets – is a statement that shows the financial position or condition of the business by listing the assets, liabilities and owner equity. The Projected Balance Sheets is presented in Exhibit V- E.
e. Financial Analysis The following is the method that uses to analyze the financial statement. The computation for the Financial Analysis is presented in Exhibit V – F. a. Net Present Value (NPV )- this refers to the excess of the present value of cash returns discounted at a chosen cut– off rate bovver the amount of the investment.
41
b. Internal Rate Return (IRR) – this refers to the rate of return that a long term investments. c. Profitability Index (Benefits/Cost Ratio/Present value Index) – this refers to the ratio of the present value of cash returns discounted at a chosen cutoff rate to the investment requirement. d. Current Ratio – indicates the ability to pay current obligations. e. Net Fixed Asset Turnover Ratio – is a measure of the projects utilization of fixed assets. f. Equity Turnover Ratio – measures how effectively would the owner’s net worth will be used in the project. g. Gross Profit Margin – equals percent of sales available after deducting cost of good sold. This percentage is available to cover selling, general and administrative costs and also earn a profit. It indicates the basic cost structure of the project and its cost prize position. h. Operating Profit Margin – relates the projects profit to its net sales. The variability of this ratio is a prime indicator of the business risk od the project . A higher ratio implies that the company has a higher level of fixed costs and therefore inflexible. i. Payback Period – this refers to the length of period or numbers of years it would take to recover an investment. j.
Break Even – it is the level of activity (production and sales) at which the company would be able to avoid a loss. The break even point of the company is one thousand two hundred one (1, 201) units
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Chapter VI Socio – Economic Desirability Socio – Economic Desirability – the proposed project is hoping to be beneficial to all for the coming years. The business will continuously achieve its objective. The study will offer entrepreneurs an attached area of investment: A. Customers – the most important factor to be considered in service output will be the customer. The company must always think about the new trends of design which rides for the satisfaction of their needs, wants and desires of the customer B. Employees – the business would require the acquisition of manpower. And by this means the unemployment rate would be lessen and would also propagate the generation of income, which would positively influence the improvement of the standard of living of employed individuals family. C. Creditors/Supplier – the establishment of this kind of business will promote the growth of other business firms which will provide the raw materials and services or which will further process its products. D. Owners – in establishing this kind of business the benefits of the owner are they earn income in this business the benefits of the owner are they earn income in a decent way and they give opportunity for a better life to other people.
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E. Community/Society/Church – in the presence of economic crisis, people think how they earn money to minimize their daily expenses. In establishing this kind of business here in Cabanatuan City would help the people to have a decent job that would give them a better opportunity to earn a living for their family. The establishment of this project would benefit the consuming public through the lowering of retail prices. F. Government – this project will benefit local and national government because it helps in generating income through taxes. It will contribute for the improvement of Philippine economy.
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Chapter 7 Findings, Conclusion, and Recommendation
A. Findings A Digital t-shirt printing business was established to expedite the present way of printing t-shirts nowadays. The present way of printing or manual method of T-shirt printing is messy and it took long period days to do the finish product. The business will provide a high-speed printing and more presentable, affordable and neat t-shirt for its customers. The Business can provide undeniable fast service. The speed in printing t-shirts will be done in more convenient way. The business will provide great ease for that t-shirt lovers; they will be benefited by the business ability to print t-shirts faster. The proposed business is convenient and easy to operate because it only need a designer and cashier to manage the business. However the person needs to have knowledge on using computer in order to create designs and also the cashier needs to be at least College level.
45
B. Conclusions: Based on the findings of the study the following conclusions are drawn: 1. The proposed business would be the first not just in Cabanatuan City but in Nueva Ecija to use digital t-shirt printing customized designs on T-shirts. 2. Ten (10) minutes is the maximum time to wait for the finish product. 3. It can provide fast, easy, affordable and high quality services for its customers. 4. The proposed business could assure its customer that there will be no stain and mess on printed t-shirts. This is one great advantage of the digital t-shirt printing business over its competitors. C. Recommendations Based on the research study conducted, the researchers recommend the usage of digital t-shirt printer for the printing of t-shirts. The researchers also recommends that when the operating the business, the employees (for layout) must have taken computer-related trainings or must be knowledgeable in using computers such as hands-on operation, encoding layouts/designing, the cashier must at least college level. The business needs at least one (1) computer to be used by the employees. As in any other studies in its initial application, the proposed business is still far from perfect and can still be improved in time. It is limited to digital printing businesses. For further research the proposed business be applied and operated.
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EXHIBIT I-B Araullo University PHINMA Education Network College of Management and Accountancy SURVEY QUESTIONNAIRE Dear Respondent: The researchers, students of Araullo University- Phinma Education Network, aim to determine the feasibility of establishing a Digital T-shirt Printing Business in Mega Center the Mall, Gen. Tinio,Cabanatuan City, Nueva Ecija as a requirement for the degree Bachelor of Science in Business Administration Major in Financial Accounting. Please be assured that the information you will provide for the researchers will be treated with strict confidentiality. The identity of the respondents will in no way be disclosed. Your participation and kind cooperation will be of great help in the completion of this study. Thank you for sharing your time and effort. The Researchers Respondent’s Profile Name: Address: Occupation:
(Optional)
Age: Sex: Income level:
Instruction: Please encircle your answer. 1. Do you buy T-shirts? a.) Yes b.) No 2. Which T-shirts do you prefer to wear? a.) Round neck b.) Collared 3. What color do you like most when you’re wearing t-shirts? a.) Is it plain? or (Please specify the color) b.) Multi colored design t-shirts 4. Would you prefer to wear a.) Imitated designs b.) Personalized designs
47
5. Which would you prefer? a.) Cotton b.) Rayon c.) Silk
d.) Linen e.) Wool f.) Acetate
6. Is 10-minute printing enough for you? a.) Yes b.) No (Specify the time you prefer) 7. What is the affordable price for you? (Round neck) (Collared T-shirts) a.) 270 b.) 310 c.) 250
a.) 310 b.) 300 c.) 330
8. When do you usually buy T-shirts? a.) Monthly b.) Weekly c.) During occasions d.) Others (Specify) 9. Where do you usually buy T-shirts? a.) Stall in mall b.) Market stall c.) Catalogue 10. What is your preference in choosing T-shirts? a.) Quality b.) Price c.) Brand d.) Style/design e.) According to your mood 11. How do you usually buy t-shirts? a.) Retail b.) Wholesale 12. What kind of personality do you belong? a.) Funk/emo/rocker b.) Sport c.) Simple d.) Fashionista e.) Girly f.) Other (specify)
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EXHIBIT I-C LETTER OF REQUEST FOR AN INTERVIEW
Sir/Madam: As a partial requirement of the course, Bachelor of Science in Business Administration Major in Financial Accounting, we are conducting a Project Feasibilty Study. The undersigned are planning to study on how to establish a Digital T- Shirt Printing Business in Mega Center the Mall Gwn. Tinio, Cabanatuan City. In this regard, may we request your office to grant us an interview and give some information about the study. We assure you that all data we gathered will be treated as confidential. Thank you. Respectfully Yours, Maria Yvette M. Badilla
Roberto Cariazo Jr.
Kylene Maranan
Ria Zelle DeGuzman
Kristine Kaye Valdez
Endorsed by: Josephine C. Evangelista, PhD Instructor, Project Feasibility Study Noted by: Emerita Modesto, CPA, CIA, MBA Dean, College of Management and Accountancy
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Exhibits I – D Structured Interview Guide Questions 1. What made you decide to put up a t- shirts printing? 2. Where is your business site? 3. How long do you spend in this kind of business? 4. How many t – shirts do you produce in one (1) year? 5. What are your marketing strategies to expand your market? 6. Where do you avail your goods? 7. What are the agreements do you have in your supplier? 8. What are the materials do you needed in the printing the t – shirts? 9. Do you use Digital t – shirt printer when you print the t- shirts? 10. Are you having an employee/s? 11. How are there monthly salaries?
50
Exhibits I – E Results of Structured Interview Kuya Wilfred
Questions: 1.
What made you decide to put
up a t- shirts printing? 2.
Where is your business site?
3.
How long you do spend in this
1. It is the only jobs I already know to do. 2. Perfect locations for the business
kind of business?
3. Fifteen (15) years
4.
4. Twenty five to thirty thousand
How many t – shirts do you
produce in one (1) year? 5.
What are your marketing
t – shirts. 5. I have my own supplier and I
strategies to expand your market?
transact directly to all schools
6.
here in Cababatuan.
Where do you avail your
goods? 7.
What are the agreements do
you have in your supplier? 8.
What are the materials do you
needed in the printing the t – shirts? 9.
Do you use Digital t – shirt
printer when you print the t- shirts? 10.
Are you having an
employee/s? 11. How is there a monthly
6. I avail t –shirts to Mrs. Emy tesoro. 7. She I in – charge for the t – shirts and only the labor is in charge to me. 8. T – shirts, silk screen, paint and computer for the designs 9. No, silk screen only 10. No, 11. Nothing
salary?
51
Structured Interview Guide Questions 1. What are the requirements in renting the space? Is there a contract? 2. What is the agreement for those who wants to rent the space? 3. Are allowing the five (5) years lease agreement? If yes, how is the payment goes? Monthly, semi – annually, annually? 4. Is the rental payment not fixed? 5. What size is the smallest space available for rent? How much? And what floor? 6. This past five (5) years, how much is the rental for the space? 7. Are you the one who spend money for the renovation of the space? Or the one who rent it? 8. What is the agreement for the payment of electric bill? 9. Can I ask the total numbers of customers who cane in the place at the regular days? In holidays? 10. Are advance payment/ deposits needed? How many months?
52
Results of Structured Interview Questionnaires 1. What are the requirements in renting the space? Is there a contract?
Analiza Go 1. Letter of interviewed, electrical load, picture of equipment. Yes
2. What is the agreement for those who wants to rent the space?
2. Six months to one year.
3. Are allowing the five (5) years lease agreement? If yes, how is
3. No
the payment goes? Monthly, semi – annually, annually?
4. Fix rental
4. Is the rental payment not fixed? 5. What size is the smallest space available for rent? How much? And what floor? 6. This past five (5) years, how
5. Four sq. M., 2nd floor, fifteen thousand pesos approximately. 6. Same
much is the rental for the space? 7. Are you the one who spend money for the renovation of the space? Or the one who rent it?
7. You will provide the equipment; we will provide the space only.
8. What is the agreement for the payment of electric bill?
8. Rendered
9. Can I ask the total numbers of customers who cane in the place at the regular days? In holidays? 10.
Are advance payment/
deposits needed? How many months?
9. Estimated twenty five thousand (25,000) for regular days and forty thousand (40,000) for holidays. 10. Yes, three months advance refundable
53
Exhibit II – A Survey Results No. of Copies Age Below 20 21 – 30 31 above Sex : Male Female 1. Do you buy t- shirts? A. Yes B. No 2. Which t-shirts do you prefer to wear? a. Round Neck b. Collared 3. What color do you like most when you’re wearing t-shirts? A. Plain B. Multi colored 4. Would you prefer to wear? A. Imitated designs B. Personalized designs 5. Which would you prefer? A. Cotton B. Rayon C. Silk D. Linen E. Wool F. Acetate 6. What is the affordable price for you? (Round Neck) A. 270
Percentage (%)
155 128 112 395
39.24 32.24 28.35 100
280 115 395
71 29 100
375 20 395
95 5 100
209 186 395
53 47 100
241 154 395
61 39 100
122 273 395
31 69 100
363 4 4 16 4 4 395
92 1 1 4 1 1 100
71 16 122 395
18 4 31 100 54
B. 310 C. 250 ( Collared) A. 310 B. 300 C. 330 7. Is 10 – minute printing enough for you? A. Yes B. No 8. When do you usually buy t- shirts? A. Monthly B. Weekly C. During occasions D. Other 9. Where do you usually buy T-shirts? A. Stall in mall B. Market stall C. Catalogue 10. What is you preference in choosing t-shirts? A. Quality B. Price C. Brand D. Style E. According to your mood 11. How do you usually buy t-shirts? A. Retail B. Wholesale 12. What kind of personality do you belong? A. Funk/emo/rocker B. Sport C. Simple D. Fashionista
87 51 48 395
22 13 12 100
288 107 395
73 27 100
130 40 194 31 395
33 10 49 8 100
320 48 27 395
81 12 7 100
146 24 36 118 71
37 6 9 30 18
395
100
319 79 395
80 20 100
31 40 233 43 40 8 395
8 10 59 11 10 2 100
55
E. Girly F. Other
Exhibit II – B Computation of Projected Population 56
Year 1990 1995 2000 2007 Total
X -2 -1 1 2 0
Y 404, 316 460, 859 586, 940 626, 023 2, 078, 138
b = ∑XY - ∑X∑Y n ∑X² - (∑X)² n = 569, 495 – (0)(2, 078, 138) 4 10 - (0)² 4 = 569, 495 – 0 10 = 56, 949.50
X² 4 1 1 4 10
XY -808, 632 -460, 859 586, 940 1, 252, 046 569, 495
a = ∑Y - b∑X n = 2, 078, 138 – (56, 949.50)(0) 4 = 2, 078, 138 4 = 519, 534.50
Y = a+bX 2010 = 519, 534.50 + 56, 949.50 (3) = 690, 383 2011 = 519, 534.50 + 56, 949.50 (5) = 804, 282 2012 = 519, 534.50 + 56, 949.50 (7) = 918, 181 2013 = 519, 534.50 + 56, 949.50 (9) = 1, 032, 080 2014 = 519, 534.50 + 56, 949.50 (11) = 1, 145, 979
Exhibit II – C
57
Demand Analysis Formula: Projected population x % of willingness x % of users x no. of frequency Where: Projected Population % of willingness = Respondent background, Question no. 1, Exhibit II – A % of users = Respondent background, Question no. 4, Exhibit II – A No. of frequency = once or twice 2010 Projected Population
% of willingness
690,383
.95
% of Users .69 .31
No. of Total Frequency 452, 546.06 1 2
Total
406, 635.59
859, 181.65
.97
833, 406
2011 Projected Population 804, 282
% of willingness
% of Users .69
No. of Frequency 1
.31
2
Total
Total
527, 206.85
.95 473, 722.10 1, 000, 928.95
.97
970, 901
2012 Projected Population 918,181
% of willingness
% of Users .69
No. of Frequency 1
601, 867.65
.31
2
540, 808.61
Total
Total
.95 1, 142, 676.26
.97 1, 108, 396
2013
58
Projected Population 1, 032, 081
% of willingness
% of Users .69
No. of Frequency 1
676, 529.10
.31
2
607, 895.71
Total
Total
.95 1, 284, 424.81
.97 1, 245, 892
2014 Projected Population 1, 145, 979
% of willingness
% of Users .69
No. of Frequency 1
.31
2
Total
Total
751, 183.23
.95 674, 981.63 1, 426, 170.83
.97 1, 383, 386
Exhibit II – D Supply Analysis
59
Formula: Projected population x % of alternatives x % of users x no. of frequency Where: Projected population % of users = Respondent background, Question no. 1, Exhibit II – A % of Alternatives = Respondent background, Question no. 9, Exhibit II – A No. of frequency = once, twice or thrice 2010 Projected Population 690, 383
% of users .95
% of Alternatives .81 .12 .07
No. of Frequency 1 2 3
% of Alternatives .81 .12 .07
No. of Frequency 1 2 3
% of Alternatives .81 .12 .07
No. of Frequency 1 2 3
Total 531, 250 157, 407 137, 731 826, 388
2011 Projected Population 804, 282
% of users .95
Total 618, 895 183, 376 160, 455 962, 726
2012 Projected Population 918, 181
% of users .95
Total 706, 540 209, 346 183, 177 1, 099, 063
2013
60
Projected Population 1, 032, 080
2014 Projected Population 1, 145, 979
% of users .95
% of users .95
% of Alternatives .81 .12 .07
No. of Frequency 1 2 3
% of Alternatives .81 .12 .07
No. of Frequency 1 2 3
Total 794, 186 235, 314 205, 900 1, 235, 400
Total 881, 831 261, 283 228, 623 1, 371, 737
Exhibit III – B Production Cost 61
Direct Materials: Round neck T-shirts: Descriptions
Quantity
Unit
Unit Cost
Total
Dark color
25
Pieces
P 80
P 2,000
Light color
25
Pieces
P 75
P 1,875
White
25
Pieces
P 65
P 1,625
TOTAL
P5,500
Collared T-shirts: Descriptions Collored White TOTAL
Quantity 25 25
Unit Pieces Pieces
Unit Cost P 110 P 100
Total P 2,750 P 2,500 P 5,250
Ink Descriptions Ink TOTAL
Quantity 6.667
Unit Litres
Unit Cost P 1,500
Total P10,000 P10,000
Direct Labor: P79, 200 per year (Refer To Chapter IV for supporting Computation)
Factory Overhead: Direct Labor P79, 200 X 250% Factory Over Head P198, 000
Exhibit III – C Pictures of Tools and Equipments 62
T-shirt Printer
Computer
Exhibit III – D Pictures of Raw Materials 63
T-shirt
Inks
Software
Exhibit III – E Pictures of Finished Products
64
65
pICpTURES
Exhibit IV- B Compensation Package 66
Position Cashier
No. Of person
Rate
1 1 2
P200 P220
Designer
Total
Deductions SSS Philhealt P200 P75 P233.30 P75
Monthly P5, 725 P6, 291.70
Annually P68, 700 P75, 500.40 P 144, 200.40
Computation: Cashier P200 per day *30 Days P6, 000 per month -P275 Benefits P5, 725 net monthly salary *12 P68, 700 net yearly salary Designer/printer P220 per day *30 days P6, 600 -P308.30Benefits P6, 291.70 net monthly salary *12 P75, 500.40 net yearly salary
Exhibits V – A Revenue Projections 67
Round Neck (2010- 2014)
Year
Customer per Day
Days
Weekly
Monthly
2010 2011 2012 2013 2014
12 14 16 18 20
7 7 7 7 7
4 4 4 4 4
12 12 12 12 12
Total no. of units sold per Year 4, 302 4, 704 5, 376 6, 048 6, 720
Price
Total revenue per Year
250 250 250 250 250
1, 008, 000 1, 176, 000 1, 344, 000 1, 512, 000 1, 680, 000
Price
Total revenue per Year
310 310 310 310 310
937, 440 1, 041, 600 1, 249, 920 1, 354, 080 1, 562, 400
Method of Projection: Statistical Straight - line
Collared T – shirts (2010 – 2014)
Year
Customer per Day
Days
Weekly
Monthly
2010 2011 2012 2013 2014
9 10 12 13 15
7 7 7 7 7
4 4 4 4 4
12 12 12 12 12
Total no. of units sold per Year 3, 024 3, 360 4, 032 4, 368 5, 040
Method of Projection: Statistical Straight - line
Total Revenues (2010 – 2014) Year 2010 2011 2012 2013 2014
Total P1, 945, 440 P2, 217, 600 P2, 593, 920 P2, 866, 080 P3, 242, 400
68
Exhibits V – B Watta Shirts Projected Cost of Sales For the five (5) – Year Period Year 1
Year 2
Year 3
Year 4
Year 5
P20, 750 P629, 981.96 P650, 731.96 (P35, 666) P615, 065.96 P79, 200 P190,066 P892, 265.96 P892, 265.96 (P23, 433)
35, 666 P699, 541.76 P735, 207.76 (P38, 340.95) P696, 866.81 P87, 120 P207,144 P1, 001, 786.81 P23, 433 P1, 025, 219.81 (P25, 916.30)
P38, 340.95 P819, 381.54 P857, 722.49 (P41, 015.90) P816, 706.59 P95, 832 P221,714 P1, 178, 034.89 P25, 916.30 P1, 149, 635.29 (P28, 399.60)
P41, 015.90 P903, 941.31 P944, 957.21 (43, 690.85) P901, 266.36 P105, 415.20 P251,334 P1, 270, 219.56 P28, 399.60 P1, 298, 619.16 (P30, 882.90)
P43, 690.85 P1, 023, 781.09 P1, 067, 471.94 (P46, 365.80) P1, 021, 106.14 P115, 956.72 P276,763.80 P1, 426, 954.66 P30, 882.90 P1, 457, 837.56 (P33, 366.20)
860,898.96
988,647.51
1,131,769.29
1,255,532.26
1,411,343.36
Year 1 3,699.6 6,956.40 33,100 15,500 32,400 97,400 P1510
Year 2 3,849.60 7,106.40 35,247 16,500 35,640 107,140 P1661
Year 3 4,250.40 7,953.60 32,474.90 181,150 39,204 117,854 P1827.10
Year 4 4,599.60 8,528.40 43,467.39 19,965 423,124.40 129,639.40 2009.81
Year 5 5,150.40 9,525.60 47,875.33 21,961.50 47,436.84 142,603.34 2210.79
P190,066
P207,144
P221,714
P251,334
P276,763.80
Direct Materials: Direct materials beg
Add: Purchases Total Materials Available Less: Direct Materials End
Direct materials used
Direct Labor Applied FOH Total manufacturing cost Add: finished goods beg
TGAS Less finished goods end
Cost of sales
Computation for Factory Overhead
Employee fringe Benefits
Employer Contribution
Packaging Transportation Cost Training Cost Training Allowance Other Expense Total
69
Exhibits V – C Watta Shirts Projected Income Statement For the five (5) Year Period Pre - operating
Sales Less: Cost of sales
Year 1
Year 2
Year 3
Year 4
Year 5
P1, 945, 440
P2, 217, 600
P2, 593, 920
P2, 866, 080
P3, 242, 400
(860,898.96)
(988,647.51)
(1,131,769.29)
(1,255,532.26)
(1,411,343.36)
1,462,150.71
1,084,541.04
Gross profit
1,610,547.74
1,228,952.49
1,831,056.64
Less: operating Expense
Advertising Electricity
P5, 000 P1, 000
P12, 600 P9, 135 P22, 000 -
P5, 000 P12, 000 3,300 4,634 P72, 000 P9, 135 P242, 000 P32, 816
P5, 500 P13, 200 3,699.60 6,956.40 P79, 200 P9, 135 P264, 000 P32, 816
P6, 050 P14, 520 3,849.60 7,106.40 P87, 120 P9, 135 P264, 000 P32, 816
P6, 655 P15, 972 4,250.40 7,953.60 P95, 832 P9, 135 P264, 000 P32, 816
P7, 320.50 P17, 569.20 4,599.60 8,528.40 P105, 415.20 P9, 135 P264, 000 P32, 816
Office supplies
-
P9, 500
P10, 500
P11, 600
P12, 810
P14, 141
Interest expense
-
P6, 000
-
-
-
-
Total operating Expense
P49, 735
396,385.00
425,007.00
436,197.00
Net income before Tax
(49, 735) (49, 735)
P688, 156.04 (166, 446.81) P521, 709.23
P803, 945.49 (201, 183.65) P602, 761.84
P1, 019, 043.71
P1, 161, 123.74
P1, 367, 531.74
(P265, 713.11)
(P308, 337.12)
(P370, 259.52)
P753, 330.60
P852, 786.62
P997, 272.22
Employee Fringe Benefits
Employer Contribution
Salaries Permit and license
Rental Payment Depreciation exp.
Income Tax Net income after tax
449,424.00
463,524.90
70
Exhibit V – D Watta Shirts Projected Cash Flow Statement For Five (5) Year Period Cash Bal. Beg
Pre – Operating
Year 1
Year 2
Year 3
Year 4
Year 5
-
P18, 435
P556,798.16
P1,039,879.24
P1,592,086.29
P 2,243,594.81
-
P1, 945, 440 P1, 945, 440
P2, 217, 600 P2, 217, 600
P2, 593, 920 P2, 593, 920
P2, 866, 080 P2, 866, 080
P3, 242, 400 P3, 242, 400
P20, 750 P5, 000 P1, 000
P907, 181.96 P5, 000 P12, 000 3,300 4,634 P72, 000 P9, 135 P242, 000
P1, 004, 461.76
P1, 154, 793.54
P1, 272, 894.51
P1, 429, 626.61
P5, 500 P13, 200 3,699.60 6,956.40 P79, 200 P9, 135 P264, 000
P6, 050 P14, 520 3,849.60 7,106.40 P87, 120 P9, 135 P264, 000
P6, 655 P15, 972 4,250.40 7,953.60 P95, 832 P9, 135 P264, 000
P7, 320.50 P17, 569.20 4,599.60 8,528.40 P105, 415.20 P9, 135 P264, 000
P10, 000
P11, 000
P12, 100
P13, 310
P14, 641
200, 188.85
216, 067.67
P257, 062.90
283, 679.11
Cash flow from Operating Activities Cash inflows from Operating Activities Collection from customer Total cash inflow from operating Activities Cash outflow from operating Activities
Payment for Purchases
Advertising Electricity Employee Fringe Benefits
Employer Contribution
Salaries Permit and License Rental Payment
Rental Deposits
Office Supplies Income Tax paid Interest Expense Total Cash outflow from operating Activities
P12, 600 P9, 135 P22, 000 P44, 000 P3, 000 -
P6, 000 1,263,316.96
1,552,943.58
1,741,992.18
1,945,584.63
2,156,047.63
71
Continuation of projected cash flow Net Cash inflow (out flow) from Operating Activities
P 117,485
682,123.04
664,656.42
851,927.82
920,495.37
1,086,352.37
Cash flow from Investing Activities Tools and equipment
Furniture and Fixture Total cash out flow from investing activities
P 152,392 P 11,690 P 164,080
cash outflow from financing activities
P 50,000
Loan Payment Borrowing
P 50,000
Investment
P 250,000 P200,000
P 200,000
P200,000
P200,000
P200,000
P 300,000
P 250,000
P200,000
P200,000
P200,000
P200,000
P18,435
P450, 558.04
P915, 214.47
P1,560, 232.28
P 2,282, 800.66
P3, 169, 153.03
Withdrawal Net cash outflow from financing activities Cash balance ending
Note: Payment for purchases is computed by adding Purchases, Direct Labor and Factory Overhead
72
Exhibits V - E
Pre – Operating
Watta Shirts Projected Balance Sheets For the Five (5) Years Period Year 1 Year 2 Year 3
Year 4
Year 5
Assets:
Cash Inventory Rent Deposits Office Supplies
P18, 435 P20, 750 P44, 000 P3, 000
P450, 558.04
P1,560, 232.28
P 2,282, 800.66
P3, 169, 153.03
P59, 099 P44, 000 P3, 500
P915, 214.47 P64, 257.25 P44, 000 P4, 000
P69, 415.50 P44, 000 P4, 500
P74, 573.75 P44, 000 P5, 000
P79, 732 P44, 000 P5, 500
Tools and Equipment Furniture and Fixtures
P152, 390
P152, 390
P152, 390
P152, 390
P152, 390
P152, 390
P11, 690 (P32, 816)
P11, 690 (P65, 632)
P11, 690 (P98, 448)
P11, 690 (P131, 264)
P11, 690 (P164, 080)
Total Assets
P11, 690 P250, 265
P688, 421.04
P1,125, 919.72
P1, 743, 779.78
P2, 439, 190.41
P3, 298, 385.03
Liabilities: Loan Payable
P50, 000
-
P50, 000
P166, 446.81 P166, 446.81
P201, 183.65 P201, 183.65
P265, 712.11 P265, 712.11
P308, 337.12 P308, 337.12
P370, 259.52 P370, 259.52
P200, 265
P521, 974.23
P924, 736.07
P1, 478, 066.67
P2, 130, 853.29
P521, 709.23 P721, 974.23
P602, 761.84
P753, 330.60
P852, 786.62
P997, 272.22
P1, 124, 736.07
P1, 678, 066.67
P2, 330, 853.29
P3, 128, 125.50
Accumulated Depreciation
Income Tax Payable
Total Liability Owner’s Equity Capital Balance Beg Add/(Deduct): Investment
Net Income/(loss) Total Less: Withdrawal Total Owner’s Equity Total Liabilities and Owner’s Equity
P250, 000 (P49, 735) P200, 265
(P200, 000)
(P200, 000)
(P200, 000)
(P200, 000)
(P200, 000)
P200, 265
P521, 974.23
P924, 736.07
P1, 478, 066.67
P2, 130, 853.29
P2, 928, 125.50
P250, 265
P688, 421.04
P1,125, 919.72
P1, 743, 779.78
P2, 439, 190.41
P3, 298, 385.03
73
74
Exhibits V – F Financial Analysis Net Present Value Present Value of Cash returns discounted at twelve percent (12%) Year 1 Year 2 Year 3 Year 4 Year 5
P 682, 123.04 P664, 656.42 P845, 017.82 P922, 568.37 P1, 086, 352.37
x x x x x
.893 .797 .712 .636 .567
= = = = =
P609, 135.87 P529, 731.17 P601, 652.69 P586, 753.48 P615, 961.79 P2, 943, 235 (P300, 000) P2, 643, 235
Internal Rate of Return: *Payback Period =
Investment of P300, 000 Average cash returns per year = .3571 (P 682, 123.04 + P664, 656.42 + P845, 017.82 + P922, 568.37 + P1, 086, 352.37)/5 ** Compute the payback period in the present value of an annuity, it between 2.78% and 2.77%. Year 1 PV of annual Cash returns Divide by Investment PI
Profitability Index (PI) Year 2 Year 3
Year 4
Year 5
P609, 135.87
P529, 731.17
P601, 652.69
P586, 753.48
P615, 961.79
P300, 000
P300, 000
P300, 000
P300, 000
P300, 000
2.03
1.77
2.01
1.96
2.05
Current Ratio Current Asset Current Liabilities Current Ratio
Year 1
Year 2
Year 3
Year 4
Year 5
P557, 157.04
P1, 027, 471.72
P1, 678, 147.78
P2, 406, 374.41
P3, 298, 385.03
P166, 446.81
P201, 183.65
P265, 712.11
P308, 337.12
P370, 259.52
3.347
5.107
6.316
7.804
8.908
75
Net Fixed Assets Turnover Ratio Net income Ave. total net Fixed Assets Net fixed assets turnover
Year 1
Year 2
Year 3
Year 4
Year 5
P521, 709.23
P602, 761.84
P753, 330.60
P852, 786.62
P997, 272.22
P65, 632
P65, 632
P65, 632
P65, 632
P65, 632
7.949
9.184
11.478
12.993
15.195
Equity Turnover Ratio Year 2 Net income Ave. Equity Equity turnover
Year 3 P602, 761.84
P521, 709.23
P723, 355.15
Year 4 P753, 330.60
Year 5 P852, 786.62
P1, 201, 401.37 P1, 804, 459.98 P2, 529, 489.40
.721
.502
.417
.337
Gross Profit Margin Gross profit Net sales Gross profit margin
Year 1
Year 2
Year 3
Year 4
Year 5
P1, 076, 607.04
P1, 218, 296.49
P1, 444, 284.71
P1, 598, 343.74
P1, 817, 928.64
P1, 945, 440
P2, 217, 600
P2, 593, 920
P2, 866, 080
P3, 242, 400
.553
.549
.557
.558
.561
Operating Profit Margin COS + O.exp Net Sales Operating Ratio
Year 1
Year 2
Year 3
Year 4
Year 5
P1, 257, 283.96
P1, 413, 654.51
P1, 574, 876.29
P1, 704, 956.26
P1, 874, 868.26
P1, 945, 440
P2, 217, 600
P2, 593, 920
P2, 866, 080
P3, 242, 400
.646
.637
.607
.595
.578
76
Break – Even Analysis Sales Mix Break Even in units Product
USP P250 P310 P560
Round Neck
Collared Total
UVC P13.52 P31.10
UCM P236.48 P278.90
SMR 57% 43% CMR
BEP = =
Composite UCM P134.79 P119.93 P254.72 45.49%
FC Composite UCM P305, 951 P254.72
= 1, 201 units
Break Even in Peso BEP = =
FC CMR P305, 951 45.49%
= P672, 631
77
