CHAPTER IV FINANCIAL ASPECT
Financial aspect is the vital part of feasibility study, which needs a critical analysis. The primary objective of every entrepreneur for investing his/her capital is to gain profit. This chapter will give them the benefits of forecasting the success of the business.
Objectives
The main objective of this chapter is to evaluate the output of the operation thru the use of financial ratios. These ratios will determine the financial status of the business. After determining the financial status, the proponent could conclude the advisable starting number of buses to acquire. Moreover, the proponents could conclude if the business is feasible or not.
Major Assumptions
The proponents used the following assumptions: a.
Method of Depreciation
The proponents used the straight line method to compute the fixed assets’ depreciation. It is calculated by deducting the salvage value which is 10%
of the investment cost then divided by the life remaining years.
b.
Operating Accounts
The operating accounts will use the following assumptions: 1.
Fringe benefits is 25% of the Wages and Salaries of selected
employees. 2.
Repair and Maintenance is 5% of the Total Fixed Assets.
3.
Advertising and Promotion, Office Supplies, Telephone, Fax and
Postage, Licenses, Utilities, and Miscellaneous Expenses will increase 5% annually.
c.
Fixed Assets
The proponents will acquire bus after 5 years of operation to sustain the growing demand for transportation.
d.
Labor and Management Compensation
The employees will expect an increase in their compensation of at least Php 20.00 yearly as prescribed by the Department of Labor and Employment (DOLE). Also, a 13 th month pay will be provided on time annually.
e.
SSS, PhilHealth, and Pag-ibig Contributions
The contributions will be withhold from the salaries and wages of the employees and will form an Contribution Payable at the Liabilities part of the company’s balance sheet.
f.
Sales Forecast
The Sales Forecast that is summarized can be found at Table 5.1.
g.
Cash to be stored at Bank
Whatever cash that will exceed on the starting balance on cash before the date of operation will be deposited in the bank to grow by means of interest.
h.
Revenue Cost
The cost of revenue is 28% of each services as figured below: Depreciation Expense
6%
Utilities
1%
Fuel, Oil, and Break Fluids
7%
Compensation
11%
Repair and Maintenance
2%
Toll Fee
1%
Capital Formation
The incorporators shall furnish an equal amount of contribution for the preliminary capital formation. Below is the listing of incorporators and their percentage of contributions for the business equity:
Edzel Jose
7.00%
Melody Araza
7.00%
Darlene Guelas
7.00%
Jasper John Abunyawan
7.00%
Reyman Delgado
7.00%
John Ronald Kevin Galeon
7.00%
Leovin Licop
7.00%
Table 5.1 SALES FORECAST SALES FORECAST LESS ALLOWANCE Year
Sales
FOR
DEC.
IN
TOTAL SALES
SALES Units Starting 10 units
2014
10
79,027,200
3,841,600
75,185,600
2015
10
79,027,200
3,841,600
75,185,600
2016
10
79,027,200
3,841,600
75,185,600
2017
10
79,027,200
3,841,600
75,185,600
2018
10
79,027,200
3,841,600
75,185,600
This table shows the sales forecast of the proposed business. The proponents computed for total sales by deducting the allowance for December sales to the whole year sales. The two weeks sales for the month of December is deducted
Table 5.2 Salaries and Wages Schedule
Manpower
Salary
Monthly
Manager Chief Accountant
3 1
27,000 18,000
81,000 18,000
972,000 216,000
13th Month 1,053,000 234,000
Repair and
12
349.50
109,044
1,308,528
1,417,572
1 6
349.50 349.50
9,087 54,522
109,044 654,264
118,131 708,786
3
628.50
49,023
588,276
637,299
6 3
349.50 349.50
54,522 27,261
654,264 327,132
708,786 354,393
6 6 6 6
349.50 349.50 369.50 369.50
54,522 54,522 57,642 57,642
654,264 654,264 691,704 691,704
708,786 708,786 749,346 749,346
3-Laguna
369,.50
28,821
345,852
374,673
3-NCR
486.00
37,908
454,896
492,804
10 10 3
1,080 848 349.50
250,800 220,480 27,261
3,369,600 2,645,760 327,132
3,650,400 2,866,240 354,393
3
349.50
27,261
327,132
354,393
Position
Yearly
Maintenance Receiving Security
Inventory Clerk General/Payroll/Purchase Accounting Clerk Ticket Sales Clerk Sales Accounting Clerk Cash Receipts/Disburse Inspector
Dispatcher
Driver Conductor Utilities
Total Gross pay yearly with 13th month pay
16,241,134.00
Table 5.3 PhilHealth Schedule of Contribution
Salary
ER
EE
Total Contribution
Manager
27,000
337.50
337.50
675
Chief Accountant
18,000
225
225
450
Repair and Maintenance
9,087
112.50
112.50
225
Receiving
9,087
112.50
112.50
225
Security
9,087 15,084
112.50 187.50
112.50 187.50
225 375
Inventory Clerk
9,524
112.50
112.50
225
General/Payroll/ Purchase Accounting Clerk
9,524
112.50
112.50
225
Ticket Sales Clerk
9,087
112.50
112.50
225
Sales Accounting Clerk
9,087
112.50
112.50
225
Cash Receipts/Disburse
9,524
112.50
112.50
225
Inspector
9,524
112.50
112.50
225
Dispatcher
9,087 12,649
112.50 150
112.50 150
225 300
Driver
28,080
350
350
700
Conductor
22,048
275
275
550
Utilities
9,087
112.50
112.50
225
2762.50
2762.50
5,525
Position
Total
Table 5.4 SSS Schedule of Contribution Position
Salary
ER
EE
Manager Chief Accountant Repair and Maintenance Receiving Security
27,000 18,000 9,087 9,087 9,087
1,060 636 636 636 636
500 500 300 300 300
Total Contribution 1560 1560 936 936 936
Inventory Clerk
15,084 9,524
1,060 671.30
500 316.20
1560 988
General/Payroll/Purchase
9,524
671.30
316.20
988
Accounting Clerk Ticket Sales Clerk Sales Accounting Clerk Cash Receipts/Disburse Inspector Dispatcher
9,087 9,087 9,524 9,524 9,087
636 636 671.30 671.30 636
300 300 316.70 316.70 300
936 936 988 988 936
12,649
883.30
416.70
1300
28,080 22,048 9,087
1,060 1,060 636
500 500 300
1560 1560 936
9,087
636
300
936
13,956
6583.50
20,540
Driver Conductor Utilities
Total
