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8/13/2019 Financial Aspect REVISED Gdxwdad
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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.
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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 13th
month pay will be provided on time annually.
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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
companys 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%
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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%
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Table 5.1
SALES FORECAST
SALES FORECAST
Year Sales
LESS ALLOWANCE
FOR DEC. IN
SALES
TOTAL SALES
Units
Starting 10 units2014 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
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Table 5.2
Salaries and Wages Schedule
Position Manpower Salary Monthly Yearly 13th
Month
Manager 3 27,000 81,000 972,000 1,053,000
Chief Accountant 1 18,000 18,000 216,000 234,000
Repair and
Maintenance
12 349.50 109,044 1,308,528 1,417,572
Receiving 1 349.50 9,087 109,044 118,131
Security 6
3
349.50
628.50
54,522
49,023
654,264
588,276
708,786
637,299
Inventory Clerk 6 349.50 54,522 654,264 708,786
General/Payroll/Purchase
Accounting Clerk
3 349.50 27,261 327,132 354,393
Ticket Sales Clerk 6 349.50 54,522 654,264 708,786
Sales Accounting Clerk 6 349.50 54,522 654,264 708,786
Cash Receipts/Disburse 6 369.50 57,642 691,704 749,346
Inspector 6 369.50 57,642 691,704 749,346
Dispatcher 3-Laguna
3-NCR
369,.50
486.00
28,821
37,908
345,852
454,896
374,673
492,804
Driver 10 1,080 250,800 3,369,600 3,650,400
Conductor 10 848 220,480 2,645,760 2,866,240
Utilities 3
3
349.50
349.50
27,261
27,261
327,132
327,132
354,393
354,393
Total Gross pay yearlywith 13thmonth pay 16,241,134.00
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Table 5.3
PhilHealth Schedule of Contribution
Position Salary ER EETotal
Contribution
Manager 27,000 337.50 337.50 675
Chief Accountant 18,000 225 225 450
Repair andMaintenance
9,087 112.50 112.50 225
Receiving 9,087 112.50 112.50 225
Security 9,08715,084
112.50187.50
112.50187.50
225375
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 AccountingClerk
9,087 112.50 112.50 225
CashReceipts/Disburse
9,524 112.50 112.50 225
Inspector 9,524 112.50 112.50 225
Dispatcher 9,08712,649
112.50150
112.50150
225300
Driver 28,080 350 350 700Conductor 22,048 275 275 550
Utilities 9,087 112.50 112.50 225
Total 2762.50 2762.50 5,525
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Table 5.4
SSS Schedule of Contribution
Position Salary ER EE TotalContribution
Manager 27,000 1,060 500 1560
Chief Accountant 18,000 636 500 1560
Repair and Maintenance 9,087 636 300 936
Receiving 9,087 636 300 936
Security 9,087
15,084
636
1,060
300
500
936
1560
Inventory Clerk 9,524 671.30 316.20 988
General/Payroll/Purchase
Accounting Clerk
9,524 671.30 316.20 988
Ticket Sales Clerk 9,087 636 300 936
Sales Accounting Clerk 9,087 636 300 936
Cash Receipts/Disburse 9,524 671.30 316.70 988
Inspector 9,524 671.30 316.70 988
Dispatcher 9,087
12,649
636
883.30
300
416.70
936
1300
Driver 28,080 1,060 500 1560
Conductor 22,048 1,060 500 1560
Utilities 9,087
9,087
636
636
300
300
936
936
Total 13,956 6583.50 20,540