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A FEASIBILITY STUDY TO MANUFACTURE AND SELL AN

ALL-PURPOSE ORGANIC CLEANING SOLUTION IN THE


PHILIPPINES

Submitted in partial fulfilment of the requirement in Management Consultancy

FORMOSO, MARK JEFFREY


SANTOS, PAULINE
VERIDIANO, MARK DANIEL

March 22, 2017


Business Description

Name of the Company

GreenCare Co. Ltd

Company Logo

GreenCare Co. Ltd is a company name engaged in manufacturing cleaning products. The
name GreenCare was derived from two words, namely Green and Care. The partners
chose this name because it embodies the objective of the product to be manufactured
which is to provide a natural way of ensuring hygienic care. The logo was simply
designed. The green colour shows that with the use of our product, you are not just trying
to use an organic solution, but you are also supporting the fight against chemical
solutions.

Type of Business Organization

The proposed business structure of the company is a general partnership. This


partnership will be created under auspices of the civil code of the Philippines which
defines the former under article 1767 as by the contract of partnership two or more persons
bind themselves to contribute money, property, or industry to a common fund, with the intention
of dividing the profits among themselves.

Under a general partnership, all proponents will be a general partner liable for all
business and obligation to the extent of his personal properties.

Nature of Business

GreenCare Co. Ltd. is a manufacturing business which will be engaged in the


manufacturing of organic all-purpose cleaner in the industry.
Company Vision and Mission

Mission

To provide cost effective cleaning solution to our customers.

Vision

To be a solutions provider for materials management and maintenance, and innovations.

Product Description

Brand Name

The product shall be branded as Mean Green Cleaning. Similar to the company, the
product will have the word Green in it so that the brand name can convey the purpose
for which the product was manufactured of. The word mean means effective which
means that product was made to effectively carry out its function.

Tagline

The product shall carry the same tagline as of that of the company which is germ-free in
an ease.

The tagline purports the objective for which the product was made which is to eliminate
germs and dirt, and ensure cleanliness of any material. It is versatile as its cleaning power
ranges from removing rust, stains and other types of dirt that may be seemingly
unpleasant.

Picture of Sample Product

Product Features and Benefits

Cleaning & De-Coating in One Step


o Standard abrasive blasting is a dirty process, often loading and even
embedding the surface with contaminants (grease, oil, tar & abrasive
particles) in the process of removing the coating. Pure sodium bicarbonate
blast media effectively de-coats and cleans the substrate in one step;
producing a level of cleanliness not seen with most processes. The media is
not reusable thus eliminating the issue of blasting with re-used media.
Coating adhesion relies heavily on surface cleanliness and a surface profile
has been used to offset this lack of cleanliness.
Unique Cutting Action
o Sodium bicarbonate blast media offers the unique properties of sodium
bicarbonate, the primary ingredient.
No Pre-Cleaning Required
o For projects where the coating is covered with grease, carbon, salt or other
contaminates, the more traditional methods require the coating to be fully
cleaned before blasting.
No Need to Re-Profile Steel
o Sodium bicarbonate blast media will not profile steel. When an operator
removes a coating from a metal surface, he or she exposes the existing
anchor pattern under the coating. Unless corrosion has occurred, there is no
need to re-profile the surface.
Reduced Solid Waste
o Pure sodium bicarbonate blast media can be dissolved in fresh water.
Natural Rust Inhibitor
o As long as Baking Soda is on a ferrous metal surface, rust will not form.
Reduced Clean-Up costs
o Large grain or coarse sodium bicarbonate soda blast media performs
roughly the same level of work (somewhat slower) as sand blasting.

Product Description

The product is a solution made up of baking soda, vinegar and lemon juice. Baking soda,
vinegar and lemon juice on germs kill and stops the accumulation of bacteria and make
it clean and safe. Not much more is required other than time and good old fashioned dirt.

This product benefits those who cannot afford commercial all-purpose germ remover but
want to maintain those shiny, clean, and old valuable items. This product is made from
natural materials and is just as effective as products that are commercially made.
Marketing Aspects

Demand and Supply Analysis

The market analysis is based the historical demand and supply collected from the
Philippine Institute for Developmental Studies discussion paper on the Philippine
markets, demand and supply on different market segments. The projections made for the
demand and supply in units are computed based on the historical data gathered.

Historical Demand Analysis

The historical demand and supply of the Mean Green Cleanser are gathered by the
proponents from the discussion paper of the Philippine Institute for Developmental
Studies (PIDS) on the cleaning products market segment.

Historical Demand

Table 1 shows the historical demand of cleaning product according to the Philippine
Institute for Developmental Studies

Historical Market
Total Historical Market Percentage
Year Demand of other
Market Demand of other brands
brands
2012 34,825,000 10.50% 3,654,000

2013 38,004,000 11.40% 4,322,000

2014 45,119,000 10.90% 4,916,700

2015 51,653,000 10.60% 5,475,200

2016 58,037,000 10.50% 6,113,600

The historical unit demand for the market segment with respect to other brands, according
to the Philippine Institute for Developmental Studies on the Assessment of Philippine
Market, are 3,654,000 for 2012; 4,322,000, in 2013; 4,916,700 for 2014; 5,475,200 for 2015;
and 6,113,600 for 2016.
Historical Demand
70000
60000
50000
Supply

40000
30000
20000
10000
0
2012 2013 2014 2015 2016
Historical Demand 36540 43220 49167 54752 61136

Analysis shows that after the significant increase in the market demand in 2013, the
market demand for the succeeding years declined slowly, reaching 10.53% from as high
as 11.37% in the last three years.

Historical Supply

The supply of Mean Green Cleanser was derived from the units produced by the local
industry.

Table 2 shows the historical supply of cleaning products according to the Philippine
Institute for Developmental Studies

Years Historical Supply


2012 3,482,500
2013 3,800,400
2014 4,511,900
2015 5,165,300
2016 5,803,7000

The historical unit supply for the market segment according to the Philippine Institute
for Developmental Studies is (in hundreds) 34,825 for 2012; 38,004 for 2013; 45,119 for 2014;
51,653 for 2015; and 58,037 for 2016.
Historical Supply
70000

60000

50000

40000
Demand

30000

20000

10000

0
2012 2013 2014 2015 2016
Historical Supply 34825 38004 45119 51653 58037

The change in the numbers of supplies per year increases in relation to the increase in the
number of demands. There is a relative increase in supplies from 2012 to 2013, however,
notable decline for the succeeding three years can be observed.

Projected Demand

The projected demand, based on the Philippine Institute for Developmental Studies on
Philippine Market are shown on Table 3.

Table 3 Projected Demand

Year Total Target Market (Projected Demand)


2018 6,949,502
2019 7,899,696
2020 8,979,807
2021 10,207,601
2022 11,603,269

The projected demand was based on the assessment of PIDS of the projected market
demand for the segment of other brands. This was computed by considering the
average increase in annual consumption and demand for cleaning products, then
multiplying it with the proportionate share of other brands and non-commercial
products.
Projected Supply

Table 4 shows the total supply of all-purpose cleaning solutions in the market. Figures
were computed based on the Projected Demand given by the PIDRs assessment on
markets in the Philippines.

Table 4 Projected Supply

Projected Market
Years Supply Factor Projected Supply
Demand

2018 6,949,502 0.86 5,976,572


2019 7,899,696 0.78 6,161,763
2020 8,979,807 0.75 6,734,856
2021 10,207,601 0.81 8,268,157
2022 11,603,269 0.93 10,791,040
The projected market demand was multiplied with the supply factor, which is the
demand-to-supply ratio, to come up with the anticipated supply for the next seven years.

The supply factor indicates how much volume can be supplied for every one demand in
a given market setting and condition. For computation of the Supply Factor, please view
Appendix C.

Demand and Supply GAP

Years Projected Demand Projected Supply GAP

2018 6,949,502 5,990,950 958,552


2019 7,899,696 6,123,795 1,775,901
2020 8,979,807 6,701,349 2,278,459
2021 10,207,601 8,298,863 1,908,738
2022 11,603,269 10,844,177 759,092

The demand and supply gap was computed by subtracting the projected supply from
the projected demand.

Analysis of the figures show that there is a noticeable gap for the first four years,
especially for the year 2019. However, upon peaking at 2,278,459 units for the year 2020,
the demand and supply gap begins to decline to 1,908,738 units, followed by a low of
759,092 units which could be an indication of increased competitors in the market.
Target Market

The intended consumers of the product are the households, sanitation services, and local
business. The product target market is further stratified through the market segmentation
into demographic and geographic segments enabling the business to better target its
products to relevant consumers.

Segmentation is done on the basis of external factors and the following:

1. Geographic
GreenCare Co. Ltd segmented its product in the Philippines, starting in
the general areas of Alabang, Paraaque, and Las Pias.
2. Demographic
Green Care Co. Ltd has segmented its product to the demographic
characteristics of the low and middle-class level of income.
3. Targeting
Rural and commercial areas
Rural areas access to cleaning commodities are limited only to
those available in markets nearby (i.e. bleaching solution,
cleaning powders, detergent, etc.). The end-users will have an
additional alternative that is low on price and works efficiently.
Commercial areas access to cleaning commodities is at par, if not
above it. However, though the segment has enough supply from
this area, the price margin among most alternatives are similar to
each other. Thus, with the entry of Mean Green Cleanser, it will
provide an alternative at a low price.
4. Market Share
The proponents decided to take an average of 12.2% market share on the
demand as seen in Appendix D.

5. Projected Sales
Table 5 illustrates the projected sales in units based on an average of 12.2% of
market share demand.
Estimated Market Share Estimated
Projected Projected
Years GAP Market of Other Market Value
Demand Supply
Share % Brands Share

2018
6,949,502 5,990,950 958,552 18.18% 111,192 20,217
2019
7,899,696 6,123,795 1,775,901 16.67% 229,091 38,182
2020
8,979,807 6,701,349 2,278,459 20.83% 305,313 63,607
2021
10,207,601 8,298,863 1,908,738 23.08% 234,775 54,179
2022
11,603,269 10,844,177 759,092 41.67% 81,223 33,843

The annual projected sales of the product were computed by multiplying the expected
share of other brands, 11% (2018); 12% (2019 and 2020); 13% (2021); and 12% (2022), with
the GAP to obtain the market share of other brands, then multiplying it by the
percentage share of the partnership from the other brands.

Product Strategies

Mean Green Cleaning is a product meant for the people, with an emphasis on non-
harmful ingredients and being eco-friendly. People these days are looking for products
that not only serve the purpose but also have a message, and that is exactly what this
product brings to the table. An all-purpose cleaning mixture that carries the motto germ-
free in an ease, unlike the competitors products Mean Green Cleaning is wholly made
from organic and naturally occurring ingredients.

GreenCare Co. positions itself as a company that cares. Most product alternatives utilize
chemicals that are harmful to the environment and the user, either through chemical
burns or fume inhalation. The product is intended for all types of consumers ranging
from households to sanitation service providers.

GreenCare Co. is determined to achieve growth within the next 5 years. Such as:

Annual increase in revenues;


Nation-wide expansion;
Celebrity endorsements.

Pricing Strategy
Green Care Co. adopted the economy pricing approach for this product. This was based
on factors such as the target market, material requirements, and production costs. The
business determined economy pricing to be the most suitable approach due to the fact
that most consumers are highly price-conscious and being a new entrant to the market
would surely be a hurdle.

In order to appropriately determine the pricing strategy to be implemented, the business


compiled the following table on competitor products and the corresponding prices.

Armor All Multi-Purpose (Auto Cleaner) 190.00


16 fl. Oz.

Domex Multi-Purpose Cleaner 152.00


1 Litre

Tuff Dirt Multi-Purpose Cleaner 580.00


1 Litre

iChem Wash-All All Purpose Cleaner 455.00


1 gallon

Lysol (Breeze) Multi-Surface All Purpose 499.00


Cleaner 510 mL

Distribution/Packaging Strategies

The common purpose of product packaging is to enclosed and protect the product from
damage while on transit or while on display. In addition package could be used to attract
the consumers, promote the product, facilitate the consumers decision, and differentiate
the product. For example, color schemes and design is considered to attract the
consumers, Information portraying the product may be indicated to the package and this
may serve as a promotion scheme, information and fact about the product could be
obtained by the potential consumers that will help them in their purchasing decision,
because package contains brand name and company logos this will help the product to
differentiate itself among its competition.

Promotion Strategies

Advertising should be targeted towards the prospective audience in such a way that it
forms a positive impact on the customer and in the process creates brand recognition.
Activities Objective Period Location Cost
To maximize
the Website
based
advertising to Social Media (i.e.
expose the Facebook,
Website Ads Permanent None
product to Twitter, Youtube,
the etc.)
consumers or
potential
consumers.
To create
advertising
method that
Print Ads provides Permanent 15,000
much
potential
longevity
To gain
exposure in
Sponsorship/Events
partnering Permanent 10,000
Partnership
with NGOs
event
To promote
the product
through their
attitude,
Personal Selling Permanent None
appearance
and specialist
product
knowledge
Raw Materials Requirements

Raw materials are necessary in the production. It is classified into direct and indirect.
Direct Materials are clearly identified and traceable to produce a unit of product, while
indirect materials are those not traceable in production.

Raw Material Description


With its concentrated acid, it can aid
in quickly eliminating bacteria and
germs from any object.

16.00 - 25.95 - per piece.

Lemon Juice
Vinegar is a liquid consisting of
about 520% acetic acid
(CH3COOH), water, and other trace
chemicals, which may include
flavourings.
Vinegar
13.00 - per 350 mL

Sodium bicarbonate, helps regulate


pHkeeping a substance neither
too acidic nor too alkaline.
When baking soda comes in contact
with either an acidic or an alkaline
substance, its natural effect is to
neutralize that pH.

11.50 per 125 g


Baking Soda
371.00 per 8 Oz.
2179.00 6 packs of 16 Oz.
1,196.00 per 64 Oz.
3,645.00 per 13.5 lbs.

This will enclose the product for


its protection and storage.

Bottle/Container
Direct Labor Requirements

Production employees the person in charge in mixing the ingredients to


prepare the solution;
Product Design Assembler the person in charge in the preparation of the
marketing/packaging design of the finished product. Costs will be based on
the per unit designed;
Packaging and Storing the one in charge in packaging and storing product
and securing before delivery. Costs will be on a per unit basis.*

*Consideration of the following direct labor costs are in accordance with PAS 2,
Inventories, stating that all costs that are directly attributable in bringing the
asset to its present location and conditions are capitalizable.

Tools & Equipments

This will be used to mix all the


ingredients (baking soda, vinegar,
water).
10,000.00 1 piece

Mixer
Used to measure the amount or
quantity of the ingredients.
848.00 per set

Measuring Spoon
This is where all the ingredients are
contained for mixing.
1,300.00 per set of 4

Mixing Bowl
This is a tube that guides the liquid or
powder into the small opening of the
container.
600.00 per set of 3

Funnel
I. Production Flowchart
Production begins with preparing the required materials, in this case lemon juice,
vinegar, baking soda and the container. The materials are then measured according to the
required amounts: 3 tablespoons of lemon juice, 2 tablespoons of vinegar, and 10
tablespoons of baking soda; and mixed until a paste-like solution is formed. The mixture
is then poured into the container followed by the application of the product packaging
and appropriate seals.

Plant Location and Layout

The chosen location of the partnership office and the manufacturing plant will be at
Madrigal Business Park, Page I Bldg., Acacia Ave., Ayala Alabang, Muntinlupa City
where is accessible to Business Process Outsourcing and suppliers. This is the proposed
building design.
Floor Plan Layout
Property, Plant & Equipment Requirements

For inputting, outputting, storage, and


processing of relevant information.
15,000 per set-up

Computer
This will be used for producing readable
graphic representation or text on paper and
other similar documents.
4,995.00 per piece

Printer
This will serve as work station of each
employee and managers to perform their
office tasks such as writing, reading or using
office equipment like computer.
1,500.00 2,000.00 per piece
Office Tables
To provide cool ventilation inside the
building.
14,999.00 per piece

Air Conditioner
To control the amount of sunlight that enters
the office.
999.00 per piece

Window Blinds
This will be needed for every work stations,
conference room, and in the office lobby.
2,520.00 6 pieces

Chairs
This will be placed in the conference room for
displaying information and any other details.
480.00 per piece 89.5 x 60 cm

Whiteboard
For filing and storage of printed files.
4,899.00 per piece

Drawer
For food, beverages and other necessities
storage.
7,500.00 per piece 3.2 cu. Ft.

Refrigerator

Annual Depreciation

Annual Depreciation Table


Office Equipment Furniture and Fixtures
Cost 57,000.00 Cost 78,000.00
Salvage Value 10,000.00 Salvage Value 15,000.00
2017 9,400.00 2017 6,300.00
2018 9,400.00 2018 6,300.00
2019 9,400.00 2019 6,300.00
2020 9,400.00 2020 6,300.00
2021 9,400.00 2021 6,300.00
2022 6,300.00
2023 6,300.00
2024 6,300.00
2025 6,300.00
2026 6,300.00
2027 6,300.00

Depreciation of Furniture, Fixtures and Equipment are computed through the straight-
line depreciation which is Cost less Salvage Value over the useful life. The useful life of
the long-term assets shall be made based on the estimate of the management, and the
manner of depreciation shall be stated in the accounting policies applied by the entity.
Variable Product Costing

Variable Manufacturing
2017 2018 2019 2020 2021
Costs per Unit

Direct Materials
Lemon (3 pcs.) 16.00 16.43 16.88 17.33 17.80
Baking Soda (1/2 pack) 21.25 21.82 22.41 23.02 23.64
Vinegar (1/2 Bottle) 3.75 3.85 3.96 4.06 4.17
Bottle (250 ml) 1.50 1.54 1.58 1.62 1.67
Direct Labor
Production Costs per Unit 7.12 7.32 7.51 7.72 7.92
Assembly Costs per Unit
7.12 7.32 7.51 7.72 7.92
Packaging Costs per Unit
Variable MOH

Utilities 20.00 20.54 21.09 22.25
21.66
Total 76.75 78.82 80.95 83.13 85.38

Predetermined FOH Rate per Unit

Particulars 2017 2018 2019 2020 2021


Budgeted FOH
Depreciation 15,700 15,700 15,700 15,700 15,700
Salaries and Wages 2,418,000 2,483,286 2,550,335 2,619,194 2,689,912
Rental Expenses 24,000 24,000 24,000 24,000 24,000
Budgeted Capacity 365,400 432,200 491,670 547,520 611,360
Predetermined FOH Rate 7 6 5 5 4

The Fixed overhead rate was computed by dividing the total fixed overhead by the
budgeted capacity per annum to arrive at the fixed overhead rate applicable to all units
to be produce for the an entire year. Changes in amount was due to the consideration of
the fluctuation rate of 2.07%, the rate from the time this paper was being written.
Costs Data for Period 2017 2021

Costs Data for Period 2017 - 2021


Particulars 2017 2018 2019 2020 2021

Total VOH per Unit
77 78.82 80.95 83.13 85.38
Total FOH per Unit 6.73 5.84 5.27 4.86 4.46
Total Absorption
Costs 83.47 84.66 86.21 87.99 89.84
Total Variable
Costs 77 78.82 80.95 83.13 85.38

The cost of the product was computed based on absorption costing, taking into
consideration all the costs, both fixed and variable cost incurred in producing a unit.

Management Plan

Organizational Chart

Presented below is the organizational chart of GreenCare Co. Ltd. The partnership is
composed of 3 partners. It has 12 employees composed of 3 managers, 2 office staffs, 1
executive secretary and 6 laborers. Partner #1 is designated as managing partner; partner
#2 as the production and marketing manager; and partner #3 as the financial manager.

Prod. & Mktg Managing Financial


Partner Partner Manager

Executive
Secretary

Office Staff #1 Office Staff #2 Laborer #1 Laborer #2 Laborer #3 Laborer #4 Laborer #5

Job Description

Partners the investors and owners of the business who invested the capital
requirements of the partnership. Partners does not necessarily pertain to
proponents.

Managing Partner the partner designated to manage the normal course of the
business/partnership.
Production & Marketing Manager the manager that is directly responsible for
managing the production and marketing of the product.

Financial Manager the manager that is responsible for the financial aspects of
the business. He shall produce fairly presented financial reports, investment
activities and develop strategies, policies and procedures related to financial
reporting, and long-term goals of the organization.

Office Staff the employee designated to perform various work assignments in


the office and takes the position of receptionist.

Laborer the employee who are in-charge of the production, design and
packaging of Mean Green All-Purpose Cleanser.

Salaries and Wages

Monthly Salaries and Wages

Monthly Salaries and Wages


Particulars 2017 2018 2019 2020 2021
Managing Partner 15,000 15,405 15,821 16,248 16,687
Production & Marketing 15,000
15,405 15,821 16,248 16,687
Manager
Financial Manager 15,000 15,405 15,821 16,248 16,687
Office Staff #1 9,500 9,757 10,020 10,290 10,568
Office Staff #2 9,500 9,757 10,020 10,290 10,568
Labourer (Production) 7,000 7,189 7,383 7,582 7,787
Labourer (Production) 7,000 7,189 7,383 7,582 7,787
Labourer (Design,
7,000 7,189 7,383 7,582 7,787
Assembly)
Labourer (Design,
7,000 7,189 7,383 7,582 7,787
Assembly)
TOTAL 92,000.00 94,484.00 97,035.07 99,655.01 102,345.70
Annual Salaries and Wages
Annual Salaries and Wages
Particulars 2017 2018 2019 2020 2021
Managing Partner 180,000 184,860 189,851 194,977 200,242
Production & Marketing Manager 180,000 184,860 189,851 194,977 200,242
Financial Manager 180,000 184,860 189,851 194,977 200,242

Office Staff #1 114,000 117,078 120,239 123,486 126,820


Office Staff #2 114,000 117,078 120,239 123,486 126,820
Laborer (Production) 84,000 86,268 88,597 90,989 93,446
Laborer (Production) 84,000 86,268 88,597 90,989 93,446

Laborer (Design, Assembly) 84,000 86,268 88,597 90,989 93,446


Laborer (Design, Assembly) 84,000 86,268 88,597 90,989 93,446

TOTAL 1,104,000 1,133,808 1,164,421 1,195,860 1,228,148

Human Resource Plan

Human Resource Requirements

Activity Responsibility Skills, Degree or


Certification Needed
Highschool graduate,
Office Staff Clerical Versed in computer
operations and
secretarial functions
Production Design Packaging design Highschool graduate,
Experience in graphic
design and layout

Production Assembly Product assembly

Production Labor Product storing and


delivery

Recruitment and Selection


o The recruitment and selection of the employees will be headed by the
partners of the business.
o The recruitment will be done through job postings in free job posting sites,
posters along the streets, and newspaper ads.
o Required document shall be collected and documented for security
purposes.
o Interview and tests will be done in the selection of the employees needed
by the partnership.
o The partners will select the employees fit for the position
o The following requirements shall be complied with upon application:
Curriculum Vitae
At least a graduate of Business Administration (preferably, major in
Accounting) for office staff; and a high school graduate for labourers.
Must be of good moral character
Training and Development
o Training and development of the employees will be done by the managing
partner along with the production manager and other partners, at their
discretion.
o Employee assessment shall be done regularly to assess the qualifications
and competency of each employees in the performing their functions.
Grievance Management
o Any conflict in the partnership will follow the protocol
o Conflict between the rank-and-file employees will be handled by the
immediate supervisors
o Due process of law and all related rules and regulations of the labour law
shall be complied with in relation to grievance management
Retirement and Termination
o All government mandated rules and regulations on retirement and
termination shall be complied with
o The company shall provide retirement benefit equivalent to 50% of the
monthly salary based on the average monthly salary for the last two years
for tenured employees for every year of service starting their 6th year.
Financial Aspects

Financial Assumptions

The projected financial statements were prepared using the following financial
assumptions:

The equity to debt ratio of the initial investment of the partners are 1:1
The selling price is at 50% profit margin above cost;
Relative increase in costs and selling price are based on the current inflation rate
of 2.70%
Equipment are depreciated for 5 years, and Furniture and Fixtures are depreciated
for 10 years under the straight line method.
Partners opted to consider their share of net income as additional investment in
the partnership.
Accounts Receivable are estimated to be 25% of the total net sales for the first three
years, while 50% for the succeeding two years.
Production is less than the demand.
Inventory are completely sold at year end, no work in process inventory as well at
year end.
All outstanding accounts are paid by the partners.
Office rental expenses include payments for the utilities (electricity and water)
Increase in salaries are in proportion to the current inflation rate of 2.70% to
maintain the capacity to purchase of the employees.
The selling price was considered under the absorption costing method,
considering both variable and fixed cost directly attributable to the product.
Production, assembly, packaging selling expenses related to labour are considered
fixed expense, and are presented in the Statement of Comprehensive Income
under the Operating and Administrative Expenses.
Provision for Income tax is 30% of the Net Taxable Income
The accounting policies of the management are based on the existing Philippine
Financial Reporting Frameworks.
Financial Statement Analysis

Stability

Particulars 2018 2019 2020 2021 2022


Current
1.82 : 1 2.15 : 1 - - -
Ratio
Quick Ratio 1.8 : 1 2.17 : 1 - - -
Equity to
1 : .39 1 : .35 - - -
Debt

Stability analysis investigates how much debt can be supported by the company
and whether debt and equity are balanced. Current Ratio shows how much the entity can
pay for every P1.00 current debt with its current liabilities. Since the entity is not
expecting to incur any debt from 2020 to 2022, the current ration for the preceding two
years are 1.82-to-1 and 2.15-to-1, meaning that for every P1.00 current liability, the entity
can pay 1.8 and 2.17 from their current assets, for 2018 and 2019, respectively.

Quick rations refers to how much an entity can pay for its currently maturing debt
with its quick assets (cash, securities and receivables). The quick ratio for the first two
years are 1.8 to 1, and 2.17 to 1 meaning, the availability of quick assets to meet currently
maturing obligations are sufficient for every P1.00 debt.

Equity to Debt ratio shows how much of the total capital is from financing, and
how much is from investing. The Debt to Equity ratio for the first two years where debt
is present are 1 : .39, and 1: .35 which means that for every P1 net worth/net asset, .35 of
it of debt.
Profitability

Particulars 2018 2019 2020 2021 2022


Gross
0.36522 0.357329 0.3545 0.352387 0.350434
Margin

Net Margin -0.06211 0.165583 0.239038 0.216556 0.132589

Profitability refers to the ability of the entity to generate income. The Gross Margin
of the company is the ratio of gross margin for every sale. For the 5-year period, the
entitys gross margin ratio are .365 for every 1 peso sale in 2018; .357 for every 1 peso sale
in 2019; .354 for every one peso sale in 2020; .352 for every one peso sale on 2021; and .350
for every one peso sale on 2020. The average gross margin ratio is at .35 which means that
for every 1 peso sale in the 5-year period, the entity is averaging .35 gross profit.

The net margin ratio measures the net income per peso sale. For the 5-year period,
the entitys net profit ratio is -.062 for 2018; .1655 for 2019; .239 for 2020; .216 for 2021; and
.132 for 2022. Average net profit ratio for the 5-year period is .138 which means that in
that period, the entity will average a net income margin of .138 for every peso sale.

Asset Management Ratio

Particulars 2018 2019 2020 2021 2022

ROA (0.0484) 0.2117 0.5683 0.3498 0.1278

ROI (0.0369) 0.1671 0.5748 0.3529 0.1289


Return on Assets show how much an entity maximizes their assets in generating
income. For GreenCare, every P1.00 asset it has 5-year period is expected to be able to
generate (.0484) net loss in 2018; .2117 net income in 2019; .5683 net income in 2020; .3498
net income in 2021; and .1278 net income in 2022. Its average return on asset in the 5-year
period is .2418.

The return on investment, on the other hand shows how much an entity
maximizes its capital resources. For the 5 year period, GreenCare is expected to produce
(.0369) return in 2018; .1671 return in 2019; .5748 return in 2020; .3529 return in 2021; and
.1289 return in 2022, for every P1.00 capital worth that it has.
Socio-Economic Aspects

Impact on National Economy

GreenCare product will help in the increased redistribution of wealth by the


government;
GreenCares generation of income will constitute ability to pay taxes to the
government, increasing the likelihood of governments internal revenue
generation.
The employees that will be employed will constitute a decrease in the unemployed
Filipinos in the country
The partnership will add up to the market economy of the country.

Impact to Local Economy

Local government will be able to generate income through local taxes paid by
GreenCare
The employees that will be employed will constitute a decrease in the unemployed
Filipinos in the country
GreenCare will provide alternative with maximum efficiency for minimum costs

Impact on Environment

Minimize wastes from inorganic solutions and substance


Maximizes the use of organic and eco-friendly materials
Causes no harm to environment and is safe on people.

Conclusions

The Philippines being a tropical country bombarded with harsh rains and scorching heat
is a prime setting for metal oxidation a.k.a. rusting, therefore there is no lack of consumers
in need of this low-cost and high reward product. GreenCare Co. Ltd. is supported by
trustworthy historical data which shows the increasing need for more diverse and eco-
friendly household cleaning solutions. The creation of said business will not only benefit
the partners, potential investors, and unemployed people; but also the environment
through sustainability and awareness. The research shows that although there are
competitors, none have broken into the organic aspect of the market thus solidifying the
ingenuity of the product. The financial studies show that the projected amount of sales
will outweigh the costs to produce the product, and in turn yield a higher net income.

To summarize the conclusions that were drawn for the proposed product:

High consumer market


Notable consumer interest in eco-friendly alternatives
Economic benefits for all related parties
Unique
Profitable

Recommendations

The project promoters recommend the following for any further studies, or
implementation of the product:

1. Increased research on the product market demographic. This may be done


through conducting a local or national survey, or inquiring with the
Department of Trade and Industry for any available pertinent information.
2. Product testing and prototyping would increase the desirability of the product
through the availability of samples to show interested parties.
3. Conduct product demos to further market the product to potential investors.
4. Create disposable or biodegradable containers to further enhance the eco-
friendly aspect of the product.
Appendices

Appendix A.

Average = % Change in Demand


4

Appendix B.

Years Demand Less Increase (Decrease)

2013 4,322,000 3,654,000 668,000


2014 4,916,700 4,322,000 594,700
2015 5,475,200 4,916,700 558,500
2016 6,113,600 5,475,200 638,400

The average historical demand of cleaning solutions in the market for the years 2013 to
2016 is 614,900, computed as follows:

Average Increase = 668 + 594.7+ 558.5 + 638.4 = 614.9

Appendix C.

% Market Historical
Market Historical
Years Share of Other Market Supply Factor
Segment Value Supply
Brands Demand

2011 12% 0.86


34,825 4,039,700 3,482,500

2012 13% 0.78


38,004 4,902,516 3,800,400

2013 13% 0.75


45,119 6,045,946 4,511,900
2014 12% 0.81
51,653 6,353,319 5,165,300

2015 11% 0.93


58,037 6,209,959 5,803,700

Appendix D.

BRANDS 2011 2012 2013 2014 2015 Average Market Share


Joy 28% 29% 32% 31% 31%
Domex 23% 23% 20% 21% 24%
Tuff
Cleaning 14% 15% 16% 16% 14%
Solution
Breeze
Liquid 13% 12% 11% 13% 10%
Solution
Armor
10% 8% 8% 7% 10%
All
Other
12% 13% 13% 12% 11% 12.2%
Brands