AN BUSINESS PLAN THAT ESTABLISHMENT OF

AGREE COOPERATIVE

An Undergraduate Feasibility Study Presented to the

Faculty Members of the College of Business and Public Administration

Pangasinan State University

Lingayen Campus

Lingayen, Pangasinan

In Partial Fulfillment

of the Requirement for the Degree

Bachelor of Science in Business Administration

Major in Operations Management

By:

Myline N. Aquino
Mark Clement Nadado
Analie Alejo
Gemma Joy Platon

Date
November 2018
 APPROVAL SHEET

In partial fulfillment of the requirements for the degree Bachelor of Science in

Business Administration, this feasibility entitled AGREE of MULTI-PURPOSE

COOPERATIVES in SUAL, PANGASINAN has been prepared and submitted by

Myline Aquino, Mark Clement Nadado, Analie Alejo and Gemma Joy Platon, is

hereby recommended for approval and acceptance.

JANDY CACAPIT,

STATISTICIAN ADVISER

APPROVED BY THE PANEL OF EXAMINERS

CHAIRPERSON

MEMBER MEMBER

Accepted in partial fulfillment of the requirements for the degree Bachelor of

Science in Business Administration,

REYNALDO T. GELIDO, DPA RUBY ROSA V. CRUZ, Ph.D

College Dean, CBPA Campus Executive Director
 ACKNOWLEDGMENT

We would like to express our sincerest gratidute to the following

people who had helped us in the fulfillment of this study.

First and foremost, we would like to thank God whoh keeps us

safe in the journey with those unknown places we went through. He

gave us strength and knowledge to pursue this study, he never failed to

guide and protecting us all throughout.

To our parents/guardians, who always keep in loving us through

their support morally, financially and patients.

To our adviser Mr. Jandy Cacapit who had untiringly share to us

his ideas and suggestions to improve our study although he have a

hectic schedule he still guide us to improve more on study.

To our research instructor Mrs. Magniemydel A. Fernandez who

had guide us and give her idea also to our study.

To our Panel members who gave to us their suggestions and other

ideas to accomplish of our study.

To our respondents who had share their time and cooperation to

answer our questionnaire.

 DEDICATION

We the researchers would like to dedicate this study to the

following:

To our Parents who untiringly bear with us in all trials we’ve

undergone in making this study. For the words of inspiration to gives us

that motivate us to work hard and not to give up.

To our instructor who had share their knowledge and who gave

their pieces of advice, concerns and problems regaeding to our study

which ha been a great help to us to accomplish of this study.

To our friends and classmates who helped us and who had been

kind in extending any help they could give.

And most of all to the heavenly father who been source to our

strength, knowledge, understanding and who guided us in all thing that

we have done.

Myline Aquino

Mark Clement Nadado

Analie Alejo

Gemma Joy Platon

 TABLE OF CONTENTS
PAGE

TITLE PAGE
APPROVAL SHEET
ACKNOWLEDGMENT
DEDICATION
TABLE OF CONTENTS
LIST OF TABLES
LIST OF FIGURES
EXECUTIVE SUMMARY
CHAPTER
I Business/Industry Overview

II Market Analysis and Marketing Plan

III Ownership and Management Plan

IV Operating Plan

V Financial Plan

BIBLIOGRAPHY
APPENDICES

CURRICULUM VITAE
 LIST OF TABLES

Table Page
 LIST OF FIGURES

Figure Page

1 RESEARCH PARADIGM
 INPUT PROCESS OUTPUT
Characteristics
of the
respondents.
A. Member
Analysis of the
B. Cooperatives input
variables
through
descriptive title in
Problems
research Poblacion,
Encountered
design with Pangasinan
by the
COOPERATIVE questionaire
S survey as the
gathering
A. Members instrument
of
Cooperatives
B. Officers of
Cooperatives

FIGURE 1. RESEARCH PARADIGM OF THE STUDY

 EXECUTIVE SUMMARY

OUR MISSION

THE COMPANY AND MANAGEMENT

OUR SERVICES

THE MARKET

OUR COMPETITIVE ADVANTAGES

FINANCIAL PROJECTIONS

START-UP FINANCING REQUIREMENTS

 Chapter I

Business/Industry Overview

The Business Industry

Agree Cooperative is a financial institution that serves to mobilized micro-

savings and micro-lending to farmers fisherman LGU's employees small businesses

and household store owner.

This locally-anchored-- in other words itbis a micro-finance institution.

To ensure the continuous operation of the cooperative ,we proposed the

mobilization of capital through investing the money into other income generating

project.

We proposed to invest the accumalated capital in a bank,offering the highest

interest rate through time deposit.on this way,we could be able to mobilize what

has been depositedby our members.

Position in Industry

Proccessing and collection cost of loans made to small farmers are high

relative to the amount lent.Lending group and credit cooperatives have been

ascribed the potential to reach small farmers with affordable credit beacuse the

processing of one large loan rather than numerous small loans may allow for saving

in administrstive costs.these arrangement entail joint liability and reduce the risk of

loan default.

Some of the factors crucial for sucessful group lending are:(a) homogenous

borrowing groups that are jointly liable and assume some managerial and
supervisory responsibilities; (b) establishing a common bond other than credit to

enchannce loan repayment as well as introduce saving mobilization;and(c) denying

access to future credit to all group members in the case of default .Important factors

for sucessful outcomes of credit cooperatives include:(a) bottom-up instituitional

development and training at the grass root as well at management levels;(b) saving

mobilization by credit cooperative redering them financially less dependent on

outside sources and enchancing borrowers incentives to repay;and(c) not rushing to

expand their activities beyond financial intermediation.

Unique Quality

• Organisation of the poor : Theoretically,the cooperative society has no

scope for the member of the rich.In fact,the major function of the cooperative

society is tto provide credit facilities to the peasants for productive purposes

only.It does not give credit for fulfilling social obligations.Thus,a cooperative

society is an association of the poor peasants for meeting their productive

needs.

• Membership is voluntary: Membership to a cooperative society is

voluntary.A peasant should assess his needs and accordingly take

membership to a particular society has definate objectives fullfilled should opt

for members.

• Absence of exploitation: A cooperative society inherently denies

exploitation of its members and consumers Basically the society take care of
 the mutual economic benefits of its own members.In the way the cooperative

society rejects any exploitation which has the basis of the intermedian.

• The role of Bank: The cooperative society cannot leave to itself.The

government being welfare-oriented cannot remain a spectator only.It has to

intervene and plays it s role in providing assistance to the peasent.It is on this

theory that the RBI and other nationalised bankd provide assistance to the

cooperative societies.The RBI being the apex bank,has made provision for the

working of cooperative banks.

• Subsidies: There is an always some risk involed advicing loans.Sometimes it

so happens that due to flood and scarcity the peasant is unable to repay the

loans.Or it is also possible that the inputtechnology has a price-tag which is

beyond the capacity of the peasent to purchase. In such a situation some

sudsidyhas to given to the peasant.In other words though the cooperative

societies are autonomous they are also guided and controlled through banks

and government cooperative department.

 CHAPTER II

MARKET ANALYSIS AND MARKETING PLAN

The researchers will discuss in this chapter if there is a demand for a

cooperative and conversely, if there is enough supply for the demand. Defining

pricing strategies used in each business life cycle will also be included, sales,

advertising and promotion.

SERVICE OFFERINGS

AGREE COOPERATIVE is stimulated to promote economic and social welfare

in general. But what makes our credit cooperative distinct is as to whom its service

is directed to. AGREE COOPERATIVE tends to offer loan for those people who are

willing to borrow money.

The proposed AGREE COOPERATIVE will be especially designed to mobilize

the small, scattered resources of the members for capital formation. It tends to

develop the habit of thrift among its members for capital build up and personal

productivity.

The operational phase of the AGREE COOPERATIVE will revolve in services,

that is extending loans to regular members and encouraging savings to associate

members.

DEMAND

The market demand of this project is to classified and determined through the

result of the survey being conducted.

Based from gathered information through survey, there is only one competitor on

our location but not directly. So it will not greatly affect our target market as well as

clients demand.

SUPPLY

Supply in AGREE COOPERATIVE is feasible to analyze as there is no evident

competitor that offer the same service.

DEMAND AND SUPPLY ANALYSIS

Demand and supply analysis shows how consumer preferences determined

consumer demand for goods and services and how business determined supply in

the product market costs.

Based on the analysis conducted, it shows that out of % member’s demand

for financial assistance and savings, only % of it is being satisfied.

Demand-Supply Gap= Demand-Supply

DEMAND SUPPLY D-S GAP

% % %

PRICING STRATEGY

Pricing strategy was tested by changing the values of the dept/equity ratio,

interest rate and the length of revolving period.

Since the cooperatives are economically viable than investor-oriented firms in facing

adverse economic condition, the proponent will give the market a reasonable rate

for the service offered. Though our purposed cooperative falls under credit
cooperative, our main focus is to encourage thrift among its members through

savings. Thus, to support the advocacy of encouraging savings, we tend to offer the

highest maximum interest rate of 6% for the time deposit and 4% for savings

deposit as set by the standards of Cooperative Development Authority (CDA). In

terms of a lending service, a rate of 2% monthly will be allocated as its interest.

SALES

ADVERTISING AND PROMOTION

In Coordination with the Residents of Our Location

The proponents will be in connivance with the residents to support our

campaign of promoting the members welfare and power through organizing a

cooperative that will be their strong complement in achieving so.

 Chapter III

Ownership and Management Plan

In the previous chapters we have studied meaning and principles of

cooperative institutions. In this unit we will discuss on the organization, progress and

problems of cooperative credit system in the Philippines. It is essential to know

about important segment of the Phillipine financial system of our feasibility study.

Today the cooperative credit system is becomes main financial stream of the rural

finance in Philippine. However, there is lots of problems occurred in the development

and expansion of cooperative credit facilities. Hence, in this unit we will discuss the

organizational aspects, development of various cooperative credit societies and their

problems including the project long range activities before the cooperative will

stablish.

Phillipines cooperatives credit system has played a significant role in the

development of economy and more specifically development of agriculture and rural

development. We can classify the cooperative credit societies inthe three categories

i.e. short term and long term credit cooperative societies, rural and urban

cooperative credit societies and agriculture and non-agriculture credit societies.

Basically non-agriculture cooperative credit societies are working in urban areas.

However, some non-agricultural cooperative credit societies are entered in the rural

financial market also since last 10 years. In the Philippines short term agricultural

credit cooperatives are responsible for production credit in rural Phillipines and long

term credit cooperatives are responsible for investment credit especially agriculture

and rural industries. While Urban Cooperative Banks (UCBs) are responsible for
delivery of nonagricultural credit and consumable loans in urban and semi urban

areas.

Form of Ownership

The law which governs cooperatives, prior to the recent enactment of

Republic Act No. 9520 (“Philippine Cooperative Code of 2008”), is Republic Act No.

6938 (“Cooperative Code of the Philippines”). Here’s a basic discussion on the new

law (a more extensive primer will subsequently be released, initially made available

to clients).

Cooperative Definition

A cooperative is an autonomous and duly registered association of persons,

with a common bond of interest, who have voluntarily joined together to achieve

their social, economic, and cultural needs and aspirations by making equitable

contributions to the capital required, patronizing their products and services and

accepting a fair share of the risks and benefits of the undertaking in accordance with

universally accepted cooperative principles. (Italicized words/phrases are inserted

under the new law.)

Purpose, the declared purpose of the law, among others, is to foster the creation

and growth of cooperatives as a practical vehicle for promoting self-reliance and

harnessing people power towards the attainment of economic development and

social justice.
Principles of Cooperatives, the following are the declared principles of

cooperatives: Voluntary and open membership, membership in a cooperative is

voluntary and available to all individuals regardless of their social, political, racial or

religious background or beliefs.

Democratic member control, cooperatives are democratic organizations that are

controlled by their members who actively participate in setting their policies and

making decisions. In primary cooperatives, members have equal voting rights of

one-member, one-vote. Cooperatives at other levels are organized in the same

democratic manner.

Member economic participation, members contribute equitably to, and

democratically control, the capital of their cooperatives. At least part of that capital is

the common property of the cooperative. They shall receive limited compensation or

limited interest, if any, on capital subscribed and paid as a condition of membership.

Autonomy and independence, cooperatives are autonomous, self-help

organizations controlled by their members.

Cooperation among cooperatives, cooperatives serve their members most

effectively and strengthen the cooperative movement by working together through

local, national, regional and international structures.

Cooperative education, all cooperatives shall make provision for the education of

their members, officers and employees and of the general public based on the

principles of cooperation.
Concern for community, cooperatives work for the sustainable development of

their communities through policies approved by their members. This is a new

provision.

Types of Cooperatives, cooperatives may fall under any of the following types, in

addition to others which may be determined by the Cooperative Development

Authority (CDA):

Credit Cooperative, Promotes and undertakes savings and lending services among

its members. It generates a common pool of funds in order to provide financial

assistance to its members for productive and provident purposes.

Consumers Cooperative. The primary purpose is to procure and distribute

commodities to members and non-members.

Producers Cooperative. Undertakes joint production whether agricultural or

industrial. It is formed and operated by its members to undertake the production

and processing of raw materials or goods produced by its members into finished or

processed products for sale by the cooperative to its members and non-members.

Any end product or its derivative arising from the raw materials produced by its

members, sold in the name and for the account of the cooperative, shall be deemed

a product of the cooperative and its members.

Marketing Cooperative. Engages in the supply of production inputs to members

and markets their products.

Service Cooperative. Engages in medical and dental care, hospitalization,

transportation, insurance, housing, labor, electric light and power, communication,

professional and other services.

Multipurpose Cooperative. Combines two or more of the business activities of

these different types of cooperatives.

Advocacy Cooperative. A primary cooperative which promotes and advocates

cooperativism among its members and the public through socially-oriented projects,

education and training, research and communication, and other similar activities to

reach out to its intended beneficiaries.

Agrarian Reform Cooperative. Organized by marginal farmers majority of which

are agrarian reform beneficiaries for the purpose of developing an appropriate

system of land tenure, land development, land consolidation or land management in

areas covered by agrarian reform.

Cooperative Bank. Organized for the primary purpose of providing a wide range of

financial services to cooperatives and their members.

Dairy Cooperative. One whose members are engaged in the production of fresh

milk which may be processed and/or marketed as dairy products.

Education Cooperative. Organized for the primary purpose of owning and

operating licensed educational institutions notwithstanding the provisions of Republic

Act No. 9155, otherwise known as the Governance of Basic Education Act of 2001.

Electric Cooperative. Organized for the primary purposed of undertaking power

generations, utilizing renewable energy sources, including hybrid systems,

acquisition and operation of subtransmission or distribution to its household

members.

Financial Service Cooperative. One organized for the primary purpose of

engaging in savings and credit services and other financial services.

Fishermen Cooperative. Organized by marginalized fishermen in localities whose

products are marketed either as fresh or processed products;

Health Services Cooperative. Organized for the primary purpose of providing

medical, dental and other health services.

Housing Cooperative. Organized to assist or provide access to housing for the

benefit of its regular members who actively participate in the savings program for

housing. It is co-owned and controlled by its members.

Insurance Cooperative. Engaged in the business of insuring life and poverty of

cooperatives and their members.

Transport Cooperative. Includes land and sea transportation, limited to small

vessels, as defined or classified under the Philippine maritime laws, organized under

the provisions of this Code;

Water Service Cooperative. Organized to own, operate and manage waters

systems for the provision and distribution of potable water for its members and their

households.

Workers Cooperative. Organized by workers, including the self-employed, who

are at same time the members and owners of the enterprise. Its principal purpose is
to provide employment and business opportunities to its members and manage it in

accordance with cooperative principles.

Categories of Cooperative. On the other hand, cooperatives are categorized

according to membership and territorial considerations:

In terms of membership –

Primary – Members are natural persons

Secondary – Members are primaries

Tertiary – Members are secondary cooperatives

In terms of territory, cooperatives shall be categorized according to areas of

operations which may or may not coincide with the political subdivisions of the

country.

Capital. The minimum paid-up share capital is now PhP15,000 (the minimum under

the old law is only PhP2,000), subject to increase by the CDA upon consultation with

the cooperative sector and the NEDA. The par value of shares of a primary

cooperative shall not exceed PhP1,000. No member of primary cooperative other

than cooperative itself shall own or hold more than 10% of the share capital of the

cooperative.

Membership. New members may only be admitted to the cooperative after

undergoing Pre-Membership Education Seminar. There are two kinds of members:

 1. Regular members

- Entitled to all the rights and privileges of membership, including the right to

vote and be voted upon.

2. Associate members

- Has no right to vote nor be voted upon and shall be entitled only to such

rights and privileges as the bylaws may provide. However, an associate

member shall be considered a regular member if: (a) he has been a

member for 2 continuous years; (b) he patronizes the cooperative as its

member; and (c) he signifies his intention of becoming a regular member.

- A member shall be liable for the debts of the cooperative to the extent of

his contribution to the share capital of the cooperative.

Tax Treatment of Cooperative. Cooperatives which do not transact any business

with non-members or the general public shall not be subject to any taxes and fees

imposed under the internal revenue laws and other tax laws. Cooperatives

transacting business with both members and non-members shall be subject to

another set of rules, but transactions with members shall remain to be non-taxable.

Audit. Audit shall be conducted by an external auditor, who must be a member of

good standing of the Philippine Institute of Certified Public Accountants, accredited

by the CDA and the Board of Accountancy.

Penal Provisions. Anyone who uses the word “Cooperative” without being

registered with the CDA is punishable by imprisonment (5 years) and a fine

(PhP20,000). Electric cooperatives registered with the National Electrification

Administration (NEA) are exempt and may not register with the CDA.

Any person who willfully attempt in any manner to evade or defeat tax in violation of

the tax treatment/privileges provided under the Code is punishable by imprisonment

(2 years but not more than 4 years) and a fine (not less than PhP30,000 but not

exceeding PhP100,000), without prejudice to a separate action to collect the taxes.

There are other penalties provided, including violations of the reportorial

requirements of cooperatives.
 ORGANIZATIONAL CHART

Diagram which shows the flow of authority.

Board of
directors

Secretary Manager Treasurer

Credit
investigator/ Collector / cashier
bookeeper
BOARD OF DIRECTORS

The board of directirs shall be to be direct and supervise all the business ,

manage the property of the cooperative and may , by resolution , exercise all such

as powers of the cooperative nor reserved for general assembly .

 The management staff

The day to day affairs of the cooperative shall be entrusted to the

management staff , headed by the general manager , which will implement

the the policies of the board and the membership assembly to attain the

objectives of the cooperative.

 Treasurer

Under the General supervision of the board directors , and the general

manager and the general manager and accountable for all the money of the

cooeperative. Disburse and receive money in accordance with the cooperative

policies formulated by the board of directors.

 Secretary

Under the general guidance and supervision of general manager , performs

profesional human resource work as a secretary. Do the over all

dessiminination of what the manager required. Record all the minutes of the

meetings related to work . Follow up the general.manager immediately during

her schedules deadline and other related work. May handle special

assignment, work under supervision, incumbent exercise initiative , and

independent judgment in performance of her assign task.

OFFICERS OF THE COOPERATIVE AND DUTIES

Officers and Key personnel

Duties and responsibilities

Key personnel

Position Duties

Chairman Shall preside over all meeting of the

cooperative and the board of directors .

He shall also sign all the revolving fund

certification and other papers of the

Agree cooperative in which the board

may direct him to sign.

Vice chairman In the absence of disability of the

chairman, the vice chairman shall

perform the duties of the chairman ,

provided however that in case of death

and resignation or removal of the

chairman the board of directors may

decide to elect his successor.

Treasurer The treasurer takes custody of all money

and papers of the cooperative. He shall

also keep a complete record for the

establishment and proof of his cash

proposition .
Secretary The secretary shall have the duties of

keeping of complete list of its entire

member and maintaining a correct record

of all meetings of the Board of directors.

General Manager It is the responsibility of the general

manager to supervise and coordinate

under board directors, the business

activities of the co-op by managing the

people , capital and physical resources.

Maintain , and revises a necessary an

adequate bookkeeping and accounting

system :, develops for board approval a

financial budget annually prepares

proper financial report regularly for board

of review :, and presents to the

cooperative membership at the regular

annual meeting , a report of the

cooperative's operation highlights.

Bookkeeper / credit Investigator Bookkeeper shall install and adequate

effective accounting system in the

cooperative. He shall render monthly

reports of the board of directors on the

financial condition and operation of the

cooperative.
Cashier Receive payment by cash, check, credit

cards , vouchers, or automatic debits .

Issue receipts, refunds, credit , or

change due to customers. Count money

in cash drawers at the beginning of shifts

to ensure that amounts are correct and

that there is adequate change. Greet

customers entering establishment.

Maintain clean and orderly checkout

areas.
Job Qualification

POSITION QUALIFICATION

Chairman Male or female

At least college Graduate

Must have accounting subjects and other

business course

with or without experience

At least 21 years of age

Vice chairman Male or female

At least college Graduate

Must have accounting subjects and

other business course

with or without experience

At least 21 years of age

Treasurer Male or female

At least college Graduate

Must have accounting subjects and

other business course

 with or without experience

At least 21 years of age

Secretary Male or female

College Graduate

Must have accounting subjects and

other business course

Computer illiterate

English language specialist

with or without experience

At least 21 years of age

General manager Male or female

college BUSINESS RELATED course

Graduate

Must have accounting subjects and

other business course

Must have at least 2 years experience

At least 21 years of age

Computer Illiterate
 English language specialist

Bookkeeper Male or female

At least Accountancy college Graduate

with at least 1 year experience

At least 21 years of age

Cashier Male or female

At least college Graduate

Must have accounting subjects and

other business course

Computer Illiterate

with or without experience

At least 21 years of age

Project Schedule

 Project will be eliminated within this year.

 Preparation of the study

This is the time where the cooperative is testing the viability of the proposed

project through conducting of feasibility study . It will take 3 weeks to

complete.

 Accomplishment of legal requirements and documentation

Two (2) weeks will be allotted to this activity.

 Building improvement and renovation

This will tale about 1 to 2 months

 Procurement of property and equipments needed

This stage deals with the acquisition of machine and equipment necessary for

the operation of the business. Two weeks will be allotted for this activity.

 Property and advertising

Personal visit to the prospective clients and other promotional activities will be

done . This activity will continuous work but given concentration for one (1)

month.

 Recruitment and selection

The manpower requirement for different function must be determined .Three

(3) weeks is enough including technical and orientation.

 Start of operation

With all things in order from technical to manpower , including permit to

operate the project is now on operation.

 PROJECT TIME TABLE

WEEKS

TASK 1 2 3 4 5 6 7 8 9 10 11 12 13

PREPARATION OF

PROJECT STUDY

ACCOMPLISHMENT OF

LEGAL REQUIREMENTS

AND DOCUMENTS

BUILDING AND

IMPROVEMENT

/RENOVATIONS

PROCUREMENT /

PROPERTY AND

EQUIPMENT NEEDS

PROPERTY AND

ADVERTISEMENT

RECRUITEMENT AND

SELECTION

START OF OPERATION
 CHAPTER IV

OPERATING PLAN

ESTABLISHING BUSINESS COOPERATIVE

 THE SERVICE

The proposed AGREE COOPERATIVE will be especially designed to mobilize

the small, scattered resources of the members for capital formation. It tends

to develop the habit of thrift among its members for capital build up and

personal productivity.

The operational phase of the AGREE COOPERATIVE will revolve in services,

that is extending loans to regular members and encouraging savings to

associate members.

 MANUFACTURING PROCESS

 COOPERATIVE SIZE AND PRODUCTION SCHEDULE

 MACHINERY AND EQUIPMENT

Office Quantity Unit Cost Total Cost

Equipment

Desktop 2 20,000.00 P40,000.00

Printer 1 10,000.00 10,000.00

Total P50,000.00
Office Furniture Quantity Unit Cost Total Cost

Tables 4 8,000.00 P32,000.00

Chairs 10 250.00 2,500.00

Filing Cabinet 2 8,450.00 16,900.00

Total P51,400.00

Office Supplies Quantity Unit Cost Total Cost

Bond Papers 1 bundle 1,800.00 P 1,800.00

Ball pens 1 box (20pcs.) 5 100.00

Folders 5 pcs. 5 25.00

Calculator 2 100 200.00

Ink for Printer 1 set 1,200 1,200.00

Staplers 2 50 100.00

Total P 3,425.00

 LOCATION

 LAYOUT

 BUILDING AND FACILITIES

 RAW MATERIALS AND SUPPLIES

 UTILITIES

 WASTE DISPOSAL

The major waste that the AGREE COOPERATIVE may produce is the used

papers arising from different papers and documentary works. The

Cooperative perceived it to another opportunity as the source of income

generation. We will be having our own as customary spot as to where these

wastes are to be kept and sell them in a volume. From here, we cannot only

help preserve the nature but also we do something productive for our

cooperative
 CHAPTER V

FINANCIAL PLAN

In financial plan is to set measurable targets or performance standards

for the organization while offering a motivating force for the group as a

whole. It provides a basis for financial control and management decision-

making. A monthly comparison of actual results to the budget will give

management an idea about what needs to be done next. It may be providing

a financial argument required to raise start-up or growth capital.

Timely and accurate financial information is a pre-requisite to a successful

operation. As new information becomes available, the budget should be

updated to reflect appropriate changes. The targeted return on investment

will directly influence the budgeting process.

MAJOR ASSUMPTIONS:

 AGREE COOPERATIVE shall use the calendar year ending December

31.

 Accrual business of accounting will be used.

 Salaries will have 10% increases every two (2) years but it depends

the contract a service receives.

 Rent of office is assumed to increase every two (2) years.

 Supplies consumption is estimated to increase 10% yearly.

 Depreciation is computed using the straight line method over the

estimated useful lives properties ranging from 1-5 years.

  Miscellaneous expenses assumed increased yearly for any purposes

operation of the company.

TOTAL PROJECT COST

SOURCES OF FINANCING THE PROJECT

PREPARATION OF FINANCIAL STATEMENTS

 INCOME STATEMENT

It is the computation of the project’s total revenues and total costs for

one period or fiscal year, thereby arriving at the concern’s net income

or deficit within the period, together with its performance and terms of

profitability and cost control.

 CASH FLOW

It is the systematic presentation of cash receipt and disbursement for a

given operating period or fiscal year. It is very useful in estimating

future financial needs, optimize the timing of project financing and

maximize profitability.

 STATEMENT OF FINANCIAL POSITION/ BALANCE SHEET

It is an overall picture of the financial conditions as of a certain time. It

shows here the assets derived by the project from corresponding

liabilities and equities.

FINANCIAL ANALYSIS

 TEST OF LIQUIDITY

Current ratio= current asset

Current liabilities

 TEST OF PROFITABILITY

PROFITABILITY RATIO

- This ratio indicates the margin of sales and overall efficiency of

asset or capital employed.

NET PROFIT MARGIN

- Tells the relative efficiency of the firm after taking into account all

expenses and income taxes but not extraordinarily changes.

Net Profit Margin= net income after tax

Sales

Return on investment= net profit

Total asset

Payback Period= initial investment

Net income
 AGREE COOPERATIVE

PROJECTED INCOME STATEMENT

For The Calendar Year Ended December 31

REVENUE YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5

Interest income 106,000.00 111,300.00 122,430.00 140,794.50 168,953.40

from loans

Service fee 650.00 682.50 750.75 863.36 1,036.04

Fines, penalties, 1,300.00 1,365.00 1,501.50 1,726.73 2,072.07

surcharges

Income interest 66,240.00 69,552.00 76,507.20 87,983.28 105,579.94

from investment

Membership fee 150,000.00 157,500.00 173,250.00 199,237.50 249,046.88

Miscellaneous 15,000.00 15,750.00 17,325.00 19923.75 23,908.50

income

Total revenue 339,190.0 356,149.50 391,764.45 450,529.12 550,596.83

Operating

Expenses

Financing Cost

Interest expense 30,000.00 31,500.00 34,650.00 39,847.50 47,817.00

on deposit
Administrative

cost

Salaries and wages 110,000.00 115,500.00 127,050.00 146,107.50 175,329.00

Officers 12,000.00 12,600.00 13,860.00 15,939.00 19,126.80

honorarium and

allowances

Office supplies 6,000.00 6,300.00 6,930.00 7,969.50 9,563.40

Project cost 50,000.00 52,500.00 57,750.00 66,412.50 79,695.00

Rent expense 12,000.00 12,600.00 13,860.00 15,939.00 19,126.80

Depreciation 9,000.00 9,450.00 10,395.00 11,954.25 14,345.10

Pre-operating 5,000.00 5,250.00 5,775.00 6,641.25 7,969.50

expenses

Total operating 234,000.0 245,700.00 270,270.00 310,810.50 372,972.60

expenses 0

Net surplus(for 105,190.00 110,449.50 121,494.45 139,718.62 177,624.23

allocation)

Allocation:

Reserved fund- 31,557.00 33,134.85 36,448.335 41,915.58525 53,287.2675

30%
Cooperative and 10,519.00 11,044.95 12,149.445 13,971.86175 17,762.4225

education training-

10%

Patronage refund 63,114.00 66,269.7 72,896.67 83,831.1705 106,574.535

payable-60%

Net surplus (as 105,190.0 110,449.5 121,494.45 139,718.617 177,624.225

allocated) 0 5
 AGREE COOPERATIVe

PROJECTED CASH FLOWS

For The Calendar Year Ended December 31

YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR5

CASH INFLOW

Net 105,190.00 110,449.50 121,494.45 139,718.62 177,662.34

income/surplus

Depreciation 9,000.00 9,450.00 10,395.00 11,954.25 14,345.10

Share capital 750,000.00 787,500.00 866,250.00 996,187.50 1,195,425.00

Reserve fund 21,038.00 22,089.90 24,298.89 27,943.72 33,532.47

Interest income 66,240.00 69,552.00 76,507.20 87,983.28 105,579.94

Initial start-up cost 76,000.00 76,000.00 76,000.00 76,000.00 76,000.00

Total cash 1,027,468. 1,075,041.4 1,174,945.54 1,339,787.37 1,602,544.85

inflow 00 0

CASH OUTFLOW

Loan receivable 500,000.00 525,000.00 577,000.00 664,125.00 796950.00

Savings deposit 250,000.00 262,500.00 288,750.00 332,062.50 398,475.00

Interest payable 30,000.00 31,500.00 34,650.00 39,847.50 47,817.00

Patronage refund 84,152.00 88,359.60 97,195.56 125,746.76 134,129.87

payable
Initial cash outflow 864,152.00 907,359.60 997,595.56 1,161,781.76 1,377,371.87

Net cash 163,316.0 167,681.80 177,349.98 178,005.61 225,172.98

Cash balance 163,316.00 390,997.80 568,347.78 746,353.39

beginning

Cash balance 163,316.00 330,997.80 568,347.78 746,353.39 971,526.37

ending
 AGREE COOPERATIVe

PROJECTED BALANCE SHEET

For The Calendar Year Ended December 31

ASSET YEAR 1 YEAR 2 YEAR3 YEAR 4 YEAR 5

Cash 163,360.00 330,997.80 568,347.78 746,353.39 971,526.3

Account 500,000.00 525,000.00 577,500.00 664,125.00 796,950.0

Receivable 0

Prepaid 59,500.00 62,475.00 68,722.50 79,030.88 94,837.05

Bank investment 250,000.00 262,500.00 288,750.00 332,062.50 396,475.0

Total asset 972,860.00 1,180,972.80 1,503,320.28 1,821,571. 2,259,78

77 8.42

LIABILITIES

Capital and 222,860.00 393,472.80 637,070.28 825,384.27 1,064,363.

patronage 40

payable
OWNER’S

EQUITY

(1,500 x P500) 750,000.00 787,500.00 866,250.00 996,187.50 1,195,425.

00

Total 972,860.00 1,180,972.80 1,503,320.28 1,,821,,571 2,259,78

LIABILITIES .77 8.40

and equity
 Bibliography

Books

Author, Title of Book(2014). Place of Publishing: Publisher.

Dahl, Roald.The BFG New York: Farrar, Straus and Giroux, 1982.

Journal

Author (last name first). "Article title."Name of magazine (type of medium). Volume
number, (Date): page numbers. If available: publisher of medium, version,
date of issue.

Unpublished Materials

Author, Title, Type of material, Institution, Place of Institution, Date

Tabisola, Christian Thom F., et.al. LimgasnaPangasinan, An undergraduate Feasibility

Study. PSU, Ling Pangasinan, 2007.

Electronics

Author of message, (Date).Subject of message.Electronic conference or bulletin

board (Online). Available e-mail: LISTSERV@ e-mail address

EXAMPLE:

Ellen Block, (September 15, 1995). New Winners. Teen Booklist (Online). Helen Smith@wellington.com

URL (Uniform Resource Locator or WWW address).author (or item's name, if

mentioned), date.

EXAMPLE: (Boston Globe's www address)

http://www.boston.com. Today's News, August 1, 1996.

 Appendices and Exhibits

The appendices and exhibits section contains any detailed information needed
to support other sections of the plan.

Possible Appendix/Exhibit Items

 Credit histories for the business owners

 Detailed market research and analysis of competitors
 Resumés of the owners and key employees
 Information about your industry
 Information about your products/services
 Site/building/office plans
 Copies of mortgage documents, equipment leases, etc. (or quotes on these)
 Marketing brochures and other materials
 References from business colleagues