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FINANCIAL STUDY
This chapter will show the quantifiable result of the project feasibility study. It will present
the forecasted financial statements for the next five years. This chapter will also cover the
detailed financial analysis of the partnership.
Major Assumptions
o Pre-operating Period
A S S E T
Current Asset
Cash 126,259.85
Petty Cash Fund 10,000.00
Inventory 66,040.13
Prepaid Rent 21,000.00
Total Current Asset 223,299.98
Non-current Asset
Factory Building 1,315,875.02
Retail Shop 240,000.00
Delivery Vehicle 90,000.00
Office Equipment 48,475.00
Furniture & Fixtures 7,350.00
Total Non-current Asset 1,701,700.02
TOTAL ASSET 1,925,000.00
Liability -
Partner's Equity
Partner A Capital 385,000.00
Partner B Capital 385,000.00
Partner C Capital 385,000.00
Partner D Capital 385,000.00
Partner E Capital 385,000.00
Total Equity 1,925,000.00
TOTAL LIABILITY & PARTNER'S EQUITY 1,925,000.00
Jirlyn's Dried Catfish
Pre-operating Cash Flow
January 1, 2018
Balance Beginning:
Partner A Capital 385,000.00 589,910.50 799,782.65 1,033,574.66 1,292,657.13
Partner B Capital 385,000.00 589,910.50 799,782.65 1,033,574.66 1,292,657.13
Partner C Capital 385,000.00 589,910.50 799,782.65 1,033,574.66 1,292,657.13
Partner D Capital 385,000.00 589,910.50 799,782.65 1,033,574.66 1,292,657.13
Partner E Capital 385,000.00 589,910.50 799,782.65 1,033,574.66 1,292,657.13
Total 1,925,000.00 2,949,552.49 3,998,913.23 5,167,873.32 6,463,285.67
Add: Net Income from
Operation 1,524,552.49 1,549,360.74 1,668,960.09 1,795,412.35 1,928,368.70
Total 3,449,552.49 4,498,913.23 5,667,873.32 6,963,285.67 8,391,654.37
Less Drawings
Partner A Capital (100,000.00) (100,000.00) (100,000.00) (100,000.00) (100,000.00)
Partner B Capital (100,000.00) (100,000.00) (100,000.00) (100,000.00) (100,000.00)
Partner C Capital (100,000.00) (100,000.00) (100,000.00) (100,000.00) (100,000.00)
Partner D Capital (100,000.00) (100,000.00) (100,000.00) (100,000.00) (100,000.00)
Partner E Capital (100,000.00) (100,000.00) (100,000.00) (100,000.00) (100,000.00)
Total (500,000.00) (500,000.00) (500,000.00) (500,000.00) (500,000.00)
Balance Ending 2,949,552.49 3,998,913.23 5,167,873.32 6,463,285.67 7,891,654.37
Jirlyn's Dried Catfish
Statement of Comprehensive Income
From December 31, 2018 - December 31, 2022
Operating Expenses
Office Supplies 14,208.00 14,918.40 15,664.32 16,447.54 17,269.91
Salaries and Wages 282,920.00 284,334.60 285,756.27 287,185.05 288,620.98
Lease & Rent 91,800.00 96,390.00 101,209.50 106,269.98 111,583.47
Utilities 37,864.92 39,758.17 41,746.07 43,833.38 46,025.05
Depreciation 75,149.64 75,149.64 75,149.64 75,149.64 75,149.64
Uniform Expense 4,000.00 4,000.00 4,000.00 4,000.00 4,000.00
Gasoline Expense 28,800.00 28,800.00 28,800.00 28,800.00 28,800.00
Fees, Licenses and Permits 6,820.00 6,820.00 6,820.00 6,820.00 6,820.00
Professional Fees 24,000.00 25,200.00 26,460.00 27,783.00 29,172.15
Bad Debts Expense 30,906.78 32,452.12 34,074.73 35,778.46 37,567.39
Other General Expenses 12,492.00 11,541.60 12,118.68 12,724.61 13,360.84
Total Operating Expenses 608,961.34 619,364.53 631,799.22 644,791.66 658,369.44
NET INCOME BEFORE TAX 2,177,932.12 2,213,372.49 2,384,228.70 2,564,874.78 2,754,812.43
Income Tax at 30% 653,379.64 664,011.75 715,268.61 769,462.43 826,443.73
NET INCOME AFTER TAX 1,524,552.49 1,549,360.74 1,668,960.09 1,795,412.35 1,928,368.70
Jirlyn's Dried Catfish
Statement of Cash Flows
From December 31, 2018 - December 31, 2022
o Financial Ratios
Liquidity Ratios
Current Ratio
2018 2019 2020 2021 2022 Average
Current Assets 2,583,122.84 3,748,964.19 5,076,375.59 6,534,778.44 8,130,607.47
Divided by Current Liabilities 1,260,120.73 1,301,451.69 1,384,753.35 1,472,594.21 1,564,904.90
Current Ratio 2.05 2.88 3.67 4.44 5.20 3.65
With an average current ratio of 3.65, it can be assumed that the partnership has the ability to meet its short term debt when
they fall due because it has sufficient amount of current assets to cover its short term liabilities. The partnership has Php 3.65 of
current assets for every Php 1.00 of current liabilities.
The partnership has more than enough current asset to meet all of its short term financial obligations as denoted by the
consistent positive figures of working capital.
Quick Ratio 2018 2019 2020 2021 2022 Average
Quick Assets 2,523,687.48 3,717,832.07 5,075,952.34 6,566,600.91 8,196,289.80
Divided by Current Liabilities 1,260,120.73 1,301,451.69 1,384,753.35 1,472,594.21 1,564,904.90
Quick Ratio 2.00 2.86 3.67 4.46 5.24 3.64
This indicates that the partnership can meet its current financial obligations with the available quick funds on hand.
This means that for every peso of the partnership’s assets, Jirlyn’s Dried Cat Fish generated Php 2.55 in revenus.
In average, the business sells and replaces its entire inventory 141 times in a year. Higher inventory turnover denotes
efficient operation and lesser cost on stocking inventory.
Solvency Ratios
Debt to Total Asset Ratio 2018 2019 2020 2021 2022 Average
Total Liabilities 1,260,120.73 1,301,451.69 1,384,753.35 1,472,594.21 1,564,904.90
Divided by Average Assets 4,209,673.21 5,300,364.92 6,552,626.68 7,935,879.88 9,456,559.27
Debt to Total Asset Ratio 0.30 0.25 0.21 0.19 0.17 0.22
In general, it shows that the partnership is 22% financed by creditors and that the remaining 78% is funded by the partners.
This also shows that the partnership has a positive sign of financial stability because the partnership has borrowed fewer funds as
compared to its total assets that it owns.
In average, creditors provide 29 centavos for each peso provided by the partners to finance the assets. This means that the
portion of assets provided by the partners is greater than the portion of assets provided by creditors.
Profitability Ratios
From the figures above, it shows that the partnership can convert 18% of its net sales to net income.
o Rates of Return
This means, every peso that the partners invested in assets produced 45% of net income.
In average, the partners have 58% return on their investment in the partnership.
o Cash Payback Period
Year 1 2,269,292.02
Year 2 1,663,237.81
Year 3 1,825,668.15
Year 4 1,956,573.85
Year 5 2,093,910.43
Total 9,808,682.25
Average 1,961,736.45
It will take ten months or .84 years for the partnership to be able to recover invested
cash.
o Break-even Point
= 578,054.56
(216.05 - 166.73)
where:
Sales price- Variable Cost
CM Ratio = x 100
Sales price
(216.05 - 166.73)
x 100
216.05
CM Ratio = 23%
At the sale of 11,720 dried fish, the partnership will earn an amount that is equal to its
total variable and fixed expenses. At this point, the partnership will have a net income of zero.
o Sensitivity Analysis
Operating Expenses
Office Supplies 14,208.00 14,918.40 14,208.00 14,918.40 15,664.32
Salaries and Wages 282,920.00 284,334.60 282,920.00 284,334.60 285,756.27
Lease & Rent 91,800.00 96,390.00 91,800.00 96,390.00 101,209.50
Utilities 37,864.92 39,758.17 37,864.92 39,758.17 41,746.07
Depreciation 75,149.64 75,149.64 75,149.64 75,149.64 75,149.64
Uniform Expense 4,000.00 4,000.00 4,000.00 4,000.00 4,000.00
Gasoline Expense 28,800.00 28,800.00 28,800.00 28,800.00 28,800.00
Fees, Licenses and Permits 6,820.00 6,820.00 6,820.00 6,820.00 6,820.00
Professional Fees 24,000.00 25,200.00 24,000.00 25,200.00 26,460.00
Bad Debts Expense 30,906.78 32,452.12 30,906.78 35,778.46 37,567.39
Other General Expenses 12,492.00 11,541.60 12,492.00 12,724.61 13,360.84
Total Operating Expenses 608,961.34 619,364.53 608,961.34 623,873.89 636,534.04
NET INCOME BEFORE TAX 2,101,325.57 1,549,632.18 2,177,932.12 2,781,118.02 2,359,046.24
Income Tax at 30% 630,397.67 464,889.65 653,379.64 834,335.41 707,713.87
NET INCOME AFTER TAX 1,470,927.90 1,084,742.53 1,524,552.49 1,946,782.62 1,651,332.37