CHAPTER IV

RESULTS AND DISCUSSION

A. MARKET STUDY

a. Market Research and Analysis

1. Demand Analysis

2. Potential Consumer Market

3. Potential Vendor Market

b. Competitive Analysis

c. SWOT Analysis

Strengths

Weaknesses

Opportunities

Threats
B. TECHNICAL STUDY

How the products are to be produced?

How much will it cost?

Where

a. Supplier

Potential suppliers shall be assessed based on the terms and conditions of the

agreement. The chosen supplier will be picked based on the criteria set by the

management, including the price, discounts, rebates, etc. These are the list of potential

suppliers for the agricultural products:

a. Phil Foremost

b. PILMICO

c. UNIFEEDS

d. PIGROLAC

e. BMEG

b. Organizational

c. Operations

When the construction of the building is complete, CMU Agrivet Enterprises shall

operate starting 8:00am to 6:00pm for seven-days a week for the whole year. Products

will be delivered according to the terms found in the contract of suppliers. Hired

employees are assigned to organize the products and manage the day-to-day

operation.

It
C. FINANCIAL STUDY

a. Cost

i. Permits/Licenses and Fees

Lot plan with site map from the geodetic engineer PHP 1,250
Barangay clearance PHP 500
The following documents must be submitted:
1. Transfer certificate of title
2. Blueprint copy of the building plans
3. Authorization from the CMU Administration board
4. Photocopy of IDs of authorized representative
Locational clearance from the City Planning and Development Office PHP 1,996
(CPDO)
Fire safety evaluation clearance (FSEC) from the local Fire Marshall at PHP 11,055
the Bureau of Fire Protection (BFP)
Fire safety inspection certificate (FSIC) at the BFP PHP 4,304
Certificate of final electrical inspection (CFEI) Office of the Building No charge
Official (OBO)
Certificate of occupancy from the Office of the Building Official (OBO) PHP 17,688
Water and sewage connection from Water District PHP 6,855
Tax declaration of improvement from City Assessor’s Office (CAO) No charge
TOTAL PHP 43,857

ii. Building Construction

iii. Other Costs

b. Major Assumptions

c. Revenue Forecast

d. Projected Financial Statements

 CMU Agrivet Enterprise
Statement of Financial Position
As of December 31

Construction YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6

Period
ASSET
Current Assets
Cash
Accounts Receivable
Non-current Assets
Property, Plant, and
Equipment
TOTAL ASSETS

LIABILITIES AND EQUITY

LIABILITIES
Current Liabilities
Notes Payable-current
Non-current Liabilities
Notes Payable
Total Liabilities
EQUITY
Net Income
Total Equity
TOTAL LIABILITIES AND
EQUITY
 CMU Agrivet Enterprise
Statement of Financial Position
As of December 31

YEAR 7 YEAR 8 YEAR 9 YEAR 10 YEAR 11 YEAR 12

ASSET
Current Assets
Cash
Accounts Receivable
Non-current Assets
Property, Plant, and
Equipment
TOTAL ASSETS

LIABILITIES AND EQUITY

LIABILITIES
Current Liabilities
Notes Payable-current
Non-current Liabilities
Notes Payable
Total Liabilities
EQUITY
Net Income
Total Equity
TOTAL LIABILITIES AND
EQUITY
 CMU Agrivet Enterprise
Statement of Comprehensive Income
For the Period Ended December 31

Construction YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6

Period
Sales
Cost of Sales
Gross Profit
Less: Expenses
Total Expenses
Profit before Interest
Less: Interest
Expense
Net Profit
 CMU Agrivet Enterprise
Statement of Comprehensive Income
For the Period Ended December 31

YEAR 7 YEAR 8 YEAR 9 YEAR 10 YEAR 11 YEAR 12

Sales
Cost of Sales
Gross Profit
Less: Expenses
Total Expenses
Profit before Interest
Less: Interest
Expense
Net Profit
 CMU Agrivet Enterprise
Statement of Cash Flows
For the Period Ended December 31

Pro Forma Cash Flow Construction YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6
Period
Cash flows from operating activities
Cash receipts from
Cash paid for
Net cash from operating activities

Cash flows from investing activities

Cash paid for
Net cash used in investing activities

Cash flows from financing activities

Net cash used in financing activities

Net increase in cash and cash

equivalents
Add: Cash Beginning
Cash Ending Balance
 CMU Agrivet Enterprise
Statement of Cash Flows
For the Period Ended December 31

Pro Forma Cash Flow YEAR 7 YEAR 8 YEAR 9 YEAR 10 YEAR 11 YEAR 12
Cash flows from operating activities
Cash receipts from
Cash paid for
Net cash from operating activities

Cash flows from investing activities

Cash paid for
Net cash used in investing activities

Cash flows from financing activities

Net cash used in financing activities

Net increase in cash and cash

equivalents
Add: Cash Beginning
Cash Ending Balance
e. Schedules

SCHEDULE 1: Loan Amortization

Principal Loan:
Interest Rate:
Term:
Annual Payment:

YEAR PAYMENT INTEREST EXPENSE AMORTIZATION CARRYING AMOUNT

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
SCHEDULE 2: Building Depreciation

Year Depreciation Accumulated Carrying Year Depreciation Accumulated Carrying

Expense Depreciation Amount Expense Depreciation Amount
f. Financial Analysis and Measures

1. Profitability Ratios

a. Profit Margin

𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒
𝑃𝑟𝑜𝑓𝑖𝑡 𝑀𝑎𝑟𝑔𝑖𝑛 =
𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠

PROFIT MARGIN
YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6
Net Income
Net Sales
Profit Margin
 b. Return on Investment

𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒

𝑅𝑒𝑡𝑢𝑟𝑛 𝑜𝑛 𝐼𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡 =
𝑇𝑜𝑡𝑎𝑙 𝑃𝑟𝑜𝑗𝑒𝑐𝑡 𝐶𝑜𝑠𝑡

RETURN ON INVESTMENT
YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6
Average Net Income
Total Project Cost
Return on Investment
 c. Return on Asset

𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒
𝑅𝑒𝑡𝑢𝑟𝑛 𝑜𝑛 𝐴𝑠𝑠𝑒𝑡𝑠 =
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠

RETURN ON ASSET
YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6
Net Income
Average Total Assets
Return on Asset
2. Liquidity Ratio

a. Current Ratio

𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑅𝑎𝑡𝑖𝑜 =
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

CURRENT RATIO
YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6
Current Assets
Current Liabilities
Current Ratio
 b. Quick Ratio

𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠 − 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑖𝑒𝑠

𝑄𝑢𝑖𝑐𝑘 𝑅𝑎𝑡𝑖𝑜 =
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

QUICK RATIO
YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6
Current Assets
Inventories
Current Liabilities
Quick Ratio
 c. Working Capital

𝑊𝑜𝑟𝑘𝑖𝑛𝑔 𝐶𝑎𝑝𝑖𝑡𝑎𝑙 = 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠 − 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

WORKING CAPITAL
YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6
Current Assets
Current Liabilities
Working Capital
3. Efficiency Ratios

a. Asset Turnover Ratio

𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠
𝐴𝑠𝑠𝑒𝑡 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑅𝑎𝑡𝑖𝑜 =
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠

ASSET TURNOVER RATIO

YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6
Net Sales
Average Total Assets
Asset Turnover Ratio
4. Debt Ratio

a. Time Interest Earned

𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒 𝑏𝑒𝑓𝑜𝑟𝑒 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑎𝑛𝑑 𝑇𝑎𝑥𝑒𝑠

𝑇𝑖𝑚𝑒 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝐸𝑎𝑟𝑛𝑒𝑑 =
𝐴𝑛𝑛𝑢𝑎𝑙 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝐶ℎ𝑎𝑟𝑔𝑒𝑠

TIME INTEREST EARNED

YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6
Net Income before Interest and Taxes
Annual Interest Charges
Time Interest Earned
 b. Debt Ratio

𝑇𝑜𝑡𝑎𝑙 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑒𝑠
𝐷𝑒𝑏𝑡 𝑅𝑎𝑡𝑖𝑜 =
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠

DEBT RATIO
YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6
Total Liabilities
Total Assets
Debt Ratio
5. Payback Period

𝑃𝑎𝑦𝑏𝑎𝑐𝑘 𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑦𝑒𝑎𝑟𝑠 𝑈𝑛𝑟𝑒𝑐𝑜𝑣𝑒𝑟𝑒𝑑 𝐶𝑜𝑠𝑡 𝑎𝑡 𝑡ℎ𝑒 𝑠𝑡𝑎𝑟𝑡 𝑜𝑓 𝑡ℎ𝑒 𝑦𝑒𝑎𝑟

= +
𝑝𝑒𝑟𝑖𝑜𝑑 𝑝𝑟𝑖𝑜𝑟 𝑡𝑜 𝑓𝑢𝑙𝑙 𝑟𝑒𝑐𝑜𝑣𝑒𝑟𝑦 𝐶𝑎𝑠ℎ 𝑓𝑙𝑜𝑤 𝑑𝑢𝑟𝑖𝑛𝑔 𝑓𝑢𝑙𝑙 𝑟𝑒𝑐𝑜𝑣𝑒𝑟𝑦

YEAR NET CASH INFLOW CUMULATIVE NET CASH INFLOW COST

2
3
4
5
6
7

𝑋
𝑃𝑎𝑦𝑏𝑎𝑐𝑘 𝑃𝑒𝑟𝑖𝑜𝑑 = 𝐴 + = 𝑍 𝑌𝑒𝑎𝑟𝑠
𝑌