INTRODUCTION

Sari-sari Store is a lay man term used to mean those businesses involved in retailing

variety basic necessities. Retailer buy large quantities of inventory from suppliers or wholesalers

and then resell inventory in smaller quantities to end-users. This type of store plays vital role

especially in poorer communities, of buying consumer products such as detergent, shampoo,

powdered milk, or beverages in single-use packages.

Purok Kakal, Brgy. Sisiman, Lutayan, Sultan Kudarat isa low-income community. Often,

basic necessities are sold in single-use packets (tingi), allowing everyone to purchase the goods

they need at an affordable price. However, there are only few small stores available in this

place, four stores to be exact. People in this place frequently travel to Koronadal City and have

their groceries due to insufficiency of basic needs.

This challenge creates an opportunity for the owner of Kenggit Sari-sari Store to cater

the needs of this community. This paper aims to examine the feasibility of putting up the

business in PurokKakal, Brgy. Sisiman, Lutayan, Sultan Kudarat and analyse the profitability of

the proposed project.

MARKETING PLAN

Kenggit Sari-Sari Store will offer the following products:

PRODUCT CATEGORY
GROCERIES
RICE
SOFTDRINKS
GASOLINE
SLIPPERS/SHOES
SCHOOL SUPPLIES
MEDICINES
Groceries include basic needs such as soaps, shampoos, detergent, fabric conditioners,

bleach, toothpaste, dish washing soap, cotton buds, deodorants, baby powder, cologne,

1
necessary napkins, milk, coffee, sugar, creamer, junk foods, noodles, canned goods, candies,

cigarettes, lotion, grooming set, and the like. Mark-up of these products will be set as 20% of

cost.

Rice includes only one variety which is M1. This product can be sold at P40 per kilo or

P2,000 per sack and can be purchase at P36 per kilo or P1,800 per sack that results with a

mark-up of P4 per kilo or P200 per sack.

Soft drinks includes Coca Cola, Pepsi, and Royal. The business will offer both 1 litter

and 8 0z that can be purchase at P190 and P160 per case respectively and can be sold at P35

and P10 respectively for a margin of P125 and P50 per case respectively.

Gasoline includes Unleaded and Premium that can be sold at P55 and P60 per litter

respectively. The business will acquire 1 container (24 litters) at a cost of P1,000 each that will

provide a margin of P320 and P440 per container.

Slippers and shoes that fits with all ages, school supplies such as ball pen, notebooks

writing pads, crayons, etc. and medicines are slow moving items. This products has a mark-up

of 20%.

THE CUSTOMER

2
Rank Top Customers Total No. of Target Market
No. Population Customer Percentage
(estimates)
1 Resident of Prk. Kakal 600 90 persons 90%
2 Resident of Brgy. Sisiman 4,000 10 persons 10%
(Excluding PurokKakal)
Total 4,600 100 persons 100%

Retrieved from (http://www.philatlas.com/mindanao/r12/sultan-kudarat/lutayan.html)

THE CUSTOMER NEEDS

No. of Units Percentage Local Availability

Products required each
month
GROCERIES 1 batch x 25 7% 4 stores x 4 batches
1 families = 25 = 16 batches
batches.
90 kilos x 25 13% 4 stores x 375 kilos
2 RICE families = 2,250 = 1,500
kilos (45 sacks) (30 sacks)
3 SOFTDRINKS
28 bot. x 25 17% 145 bot. x 4 stores =
4 1 liter families = 700 bot. 580 bot.
(58.3 cases)
60 bot. x 25 18% 315 bot x 4 stores =
8’ oz families =1,500 1,260 bot.
bot. (62.5 cases)
GASOLINE
120 litres x 10 14% 294 litters x 4 stores
families = 1, 200 = 1,176 litres
5 Premium
litres ( 50
containers)
120 litres x 10 14% 294 litres x 4 stores
families = 1, 200 = 1,176 litres
6 Unleaded
litres ( 50
containers)
7 FOOTWEARS .5 pc (once in 2 14% 10 pcs. X 4 stores =
mos.) x 100 40 pcs.

3
 persons = 50 pcs.
.20 batch per 1% 1 batch x 4 stores =
SCHOOL
8 month x 25 families 4 batches
SUPPLIES
= 5 batches
.20 batch per 1% 1 batch x 4 stores =
9 MEDICINES month x 25 families 4 batches
= 5 batches
Total 100%
(Data gathered from personal interviews with the residents of the Purok Kakal)

Supply and Demand Analysis

Product Demand Supply Per Gap or Percentage

Per month month Excess per Un-Served
month
1 batch x 25 4 stores x 4 9 batches 32%
GROCERIES families = 25 batches = 16
batches. batches
90 kilos x 25 4 stores x 375 750 kilos 33%
RICE families = 2,250 kilos = 1,500 (15 sacks)
kilos (45 sacks) (30 sacks)
SOFTDRINKS
28 bot. x 25 145 bot. x 4 120 bot. 17%
1 liter families = 700 bot. stores = 580 (10 cases)
bot.
60 bot. x 25 315 bot x 4 240 bot. 16%
8’oz families =1,500 stores = 1,260 (10 cases)
bot. bot.
GASOLINE
120 litres x 10 294 litres x 4 24 litres 20%
Premium families = 1, 200 stores = 1,176 ( 1 container)
litres litters
120 litres x 10 294 litres x 4 24 litres 20%
Unleaded families = 1, 200 stores = 1,176 ( 1 container)
litres litters
FOOTWEARS .5 pc (once in 2 10 pcs. X 4 10 pcs. 20%
mos.) x 100 stores = 40 pcs.

4
 persons = 50 pcs.
.20 batch per 1 batch x 4 1 batch 20%
SCHOOL
month x 25 families stores = 4
SUPPLIES
= 5 batches batches
.20 batch per 1 batch x 4 1 batch 20%
MEDICINES month x 25 families stores = 4
= 5 batches batches

Cost of Production

Purchase Cost/unit Selling Price

Products (Php) Mark-up Cost (Php)
GROCERIES 4,000.00 400.00 4,400.00/batch
RICE 30.00 6.00 36.00/kl.
SOFTDRINKS
8’oz 6.67 3.33 P10.00/bottle
1 liter 24.16 10.84 P35.00/bottle
GASOLINE
Premium 41.67 18.33 P60.00/litter
Unleaded 41.67 13.33 P55.00/litter
FOOTWEARS 35.00 15.00 P50.00/piece
SCHOOL SUPPLIES 2,000.00 200.00 2,200.00
MEDICINES 3,000.00 300.00 3,300.00

Place of Business

Kenggit Sari-Sari Store will be located at Purok Kakal, Brgy. Sisiman, Lutayan, Sultan

Kudarat. The place of business neighbouring schools and family homes.

Location Map

5
 Kenggit Sari-Sari Store will be selling directly to end users. The product will be displayed

at the store, itself. It will be a direct retailing operation.

Promotions

Medium Frequency Cost/Ads

Direct sales talk to Every day -0-
Customers
Signage Once a year P 500.00
Word of mouth Every day -0-
Total Cost P 500.00

Competitive Advantage

Since competitors are selling minimally, it is advantage for Kenggit Sari-Sari Store to sell

variety of products. The business will purchase bulk items allowing it to avail lesser price and

trade discounts. With this, the business may offer relatively cheaper price than the nearby four

stores. The location is also an advantage since it will be located near the main road of the Purok

where vehicle passes by. No salaries and wages expenses for the business since the owner will

be the one to manage the business.

6
Assets needed for the operation.

Qty Lifespan Depreciation

Fixed Assets . Acquisition Cost Total Cost (In Year) (Yearly)

Building 1 P 50,000.00 P50,000.00 20 years P 2,500.00

Improvements 1 P6,000.00 P6,000.00 20 years P 300.00

Scale (10kg) 1 P 800.00 P 800.00 10 years P 80.00

Delivery Equipment 1 P100,000.00 P100,000.00 10 years P 10,000.00
TOTAL P156,800.00 P 12,880.00

Furniture
and Acquisition Lifespan Depreciation
Fixtures Qty Cost Total Cost (In Year) (Yearly)
Cabinet 1 P 2,000.00 P2,000.00 5 years P 400.00
TOTAL P 2,000.00 P 400.00

Store Supplies Qty Acquisition Cost Total Cost

Ball pen 1 P 7.00 P7.00
Calculator 1 P250.00 P250.00
Log Books 2 P75.00 P150.00
TOTAL P 407.00
Non-depreciable Area Acquisition Cost Total Cost
Assets
Land 300 SQM P 60,000.00 P 60,000.00

Manpower

Position Job No. of Salary per Annual

Description/Requirements Personnel month Salary
Needs
Store In- Store Operation Monitoring 1 P5,000.00 P60,000.00
charge
Total 1 5,000.00 P60,000.00

JOB DESCRIPTION, DUTIES AND RESPONSIBILITIES

7
POSITION DUTIES AND RESPONSIBILITIES
Store In-charge Manages and performs all the tasks in the store.

FINANCIAL PLAN

Project Cost

Total project cost needed amounts to P310,000 break down as follows:

Particulars Amount
Debt: P 100, 000.00
Amount requested
to OWWA
Equity: P 210, 000.00
Total Project Cost P 310, 000.00
Proportion of Debt 3.2:6.8
to Equity

The business will finance the total project cost by personal investment and loan to
OWWA. The terms of loan summarized as follows:

Principal Loan:P 100, 000.00 Mode of Payment: per quarter

Interest per annum:__7.5%______________________Terms of Loan: 3 years

Schedule of loan interest and Re-Payment

Interest (7.5%
Quarterly per annum; Carrying
Quarters Principal
Payments 1.875% per Amount
quarter)
0       100,000.00
1 9,383.52 1,875.00 7,508.52 92,491.48
2 9,383.52 1,734.22 7,649.30 84,842.18
3 9,383.52 1,590.79 7,792.73 77,049.45
4 9,383.52 1,444.68 7,938.84 69,110.60
5 9,383.52 1,295.82 8,087.70 61,022.91

8
 6 9,383.52 1,144.18 8,239.34 52,783.57
7 9,383.52 989.69 8,393.83 44,389.74
8 9,383.52 832.31 8,551.21 35,838.53
9 9,383.52 671.97 8,711.55 27,126.98
10 9,383.52 508.63 8,874.89 18,252.09
11 9,383.52 342.23 9,041.29 9,210.80
12 9,383.50 172.70 9,210.80 0.00
Total 112,602.22 12,602.22 100,000.00  

Breakdown of Initial Capital Investment

EQUITY DEBT
Land P 60,000.00 Purchases P 79,320.24
Building 50,000.00 Store Supplies 407.00
Equipment 100,000.00 Permit & Licenses 2,500.00
Marketing Expenses 500.00
Improvements 6,000.00
Contingency Fund 11,272.76
Total P 210,000.00 Total P 100,000.00

Sales Schedule

Estimated Sales Mark-up/Price

Products Monthly Sales
Volume per month Description
GROCERIES 8 batch 10% of cost 35,200.00
RICE 15 sacks P1,800/sack 27,000.00
SOFTDRINKS      
8 oz 10 cases P10/bottle 2,400.00
1 liter 10 cases P35/bottle 3,150.00
GASOLINE      
Premium 24 liters P60/liter 1,440.00

9
 Unleaded 24 liters P55/liter 1,320.00
FOOTWEARS 10 pieces P50/piece 500.00
SCHOOL SUPPLIES 1 batch 10% of cost 2,200.00
MEDICINES 1 batch 10% of cost 3,300.00
Total 103   P 76,510.00

Estimated Annual Sales

Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yr. 5
P562,214.4
P 422,400.00
P 464,640.00 P511,104.00 0 P618,435.84
356,400.0 392,040.0 474,368.4
324,000.00
0 0 431,244.00 0
         
31,680.0 34,848.0 42,166.0
28,800.00
0 0 38,332.80 8
41,580.0 45,738.0 55,342.9
37,800.00
0 0 50,311.80 8
         
19,008.0 20,908.8 25,299.6
17,280.00
0 0 22,999.68 5
17,424.0 19,166.4 23,191.3
15,840.00
0 0 21,083.04 4
6,600.0 7,260.0 8,784.6
6,000.00
0 0 7,986.00 0
29,040.0 31,944.0 38,652.2
26,400.00
0 0 35,138.40 4
43,560.0 47,916.0 57,978.3
39,600.00
0 0 52,707.60 6
P1,110,925.2
P918,120.00 P1,009,932.00 P1,222,017.72 P1,344,219.49
0
Estimated annual sales increased by 10%. The 10% increased associated with 5%

inflation rate and adjusted risk factors.

Purchase Schedule

10
 Products Schedule of Replenishment
GROCERIES 4x a month
RICE 2x a month
SOFTDRINKS
8 oz 4x a month
1 liter 4x a month
GASOLINE
Premium 1x a month
Unleaded 1x a month
FOOTWEARS 1x a month
SCHOOL SUPPLIES 1x a month
MEDICINES 1x a month

Subsequent
First Month Month’s
Products Quantity Cost/unit Purchases Purchases

GROCERIES 10 4,000.00 40,000.00 32,000.00

RICE 17 1,500.00 25,500.00 22,500.00

SOFTDRINKS      

8 oz 12 160.00 1,920.00 1,600.00

1 liter 12 290.00 3,480.00 2,900.00

GASOLINE      
Premium 36 41.67 1,500.12 1,000.08
Unleaded 36 41.67 1,500.12 1,000.08
FOOTWEARS 12 35.00 420.00 350.00
SCHOOL SUPPLIES 1 2,000.00 2,000.00 2,000.00
MEDICINES 1 3,000.00 3,000.00 3,000.00
Total 105   P79,320.24 66,350.16

11
Projected Statement of Financial Performance

Kenggit Sari-Sari Store

Projected Statement of Financial Performance
For Five Years

(in pesos)
Yr.1 Yr. 2 Yr. 3 Yr. 4 Yr. 5 TOTAL
Sales 918,120 1,009,932 1,110,925 1,222,018 1,344,219 5,605,214
Less: Cost of Sales (1) 734,652 770,591 808,280 847,803 889,248 4,050,574
Gross Margin 183,468 239,341 302,645 374,215 454,971 1,554,641
Less: Expenses
Permits and Licenses 2,500 2,500 2,500 2,500 2,500 12,500
Salaries Expense 60,000 90,000 90,000 90,000 90,000 420,000
Supplies expense 407 427 449 471 495 2,249
Marketing Expense 500 525 551 579 608 2,763
Utilities Expense (2) 1,500 1,575 1,654 1,736 1,823 8,288
Depreciation expense (3) 12,800 12,800 12,800 12,800 12,800 64,000
Miscellaneous expenses 2,000 2,100 2,205 2,315 2,431 11,051
Interest Expense 1,875 1,734 1,591 - - 5,200
Total expenses 81,582 111,662 111,750 110,402 110,657 526,051
Income before tax 101,886 127,679 190,896 263,813 344,315 1,028,589

Income tax expense (4) Exempt Exempt Exempt 2,763 18,863 21,626
Net Income after Tax 101,886 127,679 190,896 263,813 325,452 1,006,964

*See notes to Financial Statements.

12
 Projected statement of financial performance indicates that the business earnings

amounts to P101,886, P127,679, P190,896, P263,813 and P325,452 respectively or a total of

1,006,964 for five years projection.

Projected Statement of Financial Position

13
 Kenggit Sari-Sari Store
Projected Statement of Financial Position
For Five Years

(in pesos)
Yr. 0 Yr.1 Yr. 2 Yr. 3 Yr. 4 Yr. 5
ASSETS
Current assets
Cash in Bank 11,273 94,895 197,160 359,779 633,605 982,076
Inventories 79,320 79,320 84,079 89,124 94,472 100,140
Supplies 407 431 457 485 514 545
Prepaid Expenses 3,000 3,150 3,308 3,473 3,647 3,829
Total current assets 94,000 177,797 285,004 452,861 732,237 1,086,589

Non current assets

Land 60,000 60,000 60,000 60,000 60,000 60,000
Building 50,000 47,500 45,000 42,500 40,000 37,500
Improvements 6,000 5,700 5,400 5,100 4,800 4,500
Equipment 100,000 90,000 80,000 70,000 60,000 50,000
Total non current assets 216,000 203,200 190,400 177,600 164,800 152,000

Total Assets 310,000 380,997 475,404 630,461 897,037 1,238,589

LIABILITITES & CAPITAL

Accounts Payable - - - - - -
Income tax payable - - - - 2,763 18,863
Total current liabilities - - - - 2,763 18,863

Loan payable 100,000 69,111 35,839 - - -

Total liabilities 100,000 69,111 35,839 - 2,763 18,863

Capital, Beg. 210,000 210,000 311,886 439,566 630,461 894,275

Add'l investment - - - - - -
Net income - 101,886 127,679 190,896 263,813 325,452
Drawings - - - - -
Capital, end 210,000 311,886 439,566 630,461 894,275 1,219,726

Total liab. & capital 310,000 380,997 475,404 630,461 897,037 1,238,589

14
 Projected Statement of Financial Position shows the assets, liabilities and capital of the

business. This indicates that the business’s wealth increases in the 5 years projection.

Assuming no withdrawals made by the owner.

15
Projected Statement of cash Flows

Kenggit Sari-Sari Store

Projected Statement of Cash Flows
For Five Years

Yr.1 Yr. 2 Yr. 3 Yr. 4 Yr. 5

Operating Activities
Net Income 101,886 127,679 190,896 263,813 325,452
(Increase) decrease in Inventories - (4,759) (5,045) (5,347) (5,668)
(Increase) decrease in Supplies (24) (26) (27) (29) (31)
(Increase) decrease in Prep. Exp. (150) (158) (165) (174) (182)
Increase (decrease) in Account payable - - - - -
Increase (decrease) in T ax payable - - - 2,763 16,100
Depreciation expense 12,800 12,800 12,800 12,800 12,800
Net cash flow from operating activities 114,512 135,537 198,458 273,826 348,471

Investing Activities
Acquisition of fixed assets - - - - -
Net cash flow from investing activities - - - - -

Financing Activities
Add'l investments - - - - -
Loan Amortizations (30,889) (33,272) (35,839) - -
Drawings - - - - -
Net cash flow from financing activities (30,889) (33,272) (35,839) - -

Net increase (decrease) in cash 83,622 102,265 162,620 273,826 348,471

Add: cash balance beginning 11,273 94,895 197,160 359,779 633,605

Cash balance end 94,895 197,160 359,779 633,605 982,076

Statement of cash flows shows cash inflows and outflows of the company. The business

uses indirect method of presentation that indicates a very small increase of cash in year one,

and a sudden increase in year two onwards. The statement shows all positive cash so there’s

no need for the owner to invest additional cash in the business for the five years projection.

16
Notes to Financial Statements
(1)
Cost of Sales Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yr. 5
Inventory, beg - 79,320.24 84,079.45 89,124.22 94,471.67
Add: Purchases 809,172.00 775,350.36 813,324.68 853,150.11 894,916.38
Freight- in 4,800.00 5,040.00 5,292.00 5,556.60 5,834.43
Total goods available 813,972.00 854,670.60 897,404.13 942,274.34 989,388.05
Less: Inventory end 79,320.24 84,079.45 89,124.22 94,471.67 100,139.98
Cost of sales 734,651.76 770,591.15 808,279.91 847,802.66 889,248.08

(2)
Utilities expenses Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yr. 5
Electricity 1,500.00 1,590.00 1,685.40 1,786.52 1,893.72
Total 1,500.00 1,590.00 1,685.40 1,786.52 1,893.72

(3)
Depreciation Expense Estimated
Economic Useful Annual
Assets Cost Life in Years Depreciation
Building 50,000.00 20 2,500.00
Improvements 6,000.00 20 300.00
Equipment 100,000.00 10 10,000.00
Total 156,000.00 12,800.00

* The above table of depreciation indicates the yearly decrease of fixed assets amount

due to usage. The annual depreciation was derived using Straight-line Method of Depreciation

that is Cost of asset minus salvage value divided by economic useful life. The company did not

set salvage value due to remote information. Any recovery of fixed assets at the end of useful

life will an adjustment to its value.

17
 Tax Table Schedule

(4)
TRAIN LAW R.A. 10963

If Taxable Income is: Tax Due is

Not over 250,000 EXEMPTED
Over 250,000 but not over 400,000 20% of the excess over 250,000
Over 400,000 but not over 800,000 30,000 +25% of the excess over 400,000
Over 800,000 but not over 2,000,000 130,000 + 30% of the excess over 800,000
Over 2,000,000 but not over 5,000,000 490,000 + 32% of the excess over 2,000,000
Over 5,000,000 1,450,000 + 35% of the excess over 5,000,000

Income Tax Expense Schedule

Income Tax Expense Schedule (R.A. 10963)

Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yr. 5
Income Before T ax 101,886.24 127,679.29 190,895.78 263,813.41 344,314.68
Less: Base Amount 250,000.00 250,000.00 250,000.00 250,000.00 250,000.00
Excess Amount - - - 13,813.41 94,314.68
x T ax Base Rate 0% 0% 0% 20% 20%
Tax on Excess - - - 2,762.68 18,862.94
Add: Basic Tax - - - - -
Income Tax Expense Exempt Exempt Exempt 2,762.68 18,862.94

Income tax expense schedule indicates that the first 3 years of operations is exempt
from tax since it did not reach the threshold of P250,000 and above to be taxable. On the fourth
and fifth year however, indicates tax expense of P2,762.68 and P18,862.94 respectively.

18
 Schedule of Fixed Assets

Building Improvements Equipment

Costs 50,000.00 6,000.00 100,000.00
Annual Depreciation 2,500.00 300.00 10,000.00
Carrying ammount, Yr. 1 47,500.00 5,700.00 90,000.00
Annual Depreciation 2,500.00 300.00 10,000.00
Carrying amount, Yr. 2 45,000.00 5,400.00 80,000.00
Annual Depreciation 2,500.00 300.00 10,000.00
Carrying amount, Yr. 3 42,500.00 5,100.00 70,000.00
Annual Depreciation 2,500.00 300.00 10,000.00
Carrying amount, Yr. 4 40,000.00 4,800.00 60,000.00
Annual Depreciation 2,500.00 300.00 10,000.00
Carrying amount, Yr. 5 37,500.00 4,500.00 50,000.00

Fixed assets schedule indicated the reduction of depreciable assets per year due to

wear and tear. Carrying amount as of the fifth year of building, improvements and equipment

were P37,500, P4,500 and P50,000 respectively.

19
Financial Ratios

Financial ratios depicts the business’s competitive position and financial structures.

Among of them includes return on investment, payback period, and return on sale, current ratio

and asset turnover ratio.

Return on Investment

Return on investments is a measure of profitability that indicates whether or not, the

company is using its resources in an efficient manner. The higher the return on investment, the

more efficient the company in utilizing their resources.

Yr.1 Yr. 2 Yr. 3 Yr. 4 Yr. 5

Net Income 101,886 127,679 190,896 263,813 325,452

Return on
Investment = Total assets 380,997 475,404 630,461 897,037 1,238,589

Return on Investment = 26.74% 26.86% 30.28% 29.41% 26.28%

Return on investment as computed indicates 26.74%, 26.86%, 30.28% 29.41% and

26.28% respectively for five years. This means that there is a return of P.2674 for every peso

invested in the business on the first year of operations.

Payback Period

Payback period is a method of evaluating investment opportunities and product

development projects on the basis of the time taken to recoup the investment. The lower the

payback period, the more it is favorable to the business.

20
 Payback Accumulated cash inflows Annual Cash Flows Accumulated
Period = Initial investments Yr. 1 83,622 83,622
Yr. 2 102,265 185,887
Yr. 3 162,620 348,507
= (348,507-310,000) + 2 years Yr. 4 273,706 622,213
310,000.00 Yr.5 348,591 970,803
Total 970,803

= 2.12 years

Based on the computation the owner will fully recover the investment of P310,000 in

2.12 years or 3 years and 1 month.

Return on Sales

Return on sale is a ratio measuring the performance of a business, expressed as a

percentage of sales revenue. The higher the ROS, the better.

Yr.1 Yr. 2 Yr. 3 Yr. 4 Yr. 5

Return on
sales = Net Income 101,886 127,679 190,896 263,813 325,452
Sales Revenue 918,120 1,009,932 1,110,925 1,222,018 1,344,219

11.10% 12.64% 17.18% 21.59% 24.21%

The computation showed results of 11.10%, 12.64%, 17.18%, 21.59% and 24.21%for

five years projection respectively. This means that there is a .11 income in every peso of sale in

the first year of operation.

21
Current Ratio

Current ratio is an indicator of a firm's ability to meet short-term financial obligation, it is

the ratio of current assets to current liability. If the current ratio is 1 or more, the company can

be able to pay its short-term obligation, if the current ratio resulted to less than 1, the company

cannot be able to pay its short-term obligation when it becomes due.

Yr.1 Yr. 2 Yr. 3 Yr. 4 Yr. 5

Current Ratio= Current Assets 177,797 285,004 452,861 732,237 1,086,589

Current Liabilities - - - 2,763 18,863

0.00 0.00 0.00 265.05 57.60

Current ratio presented only in year five since there is no obligation presented on the

first year to 3rd year. Based on the fourth and fifth year’s result the business is very liquid

enough to pay its current liabilities.

Asset Turnover Ratio

Asset turnover ratio indicates how successful the business in utilizing its assets in

generation of sales revenue. A high ratio is desirable.

Asset Yr.1 Yr. 2 Yr. 3 Yr. 4 Yr. 5

Turnover
Ratio = Total Sales Revenue 918,120 1,009,932 1,110,925 1,222,018 1,344,219
Total Assets 380,997 475,404 630,461 897,037 1,238,589

240.98% 212.44% 176.21% 136.23% 108.53%

Based on the computation above, the business efficiently utilizes its resources in

generation of sales. A peso invested can generate 2.41 sales in year one.

22