ALDERSGATE COLLEGE

School of Business and Accountancy

Solano, Nueva Vizcaya

CHAPTER V

FINANCIAL STUDY

Major Assumptions

Rapsa Inihaw Republic financial picture is quite promising. Since it is operating a cash

business, the initial cost is significantly heavy for a start-up business. The process is labor

intensive and recognizes that a higher level of talent is required. The financial investment in its

employees will be one of the greatest differentiators between it and Rapsa Inihaw Republic’s

competition. This means that because the production staffs were certified, there will be a

competitive advantage. The costs incurred during training will eventually return through the high

level of services provided by our competent employees. For the purpose of this pro-forma plan,

the facilities and equipment are financed by the business partners. There will be a minimum of

inventory on hand so as to keep the product fresh and to take advantage of price drops, when and

if they should occur.

Initial Capital Cost for Business Requirement

CATEGORY EQUITY TOTAL
FIX CAPITAL COST:
  1. LAND (12x8 sq. meter) ₱400,000
  2. SITE PREPARATION & DEVELOPMENT ₱50,000 450,000

  3. STRUCTURAL:
  Building and other civil works 700,000
Total 1,150,000
  4.MACHINERIES, EQUIPMENT AND ACCESSORIES
  Aircon ₱30,000
  Telephone with Internet (monthly) ₱3,000
 ALDERSGATE COLLEGE
School of Business and Accountancy
Solano, Nueva Vizcaya

  POS Machine ₱40,000

Food Warmer ₱30,000
Water Dispenser ₱5,000
Barreled Grill ₱60,000
Stereo Speaker ₱1,400
Steamer ₱10,000
Rice Cooker ₱2,400
Kitchen Range Hood ₱8,000
Straw Dispenser ₱120
Knife ₱240
Cutting Board ₱500
Napkin Holder ₱3,000
Food Trays ₱6,000
Glass ₱1,250
Glass Plate ₱1,440
Spoon and Fork ₱3,000
Digital Timer Clock ₱2,000
Total Machineries and Equipment 207,350
  5. FURNITURE AND FIXTURES
Tables ₱16,800
  Chairs ₱12,600
Counter Tops ₱35,000

Book Shelves ₱9,000

Total Furniture and Fixtures 73,400

Total ₱1,430,750.00
This table shows Rapsa Inihaw Republic’s prospective initial capital cost for the business
requirements.
 ALDERSGATE COLLEGE
School of Business and Accountancy
Solano, Nueva Vizcaya

Initial Capital Cost for Building Planning and Preparation

CATEGORY EQUITY TOTAL

PRE-OPERATING CAPITAL
EXPENDITURES
1. Pre-investment studies and
  ₱60,000.00
investigation ₱60,000.00
  2. Management of Pre-object operation
₱70,000.00 ₱70,000.00
  a. Final Planning
₱30,000.00 ₱30,000.00
b. Supervision, Coordination, Test,
 
Runs ₱20,000.00 ₱20,000.00
c. Recruitment and Training of
 
Personnel ₱20,000.00 ₱20,000.00
  d. Arrangement for Suppliers
₱35,000.00 ₱35,000.00
e. Arrangement for Marketing and
 
Promotions ₱20,000.00 ₱20,000.00
f. Building Up of
 
Connection/Network ₱50,000.00 ₱50,000.00
 
g. Procurement of Legal Permits ₱20,000.00 ₱20,000.00
TOTAL: ₱325,000
This table shows Rapsa Inihaw Republic’s prospective initial capital cost for building planning and
preparation.

Financial Statement from the Pre-Operating Period

ASSETS
  CURRENT ASSETS:
  CASH ON HAND 568,250
  SUPPLIES 5,000
PREPAID ADVERTISING 3,500
BUILDING PERMITS 36,500
 ALDERSGATE COLLEGE
School of Business and Accountancy
Solano, Nueva Vizcaya

TOTAL CURRENT ASSETS 613,250

  NON-CURRENT ASSETS:
  LAND 400,000
  BUILDING 700,000
  ELECTRICAL SUPPLIES 5,000
  MACHINERIES, EQUIPMENT AND ACCESORIES 208,350
  FURNITURE AND FIXTURES 73,400
TOTAL NON-CURRENT ASSETS 1,386,750

  TOTAL ASSETS ₱2,000,000

  CAPITAL
  CAPITAL CONTRIBUTION 2,000,000
TOTAL LIABILITIES & CAPITAL: ₱2,000,000
This table shows Rapsa Inihaw Republic prospective financial statement from the pre-operating
period.

Pre-Operating Income Statement

YEAR 1 YEAR 2
SALES REVENUE ₱1,002,352 ₱1,610,479
Less: cost of goods sold 231312 222,607
Gross Profit ₱771,040 ₱1,387,872
Less: operating expenses
Salaries 483,840 483,840
Bonuses (13th Month Pay) 40,320 40,320
Utilities 10,130 10,130
Supplies 100 100
Advertising 1,500 1,500
Depreciation
Land 35,000 35,000
Building 14,000 14,000
 ALDERSGATE COLLEGE
School of Business and Accountancy
Solano, Nueva Vizcaya

Machine and Equipment 4,167 4,167

Furniture and fixtures 1,468 1,468
Electrical 100 200
Total Operating Expense 590,625 590,725
Net Profit Before Taxes 180,415 797,147
Less: 12% Tax 21,649.80 95,658
Net Profit After Taxes ₱158,765.20 ₱701,489
This table shows Rapsa Inihaw Republic’s prospective pre-operating income statement.

Pre-Operating Period Cash Flows

CASH INFLOWS:
CASH CONTRIBUTIONS: ₱2,000,000
TOTAL CASH INFLOWS 2,000,000

LAND 400,000
BUILDING 700,000
MACHINERIES AND EQUIPMENT 208,350
ELECTRICAL 5,000
PREPAID EXPENSES 3,500
FURNITURE AND FIXTURES 73,400
COST OF MATERIALS 231,312
MISCELLANEOUS EXPENSES 10,130
CONTINGENCIES 50,000
TOTAL CASH DISBURSEMENTS 1,681,691
CASH BALANCE, END ₱318,308
This table shows Rapsa Inihaw Republic’s prospective pre-operating period cash flows.
 ALDERSGATE COLLEGE
School of Business and Accountancy
Solano, Nueva Vizcaya

Balance Sheet for the Ending Year

ASSETS YEAR 1 YEAR 2

CURRENT ASSETS
CASH ₱318,308
PREPAID EXPENSES 2,000
BUSINESS PERMIT 36,500
SUPPLIES 4,500
FIXED ASSETS
LAND 400,000
BUILDING 204,183
ELECTRICAL SUPPLIES 4900
MACHINERIES EQUIPMENT AND
204,183
ACCESSORIES
FURNITURE AND FIXTURES 71,932
TOTAL ASSETS ₱2,000,000
CAPITAL
CAPITAL CONTRIBUTION 2,000,000

END CAPITAL 2,000,000

TOTAL LIABILITIES & CAPITAL: ₱2,000,000
This table shows Rapsa Inihaw Republic’s prospective balance sheet for the ending year.
 ALDERSGATE COLLEGE
School of Business and Accountancy
Solano, Nueva Vizcaya

Legend:
Total Projected Sales
To get the projected sales, the formula:
A =B (C)
Where:
A – Total projected sales
B – Total projected customers
C – Money spend by customers
Formula:
A = B (C)
A= 21,600 (4,641)
A = 1,002,351

Financial Analysis

To get the financial analysis, consider the formula:

X = A/B

Where:

A = Total Project Cost

B = Annual Sales/Net Income

Therefore:

X = A/B

X = 1,755,750/771,040

X = 2.277

X = 2 years, 2 months and 7 days = Return of Investment