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  • Payback Period (In Months)

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    Reyy Arboleras
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    The document analyzes the financial performance of a project over 5 years using various metrics: 1) The payback period is calculated as 4.54 years or 54.46 months. The discounted payback period is 4 years or 48 months using a 12% discount rate. 2) The net present value is slightly negative at -₱336.70. The internal rate of return is estimated at 7%. 3) Break-even analysis shows that the number of units needed to break even decreases each year from 22,072 in 2021 to 8,684 in 2025 as sales increase and costs remain steady.

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    The document analyzes the financial performance of a project over 5 years using various metrics: 1) The payback period is calculated as 4.54 years or 54.46 months. The discounted payback period is 4 years or 48 months using a 12% discount rate. 2) The net present value is slightly negative at -₱336.70. The internal rate of return is estimated at 7%. 3) Break-even analysis shows that the number of units needed to break even decreases each year from 22,072 in 2021 to 8,684 in 2025 as sales increase and costs remain steady.

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    11 views4 pages

    Payback Period (In Months)

    Uploaded by

    Reyy Arboleras
    The document analyzes the financial performance of a project over 5 years using various metrics: 1) The payback period is calculated as 4.54 years or 54.46 months. The discounted payback period is 4 years or 48 months using a 12% discount rate. 2) The net present value is slightly negative at -₱336.70. The internal rate of return is estimated at 7%. 3) Break-even analysis shows that the number of units needed to break even decreases each year from 22,072 in 2021 to 8,684 in 2025 as sales increase and costs remain steady.

    Copyright:

    © All Rights Reserved
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    of 4

    Payback Period

    Payback Period (in months)


    Payback Period (In years) 4.54
    *12
    Payback Period (in months) 54.46

    Year Net Cash Flows Counted Years


    (Opt. Act.)
    0 (2,100,000.00)
    1 ₱260,479.72 1
    2 (285,547.50) 1
    3 ₱271,539.40 1
    4 1,007,774.45 1
    5 1,569,865.71 0.54
    Total ₱4.54

    Discounted Payback Period (in


    months) *
    48.00
    /12
    Discounted Payback Period (in years) 4.00
    *Using 12% effective interest rate
    **Using 10% required rate of return

    Discounted CF No. of Years Total DCF Balance DPP in years


    2020 (2,100,000.00)
    2021 232,571.18 1 1
    2022 (227,636,.72) 2 1
    2023 563,486.00 3 1
    2024 640,458.88 4 1,208,879.34 (891,120.66) 1
    2025 890,783.97 4.00
    No of months 12
    in a year
    DPP in months 48.00
    Net Present Value (NPV)
    NET PRESENT VALUE
    INITIAL INVESTMENT (2,100,000.00)
    232,571.18
    (227,636.72)
    DISCOUNTED CASH 563,486.00
    FLOW
    640,458.88
    890,783.97
    NPV (336.70)

    Internal Rate of return

    Internal rate of return 7%

    2020 2021 2022 2023 2024 2025


    CF -2,100,000.00 260,479.72 285,547.50 271,539.4 1,007,774.45 1,569,865.71
    0
    RR 10%
    R

    Profitability Ratios
    PROFABILITY RATIO
    Operating Profit Margin -0.903234 -0.188653 0.072219 0.245522 0.368229
    Return in Assets -0.483976 -0.198010 0.094749 0.343228 0.537237
    Return in Equity -1.165714 -0.693056 0.324686 1.086290 1.334881
    Return in Investment -0.492740 -0.173031 0.086692 0.370545 0.679469
    Return on Sales -0.081005 -0.026179 0.012283 0.049165 0.084429
    Liquidity Ratios
    2021 2022 2023 2024 2025
    Liquidity Ratio
    Current Ratio 1.245264519 0.9874530635 1.044249365 1.1651314 1.366535678
    Acid Test Ratio 0.3003440167 0.06865641462 0.158660384 0.3876382554 0.6063414385

    Net Working ₱306,671.59 -₱16,446.35 ₱60,210.63 ₱256,085.97 ₱581,709.54


    Capital

    Activity Ratios
    Activity Ratios
    Asset Turnover 5,97 6.99 7.89 7.56 6.87
    Inventory Turnover 15.27 15.24 15.67 16.11 16.56
    Ave Inventory 761,501.01 784,346.04 785,031.39 785,737.30 786,464.39
    Ave Asset 2,138,028,11 1,986,553.66 1,878,247.25 2,094,274.45 2,461,552.48

    Annual Net Cash


    Inflow
    Net Income (1,034,754.73) 363,364.37 182.052.79 778,114.55 1,426,885.77
    Add: Depreciation 40,246.43 40,246.43 40,246.43 40,246.43 40,246.42
    (994,508.31) (323,117.95) ₱222,299.22 ₱818,390.98 ₱1,467,132.19

    Solvency Ratios
    Solvency Ratios

    Debt Ratio 0.584824 0.714294 0.708182 0.684036 0.597539


    Debt-to-Equity Ratio 1.408619 2.500103 2.426794 2.164918 1.484715
    BREAK-EVEN ANALYSIS

    2021 2022 2023 2024 2025


    Average sales price* ₱502.36 ₱536.74 ₱563.58 ₱591.75 ₱621.32
    Average Variable ₱441.66 ₱446.42 ₱452.14 ₱457.92 ₱463.79
    Product Cost**
    Average Variable ₱0.00 ₱0.00 ₱0.00 ₱0.00 ₱0.00
    Administrative
    Expenses***
    Contribution Margin ₱60.70 ₱90.31 ₱111.43 ₱133.83 ₱157.55
    Fixed Expenses:
    Utilities 91,071.48 93,803.62 93,885.59 93.970.01 94,056.97
    Salaries and 758,718.00 781,798.50 782,490.92 783,204.08 783,938.70
    Professional Fees
    Rent 420,000.00 420,000.00 420,000.00 420,000.00 420,000.00
    Repairs and Maintenance 5,000.00 5,150.00 5,154.50 5,159.14 5,163.91
    Marketing Expense 50,400.00 50,400.00 50,400.00 50,400.00 50,400.00
    Depreciation 14,621.43 14,621.43 14,621.43 14,621.43 14,621.43
    Total fixed Expenses 1,339,810.91 1,365,773.55 1,366,552.43 1,367,354.65 1,368,181.01
    Breakeven Units^ 22,072 15,122 12,263 10,217 8,684
    *Sale, net of VAT/Units sold (xxx/xxx)
    **Variable Production Costs/Unit sold (xxx/xxx)
    ***Variable Administrative Expense/Units sold (xxx/xxx)
    ^Total Fixed Expenses / Contribution Margin (xxx/xxx)

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